Black Horse becomes White Knight

HBoS - the supposed victim if we are to take Alex Salmond seriously of short-sighted, short-selling spivs in the stock markets - has taken refuge in a shot-gun merger with the more sober high street bank Lloyds-TSB - to form Lloyds-HBoS a combined company with assets of more than a third of a trillion pounds and 38 million customers.

If the competition authorities allow it (and the government will surely invoke the national or public interest to suspend normal rules of competition law) then we will have in our midst a banking giant providing more than a quarter of UK property mortgages with significant monopoly power in the banking sector.

The demise of HBoS may well make the credit crunch worse for the ordinary borrower looking for a loan from high street banks. Lloyds-TSB has largely stayed clear of the more reckless forms of lending to people who have become over-extended. They are hardly likely to allow HBoS to do the same when Howard and his friends join the family. We are nudging back to a by-gone era, an age of credit rationing.

Lloyds-TSB and HBoS together employ more than 130,000 people so, whilst the merger wil reduce the risk of another Northern Rock for the government and the prospect of another nationalisation will all of the political damage that would generate.

There will be an enormous number of job losses as the newly integrated business looks to achieve cost-savings. This on a day when official measures of unemployment rose to their highest level for nine years. Up to 40,000 jobs are likely to be lost as a result of the creation of this mega-bank.

Jim’s blog on Robert Peston’s scoop of the year is worth reading!

And if this rescue deal fails? Read Anatole Kaletsky in the Times today

BMW - Bavarian Monopolist at Work [24 May 2012]
Unit 3 Micro: Game Theory and Business Economics [21 May 2012]
Unit 2 Macro: The Importance of Productivity [20 May 2012]
Unit 2 Macro: Revision Notes on Supply-side Policies [10 May 2012]
Unit 1 Micro: Using the Cost-Benefit Principle [30 Apr 2012]
Unit 3 Micro: Revision on Nationalisation [13 Apr 2012]
Unit 3 Micro: Quiz on Market Structures [11 Apr 2012]
Unit 1 Micro: Market Failure in Private Health Care [8 Apr 2012]
Unit 3 Micro: Revision on Contestable Markets [8 Apr 2012]
Unit 3 Micro: Monopoly and Economic Welfare [6 Apr 2012]
Unit 3 Micro: Revision on Takeovers and Mergers [3 Apr 2012]
Unit 4 Macro: Productivity Improvements in China [3 Apr 2012]
Unit 3 Micro: Revision on Scale Economies, Technology and Prices [1 Apr 2012]
Unit 3 Micro: EU Imposes Further Price Cap on Mobile Phone Companies [29 Mar 2012]
10 Solutions to Binge Drinking [21 Feb 2012]
Unit 4 Macro: Focus on India - Supply Side Issues [25 Jan 2012]
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MON€Y PANIC$ – A Visualisation Challenge [18 Nov 2011]
LSE lecture: Darwin economy [13 Nov 2011]
Unit 3 Micro: Examples of Price Discrimination in Action [31 Oct 2011]
Unit 3 Micro: Ofcom gives stamp of approval for flexible pricing in mail [21 Oct 2011]
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Six Global Trends Shaping Business Strategy [15 Jun 2011]
AS Macro Key Term: Supply-Side Policies [25 May 2011]
AS Macro Key Term: Spare Capacity [23 May 2011]
AQA A2 Economics - European Context [23 May 2011]
A2 Micro: Competition Policy [20 May 2011]
A2 Micro: Oligopoly [20 May 2011]
A2 Micro: Entry Barriers in Markets [19 May 2011]
A2 Micro: The Importance of Profit [19 May 2011]
A2 Micro: Market Structure, Conduct & Performance [19 May 2011]
A2 Micro: Consequences of Price Discrimination [19 May 2011]
Unit 3 Micro: Perfect Competition [19 May 2011]
A2 Micro: Competition and Efficiency [19 May 2011]
A2 Micro: Outsourcing [18 May 2011]
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Wiki Revision: A to Z on Monopoly [23 Apr 2011]
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A2 Micro: Updates on Competition Issues [2 Apr 2011]
The New North - Population Shift [23 Mar 2011]
Timetric: Price convergence within the EU [13 Mar 2011]
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Changes in Real Prices [24 Jan 2011]
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Tesco - Time to start a price war! [19 Jan 2011]
Economics Q&A: How might rising food prices affect food retailers and manufacturers in the UK? [16 Jan 2011]
HMV - another busted flush on the High Street [6 Jan 2011]
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The Rise and Rise of Internet Monopolists [14 Nov 2010]
Experimenting with Google Docs - the Rise of a Digital Conglomerate [8 Nov 2010]
Contestability in the online electricals market [2 Nov 2010]
Melting ice and teaching the effect of competition on profits [31 Oct 2010]
Extend and Enrich with EconoMax [29 Oct 2010]
A2 Micro: Monopoly Price and Output [28 Oct 2010]
Quangos can go [14 Oct 2010]
Competition in action: Google vs the World! [6 Oct 2010]
CEO admits biggest mistake in corporate history! [29 Sep 2010]
Student View: Takeovers and Mergers and Shareholder Value [27 Sep 2010]
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External Growth - Google’s Acquisition Boom [21 Sep 2010]
Market implications of creating the world’s biggest airline [19 Sep 2010]
Behavioural economics and competition policy [12 Aug 2010]
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Unit 2 Macro: How can supply-side policies help in a recession? [6 Jun 2010]
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Unit 3 Micro: Efficiency and Price Intervention in Markets [21 May 2010]
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Chinese growth in words and pictures [21 Jan 2010]
Contestable Markets - Google launches the Nexus One [6 Jan 2010]
Business Growth - Costa Looks East [18 Dec 2009]
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Macroeconomic stability [14 Dec 2009]
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Nationalisation - Teacher Presentation [17 Nov 2009]
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Perfect Competition - Teacher Presentation [2 Nov 2009]
Human and social capital and pathways to prosperity [14 Oct 2009]
Kindlenomics [11 Oct 2009]
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