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Credit Crunch Nightmare: Report Claims British Banks Are Technically Insolvent!

January 18th, 2009
British banks were not far behind their American cousins in being hammered by the onset of the global financial crisis, inflicting a cruel credit crunch on businesses and consumers in the United Kingdom. The unpopular British Prime Minister, Gordon Brown, initiated his own version of borrowing staggering amounts of money to prop of the tottering British banks, as fabled names like Northern Rock and HBOS became symbols of chronic institutional failure.
Early in his deficit spending spree, Gordon Brown boasted to Parliament, in a fiscal version of the Freudian slip, that he had “saved” the world. Well, it appears that boast from the right honorable gentleman was a tad premature. A report just released by financial analysts at the Royal Bank of Scotland will make limp the stiffest of British upper lips.

Entitled appropriately “Living on a Prayer,” the report concludes that UK banks are “technically insolvent.” The Brown government’s expenditure of nearly $400 billion to prop up British banks impacted by the Global Economic Crisis has almost entirely failed to curtail the affects of the credit crunch.

In a stealthy meeting at 10 Downing Street involving Prime Minister Brown, Financial Services Authority chairman Lord Turner and Bank of England governor Mervyn King, the implications of the “Living on a Prayer” report were digested. The purpose of this panicky pow-wow was apparently to conjure up some desperate last-ditch solution. According to media reports in the UK, Brown will probably throw another $150 billion in taxpayers money at the UK’s insolvent banks, desperately hoping that more deficit spending and mortgaging of the future will somehow repair the mistakes made by the “masters of the universe” whose casino capitalism is responsible for  incinerating the balance sheets of British banks.

The problem with Gordon Brown’s characteristic response, as with the TARP and Fed money gusher in the United States, is that we are dealing with a Global Economic Crisis, which means that there is not enough real money on the planet to plug up the collective insolvency of all the world’s major banks and credit institutions. Living on a prayer, indeed!




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