2 questions.

If not voting is abstention, then surely bank shareholders of any grouping will gain no more power than they currently do have if members of the public simply hold on to their shares and do nothing else?

Second, aside from the question of what is best for the banking sector (which this proposal is patently nothing to do with), do you think it’s a good idea for taxpayers to get a “reward” like this for having either implicitly or with no approval having their money tied up in these banks for a period of time?

And a point to make on who gets the shares. Everything I’ve seen (though it is not necessarily a fact) points to the discussion of distribution being centered around those with a national insurance number. As I say, may not be the case though.

It is also worth pointing out that assuming this scheme took off, when it came to people selling their shares, they will in large part spend it on German cars, chinese produced electronics, clothes manufactured in the third world, and foreign holidays.

How is that going to help us more than the government just ploughing any eventual profit from the “sale” of these banks back into the exchequer?

@2 – I guess they’ll get 20% VAT back straight away.

@ 3 Neil

True dat…..

…although I’m not sure that it would exactly make up for the outflow represented by the spending on imported goods and/or the fact that a significant amount of it will be spent abroad.

Richard,

And maybe also he should be aware that a company with a massively diverse shareholder base, none of whom vote because none of whom think they have any influence, is susceptible to control by a small minority of shareholders who can capture a block of shares at modest cost?

So you prefer a system where only a small minority control all shares (at modest cost as there is less competition for them) and then control all companies anyway? Strange logic there – opposing mass share ownership because it allows a small number of shareholders to control companies, when the other choice (unless you really advocate complete nationalisation) is minority shareownership with a small number of shareholders even more certainly controlling companies.

And therein I think lies his plan: this is about letting a minority have control at remarkably little cost whilst they exploit the state that will have given them that opportunity and the rest of us who would be taken for a ride.

Well, give or take that we would still have some of the value of the company, and the ability to act together if we could be organised. To be honest, if I wanted to give control of the banks to a minority I’d sell the shares on the open market or even in a closed deal – it might work a bit better if the minority controlled the shares you know.

These banks need strong control in the interests of society – not least because the chance of another bailout being needed soon is very high. That’s nationalisation – not this cock-eyed mechanism for delivering minority control for an elite.

Ah, so you do want nationalisation. Control of the banks by a small minority (democratic representatives) appointed by a massively diverse electorate, many of whom do not vote because they do not think they have any influence – oh, hang on, it’s exactly the same problem. For nationalisation to be any fairer to people you have to believe that people will vote when it suits them – just like shareholding.

But if you want nationalisation, make the case for it. Don’t just expect us to believe your silly (and baseless) assumptions about the motivation behind taking public ownership somewhat more literally than placing power in the hand of a few bureaucrats.

Does anyone know what percentage of the company would be handed out to the public? If you wrote to every adult in Britain saying “Congratulations, you now own £300 in bank shares” or whatever, I imagine the majority of people would immediately sell to get the money – what kind of effect would that have on an already troubled institution? Genuine questions both, I’m not a economist.

Galen10,

It is also worth pointing out that assuming this scheme took off, when it came to people selling their shares, they will in large part spend it on German cars, chinese produced electronics, clothes manufactured in the third world, and foreign holidays.

Ah, the return of Buy British…

If of course those cars use British components, the Chinese send their children to study here, British water purifiers are brought by the third-world country, and the holiday destination decides to use British chemicals to clean the pool, some of the money comes back again. You see, the more money going hither and thither, the more will come our way – we still make things (thankyou Evan Davis) and people still buy them – so if we give other people money, they have more money to give to us.

6. “To ensure that the stock market operates
normally, Portman’s plan sells just over 21
per cent of the stock to the market in two
transactions: a Convertible Bond covering 6
per cent of the shares worth some £5 billion
at the time of the announcement, and 15 per
cent of the shares in institutional placings at
the time of distribution. Selling the shares
in this way ensures that the market will
operate normally, whilst providing valuable
early revenue for government. Demand
is anticipated to be high, as the structural
overhang on the shares will be removed,
eliminating the need for the government
to sell at a discount. Indicatively, these
transactions should account for £15 billion,
leaving nearly £50 billion of shares to be
distributed, as detailed in Appendix B. ”

http://www.libdems.org.uk/siteFiles/resources/PDF/SW/20110307%20CentreForum%20Pamphlet.pdf (just popped up on my feed about 15 minutes ago)

Selling RBS shares is actually quite difficult for the government. UKFI have 90 billion shares and you can’t just dump that amount on the market without collapsing the share price. That is why they have been in discussions with sovereign wealth funds to sell them tranches without recourse to public sales. Moreover, the taxpayer is not getting value at the moment or seems likely in the near future because RBS shares are undervalued. Embedded regulatory risks and exposure to Ireland means they are possibly undervalued or not depending how the risks turn out. Giving them free to taxpayers in tranches is such a crazy idea, but it is clearly not getting value for the country as an entity.

* is not such a crazy idea*

@7 Watchman

I wasn’t advocating a Buy British policy, I was pointing out that there were better ways of ensuring that the taxpayer/state as a whole gets a better return in this particular circumstance than giving every taxpayer a few hundred quid to spend as they please, becuase inevitably that would result in a goodly amount simply being “exported”.

I’m aware that some if that will still happen even if the proceeds of the sale just go into the general pot, and result in e.g. tax decreases (or at least avoidance of increases), but it would probably not be as much, or as immediate.

I’m not advocating some autarchic nightmare.

“I was pointing out that there were better ways of ensuring that the taxpayer/state as a whole gets a better return in this particular circumstance than giving every taxpayer a few hundred quid to spend as they please”

Of course there is. But this isn’t a policy about giving people a better return, it’s about making people feel like the government isn’t simply stripping everything away from them and that when an opportunity arises that they can individually have some choice over how they individually benefit.

