Markets were nice and closed and peaceful in the States today, but they were roiled in Europe. The euro took a nosedive along with Spain’s credit rating, as did sterling, and the Royal Bank of Scotland saw its shares take a nearly 70% haircut, after reporting its full-year net loss for 2008 would be something along the magnitude of 28bn GBP.

UK now has the bank about 70% nationalized (after today converting a chunk of preferred shares to common shares, relieving RBS of the duty of paying 12% interest on the preferred – taxpayers have already lost about 12bn GBP on the deal, so the foregone interest is really a drop in the bucket, right?), and most of the Haterade for the bank’s ill-advised acquisitions falls on RBS’ former head Sir Fred Goodwin, aka “Fred the Shred,” aka a guy who likes to drive around in a Triumph Stag, which I was just told is a car best known for engine failure. A significant part of the 2008 loss was pinned directly on Goodwin’s acquisition of ABN Amro (a Dutch bank, but chock full of US subprime loans… sorry guys).

Funny quote from the Independent: One former RBS executive said: “Fred is intimidating and charming, acerbic and charming in equal measure. As far as he was concerned, he was the man who was going to put us on the same footing as HSBC or Citigroup.” They’re on very similar footing to Citigroup right now, indeed.

RBS’ current chair, Stephen Hester, seems inclined to cut Fred a break though, and acknowledges something I always thought was obvious – that no one in their right mind would want to buy up the common of any bank in any state of nationalization, lest they wake up one morning and find their entire interest diluted or wiped out:

“It is absolutely nothing to do with people’s assessment of the value of banks. People are throwing their hands up in the air and saying ‘we have no clue what the value of banks are so we’re going behave only on one bases’ – and that’s an emotional assessment of the chances of banks needing more capital.

“And if they need more capital, the assumption that governments are the only ones that are going to provide it. If governments provide it, the assumption that that dilutes shareholders and ultimately leads to nationalisation and wipes them out.

“Therefore, it is a one way trading bet to assume that, in these uncertain times, banks will need more capital, that that will involve government dilution ergo sell the shares.”

Hester is now dealing with the task of righting this failboat, and has been working to offload RBS’ Bank of China stake, possibly their various insurance interests and whatever other non-core assets are lying around. So, what’s the lesson? Supermarket banks don’t work, anywhere?

Also worth a read: Ambrose Evans-Pritchard on US and UK “bad banks” and the idea of a Biblical debt jubilee. (h/t to CB for this one!)