Britain’s bailout

London’s equivalent of Wall Street woke up to hear what it wanted to, news of a huge bailout. Will it work? The package was put together at 5 am this morning after lawmakers worked through the night in response to Britain’s stock market hitting a new low yesterday. Britain’s Treasurer rushed onto the newswires to deliver the news. Part of the plan will be used to guarantee any loan banks make to each other and another large portion will be to help banks restock their capital right away. There are also short term loans which the Treasurer insists is a safe bet. This financer isn’t quite as sure given the turmoil in the market. So U.K. taxpayers are now owners of banking stocks. The Prime Minister says the banks will have to now answer to the government. The conditions include limits on how much bank executives can be paid and guarantees to help out homeowners and small businesses. That may not comfort those who believe the banks are being awarded for their greed and mistakes. The public expressed its anger on the streets today, just as in the U.S. Because of the size of the bailout, if all the money is used, it will almost certainly lead to tax increases and cuts in government services. After all, Britain has to borrow the money just to generate the bail out.