New Labour's Scorched Earth policies

As I said back in July...

In re-nationalising Fannie Mae and Freddie Mac, the USA seems to be following the Japanese model, which basically means nationalising all the banks' debt problems and thus dragging things out for decades.

Our lame duck Labour government is going to do a 'scorched earth' and leave the Tories with a complete mess. But will it be 70s style complete chaos, a slow lingering Japan or a Second Great Depression? Answers on a postcard, please.

Nulab have now decided for a Japan-style nationalisation* and slow lingering death.

Just a few further points to note:

1. Only 11% voted for "Invest taxpayers' money in new share capital" as the best way of sorting out the banking 'crisis', as against 49% for "Let them fail"!

2. What is really terrifying, is that The Tories seem to be happily going along with this, with George Osborne prattling brightly in yesterday's FT that if the gummint invests our money in floundering banks, this would enable the gummint to regulate the salaries that banks pay their employees. That looks like a lose-lose to me.

3. Rather ironically, another article later in the same edition reported that "Goldman Sachs said that Japan was probably best placed to lead the advanced economies out of the slump after completing the process of balance sheet restructuring, which has made it less vulnerable to the credit crunch than the US and Europe". So why didn't we just skip straight to "balance sheet restructuring", aka "debt-for-equity-swap"?