Is it holistically the best thing for that individual in terms of “better return”? Well that depends on whether you’re including happiness or other more emotional measure of how much better off that person feels or not.

Objectively it might not be, but since when has objectivity counted for anything in the public’s mind on recent decisions?

This is a blagg!

We’ve already had “senior Lib Dems” telling us that this scheme is supposed to encourage more people to invest in shares.

My own belief is that, as the banks and other institutions have run out cash, can’t print any more due to inflation fears, they’ve decided to try and persuade Joe and Jill public to part with their hard earned readies. Boiler room scammers couldn’t dream this one up. The way that this scheme has been described it will simply mean that the punnters own the shares in name, but can’t even just get straight profit from selling them – the first grand will go back to the gummint. Then add the paperwork involved in giving the HMRC their share, it will serve only to make most peoples’ lives more complicated.

Clegg should be drowned in pig manure for dreaming up this one!

IF RBS is a promising asset within a reasonable timespan then it seems daft to unload the shares right now, just more political gimmickry from a dead man walking.

Oh dear the global elites will not like this idea. They don’t finance the tory party so that Jow Ordinary can get his dirty hands on ‘their property.”

It won’t happen, Clegg’s just trying to win back some popularity.

The Banks will be sold off to the highest bidder in time for corporation & higher rate income tax cuts just before the next general election.

In 2014 paying off of the national debt won’t be quite so urgent.

http://neitherangryorscared.blogspot.com/

I’m amused at all the ‘left wing’ sites attacking this idea. All focus entirely on that Clegg wants to give the shares to ordinary people. They attack every possibility they can think of in relation to this. Nevermind that it’s a proposal without all the serious detail yet. Nevermind the detail we do have counters a fair few of the arguments. Nevermind that it’d help people rather nicely.

Can’t have the government giving people money, that sounds like a welfare state to me.

Honestly, get your heads into daylight and actually look at the proposal we already have and the various ways it can be done. Stop spreading fud.

@17

LOL if you think Clegg has people’s interests at heart. That’s why this proposal is being picked over, you know. Because Nick Clegg is a proven two-faced liar with the backbone of a slug & the principles of something slightly less palatable.

(source for above statement: http://blogs.susu.org/sabbs/files/2010/11/Nick-Clegg-tuition-fees-pledge.jpg )

“I’m amused at all the ‘left wing’ sites attacking this idea. ”

It makes sense. Why would left wingers of the vehement kind ever be happy with the state giving money to individuals regardless of their need, when it is already in the state’s hands to spend on the betterment of society? Ideologically this isn’t a particularly left wing policy. Nor is it really right wing either of course, but that’s a different matter.

“Because Nick Clegg is a proven two-faced liar with the backbone of a slug & the principles of something slightly less palatable.”

It’s always nice to see that people still view politics as so simple. Quaint.

@ 17 Rich

Well, I can see how right wing sites and supporters would be smacking their lips at the prospect, but leaving aside your touching delusion about Nick Clegg’s motives, your analysis is totally flawed as some of the posts above show.

It would help some people rather nicely, but it will also likely lead to a less than optimal solution than just selling the banks at the best price the government of the day can get, and crediting the amount to the public purse to try and fill some of the huge hole in our finances caused by the banks in the first place.

Of course the Tories are going to look kindly on the concept… after all they are the ones who sold off all those nationalised industries cheap in the first place, and not by giving shares to everyone, but by undervaluing them and selling the shares to those that could afford them.

And isn’t he aware that such schemes have rise to the concentration of power in the hands of the oligarchs in Russia?

…

And therein I think lies his plan: this is about letting a minority have control at remarkably little cost

In Russia they flew helicopters to village and exchanged share certificates for bottles of vodka.

In the UK, if you want to buy shares from somebody, you have to do so at the prevailing price on the stock exchange.

I realise this is beyond the grasp of the author, but you can already do that – you don’t need to give RBS shares to individual citizens first before you can attempt to buy a large proportion of the shares (form a “block” as the author has it), when a company is listed you can just buy those shares any time you like. If a minority wants to gain control of Barclays, it can do so today, by buying the shares.

The only way handing out shares to the public will enable investors to take control of RBS at low cost would be if the public en mass decided to sell their shares, driving down the price. Now, I guess that might happen, but lets not forget that “a minority” won’t have the field to themselves if that happens, there will be dozens of pension funds, hedge funds, fund managers from all round the world in the market for those shares. It’s not as if a secretive cabal will be able to go around the housing estates of Britain buying up the shares on the doorstep for peanuts.

(I knew agreeing with Richard M was the exception rather than the rule)

“In Russia they flew helicopters to village and exchanged share certificates for bottles of vodka.”

I’m sure that would never happen here… But, can you explain why so many people took the money, pretty much against their own interests it turns out, when the demutualisation scalpers were doing the rounds back in the nineties?

@22 Luis Enrique

” It’s not as if a secretive cabal will be able to go around the housing estates of Britain buying up the shares on the doorstep for peanuts.”

Perhaps not, but given the history of privatisations in this country, the eventual effect might be much the same in that “ordinary” people get relatively little benefit from this stunt, whereas a small number of people will make a killing. The only part of the current plan that is different from earlier sell offs is that they are planning to give shares to everyone on the electoral register rather than invite offers from those with the money.

