Having provided guarantees to the banks on very favourable terms, the government must follow these up with equity injections, as is being done in many other countries, in order to underpin our fragile banking system, reinforce its guarantees and participate in the upswing which will ultimately occur.
While this will affect exchequer borrowing, massively dilute existing shareholders and shred the reputations of many high-flyers, it is surely more prudent to inject new equity before problems...
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