Is The Crisis Transforming Global Finance?
AFTER much dithering, lots of high drama and much effort to avoid the inevitable for fear that it would straightjacket capitalism, governments in the developed industrial countries have taken the first, major, necessary step to begin resolving the financial crisis. They have, effectively, nationalised a large part of the private banking system. The process began in the UK, where the Gordon Brown administration stepped beyond what Bush was willing to do and announced that it would resort to an “equity injection” to buy ordinary and preference shares worth £37 billion in three of the biggest banks in the country: Royal Bank of Scotland, Lloyds TSB and HBOS. Existing shareholders have the option of buying back the ordinary shares from the government. But if they do not, as seems likely, then the government would have a stake of 60 per cent in RBS and 43.5 per cent in the combined entity that would emerge after the ongoing merger of Lloyds TSB and HBOS. This clearly amounts to State takeov
