Northern Rock

Tony Curzon Price (London, oD): Anatole Kaletsky is just the latest to criticise the Rock's nationalisation mainly on the grounds that it distorts competition for banks that do not benefit from state guarantees. George Osborne was the first to make that the main plank of the Conservatives' objections.

Anthony Barnett (London, OK): I think I know what the problems are with the Labour Party and perhaps I should write about them more. But I prefer to explore what I know don't understand, and I've just read this in today's Telegraph column by Simon Heffer, on the Northern Rock crisis:

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.

Tony Curzon Price (London, oD): Nationalisation, as a few of us have long claimed, was the only solution that satisfied the political constraints. Once the Bank of England had lent as much as it did to the Rock, and the taxpayer was explicitly providing it with the one thing any bank needs above all others to operate - credit-worthiness - then it was clear that in reality the taxpayer owned the asset. Whether in name or not, the taxpayer was doing the owner's job: nationalisation was just a way of making reality accord with law - by changing the law.

Tony Curzon Price (London, openDemocracy): Banks are utilities. A plank of Mervyn King's defence of his handling of the Rock is that he tried to persuade his international colleagues (to no avail, apparently) that the international banking rules known as Basle II should require banks to maintain a certain degree of liquidity, not just a certain capital adequacy. That is, it should not have been good enough for the Rock to say "we have capital worth one fifth of our loans": it should also have been required to say "and one fifth of that can be turned into cash within 15 days..."

Anthony Barnett (London, OK): A copy of the "Briefing memorandum" codenamed 'Blackbird' and put together by "Merrill Lynch, Citi and the Blackstone Group" for the sale of Northern Rock was apparently leaked to the Financial Times. An injuction was placed on it to prevent its publication. Thanks to Guido Fawks, who has a good post on this, you can read it the full document here. There is an entertaining, aka shocking discussion of what happened on the FT site here. Will Hutton today wrote an angry case for nationalisation rather than permit a billion pound plus plus rip-off of the taxpayer. He outlines as much as he can of what has been gagged in the memorandum, describes as "jaw-dropping" the prospective government subsidy to the circling city sharks, insists that having taken all the risk with public money the Treasury must protect this investment by nationalisation and, later, a full-value sell-off and not allow us to be swindled. Darling, says Hutton, "must bite the bullet and for his own reputation and that of the government, he must do it soon". Clear fighting prose, Will. But what if Darling doesn't? As for the gagging order, Guido says, and it sounds right to me, "The reasons for this being suppressed are not commercial, they are political. Everybody in the City already knows what is in the memo. The government just doesn't want the political embarrassment".