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The Great Bail-Out Swindle
Why do newspapers get it so wrong? It's bad enough columnists talking us into recession, but to exaggerate the scale of the government's fire fighting is plainly idiotic. Luckily bloggers are on hand to set the record straight. Tim Worstall corrects the Telegraph's claim that the bailout of Bradford & Bingley will cost the taxpayer £150 billion:
"No it won’t.
"The total loan book for B&B is £40 billion or so. So that is the total exposure. Add the Northern Rock exposure and that’s how you get to £150 billion.
"But for it to cost that much you have to value those mortgages at nothing. That every one of them will fail, that none will be paid and that the costs of repossession and resale will be equal to the value of the debt. That is, that all of those houses are worth damn near nothing.
"We might indeed be having problems but they’re not that bad as yet.
"It’s easy enough to believe that we taxpayers will take a haircut of 10%, 20 % even, just as it’s possible that it could be a wash, but it really ain’t gonna be a 100% loss.
"Or if you prefer, if events do lead to a 100% loss then we’ve all got much greater problems than that loan book."
