THE complexity of the worldwide crisis in the money markets is so great and the amount of public money being used to shore up the banking system so large that the majority of us greet each new revelation with increasing bewilderment.
Some £37 billion of our money was promised to three of Britain’s biggest banks yesterday to help them balance their books.
The unprecedented rescue package amounts to a partial nationalisation of the Royal Bank of Scotland, Halifax Bank of Scotland and Lloyds TSB. In theory, the taxpayer could end up owning 60 per cent of RBS and more than 40 per cent of HBOS and Lloyds TSB once they merge.
Many people will think it absurd that public money is keeping massive private businesses afloat when a small building firm, for instance, would not get such help if it were about to go under.
The reality is if the banks go down, we go down with them. Without a flow of money through the banking system many of the wheels of our society simply grind to a halt.
Businesses cannot pay their bills, wages go unpaid and, slowly but surely, those at the bottom of the payment chain go under. Then we are in a downward spiral of mass unemployment and all that entails.
That is why yesterday’s bail out, unpalatable though it may be, was so necessary.
It will not bring about recovery – we could be a year or more away from that – but it will encourage stability.
And we all have a stake in it working.
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