Neil,

I’m not quite clear what you are asking me – if your building society demutualises and gives you shares, you can hold on to them or sell them. I don’t know which is against your interest. The OP seems to suggest that people will sell their shares too cheaply, thereby allowing a “minorty to gain control at low cost”

do you think that a large proportion of people if handed shares will just flog them, allowing other people to buy them at a low price? Possibly so, I don’t have an instinctive knowledge of how millions of people would behave. However, the fact remains there is no mechanism for any single minority to buy up those shares without having to compete with other buyers.

(I suspect this is a lose lose in some people’s eyes – if you give people shares and the price subsquently rises, those that sold early will be described as having been duped somehow into selling too low, if the shares subsequently fall, those that don’t sell will feel hard done by)

Galen,

how will ordinary poeple get little benefit whilst others make a killing?

the only way I can make sense of that is that if you think ordinary people will sell at a low price, insiders will buy, and the price will subsequently rise sharply.

well, I can tell you one thing – if it really is that obvious that shares in RBS are going to rise sharply, if we do all get given some: don’t sell them

if it really is that obvious RBS share are going to be worth much more tomorrow than they are today, why aren’t they already worth more today?

Not wishing to be rude Luis, but were you actually around when so many building societies demutualised in the nineties?

The fact that you don’t understand what I’m asking suggests maybe you weren’t.

@20

“It’s always nice to see that people still view politics as so simple. Quaint.”

It’s always nice to see people defend the indefensible. Oh, wait, no it isn’t.

28. Who’s defending anything? I’m just not putting childish labels on everything when the reality is more nuanced.

Neil,

Sadly, I’m well into middle age. Perhaps I just wasn’t paying attention. Not meaning to be rude, but perhaps you could lean to state your questions more clearly.

@29 Lee

I doubt you’ll find many takers here (or anywhere other than LD Voice I imagine!)for your take on Nick Clegg’s actions. You may attribute them to a nuanced view, but it has the look and feel of a lack of principle and courage on his part.

His party has basically collapsed to a rump of support in line with the old Liberal party of the pre-Alliance/SDP days, they queered the pitch on electoral reform for a generation or two, and have now left us at the tender mercy of going into the next GE with the equally unpalateable options of either a Tory majority, or a majority for a Labour which few are confident will change.

@26 Luis

“how will ordinary poeple get little benefit whilst others make a killing?..”

Because the chances are “most” people (who have little or no experience of share owning and trading) will probably sell their shares fairly quickly and take a quick gain. They will then spend the money (as argued previously) in ways which are probably less than optimal than if the government just took the overall gain, because a decent proportion of that spending will effectively be “exported” in purchasing goods and services made abroad.

As was obvious from previous privatisations, the outcome wasn’t a mass share owning democracy. Most people quickly sold their shares for a windfall gain, and some held onto them as a nest egg. Since it was generally seen that the companies involved were sold off ridiculously cheap, it wasn’t “ordinary” people who benefitted, still less everyone because the shares weren’t allocated to everyone were they?

The only difference with the current stunt is that they are planning to include more people (tho still not everyone). The charge still remains; the outcome will not benefit “everyone” as simply having the government take the gain would.

Galen,

I think I have a somewhat more optimistic view of “ordinary people’s” ability to manage their own finances and decide what to do with their money for their own best interest, but I concede a large number of people probably do make bad decisions. I’m not sure these people will really be better served by the government either nationalising RBS or selling it via some other means (either a simple share sale or sold to a mutual). I see your point. I don’t really have a view either way on the best thing to do with RBS, I just wanted to dispute Murphy’s contention that the intention is to hand RBS to a “minority” on the cheap.

“Perhaps I just wasn’t paying attention.”

Well that’s a pity – what happened back then is quite pertinent to what we’re discussing now.

Neil

do you think you could bring yourself to actually state what you have in mind?

@33 Luis

“I’m not sure these people will really be better served by the government either nationalising RBS or selling it via some other means”

I’d say it is a racing certainty they would, in as much as the whole amount realised from the sale would go into the “general pot”, whereas in the case of Nick’s stunt it won’t. I accept that the benefit of much of it will still go into the economy generally, but a significant proportion will not.

I share your scepticism that there is a cunning plan to sell RBS and/or Lloyds on the cheap….. but the eventual outcome may be much the same; the benefits will not be realised in the most equitable way seen from a societal point of view, they will benefit some more than others.

Note that I’m not making some anti-capitalist point about the evils of share owning or of cpitalist running dog lackeys…. I’m saying that this is a crap plan which owes a lot more to Clegg’s cynical and probably doomed attempt to regain some support.

Jesus wept Luis, do you expect me to teach you how to operate Google or something?

Neil,

I suppose I could google “UK building society demutualization” and trawl through the results until I locate something that might be what you have in mind. On the other hand, if you actually want to ask me something, perhaps you could do so in manner that doesn’t require me to spend half an hour doing research trying to figure out what you have in mind. On second thoughts, don’t bother, you don’t strike me as a particularly worthwhile interlocutor.

Fair enough Luis, sorry to have wasted you valuable time.

“Jesus wept Luis, do you expect me to teach you how to operate Google or something?”

Neil, claiming that you have knowledge that sheds important information on an argument, but then refusing to share or explain that knowledge while still remarking on the other person’s alleged ignorance, simply marks you out as someone who can’t win the argument through facts or reason so tries to win by going “Well I know more than you so I’m right nyaaaah!”

It might not be your intention, but this is exactly what you’ve been doing for your last few comments. Pretty much nobody falls for this, and it’s effectively a kind of trolling. For the record, Luis is pretty knowledgable on issues like this.

“and it’s effectively a kind of trolling”

And feigning ignorance isn’t? Who knew.

Jesus wept Luis, do you expect me to teach you how to operate Google or something?

