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The Royal Banker of Scotland and the imaginary money

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Some words in a rhythm; Chancellor,iron, Services Authority, Financial, Bank of Scotland, Royal, Brown,Gordon, crime,white-collar, soaring values, shared,thin air, money out of.

One of today’s many revelations is the rise in the taxpayers stake in RBS – to 80% ownership – the Reuters story linked at the bottom of this piece, gives the Chancellor, Alistair Darling’s, explanation. This is effective nationalisation of RBS but the government is still clearly anxious to avoid taking all of its debts and liabilities onto the national balance sheet. This continued reluctance gives an idea of the scale of these operations, as 20% of what RBS used to be worth is still a mind-bogglingly enormous sum of…

Actually, what the sum is made of is an interesting question and these links may help explain some of it. One important thing to remember if you explore these, is that money is about trust and basic human psychology (the link under help is very good) and this is important when you consider debt, or, imaginary money.

Some of the consequences of the collapse in value of RBS’s ‘money’ are explained by Sam Jones at FT Alphaville who has a fisking of this morning’s announcements here.

In essence, the ‘insurance guarantee’ the UK taxpayer is now giving to RBS means that we are now both helping to fund the banks ongoing operations and guaranteeing their existing, and perhaps future, trading losses of whatever it is.

From the UK; BBC report, Telegraph report, Guardian report, Reuters report, AP report and Bloomberg on Sir Fred Goodwin’s pension.

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