National Bail Outs

Back in 2008 the UK economy came within a whisker of meltdown and bankruptcy - because of the near collapse of major banks such as the Royal Bank of Scotland.

The Labour Government of the day did the right thing - the only thing in fact - by guaranteeing the incredibly risky and stupid debts that these (private) banks had run up. 

In the process the government also decided to guarantee the savings and investments of bank depositors - otherwise ordinary savers faced the prospect of losing everything - along with the bank's shareholders.

But the key point to note is that UK PLC cleared up its own mess - accepted responsibility for allowing this terrible situation to happen in the first place - and set about the task of preventing  a chaotic financial situation from turning into a complete disaster.

Yet this all came at a huge cost to the country - which we are all still paying for now - and the consequences are very painful for very many people.

The list goes on and on but here are a few obvious examples:

• Prices are racing ahead of earnings as the cost of living rises
• Private sector workers have faced pay cuts and reductions in hours.
• Public sector workers have had a pay freeze imposed
• Savers have been hit by artificially low interest rates
• The value of private pensions and annuities has slumped

So people generally are worse off - although that's not to say there have been no winners of course.

Because people paying a mortgage, for example, have benefited hugely from the same artificially low interest rates - which have 'robbed' other UK citizens such as those who rely on fixed incomes and their savings in their savings.

All of which means that we really are all in this together - in the sense that UK PLC has to sort out its own mess - instead of relying on a bailout from the European Union (EU) and/or the International Monetary Fund (IMF) - which would also have come a great cost.

Now that's not to deny that some people are bigger 'winners' or 'losers' than others - but the fact remains that it is UK PLC and its millions of shareholders (i.e. you and me) who are paying the price to put things right.

Contrast this situation with what's going on at the moment in Cyprus - where the country's main banks are bankrupt and need a huge injection of cash - or the country will quickly follow suit. 

Now I can see why people with relatively small sums of money are up in arms about the sudden 'cash grab' on their savings - it's a painful tax to fix their country's economic problems caused by years of profligacy.

But if the Cypriots don't pay to mend their one fences - why should the rest of Europe do so on their behalf unless Cyprus plays a big part - a credible part - in its own economic recovery?

Especially as the country is awash with billions of Euros of Russian money - which many well informed financial commentators say has been expropriated and laundered in Cyprus to avoid paying tax in the Russian Motherland.