You could have spent time writing what you meant instead of being a bit of a tosser.

“feigning ignorance” oh go fuck yourself Neil, you can see #25 I tried to figure out what you were asking.

LOL at Neil’s “argument”/rhetorical strategy.

Yeah, Luis, why don’t you just construct my argument for me? Isn’t obvious what it is? You can’t possibly know what you’re talking about if you don’t know what I’m talking about before I tell you.

/arbitrarily large quantity of feigned outrage, “cripes,” “Jesus wept,” etc/

32. Galen10

Because the chances are “most” people (who have little or no experience of share owning and trading) will probably sell their shares fairly quickly and take a quick gain. They will then spend the money (as argued previously) in ways which are probably less than optimal than if the government just took the overall gain, because a decent proportion of that spending will effectively be “exported” in purchasing goods and services made abroad.

Every export is an import. More or less. So what if it is spent on goods and services from abroad? They will buy more of our stuff in return and everyone is happy. What you mean, of course, is you think the Government is made up of much smarter people than the average voter and they will spend the money more wisely. It is arrogant, but I also think it is wrong. If the past is anything to go by the government will waste it too. Another Dome. Another Ground Nuts scheme.

But it is interesting to see you so opposed to Britain’s payments to the EU via things like the CAP. That is an open export. Which is bad, right? And to see you agreeing with Paul Staines – no more aid to India.

The charge still remains; the outcome will not benefit “everyone” as simply having the government take the gain would.

Yeah because having people decide for themselves what they need is nowhere near as sensible or fair as having some twerp in Whitehall who already manages to waste 40 pence out of every pound spent in Britain decide for us.

I would have hoped this sort of contempt for the common man died a long time ago in Britain. And as far as I can see, buying a new Xbox or a Wii is a much better use for the money than anything the government could do with it. Who is to judge what is best for anyone except that person themselves?

I think the comments since mine have rather proven my point.

In response to @21, er, none of the anti posts above actually show my analysis is flawed. They barely even touch on the actual subject other than “It sucks”, and pure partisan hackery. @18 demonstrates this perfectly. The right wingers also don’t really like this idea as it’d be giving money directly to the poor.

The convergence between the ‘right wing’ and ‘left wing’ over attacking anything just because it involves a lib dem has been rather sad. The tribalism displayed here has been especially sad. Not much Liberal about this place for a long long time.

@45 SMFS

Oh spare us the libertarian faux outrage.

Much as it suits you to scratch your atavistic ideological itch and paint anyone who disagrees with you as a hopeless supporter of big government and the concept that they know better than individuals, it ain’t necessarily so.

In this particular instance, I think the proposed scheme is a bad idea for some of the reasons above.

The telling part of your “Every export is an import. More or less. ” post above is MORE OR LESS, yes? Because in this particular case, whilst it is not guaranteed (because who knows about when the sale will be, or how stupid the then current govt will be) it is at least arguable that if they gain £x billion, and use it to offset some of the huge hole we are in, that will be of more benefit to society as a whole in a utilitarian sense, than letting people blow it on a new X-box, or spend it on foreign holidays.

You might like to squeal “oh the arrogance, oh the contempt for the little man”, but you still haven’t answered the substantive charge that this whacky scheme is more about helping a minority (even if not explicitly), than helping the greatest possible number.

@47 Galen10

Reading your post, you’d fit in very well on the tory sites right now. The common person spending money? The idea itself is hideous! You talk about arrogance, but you seem full of it and not much else.

@ 46 Rich

“I think the comments since mine have rather proven my point.”

No, they honestly haven’t. They’ve demonstrated that it’s an opportunistic move by a dead man walking who can see a clear and present danger of his party becoming an electoral afterthought, due mainly to the way he and his mates have acted over the past 13 months.

Some right wingers might not like the move, but many more will; it is simply more of the old Thatcherite “property owning democracy” line, and about as honest and well thought through.

The lame accusation that those opposed are doing so for tribal reasons don’t engage with the criticisms made of the fairness of the scheme above; it isn’t about tribalism, or being anti-LD for the sake of it, it’s about the proposal being ill-considered, inequitable and politically opportunistic.

@49

They certainly have proven my point, in that they’ve been attacking without facts and knowledge. As the attacks ignore the hard details we already have, they’re not very good. More details are certainly needed, but I haven’t been seeing a call for that from the trolls so far.

The idea originated a while back, and has been talked about amongst Lib Dems previously. Clegg hasn’t come up with this suddenly out of nowhere. That a lot of the focus from you, and others, has been on it coming from Clegg being desperate for votes, proves my main point. This about you attacking an idea from the Lib Dems. Facts come second, tribalism first. Same for a lot of tories against the idea.

Your last sentence is also proving my point. You don’t have actual hard facts behind you, so you repeat the attack. Fling enough shit, some of it’ll stick eventually.

@48 Rich

I’m about as far away from a tory as it would be possible to get. I may not join Jeremy Hardy in dancing on Thatcher’s grave, but I certainly understand the sentiment.

The fact that some people might not think this is a great idea doesn’t mean you can pigeonhole them into your chosen ideological niche. I’m not going to take any lectures about arrogance from an individual like you who is more adept at playing the man than the ball, and seems incapable of actually engaging in a debate about the flaws in the scheme discussed above in favour of cheap shots like that in your post.

“Clegg’s cynical and probably doomed attempt to regain some support.”

I dunno, people are simple creatures, “I want to give you free money” isn’t exactly a vote loser amongst those who aren’t already entrenched to hate everything the man does simply because of the party he’s in.

“it’s about the proposal being ill-considered, inequitable and politically opportunistic.”

