The Mexican (Well, Scottish) Standoff: The Quandry of RBS

It falls to the droll Robert Peston of the BBC to deliver bad news, especially these days. He does it with as much 'stiff upper lip' as one can reasonably muster.

But, no doubt about it, the news is bad.

RBS, now a ward of the UK taxpayer, lost another £6.2 billion last year. Lessee, at $1.60 a pop, that's....(be right back, gotta use a spreadsheet for this one)...

$2,560,000,000. Two billion, five hundred sixty million. Dollars. Or, as we say 'round here: A sheeutload of money, bubba! Sheeut!

The British taxpayer, under Gordon Brown's unelected service as PM, has been forced to pony up £45.5 billion to prop RBS up. £25.5 just last fall, and £10 billion of that has evaporated already.

Peston continues:

So what are we as taxpayers getting for the fortune we've put into RBS?

What we're not getting is oodles of credit funnelled to businesses vital to the UK's economic recovery.

By its own admission, Royal Bank has flunked the government-set target of providing £16bn of additional loans to "credit-worthy" businesses.

It insists that's not as a result of bad faith on its part.

Royal Bank says the money is there to be lent, but that bankable businesses don't want to borrow - or, at least they don't want to borrow enough.

In fact, there has been a £12.2bn reduction to £151bn during the course of the year in the total volume of loans provided by Royal Bank to companies.

These are disturbing figures - not least in the context of the shocking official statistics released this morning on investment by British business, which showed that in the last three months of 2009 business investment fell almost 6 per cent to a level not seen since 1992.

It's a classic Mexican Standoff: The lender only wants risk-free loans, and businesses will be damned if they'll borrow a penny from these clowns! Or anyone else, for that matter. They're better off downsizing, deleveraging, and hunkering down. Someone else can stick his neck and get it chopped off.

On either side of the pond, who can set up any sort of projections of production costs/sales/revenue/profit etc. when the People In Charge don't seem to believe that unbridled spending into eternity creates instability?  Then there are the tax increases that will hammer any profits.  And as-yet-unanticipated regulations. And unions. And health insurance 'reform'. Makes you wanna go out and borrow a billion or two, huh?

If you make money, you're a villain, and the tax-man comes calling, to remind you Who'sInChargeByGod.  If you lose money, you're wiped out. Unless you're a large bank, or GM, or Fannie, Freddie, or AIG. Then they give you more to play blackjack with.

Chin-straps on, friends and neighbors. It's going to be a rough ride.

RBS and the British Taxpayer. Not A Love Story

The BBC's Robert Peston once again weighs in with that English dry humor:

In my wilder imaginings over the years about the future of the public sector, it never occurred to me that one day as a taxpayer I would be financially liable for the overdrafts on 3.2 million UK retail bank accounts, £10bn of loans to British small businesses and a further £10bn of UK residential mortgages provided to 70,000 home owners.

He goes on to detail how the taxpayers of the UK will be paying for RBS into the indefinite future.

It's not pretty.

I wonder if this was assembled in order to be inexorably in place before next year's elections. Brown and Labour must certainly know they are on the way out.

Which raises the next question: What else do they have under their sleeve?