Cable: 'short-sellers effectively speculated against the taxpayer'
Updated on 19 September 2008
Krishnan Guru-Murthy talks to the Liberal Democrats treasury spokesman Vince Cable.
Interview Extracts
"I welcome the fact that the British government - having drifted for the best part of a year - has, within the last 48 hours, done several sensible things.
"Getting the HBOS-Lloyds merger together was right. And I think they were right to prod the financial services authority into taking action against short-selling."
"One of the big problems we have over here is that the housing market was massively overvalued. It's now correcting very painfully.
"If the government feels it can use its own balance sheet to borrow to help alleviate this current crisis, it's much better using it to acquire land, to acquire property and make it available to social housing than acquiring dud loans from the banks.
"Speculation is an important and legitimate part of the stock market. [But] there was a particular problem that appeared this week ... the way in which short-selling operated in respect of the major banks generated panic across the board.
"Moreover, it was effectively speculating against the taxpayer because the institutions knew perfectly well that the banks ultimately will precipitate an intervention by the tax payer if they were to go down.
"It's not the same as normal speculating against weak companies."
