If it's good enough for banks it's good enough for GovernmentThe Gov't has appointed Rothchild to advise on splitting problem bank RBS into a Good Bank and Bad Bank (report). The idea is to speed the recovery of the useful parts (mortgages, business lending etc) by shoving the toxic loans and some matching debt into a sack to rot and fester at the end of the garden.
If bondholders in a solvent bank can be burned, why stop there? Britain is struggling to recover under a mountain of state debt, so let's split off the bits we don't want and draw a line under it (© Tony Blair).
Good Gov't / Bad Gov't split
|Good Gov't||Bad Gov't|
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Communities & Local Government
Holders of Gilts can take an immediate 25% hit and more later if we feel like it.The Good Gov't can move ahead with reviving the economy with plenty of spending on jobs, roads and health. Income tax can be cut to 15%, corporation tax to 12%, making it the lowest in the EU.
A disadvantage of the split is the need for two General Elections, one for each Gov't. Perhaps Gordon Brown and Tony Blair will come back to jointly run the Bad Gov't, tied together like bickering conjoined twins in an uncivil partnership.