Should the government be selling its Lloyds TSB shares now?

Lloyds TSB announced an unexpected profit of £1.6 billion for the first half of 2010 this week.

Given that the government owns a substantial chunk of the bank this is very good news for taxpayers. In fact the current stock price is over 73p per share which is way above the 63p per share break even price for the government. If they were to sell their stake now they would make a handsome profit.

Although this should be caveated by the fact that if they were to try and unload all their shares right now that could have a distorting effect on the market and they may not do as well. I expect when they do eventually unload them they will do it in phases.

The question is, when should they do so? After all it is not their money but the taxpayers. It is an important question to ask now that selling the shares would net a profit. The reason they were purchased in the first place was to prevent the bank from collapsing. It is now pretty clear that that is not going to happen. Things have stabilised.

So why are we still holding onto the shares? I imagine it is tempting for the government to wait and hopefully get an even greater profit. We have a huge deficit and a few more billion would be welcome. But of course share prices can go down as well as up. Although for example Robert Peston's analysis this week would suggest that further profit is quite likely it is no guarantee.

I am interested as to exactly what criteria the government will use to decide how and when to sell. Of course the problem is that if they were to announce this strategy then that in itself could affect the share price. However I very much hope there is a plan to sell and quite soon, now Lloyds TSB is profitable and the government would also make a profit.

After all, we do not elect governments to speculate with our money in the banking market.

Something unusual is starting to happen...

I was just listening to the World at One and there was a piece about Goldman Sachs and banking in general. They discussed the situation with the legal proceedings against the bank and then they moved on to the political aspects to this.

They had a clip from Nick Clegg from his press conference this morning where he was castigating the bankers for their excesses. Not the Prime Minister Gordon Brown. Or the Leader of the Opposition David Cameron. But Nick Clegg.

Then they had a politician with their party's Treasury brief in the studio to interview about the subject. It was Vince Cable. Not the Chancellor of the Exchequer Alistair Darling. Or his Conservative Shadow George Osborne. But Vince Cable.

We are now getting a fair crack of the whip in terms of media coverage. It is partially to do with the fact that we are in an election campaign anyway but it feels like more. It is starting to feel like the media realise that what the Lib Dems think about these things matters. That can only be because there is a sense that the party is in the ascendancy and an historic breakthrough may, and I stress may be just round the corner.

Of course what this extra coverage means is that people get to hear us more and more and we know from the coverage that the other two parties usually get that that helps with the recognition factor and hence often feeds through into the polls.

If this continues, the poll surge could very quickly start to become self-reinforcing.

UPDATE 13:55: Maybe I should have carried on listening beyond 1:30 as Jennie has just pointed out we very much did not get a fair crack of the whip in the second half not even being interviewed in a piece about a Lib Dem held seat. Maybe this is their bizarre way of trying to balance things out!?