I’d hardly call it ill-considered or inequitable. Go and read the information already out there about the scheme and how it’s come in to existence as an idea. It might not be logistically possible, but then the Lib Dem’s own analysis in to it says just as much, and that there are definite obstacles that need to be considered and overcome before it could be implemented.

51. He didn’t call you a Tory.

At the risk of annoying both parties in the Neil/Luis contretemps, can I try and make Neil’s point for him? (I am bored whilst waiting for a train).

Neil – “But, can you explain why so many people took the money, pretty much against their own interests it turns out, when the demutualisation scalpers were doing the rounds back in the nineties?”

Luis – “I’m not quite clear what you are asking me – if your building society demutualises and gives you shares, you can hold on to them or sell them. I don’t know which is against your interest.”

Prior to demutualisation, the building society to which I belonged was required to ballot its members to approve the transformation into a PLC. It is this vote that I believe Neil is referring to, not the subsequent choice to either hold on to or sell the shares.

As an aside, I voted against demutualisation, but sold the shares which were given to me.

@ 50 Rich

You haven’t referred to, let alone properly engaged with, any of the arguments above about the pros and cons of the scheme. Even SMFS managed to do that.

Nobody claimed it was Clegg’s idea, they questioned his motives for promoting it.

The fact someone so distasteful to many (especially on this site) is behind it doesn’t help, but some of us are actually capable of calling bullshit on an idea not thru tribalism, but because it is in fact a pile of steaming crap. It wouldn’t be any less crap if Ed had proposed it.

Apparently if the shares were disposed free to the public only the upside to the breakeven figure would go the person holding the shares with the breakeven going to the Treasury. Nominally 51p for RBS ( currently 36p) so a long way off the breakeven. However, after Treasury administration costs etc the true breakeven is more like 54/55p. I would think it quite a logistical nightmare to administer. Moreover, adding brokerage fees when the person sells adds another few pence that they need the shares to rise before the recipient gets anything. For the public to make anything, realistically RBS needs to become around 60% more valuable.

Having tens of billions of shares in public hands but off market that only attain value to the holder all at the same price could see huge influx of sales when that price is reached. Pretty much ensuring that the attained price does not last long.

@52 Lee

“I dunno, people are simple creatures…”

Ooooo.. careful now, you wouldn’t want to be labelled arrogant and more fit for a tory site would you!

My views about Clegg and the LD’s are fairly widely known in here, but I’ll say it again, it is actually possible for some of us to see through the red mist of hatred; if I thought the hopeless principle void had a valid point point, I’d say so. I’m not against it because it’s LD produced or endorsed snake oil, I’m against snake oil per se.

“It might not be logistically possible, but then the Lib Dem’s own analysis in to it says just as much, …”

No shit Sherlock! Even they aren’t really convinced that it culd be made to work. And whilst it could be construed as more equitable than past privatisations, it is still demonstrable less equitable than other potential ways of taking the benefit of the money when the banks are sold.

@51, 55

Part of what’s been keeping me amused is the ideological convergence between the right wing and the left wing in attacks on the Lib Dems. You’ve been brilliantly proving my theory on this. Doesn’t matter what the idea is, attack it, and come up with a reasoning to support it. It’s been very evident when reading articles from here (plus similar sites), and comparing to ones on right wing blogs (say conservative home). I can’t say you come at the attack from different angles, as the reasoning comes after the attack. Ideology isn’t mattering so much, but tribalism is. The reasoning builds on itself, and you are undoubtedly convinced.

When it comes to flaws in the scheme, some certainly exist. They’re very much outweighed by the positives. I have indeed stayed away from engaging over pros and cons, simply because it’d be an even greater waste of time to argue with someone who obviously hasn’t read any details beyond the headline.

I’ll respond to your first comment, @2. You fairly obviously don’t understand the global economy. You don’t understand that someone buying a big TV made in Japan still benefits this country. There’s the salaries of everyone involved in the chain, a lot of those in the UK. There’s the tax paid (VAT, council tax on the property it’s sold at, business tax, ect). So the money feeds back in, and helps pay for the jobs of people working in this country. Even if someone uses the money for a holiday in another country, a lot of that money still gets spent int he UK just from the travel and other pre-holiday expenses. Even the money spent elsewhere helps boost things, as we are in a global economy, whether you like it or not. We rely on other countries having stable economies.

The main argument against seems to be the money would be better spent by the state (although less money would be made from selling shares due to the chunks they’d be sold in) (or if you’re a tory, the profit should be used to cut taxes at the higher end), and that people shouldn’t be given a windfall to spend as they’d waste it. An alternative is the banks should be nationalised entirely. Just what we need, more permanent debt on the states balance sheet, as well as control over most peoples money directly by the state. Or we could mutualise. A better option than nationalisation, runs into the issue of it’d cost the government a lot due to the shares not being sold off. We could stick to the plan of just selling the shares off, and we’d be able to use the cash to pay off some debt, but that’d leave us with the problem of a deficit. One time windfalls aren’t useful for a sustainable economic policy.

So yeah, you certainly seem blinkered by tribalism, preferring to attack over engaging in the actual debate.

The idea is more equitable than others, and would provide more direct help to a lot of people than alternatives. Bit too equalising for you I guess.

@55 Doesn’t your point assume everyone decides to sell soon after the point they’re allowed to, making a minimal amount of money for themselves? Odd.

@57

Your last paragraph fits right under “made up, facts need not apply”. Do better, especially when assigning viewpoints to your opponent. I so love being told how us Lib Dems think. Labour and the Tories always seem to know better than us. Oddly enough, can’t remember the last time you were right.

