The N word
Stand by to see if Gordon Brown uses PMQs to continue softening up public opinion for the return of the "N word" to the political fray.
For week after week, when the Lib Dems’ Vince Cable advocated nationalising , ministers seemed terrified of even uttering the word. Then they began to say that "no option was ruled out". Now they are attacking the Tories for resisting what they say may be the only answer to the stricken bank.
Be in no doubt that Alistair Darling and Gordon Brown are fully aware of the awesome political downsides of the "N word" - with its reminders to those of my generation and above of British Leyland, British Rail and the so-called "British disease".
They may, nevertheless, nationalise the bank if they feel they can present it as the best/cheapest option for the taxpayer. (My colleague Robert Peston explains on his blog why private sector solutions for the Rock may be pricier solutions).
There is also another issue here - when will the losses to the taxpayer be evident and quantifiable? I'm told that that some "solutions" involve writing off billions of taxpayers money upfront whereas others allow the exact scale of losses to be hidden for years to come. Naturally this will not be a factor in ministers’ minds.
PS: Yesterday the man at the eye of the storm delivered an interesting speech about how he sees the Treasury. Alistair Darling will come under ferocious fire when the final decision on the future of the Rock is taken. His words yesterday give a guide to how he would like his period at the Treasury to be seen.
(pdf)
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Comments
Is Northern Rock the new snake oil?
Nick,
Perhaps Charles E H will post another item on this blog to the effect that Gordon will say nothing on this matter - he will be relaxed in the moment, and that we should all hail the blessed leader. Perhaps Charles isn't a UK taxpayer or NR shareholder - that would certainly explain a lot.
My own view is that the Gov't needs to come clean on the costs, otherwise, the money markets will assume the worst and price our currency, etc. accordingly. If only being relaxed was the answer.
All the best.
If they nationalise the bank (at whatever price to the shareholders), will they follow the same business model? Will they review the existing business model and make changes? Given the current state of the market and economy, will they be able to extricate the bank from some transactions? Where will government involvement in a sensitive business sector leave other participants in the same sector, particularly when it comes to attracting deposits? Will they be advertising for business?
In short, why not simply call in an administrator, and wind the business down sensibly?
What amazes me is that the "N word" is still talismanic to so many on the Left, including many Labour MPs, when its credibiliy as a policy was comprehensively demolished via practical experience of its horrors.
Planned economies don't work. Full stop. The end.
They could always have left it to the market, that would have been free for taxpayers.
Instead they're wasting billions of my money and yours, propping up a bank they will end up nationalising anyway, just to look after a few Labour constituencies.
Does anyone seriously believe that a Southern English institution would have been saved ?
This is surely public money being used in the same way that the Rover support money was used before the general election.
Surely it should be illegal.
Excuse me, I thought Northern Rock had already been nationalised.
People always remember the bad old nationalised industries-especially British Leyland. British Rail? It wasn't that bad really and gave the country very good value for money-pretty good service most of the time for modest state subsidies. Today's private rail firms are no better than BR but cost the country much more in subsidies.
An apt precedent with Northern Rock is Rolls Royce-saved from ruin by being nationalised by the Tory Heath government, and later re-privatised. It's now a precious rare UK world class manufacturer we could easily have lost.
Nick,
Cameron repeatedly said "YOU did this" to the Prime Minister today and the Speaker did not step in to stop this unParliamentary use of the second person. There didn't seem to be much complaint from Labour back benchers about this either.
What's happening to standards in the House!?
R
Surely it's the "P word" not the "N word" which is has the more negative impact Nick.
Surveys show the renationalisaton of British Rail would be a very popular policy. It's the privatisation of so many of our utilities which has been unpopular.
Please don't assume that the British public have totally bought into the Thatchrite mantra that private is always best.
Darren
Hardly appropriate to draw attention to a dull article by using extreme language...the N word! Besides, when did a Labour government ever nationalise anything?
oh...
Northern Rock isn't the new snake oil - New Labour is...
Darling is just sitting there like a rabbit in headlights, waiting for the Northern Rock car to hit him while he is completely paralysed thanks to Gordon Brown. It's all about damage limitation for the Prime Minister - Darling's reputation is worth sacrificing.
I can't believe that I'm about to say this, but I almost feel sorry for Darling.
Yes, Vince Cable has been deeply impressive for quite a while now.
I suppose he was'nt 'telegenic' enough for the Lib-Dems to leader.
Their loss.
Regarding NR, readers might care to ponder that the BoE's real power is 'creato ex nihilo'.
That is, an accountant at the BoE is instructed to sit at a computer and enter £25Bn or whatever into an electronic ledger, which subsequently gets 'loaned' to NR or whoever.
Yes, I know it is very hard to get your head around that, I struggled myself, but that is the reality.
Not 'money for nothing' but 'money from nothing'.
At 12:06 PM on 16 Jan 2008, Chris Packham wrote:
People always remember the bad old nationalised industries-especially British Leyland. British Rail? It wasn't that bad really and gave the country very good value for money-pretty good service most of the time for modest state subsidies
You have got to be either joking or hoping that enough time has passed that people will have forgotten how misleading such a comment actually is (to put it generously).
All nationalised industries end up being run in the interests of the staff, not the customers. Therein lie the seeds of their own demise and the massive costs borne by the taxpayer. As has been repeatedly proven over the decades. Quite apart from how disastrous nationalisation is as a policy, why do YOU believe it is actually such a better way of running an enterprise? Concrete evidence please rather than leftish waffle about "common ownership". This should be good....
'They may, nevertheless, nationalise the bank if they feel they can present it as the best/cheapest option for the taxpayer.'
It should have been left to go to the wall.
Still, Darren, Charles E, other muppets, that's all that socialists are good at isn't it? Spending other people's money on themselves and their friends.
