Horse sense is the thing a horse has which keeps it from betting on people.
Not a phrase you hear a lot these days but I think this time the Yanks may be right.
The US Congress’ veto of the Paulson Plan as it stood to bail out the US banking system to the tune of at least $700 bn shows that they, at least are listening to their voters, acknowledging their concerns and acting upon them.
For too long, too many very rich people made too much money (and that goes for this side of the Pond as well as the other) from encouraging the great unwashed to saddle themselves with huge amounts of debt in order to buy things that they didn’t really need.
What did it for the Paulson Plan as far as the general Americans were concerned was the lack of any kind of limitation on the fat cats who benefitted so much from the situation just before the crash as well as the fact that there was no guarantee that the plan would work. Rather, there was the overwhelming feeling that $700bn would just be the start of it with no clear idea of where it might end.
There is also some grumbling over here over the way that taxpayers’ money is being heaped into financial institutions to help them survive after some fairly disastrous financial decisions, namely Northern Rock and Bradford and Bingley. After all, it was Northern Rock’s investment in the sub-prime market that brought the UK house of cards down in the first place.
Actually, in the case of HBOS, which in any case, may or may not be rescued by Lloyds TSB, it wasn’t entirely their fault. HBOS’s undoing was their exposure to the mass mortgage market and the share-price gambling frenzy that went on by investors selling short in order to make more money when the share price fell even further. (I suspect something similar was happening to Wolseley’s shares a couple of months ago).
We understand that there is a quite dreadful financial mess at the moment and something has to be done about it. But what ticked the US voters off so much was the fact that there there’s precious little taxpayer help for Joe Public if he makes a dodgy investment decision.
I’ve made a few ill-advised investments myself in the past, usually with a man called William Hill, based on whether one four-legged creature can run faster than another. I’m thinking of asking Gordon Brown for a handout.