I think it’s pretty clear that in the long run allowing building societies to demutualise has been a disaster, but that doesn’t mean that the members who received the shares at the time did not benefit personally. I’m sure many of them still feel that on a personal level it was worth it.

Personally I don’t see much wrong with Clegg’s plan in principle – we all own (most of) RBS and Lloyds, why shouldn’t we all get the direct benefit if the government decides it no longer wants them to remain in state ownership. And it’s a progressive move in that the least well off will benefit proportionally more than the better off.

So what if people sell their shares and spend the money on stuff made abroad? They will still generally use UK based retailers and pay VAT so there will still be a benefit to the UK economy and the public coffers.

@58 Rich

As your post amply demonstrates, the real reason you failed to engage before now is that you don’t know what you are talking about. For what it’s worth, I’ve read extensively about the details, and yet remain unconvinced. I wonder why that is?

Oh, of course, in Rich-land it MUST be because I’m a hopeless tribalist, infected by an irrational hatred of that nice Mr. Clegg. Shhheesh.

Even someone with as little grasp of the dismal science as me can spot the obvious flaw in your little Japanese TV example. Of course there would be benefits to this country of the type you describe (oh.. and well done you for finally actually deigning to engage in actual debate rather than just throwing rocks from the sideline…. not THAT hard really, was it?).

The point however is that, as even you admit, some of that benefit does not come back…. so it is at least arguable that it would be better for the whole of the amount simply be offset against the yawning deficit.

The idea is more equitable than SOME of the others, yes… but it isn’t the only or even the best answer.

In future you might like to actually come up with your last post up front, rather spout screeds of “ya-boo sucks, you’re a tribalist” trolling first.

I won’t be holding my breath.

witchsmeller,

So I was being asked why people voted for demutualization? No wonder I was confused – the OP and subsequent discussion was about whether people, once given shares, would dumbly hand them over to buyers like Russian vodka drinkers.

right, well I guess we now have the possibility that the financial crises would have been less severe if more banks had stayed as mutuals. But I don’t think the question was: “why didn’t people see that coming?” – of course they didn’t. So the question is whether demutualizing was against people’s interests, on basis of what was known at the time. Was the quantity of money members received in shares worth less or more to them than continuing membership of a mutual would have been? Buggered if I know – why was I supposed to know that people would have been better off with a mutual? (which is presumably what Neil was getting at – people are too tempted by the prospect of a quick buck and can be exploited by unscrupulous investors – that actually explains his point, not sure why he couldn’t just explain it to me). I quite like mutuals and have been with Nationwide for years. Can’t say I’ve noticed they pay me more interest or charge me less than the listed banks, and I do find their systems rather annoying. Perhaps I’d rather have a few hundred quid.

(the idea that some people take a quick buck, potentially against their long-run better interest, is a common one – people are impatient. in economese, known as having a “high subjective discount rate” (although under that formulation, people are rationally being impatient because they simply value things today more than things tomorrow – you need a somewhat different formulation to argue that people are mistakenly being impatient).

@ 59 Rich

“Oddly enough, can’t remember the last time you were right.”

I seem to recall being uncannily accurate about the collapse of the LD’s, and what a crap idea going into coalition was.

@61
That was a lovely job of saying “Very nice, but you’re wrong. No, I won’t say why, you’re just stupid.” So after attacking me for not engaging, you yourself are too worthy to actually respond to actual facts and the alternative options. Well done you.

You prove rather wonderfully that you don’t get it yourself. The deficit is not the debt. Yet you confuse the two. Well done. After making a mockery of me, you yourself fail. This confusion does seem rampant, so it’s not just you.

I’m not sure where I admit that the whole benefit doesn’t come back. The (admittedly limited so far) studies so far suggest more of an overall benefit for the state if this idea is followed. It gets its ‘investment’ back, while everyone in the country benefits directly, and then also feeding back into the state. The country is not the people or the state. It’s both.

So far you’ve demonstrated you have a rather weaker grasp of the issue than a lot of people. From your very first post infact. You seem determined to keep denying the point about tribalism, while every response makes the point stronger. Congratulations.

@63

We’ve been lower in the polls, and despite the hammering, our actual vote share recently was higher than polls said it would be. The details on the polls show people actually like a number of specifics that have happened due to the lib dems, but that isn’t translating into vote poll share. As to the coalition overall, that’s an entirely different argument that would take several dozen threads of its own.

@ Rich

” Doesn’t your point assume everyone decides to sell soon after the point they’re allowed to, making a minimal amount of money for themselves? Odd. ”

No I am not assuming that everyone would sell at exactly the same time. However, obviously 45 million people holding 90 billion shares would all move into profit at exactly the same time. It is a fair assumption that millions would dump their shares on the market at the first profitable opportunity. Apart from being below the purchase price the sheer quantity of the RBS shares is the difficulty for the Treasury in a disposal. The difficulties of scale do not go away even with this method. Hence, the Treasury are in discussions with sovereign wealth funds to buy tranches.

I would let RBS engage in buying their own shares back from UKFI to reduce the outstanding shares. It reduces the Treasury holding and increases the value of the shares that they already hold and means that there are fewer to dispose.

@64 Rich

Which bit of it don’t you understand Rich? I mean, I know you’re an LD tribalist, so obviously none too bright, but even a “bitter einder” like yourself ought to be able to see that all through the post until your post 58 you simply stonewalled and insisted that your point was correct.

You admit the point in post 58:

“So the money feeds back in, and helps pay for the jobs of people working in this country. Even if someone uses the money for a holiday in another country, a lot of that money still gets spent int he UK just from the travel and other pre-holiday expenses. Even the money spent elsewhere helps boost things, as we are in a global economy, whether you like it or not. We rely on other countries having stable economies.”