Whilst they are busy hiding the figures, what happened to transparency and open, honest government.
Didn't last long did it?
Nick,
The options for Northern Rock appear to be fast diminishing. What is increasingly annoying with this government is the unwillingness to admit they got it wrong. Wrong not to spot the problems of the bank earlier; wrong to make an unlimited guarantee public whilst seeking a rescuing buyer; wrong to announce a preference for a private sector solution without publicly stating what the government would do in that event.
The government will, no doubt, present the loss of millions of hard earned taxpayers' money as a triumph. They have form on that: on the Dome, the Olympics and now the Rock. Currently the public pronouncements of Messrs Brown and Co are so peppered with this sort of hyperbole and nonsense the most people now discount their words. If Mr Brown wants to preside over a government known for its incompetence, he has succeeded. if he now wants to preside over one known for the insignificance of its messages, he is well on his way...
NR will be nationalised - what else can be done? Taxpayers are already shoring it up.
I'm waiting to see what is given to shareholders. As a southerner I feel sure that Brown will want to give his loyal supporters something but I don't see how he can justify it. NR is worth nothing so I'm afraid shareholders should get nothing.
NR is nothing like the Rolls Royce situation
'All hail the blessed leader' who created the Tripartite structure that lead to the first run on a bank in 140 years. That failed to supervise dangerous business practices. That ignored the warnings of it's own advisors that this bank would go under.
He is indeed a great man who has worked out how to pretend that it has nothing whatsoever to do with him.
I would doubt very much that the majority of British view Nationalisation as the bête noire it is generally depicted to be (the invocation of the worst examples of the recent past notwithstanding).
Is it not the case that had market forces been exclusively left to their own devices, Northern Rock would be nothing more now than an acrid, smoking, memory, coupled perhaps with the devastating meltdown of the unfettered capitalist edifice itself? And consequently, of course, the very real destroyed lives.
It is now quite clear that most posting here, along with Mr Robinson and Cameron have never been engaged in very sensitive commercial transactions. The Chancellor is right in keeping his cards close to his chest, and to take time to cover all posibilities. I don't want my taxes blown away just to avoid simple media headline or a question at PMQ's, its more important than that.
Northern Rock was/is a private company with a failed busness plan, which just goes to show that private enterprise can also distroy a company. I don't think there was any nationalised enterprise which had a £50 billon handout that the private enterprise company Northern Rock as recieved, so maybe nationalisation was/is no so bad after all.
The present position of the Rock is the result of the Capitalist system, as is happening in Europe and in the USA. We all agree that this is right for us! -Vide Robert Peston’s report-
Why is boy Dave accusing the Govt. about the Rock Nick, and when it comes to the DISASTROUS years under Lamont, boy Dave says, that those were circumstantial events in 1992, and not his own INCOMPETENCE?
Why is it that millions of people in UK, do not forget and WILL NOT forget those humiliating years for Britain, Nick?
Nick, you forgot British Coal.
All 500 years of this 'British disease' under your feet.
The Tories dismantled Nationalisation and our Electric companies are reaping the benefits of the 'market-place'.
All at our expense, of course.
Nationalisation is becoming more and more welcoming by the hour.
Gary
Thanks to the mismanagement of this Government, London's reputation as a financial centre is badly dented and we are going to have £50 odd billion plus at risk in a dodgy bank for a very long time. All this as the property market falls and the currency markets sell £, which tells you much more reliably than any politician what is going on.
The decline in the exchange rate with the € is now worse than Black Wednesday, where at least the position was quantified and losses crystallised, and the situation is costing and will continue to cost us a lot more. So much for the end to Tory boom and bust economics, Gordon seems to have a very nice line in this now! What price prudence?
One of the problems at the moment is that we have just one word to describe at least two very different things. NR is not being nationalised (if that eventually is what happens) in order to allow the state to run one of the commanding heights of the economy like steel, coal, or the railways. What is suggested is a temporary measure to allow the state to rescue a failing private company whose demise would probably have led to serious problems for the economy generally because of loss of confidence in the banking system. This sort of nationalisation has previously been used by right-wing governments both here and abroad (eg Japan), and has nothing to do with socialism. Why can't many of the posters here understand that simple proposition?
Cameron's position on this issue is now quite disgraceful. He originally supported the government's action, but now seems to have no policy at all except to indulge in playground yah-boo name calling. He mutters about 'administration', while failing to explain how that would be better than 'nationalisation'. Almost all the people who know about these things see 'administration' as a complete nonsense in this situation.
Nick,
Perhaps one of the appologists for this sorry, self-confessed incompetent government can explain something to the rest of us:
A pay award for the police (who we need), which was recommended by an independent arbitration tribunal, can't be afforded in full by the government (in England at least) because it would cost a few million pounds too much. (So much for independent arbitration under Gordon then). Several billion pounds can be found, however, to prop up a private bank (which we don't need) that was brought to the brink of insolvency by the ineptitude (or greed) of its directors. No doubt Tao would have a pithy saying to explain this apparent conundrum, but in his absence perhaps his disciple on earth can enlighten us?
This whole sorry debacle, much of it due to the sheer political incompetence of the treasury (run as it is now by number 10)in its dithering at the outset, makes me yearn for the days when Prudence was in residence. Just what did happen to her anyway?
Just a small point for Malcolm, the tribunal awarded (if I remember rightly) the police a 2.5% rise. This month the police pay packet is 2.5% higher than it was this time last year. If you don't believe me, ask a policeman.
Surely the Government had to explore market options for this?
If Ministers had started mentioning the 'N' word then the financial markets would have jumped all over the place and private investers would have run a mile.
This is a tricky situation that needs calm and measured thinking. Something the Liberals seem to have very little of.