The risk is still there
"An economic calamity has taken place". So claimed the Tory leader today drawing, he said, on his own experience of working at the Treasury on Black Wednesday. Yet somehow, at least in Westminster, it's not felt like that sort of day.
Of course, nationalising Northern Rock is something this government did not want to do.
Of course, Gordon Brown hoped that the ‘N word’ would never again be used in the same sentence as ‘Labour government’.
Of course, the risk ministers are taking with vast sums of taxpayers money is still there.
That, though, is the point - the risk is STILL there - as it was last week and as it would have been even if ministers had today announced not the nationalisation of the Rock but its sale or, as the Tories recommend, putting it into administration.
There is clearly political damage to a government that's constantly proclaimed its capacity to deliver economic stability and reputational damage to Britain as a financial centre but the scale of this will not become clear until we know the answer to what is now the £100 billion question - how much, if any, of this unprecedented subsidy will actually be lost.
In other words, unlike on Black Wednesday, we do not know that billions have been lost. If they are, though, David Cameron will not be alone in using the word calamity.
I'm 
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The situation is worse than you think Nick. The guess is that NR will downsize and will do so by encouraging mortgage holders to switch by raising interest rates.
However which borrowers will switch in the current market? The answer is: those who can find better rates i.e. those who are able to service their debt relatively easily and who have good credit ratings.
The ones who are in danger of defaulting will NOT be able to re-mortgage and the increased rates to persuade them will undoubtadly cause more of them to default - which means that you and I as underwriters will lose an awful lot of money as the bank becomes mainly a sub-prime one.
Does not seem to be a happy scenario.
Perception is all and the perception is that Messrs Brown and Darling have lost the plot. Whatever the eventual profit and loss account at Northern Rock the political damage with the electorate and all the key opinion formers is done. And, like Humpty Dumpty, once a political leader is damaged.....the mood of the House is no longer what counts.
Well done, Nick! for making the Prime Minister look like he was sucking on a sour grape while you were asking your question at the News Conference this morning. He really does need a body language expert to get to work on him!
Im still not certain that the man in the street will be able to understand why the government has £50,000,000,000 to spend one day but not the next for
Police Pay
Clean hospitals
Funded Pensions
Road Building
Cheap Rail a la Suisse etc
Immigration Service (one that works)
If anything the gov should have used its position to lobby the UK banking sector to solve this problem with a small warning that the securing of depositors funds would be increased by a levy or a reversal of the 2% reduction of the corporation tax rate.
If anything the whole episode underpins these facts:
The UK government fails consistantly to educate its populace how it funds government spending programs. The institutional placement of government paper and the constant repackaging of actuarial based spending with bond yields and fixed income tied to the investment appetite of international and domestic investors.
The relationship between the average worker the taxes levied the spending on health, security and education all add up to form the marginal rates for those participating in the UK economy.
From babies to private equity funds.
Transparency and accountability at all stages of government. No one of the electorate ever had a chance to voice their opposition of the government investing £50,000,000,000 in a bank.
Indeed, this has been a lot more controlled than the events of Black Wednesday, but it is Brown's "Black Wednesday" - not sure how history will judge the events though. On the other hand, anyone notice that the Government seems to have released the draft of the Iraq WMD dossier - good day to bury bad news?
Nick,
I watched the Chancellor deliver his speech today in Parliament. I also heard George Osbourne and Vincent Cable.
What struck me was the paucity of Osbourne's response/argument. He spoke of Darling being a 'Dead Man Walking' - as he looked for the headlines. But on the substance he was lacking - attacked by Darling and, especially, Cable for not getting to grips with basic economic policy.
The Shadow Chancellor should know that his role is to be a credible alternative.
With David Cameron calling for Darling to be 'sacked' when they, or rather Osbourne - have no plausible alternative - and appear themselves to be calling for nationalisation in all but name - is playing games with the same financial services sector they say they want to protect.
Political opportunism is one thing, playing with peoples jobs, homes and their childrens future is another.
For all Labour's troubles at the moment, Cameron's 'Calamity' argument and Osbourne's useless performance today - in PR and substance terms - shows once the spotlights thrown on them the country may just be grateful - like temporarily nationalising northern rock - we have a government that is the least worst option.
Nick, You say: "we do not know that billions have been lost". Are you willing to put your money where your mouth is? How about a little wager? If, after this whole fiasco is over, government losses are less that £10 Billion, I'll give you £100. If, however, they are more, the you give me £1 for every £1 Billion more.
Maybe its because I am only 30, but I just think the political classes and westminster village is massively over playing the significance.
They wanted a private sector deal if they could get the right terms, they couldnt get the right terms, so they nationalise.
Noone seems to be arguing that:
(a) they shouldnt have acted in the first place
(b) they should have signed a bad private sector deal
All the criticism seems to be that either 'this is some sort of economic disaster' but the reasons why i should believe this are left unclear.
Or that its proof of dithering. But that seems all just spin. Is there any reason not to believe the govt tried to get a private sector bidder but when it couldnt it nationalised? What would be a story is if it has gone with a private sector bidder if nationalisation was worse or vice versa
And so, all we are left with is the criticism that this is somehow a massive political statement for the govt. And I guess thats where I come back to being 30 and just dont see it
Nick,
To get it in perpective it's about the same amount filched from our Pension Funds by one Gordon Brown, and that amount goes up every year.
Is it me, or is it actually the tories who sound like the ideaological headbangers in all this?
This is from the 91Èȱ¬ site:
Shadow chancellor George Osborne said nationalising the bank had taken the country "back to the 1970s and the failed policies of Labour's past".
He added that the Conservatives would vote against the emergency legislation the government wants to push through later this week in Parliament so that it can nationalise Northern Rock.
Will we taxpayers now have to pay public sector pensions to the 12,000 employees of northern rock?
To say that the risk is still there as if the degree of risk in different solutions was the same is poor journalism.
Liquidation would have ensured that the shareholders would end up bearing losses until their capital in the bank was exhausted. Only then would the state need to step in to prevent depositors being affected.
Nationalisation is a poor option because it makes opaque the contribution to losses by the new management.
There would have been no risk to the taxpayer if Brown and Darling had let the bank fail as they should have done in the first place. The shareholders would have been wiped out, something could have been done to help the savers, and a few jobs would have been lost - not a big deal. But because they were worrying about the effect on the Labour Party not on the country they've now saddled us with a £100 billion risk.
The episode shows just how 'lightweight' Cameron and Osborne are.
Nevertheless, they will probably be in power, but only because the doleful political wheels grind and the electorate throw out this Nu-Lab lot and the Tories simply fill the boots.
English people ... there is a better way ... start voting for genuine independents (and independence for England) at the next General Election!
I have watched this whole fiasco with interest.
So now each taxpayer apparently has a £3,500 steak in the new Northern Rock.Gov
Presumambly the bank will now be subject to the annual cost saving exercises that most Gov't departments are subject to.
Item No 1 on the new Business plan is sure to be a reduction in staffing costs.
I have sympathy for the employees.
Just as a matter of interest, how many billions of pounds were lost (as in lost and never to be replaced) on Black Wednesday? David Cameron must know - after all he was there - or like Arsene Wenger - has he forgotten or worse still could he not see from his position in the dugout? What a load of hypocrisy! I doubt the Tories would have done any better in the current scenario.
The art of opposition is to look like a credible Government in waiting and so far I have seen nothing at all from the Conservatives to indicate that they have any real substance to their opposition other than asking for all and sundry to resign.