As anyone can see only SOME of the money feeds back in, particularly in the case of money spent abroad on holiday. I particularly like the bit about even money spent there is (eventually) good for the global economy…. how indirect and long term are you looking for the benefits to be? And you have the gall to accuse me of ignorance? Best fish the log out of your own eye first eh?

How are those polls looking now… 9% I think last time I looked, and even worse in Scotland. You must be so proud.. propping up a Tory government, losing the AV vote, handing the SNP victory in Holyrood… what next I wonder? Perhaps the superbly ill-judged strategic defence review you participated in can encourage Argentina to take another pop at the Falklands… you could always hope that’d do the same for your chances that it did for Thatcher’s eh?

Luis: but I concede a large number of people probably do make bad decisions.

You concede? That we just came out a bad financial crash, and still are suffering its impact should tell you something?

Could I just say that it is demand that leaks abroad not money. Personally, I can’t see why it matters what people would spend any largesse on.

@68 Richard W

The government used our money to effectively nationalise the failing banks, yes?

If everyone spends £500 on a new Sony Bravia, only some of the benefit of that spending is felt at home, and some of it elsewhere i.e. where it was manufactured and into the coffers of the company who made it. If however the government simply ploughs all the money back into you know.. that big black hole everyone keeps talking about, then all the benefit is available to do stuff like spend on the NHS, lower taxes on the poor, reduce VAT, build more Millenium Domes (one of those is not a good example).

Sunny

you don’t like my use of the word “concede”. You think my use of it reveals what? What’s your point?

Galen10,

You know I normally respect your views and enjoy arguing with them, but you do seem rather too set on the fact the Liberal Democrats are toast. Whilst they may indeed lose support overall in the short-medium term for their coalition participation (it’s hardly a Tory government – have you compared the coalition agreement with the Conservative manifesto), the long term outlook need not be bad – for a start, the present low polling seems to reflect the normal long mid-term drop governments suffer (it’s odd that it seems to focus on the junior party in the coalition, but we don’t have enough data on coalitions in the UK to build on that…), and the Liberal Democrats can actually now say they have been in government and are in the real world. Yes, they’ve lost the support of a group who are primarily urbanite social democrats, but that does not mean they cannot take other votes from other sources. In short, opinion polls now are no guide to polls taken after a certain time (no idea when – ask the experts) in the future.

69. Galen10

@68 Richard W

“The government used our money to effectively nationalise the failing banks, yes?”

No, they borrowed it from the gilts market.

” If everyone spends £500 on a new Sony Bravia, only some of the benefit of that spending is felt at home, and some of it elsewhere i.e. where it was manufactured and into the coffers of the company who made it. ”

It creates demand where a Sony Bravia is made. However, everyone in the chain shares in that demand by adding value encapsulated in the end sale. However, actual sterling money has no use to anyone overseas as it can only be spent in the UK. Therefore, it is the wrong way to think about things as the money leaving the UK. The import would slightly weaken the external value of sterling.

“If however the government simply ploughs all the money back into you know.. that big black hole everyone keeps talking about, then all the benefit is available to do stuff like spend on the NHS, lower taxes on the poor, reduce VAT, build more Millenium Domes (one of those is not a good example). ”

Yes, they would retire some gilts and reduce the national debt if they were operating with a surplus. Alternatively, if they had a deficit just borrow less and that would have the same effect of reducing what the national debt would be without the money from the share sales. Borrowing is just deferred taxation so reducing the outstanding stock of gilts or adding to them at a lower rate is the same as future tax being lower. One could describe it as more government spending available for other things as the share of government spending on interest would be lower.

Galen, you seem to have decided that rather than deal with the options I laid out, to just call me stupid and not know what I’m talking about.

However, from your first post on this matter, you’ve been ignorant. You attack the fact that the money would be spent by individuals, the mere idea it might be spent in a ‘foreign’ location is a bad one. Perhaps you should join UKIP, they like that sort of view.

You mix up the debt and the deficit. That you do not know the difference between the two makes your opinion on the economy worth less than nothing. If you do not understand this basic issue, and use it as a basis for an argument, you’re putting yourself out for a fall. It’s a very long fall right now.

From going from attacking me for not giving enough facts (that people couldn’t be bothered to read beyond the headline is my fault it seems), you’ve gone to attacking me for, er, giving the options and and likely consequences (which I haven’t made up in my head, but actually read source material).

Your understanding of a number of economic facts is extremely poor. If you’ve studied this area, it’s not showing. I suggest starting over, and then continuing with a daily dose of economic news and reading reports from a variety of sources. Get a grip on the issue, then we can have a proper debate on this.

@71 Watchman

“Yes, they’ve lost the support of a group who are primarily urbanite social democrats, ..”

Oh come now, a fall from the 23% they polled 13 months ago to around 10% now.. and it’s all attributable to urbanite social democrats? Around 30 million people voted in the GE…and somehow you think 5 million of them are urban social democrats?

That is the most ridiculous thing I’ve heard about the LD’s in a while…. and given some of the guff the few remaining LD apologists come out with, that’s really saying something watchman. Honestly, well done. You deserve a coconut at the very least.

Time will tell if the LD’s are indeed toast. I’ll happily eat crow if they stage a lazarus like recovery…. perhaps you’ll do the same if they diminish and travel into the west?

Of course opinion polls can change… but how many of that “lost” 5 million do you think are going to come back? Or, if they aren’t, where are these fabled alternative votes coming from…? The Tories? Labour?

