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The truths they don't want you to read....

Monday, February 18, 2008

Northern Rock

"Temporary public ownership".

That'll be like being slightly pregnant.

Gordon Brown caused this; have no doubt. The economic mishandling was his fault, and his alone.

But the ball has been passed to Alasdair Darling, who has the unenviable task of trying to make a cake out of a turd. And will carry the can when it all goes horribly wrong.

We - that's you and me as Joe Taxpayer - are much worse off thanks to the delay and prevarication by Gordon Darling , the Siamese Twits, who tried to do anything other than nationalise the bank, and hence cost us buckets of money in the meantime. Indecision has its price, and we are paying for it.

The only sane bidders for the bank pulled out leaving the discredited management team (did they honestly think that they would have the faintest chance?) and Richard "Photo op" Branson who offered to buy the bank using our money in exchange for valuing his worthless Virgin Money brand at £250m.

The sad thing is that the Government were considering letting him win just to take it off their hands, until older and wiser heads pointed out that it was barely short of a scam.

11 comments:

Anonymous said...

Great. We are now responsible for one of the most reckless lenders of the housing boom. A lender which even now is offering a product that allows you to borrow 125% of your home's value.

I wonder how this new liability on top of a £34bn deficit for 06/07 and a £574bn government debt - 42.6% of GDP will fit in with Gordon Brown's famous Golden Rule?

What gets me is the audacity of hedge funds and speculators who bought in after the problems became apparent and who are now threatening legal action if the government (read taxpayer) doesn't pay them £4 a share. This company would have collapsed under the weight of its own liabilities long ago were it not for tax payer intervention.

You took a punt and you lost, you must have known that this outcome was more than likely. Live with it.

Anonymous said...

At least my money will be safe now, won't it?

Angus said...

Anon 2:16 - the exposure has gone up from a few (sic) billion to over £55bn and counting whilst Gordon and Alasdair have been deciding what to do. It might be safer, but that's because you and I are offering an open ended guarantee.

Nice to know you are so generous.

Anonymous said...

Angus:

I'm sure you're familiar with the concept of 'moral hazard'.

What Brown has done, in essence, is to introduce 'moral hazard' into the very heart of Britain's most important industry: global finance.

I've seen erroneous comments elsewhere that 'the government is bailing out NR investors', but clearly no such thing is envisaged. Indeed, investors are already screaming about suing Government to get some return on their shares, presumably because they feel they would've gotten more if Branson and Company had taken on NR. Of course, I have no sympathy for these clowns: if you play the market, you have to realize that there are no guarantees, and most certainly should not expect other citizens to bail you out of your losing bet.

No. 'Moral hazard' in this case refers to all the other financial institutions which have just received tacit encouragement to be irresponsible, on the assumption that if things blow up, Government will not let them fail outright.

NR should've been allowed to crash and burn; instead this Government, with its customary incompetence, has made the fiasco ten times worse.

We are ALL going to suffer dearly for years to come.

In reply to Anon 2:06, this assumption of some £100 billion in debt has blown right through Brown's Golden Rule.

Add to this an eyewatering public debt which is now 130% of GDP (that's just the funded portion, too), and you have a catastrophe looming.

For comparison, the US government, considered by most US citizens to be wasteful and foolish, has run up a public debt which is only 37% of that nation's GDP.

I don't know what 130% of GDP works out to in terms of 'pounds per person', but I'm sure it's something astronomical.

Now we know what Gordon's magic trick has been: fund public sector expansion at an insane rate. We thought he was doing so by 'stealth taxes', but it appears he was just shoving the debt obligation off into the future.

Typical Gordon: illusion and deceit, and we're all royally screwed as a result....

Anonymous said...

Angus,
I have no sympathies with share holders, who know that their choice of investment instrument is a risky one. I have no sympathies with an incompetent government who have allowed this situation to go out of control. Perhaps allowing NR to crash would have jolted all the idiots who continually fill one hole with another.

Anonymous said...

Worse still, we Joe Public as owners now sponsor Newcastle United! Government influence in football.

Anonymous said...

Winston Churchill said in 1945 on losing the election "When you get Socialism you get the Gestapo". Just look at this country now after 10 years of Blair and Brown.

Anonymous said...

Blair, G.Brown, Darling, D.Brown whats the connection other than they have conspired to ruin the wealth and defence of this country?

Captain Swing said...

Does this now mean that Salmond will be pushing even harder for independence as he will not want Scottish tax payers Sponsoring an English football club?

Anonymous said...

Captain Swing:

Alex Salmond has just been given the perfect rationale for independence, courtesy of the idiots in Westminster:

Kosovo.

The UK now has absolutely no moral or legal basis to deny independence to its constituent members should they wish it.

Another Labour own-goal....

Anonymous said...

i quite agree