Socialism and our toxic loans

“FOUR legs good, two legs bad,” was the slogan coined by the communist animal dictatorship in George Orwell’s Animal Farm. The obvious unfairness of the slogan is because it takes no account of the conduct of either two-legged creatures or four-legged ones. It is simply a matter of whether you are two-legged or four-legged that counts. It is a statement of political prejudice.

I thought of Orwell’s book when I read the reports about how the Co-op Bank has been bailed out by City hedge funds. To many – especially the leftie correspondents in the BBC – this was scandalous. How selling out to the nasty capitalists will soil the pure reputation of the saintly Co-operative Society. But what was the alternative? Simply, the Co-op Bank would have required a massive injection of cash – our cash – from the Government. And so the taxpayer would have been landed with another huge liability to follow the nationalisation of RBS. Richard Pennycook, the Coop’s financial director admitted this: “We are all extremely sorry about what has happened, but there is a difference between today and June. In June, if we hadn’t taken this action, the Bank was going to go bust … the impact on the wider group would have been disastrous.”

Even after the hedge funds’ injection of £1.5bn, 50 of the bank’s 324 branches are going to close. It could have been a lot worse, as Mr Pennycook said: “The 4.6 million Co-op Bank customers would have lost their savings.”

I should like to question this whiter-than white reputation enjoyed by the Co-op in the eyes of the leftie politicos in the press and on the BBC. The reason the Co-op Bank got into its parlous state in the first place was because it had been issuing toxic loans – and so many toxic loans, scattering them around like confetti, which is all they turned out to be worth.

And that’s why the Bank was bust.

Now what, may I be so impudent as to inquire of all these righteous socialists, is morally upright and admirable about issuing toxic loans? A toxic loan is a loan given to someone who has not the means to pay any of it back. That, just to remind you, is what Bill Clinton did when, in the interests of “equality,” he ordered big loans to be made to poor black people in America’s southern states – so that they might own their own homes just like those who were better off and who could afford the mortgage repayments.

That, as you know, was one of the main and original causes of the great debt crisis, which led to the financial collapse of 2008 and the world slump from which we are all still suffering.

There was nothing whiter-than-white and morally upright about the Co-op Bank’s lending policy.

This is not a subject confined to the mistakes of the Co-op Bank. If I may lapse into Orwellian terminology, the whole bloody farm is rotten.

There is a dominant view throughout the media and, because people do watch telly and read the papers, in the country as a whole, that anything nationalised or public and socialistic must be good, and it is only the nasty capitalists and money-makers who are the baddies. Four-legged, publicly-owned institutions good, two-legged private companies bad. Somehow this absurd prejudice persists even when it is demonstrated that a socialistic institution is hopelessly inefficient and wasteful – like the NHS or the state schools, for example. Who was it said: “The problem for socialists is that they always end up running out of our money”?

This article first appeared in the Northern Echo.