It isn’t odd that the fall is focused on the LD’s…. they are just the fall guy for a party that is smarter than they are, who have comprehensively and repeatedly out-thought them. they have thrown the LD’s a few bones to keep them on side; the biggest surprise is that they can still scrape even 10%, but that probably just reflects the historic Liberal core vote.

If you think the heady days of “I agree with Nick” are coming back any time soon, you must have been out of the country a lot recently.

The Lie Dems are reduced to throwing out ideas that are immediately slapped down by their tory masters. Pathetic.

No way the tories will accept this. Their financial backers don’t want the people to have anything. All policies should be for the rich. In their eyes. The tories are the most political party in the Europe. They don’t get out of bed in the morning unless there is political advantage.

@72 Richard W.

“No, they borrowed it from the gilts market.”

So it still has to paid back, yes? Whether they borrowed it, or took it out of the till, it’s just another burden. The issue is how it’s paid off in the end.

Perhaps you can explain the rest in plain English….. you know, so that someone without an economics degree can understand.

@73 Rich

I bow before your detailed and undisputed grasp of the economic subtleties of the issue.

I’m sure there can be no other possible economic approach other than yours.

Your purported explanation @ post 58 didn’t explain anything, still less address my point. Stop hiding behind the soi distant superiority of someone who studies Economics 101, and explain it to me then…. I’m all ears.

How is it actually better from the point of view of society in general to follow this scheme, rather than just have the government sell the shares and take the gain?

Humour me (and others without your God like knowledge of economics) and explain it in terms that don’t make our ears bleed, require an economics qualification, or give us the feeling that you are talking thru a hole in the top of your head.

@71 Watchman

“it’s hardly a Tory government – have you compared the coalition agreement with the Conservative manifesto), the long term outlook need not be bad”

I used to just think you were misguided…. now I have questions about your sanity.

How much of the Tory manifest do you think would have gotten through with a minority tory government? that’s right genius… probably less than they’ve gotten through in the past year. add to that the LD’s might not have self destructed, and we might not have seen electoral reform kicked into the long grass for a few generations.

The long term outlook may not be as bad, but it could equally be worse. If the LD’s ARE toast, we’re left with a choice between the Tories and Labour.

Whose fault is that exactly?

@71 Watchman

“it’s hardly a Tory government – have you compared the coalition agreement with the Conservative manifesto), the long term outlook need not be bad”

You must be bat shit insane if you think this govt is not a tory govt.

@77

Well, you’re continuing to troll and not actually answer me. But I’ll bite and respond in detail.

If the government follows this scheme, a few things will happen. First, the government will make back its investment, clearing that chunk of debt. Second, individuals would gain a direct monetary benefit from the sale of shares. The money would be distributed equally to all, and of course be a bigger % of income to those on the lower end of the income scale. Because of the distributed nature of the shares, they would sell for more overall than if the government sold them (even in lots of little blocks). This would mean more money actually moving in the UK economy. If the government sold the shares, it wouldn’t solve the financial crisis we have. The profit would clear some debt, but leave us with the deficit unchanged. If individuals have the shares, it helps them directly (or is the government meant not to have policies that help people directly? Would you prefer a system of tax credits that screws people over?)

Do I address every single point and possibility here? No, because I’m not writing an essay on it.

Now, stop being such a bloody moron and riding around on your high horse. Insulting my level of economic knowledge when your own is obviously little is hilarious, but a little sad. When confronted with multiple options, you retreat to insults and don’t engage with the problem. You reveal how little you know yourself in your own response (debt ? deficit. You need that repeated again?)

Anyway, since the insane troll known as sally has made her appearance, best I start ignoring this thread, and you, and engage people with at least basic knowledge. Been fun, but I don’t know why I keep expecting people like you to be able to debate anything.

76. Galen10

” Perhaps you can explain the rest in plain English….. you know, so that someone without an economics degree can understand. ”

I thought it was pretty clear. However, sometimes responding on a blog it is easy to assume that people understand what is being said without that always being the case. Defining and explaining every term all the time is not realistic.

You asked

“If however the government simply ploughs all the money back into you know.. that big black hole everyone keeps talking about, then all the benefit is available to do stuff like spend on the NHS, lower taxes on the poor, reduce VAT, build more Millenium Domes (one of those is not a good example). ”

I think that this proposal is a silly season story unlikely to go anywhere. However, I think you are misunderstanding the proposal. The government would still get back their investment from originally buying the shares. Only the upside to the government breakeven figure would go to the holder of the free shares. So yes, they would plough the money into reducing the national debt by buying back gilts from the market.

It is true that the government could be losing out on a windfall from the upside to the breakeven figure and I think that is what you are getting at. However, currently an upside looks a distant prospect. The problem that they have is they would dearly like to dispose of the bank shares back to the private sector. However, until there is regulatory clarity and the eurozone crisis resolved, they could only sell at a loss. Political dynamite especially if the bank shares appreciated. Moreover, the stock market has never had to absorb the sheer quantity of shares that the government are holding. Even if the government was showing a profit on the current share price actually selling them is a monumental task.

@80 Rich

I think it’s fairly clear who is the unreasonable one here, and who the one throwing insults around is. as for being scared of sally and using it as an excuse to run off and a hide, it shows your strength of character pretty exactly.

As Rich W notes in 81 (you see, some people can actually engage without all the holier than than thou intellectually superior bullshit you’ve been posting above), what the government may be losing out on is a windfall from the upside of the breakeven figure.

As is also pointed out above under the scheme, as soon as the shaes allocated to the public went to a decent level, there would be a huge dump of them….so presumably their value would go down.

Still…at least if you are taking your ball home in a huff we won’t have to suffer your histrionic tantrums anymore. at least sally provides some light relief… your just an obscurantist bore.