Playing God

Shares in newly formed Lloyds Banking Group have dived over 40% on news that losses of one of its constituent companies, HBOS, were significantly more than estimated at £10bn for 2008, up by £1.6bn since the announcement of its merger with Lloyds TSB only in November.

For those of us sharp enough to remember the series of events, at the eleventh hour Gordon Brown himself intervened to ensure the merger went ahead.

Daft Decisions

The whole merger was competitively questionable enough with the new group having an unhealthy 28% of the UK mortgage market, but after Brown's intervention Lloyds TSB soon went to the Treasury for a cash bail out. So, not having the finances to have achieved the merger in the first place, Lloyds TSB asked for a bail out which subsequently led to the UK taxpayer being forced to take a 43% stake in the newly combined banks now called Lloyds Banking Group.

So our little investment portfolio looks a bit grim today at the announcement of these unforeseen losses.

Due Diligence

Rather like Fred Goodwin's obsessive behaviour in doggedly chasing and raising the price of ABN AMRO Bank only to call it 'bad timing', it seems that lack of Due Diligence is becoming a watchword of our Government and specifically Gordon Brown as they reel in shock that a) RBS, which is over 70% publicly owned, awards its executives over £1bn in bonuses after clocking up huge losses and b) that the banks (HBOS & Lloyds TSB) they forced to merge, bail out and take a stake in have far greater losses than they knew (or not cared) about. Very much like the Northern Rock debacle where our considerable generosity as taxpayers bailed it out and loaned it tons of money only to see management and staff get paid a bonus just for paying us some of it back.

It's a lack of attention to detail which is becoming a recurring theme for this Government and really is the defining characteristic of their continued faith that by blasting huge sums of money at the financial system that it will be more than enough to kick start the economy.

But what are they paying for?

So far, all we see is bonuses getting paid for turning up to work and doing some of the things they are supposed to. We are seeing banks continue to behave as if nothing has happened and more and more losses flying out of the accounts which just go adding to the ever-increasing tab paid for by the Taxpayer.

I have said it before, but it may well be about time we stopped paying our tax as a wake up call to this Government to start thinking before it pours the money either into the pockets of executives who do not deserve it or stop bailing out banks who cannot tell you what their exposures are to losses.

If we, as taxpayers, got the slightest bit wrong in our sums on our returns we would be slaughtered and hounded like criminals. We are seeing the rise of a knew type of crime - wasting money. I see banks either lying about their financial situation at worst, covering up as an in-between level or just incompetent in being able to calculate losses, demanding taxpayer handouts on unprecedented scales which the Government gives without our consent.

This kind of unwise investment decision making by the Government, and banking incompetence to assess losses and then spend on bonuses, should really be meat and drink to the FSA for poor advice to the investor - i.e. the taxpayer - and we should be protected.

In different times, this might be construed as fraud and theft. For now it's called incompetence - which is criminal enough in my book. But Brown is playing God and he thinks he is both clever enough and mandated enough to do what he wants. I hope we all sober up soon because he has no clue.