Perhaps I misunderstood something about stocks and shares? I thought the received wisdom was to buy them low and sell them high. Perhaps I misunderstood about how the Government is meant to handle public money? I thought it was meant to be prudent and efficient, making the most of the resources it has available rather than trading speculatively or beyond its means (in the same way NHS Trusts have been told to tear up the financial plans they wrote and not to get carried away on that safe staffing level thing when they can’t afford it). And perhaps I misunderstood something about the Conservative Party? I thought they were the ones meant to be safe with the public purse?
I am referring to yesterday’s sale of a 5.4% stake in RBS by the Government. That stake was purchased at 500p a share in 2008 and sold at 330p a share yesterday and, although that generates an immediate injection of cash for the Government, it is an overall loss on what was invested. Maybe it is about being canny, kickstarting RBS shares into a sharp rise and then selling the rest at a level which more than makes up for this shortfall? I wouldn’t count on it though; it is just as likely that RBS shares could slump even lower as other investors wait for another attempt. Even if it does work, the people who benefit will be those who hold the shares, not those who’ve just sold them at a net loss.
It may be that the Chancellor and his fellow Cabinet members have been scrupulous to ensure that they don’t personally benefit directly from the scheme, given that politicians are often under intense scrutiny. However, I’d imagine that quite a few friends of those people are richer today because of the giveaway price. I’m not a financial expert so perhaps it will all turn out well but, at the moment, I can’t help wondering if there is a sniff of either recklessness or lack of concern for public benefit, both of which were in the air when RBS got into crisis at the first point.