Anthony Barnett (London, OK): I have been snowed in in Athens! Airport closed, three inches of snow on the lemon tree outside our friends house is very pretty but not good for the fruit - or the tree - or coming back to the UK. Meanwhile Northern Rock will be nationalised. What nation is that then, you may well ask. But let's leave that question aside. It shows the strength of judgement of Vince Cable and the weakness of the Conservatives. John Redwood's ten reasons why Labour is utterly mistaken strike me as shrill and one-sided. Where was the private bidder willing to take on the losses he accuses the government of taking on, and what about the possible gains to be made by taking it over now? As oD's Ed-in-Chief says below, the government is right the nationalise as it is making legal what is already the reality. Ands what this country needs is real not fantasy government. Where James Forsyth makes a strong argument is on Darling and Brown's procrastination. So we have one of those strange situations where what the government has done is right but it seems wrong, and what the opposition says is wrong but it has a point, and what the Lib-Dems say is spot-on but not seen as relevant. We have been here before, a general sense of decline and drift. Oddly enough there seems to be a similar situation here in Greece, though I don't have the language and can't read the press. The government is tangled in corruption but Pasok, the socialist opposition party is not dominating the scene with a new way forward despite the quality of its leader.
Northern Wreck: better late than never
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Comments
Since it's in the mortgage-lending business and we're seeing a decline, trading itself out of trouble is not an option. Selling assets at this time would be selling them short - and thus, failing the main shareholder - the state.
Nationalisation happened last September, so there's little point in bemoaning it now that it's official. If I have a problem, it's that the government hasn't renationalised all that John and his ilk flogged off on the cheap back in the 80s...
My proposal is that the government should act as tough bank manager to Northern Rock, limiting our exposure, not increasing it, and setting deadlines for repayments. The Company can then see if it can trade itself out of trouble, or turn to selling assets to repay the loans.
I feel that had a Tory government been faced with Northern Rock, nationalisation would have taken place in September, followed by a rundown of the bank and sale of assets - which is what Labour is doing now, but belatedly.
It's interesting, John, that you are advocating a hands on, political approach, as opposed to arm's length as the government is attempting. I imagine if the government was hands on in the way I desire (guaranteeing no compulsory redundancies, etc) you'd be complaining about politicisation. Am I right?
John: Thank you for your prompt response but I am still baffled. A bank manager does not lend a customer £100 billion and then tell it to pull its socks up. Northern Rock played the market recklessly and lost. Better regulation would have prevented this. Once it happened depositors had to be protected and the financial sector couldn't let a bank go down. So the government had to act. As with Rolls Royce (aircraft) which was nationalised under Heath and is a successful company now, it is much better to pursue the public interest clearly in such a crisis than look on a matter like this in narrow terms of a company that over-reached itself.
Anthony
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