Another day, several more reckless throws of the dice (24)

And here's the second batch of today's crop of crap:

4. "Alistair Darling, the UK chancellor, is set to drop the £480m annual interest bill charged to Lloyds Banking Group on a taxpayer loan in exchange for a promise by the bank to provide billions of pounds in extra mortgage funding and loans to small businesses. Mr Darling is prepared to convert £4bn of government preference shares – which carry a 12 per cent coupon – to ease financial pressures on Lloyds and as part of a wider deal to boost lending in the economy. Although talks are continuing this week, the preferred shares are expected to be converted into other forms of non-voting equity..."

WTF? They are giving this bank £480 million a year of our money, in exchange for more reckless lending - we know it's going to be reckless because ...

5. "Taxpayers may become liable for £500bn worth of bad loans and investments made by Royal Bank of Scotland and Lloyds Banking Group, the BBC has learned. It would be part of the government's Asset Protection Scheme, under which taxpayers insure banks against future losses from such assets."

*rant*

I've done the numbers on this, the total losses suffered on UK residential mortgages by UK banks will be in the order of £40 billion, to which add an unknown figure for US sub-prime and commercial loans that go bad, total losses £100 billion, tops. Where does £500 billion come from? Doesn't the government realise that the banks will merely exaggerate the size of their losses, collect the guarantee payments and in future, over the next decade, maybe, miraculously recover far more than their original estimates?

*/rant*

3. "Local councils face a £6bn fall in contributions from property companies this year as developers halt work and renegotiate plans in the face of the industry’s worsening crisis... In the financial year to March 2008, EC Harris estimates local authorities received as much as £9bn in planning contributions, also called section 106 agreements. It predicts a fall to £3bn this year and £2bn next year."

*sigh*

S106 agreements are the stealthiest of stealth taxes. Everybody (but me, it seems) loves bashing property developers - but all they do is respond to demand from the likes of you and me. Bashing property developers is like car drivers slagging off oil companies ... oh, right. S106 agreements actively discourage new developments - like the various Planning Gains Supplements that have come and gone over the decades, and as we now see, receipts fluctuate wildly and plummet when times are bad.

Chances are, the government will just hike taxes on incomes and production to make up the shortfall via the revenue support grant, thus putting more people out of business and out of work, and thus locking us in to a recessionary spiral.

Hey ... how about scrapping S106 agreements and rolling them into Land Value Tax, which would be a much more reliable source of tax revenues? LVT would also put the onus on councils to get the best value for money to make the area as attractive as possible, hence keeping rental values and house prices as high as possible to ensure that the money keeps rolling in, in a sort of virtuous spiral etc etc?

*/sigh*