Sunday, February 17, 2008

Darling Humiliated by Northern Rock Nationalisation

Even the most devout Labour spinner cannot disagree that the nationalisation of Northern Rock represents a total humiliation for the government. Alistair Darling's dithering and uncertainty have made even Gordon Brown look like a man of decision. I do not trust the government to run a whelk stall, let alone a bank. And they will be doing it with our - my (!) - money. God knows what hit the taxpayer will take now. And it will get even murkier when the government is sued for mismanaging the whole process, as it surely will be. The whole tri-partite regulatory system, which the Tories warned Gordon Brown would fail when he set it up, has been a disaster. And we're the ones picking up the bill. Plus ca change...

45 comments:

Paddy Briggs said...

Iain

Arrant nonsense!


Let’s be clear about the key issue here – this is not a failure of Government it is about a failure of capitalism. Of course it does not mean that the Capitalist model is defective – it means that the capitalist model is vulnerable on the margins.

Northern Rock’s failure was a failure entirely attributable to greedy and incompetent management who had no feel for their “stakeholders” or for the world in which they operated. Greed? Well just look at the obscene salaries (etc.) that they saw fit to pay themselves. Incompetent? Of course, no vision, no alternative scenarios - no hope!

How has Government handled it? Well the thought that the ridiculous Branson could be anywhere involved just shows how much there was clutching at straws. Government had assumed that there were checks and balances in the financial systems that would preclude the possibility of a Northern Rock situation. There were not. When ignorance, greed and incompetence rules then even Government cannot cope.

There was no alternative to nationalisation. That was obvious ages ago (well said Vince Cable). But let’s lay the blame where it is right to do so. On a system that trusts entrepreneurs (why?) and on a culture that allows these parasites to reward themselves obscenely before retreating in the face of “events” to their comfy houses and their generous pensions.

Alex said...

I keep thing about the last outbreak of Foot & Mouth?

Is theor anything safe in this government's hands?

Ted said...

Surely Iain you wouldn't want Newcastle United to lose it's shirt sponsor?

Anonymous said...

Gordon Brown has pulled all of the strings on this one and left poor hapless Darling to carry the can. It is so typical of the control freak who makes himself available for the good news but runs away from the bad. What a disgraceful man who put his party first before the hard working taxpayers of this country. Gordon Brown set up the tri-partite regulatory system which failed at the first test and, because he was going for an election, dithered over NR so as not affect the Labour vote. Ditherer and his Dunce, the Double Ds of the Dreadful Government.

jsfl said...

Paddy Briggs:

Arrant nonsense!

I'm glad you preceded your post with a summary of its content. It saved me the bother of reading it!

The names Brown and Darling will be synonymous with those of Callaghan and Healey. Yet another dark day for Britain and there have been far too many in the last few months

Alex said...

@paddy briggs:

You clearly are not well versed in banks and their regulation. NR was full of Labour cronies such as Derek Wanless, he of govt quangos and ex-Nat West.

Your assertion "The key issue is a failure of capitalism" overloooks the fact that baks have a regulatory framework that is supposed to prevent such a failure by controlling the behaviour of banks. The framework, or rather its implementation as devised by Gordon Brown, has failed.

The key issue is a failure of the executive.

hatfield girl said...

The North East has long been a Third Sector economic heartland; Northern Rock was the delivery vehicle, and its Foundation extended New Labour ideologies and concerns into social and cultural sectors.

When the Office of the Third Sector was set up in 2006, it became part of the Cabinet Office, taking in various bits and pieces but mostly moved in from the DTI.

Brown and Balls are personally and closely identified with the implementation of policies that are familiar, despite the NuLabourspeak, as those of socialist directed economies. Brown spoke of the:
"...dynamism and power of what I see as the great forces of change in British civic society: the growing role of social enterprise, the expanding corporate social responsibility of companies. the proliferation of local community and environmental action, the innovation and diversity of the Third Sector as a whole."

Only it is bankrupt without £100 billion of taxpayers' money - £3000 for every family in the country.

This is the collapse not just of a local bank, but of the thing Gordon Brown kept telling us he had to offer: his 'vision'.

Anonymous said...

Paddy you are partly right, NR had a flawed business model. However the blame for this fiasco rests with the government. They are the ones who are supposed to regulate and control the way banks go about their business. In this respect they have abjectly failed. Brown messed with a system that had worked for many years. He created a regulatory system where no one was taking responsibility. Hence when the crap hit the fan and the cash ran out the result was an "advertised" loan that caused panic on the high street. Instead of quietly getting on and sort the thing out they panicked and let all hell break loose.

So put blame where it belongs squarely at Brown/Darlings door.

Tel

verity said...

JSFL - I didn't even get to Paddy Briggs's summary. I stopped at the first line after "Iain". It signalled that the entire post was going to be rendered unreadable, stuffed with clichés and boilerplate socialism.

Anonymous said...

You should be flattered Iain.
Methinks Briggzy is not simply a wrong headed loner. He talks crap but it is glib crap with closely argued non-points.

methinks he works for Labour HQ and has been detailed to provide an auto rebuttal service for them on the blogs which they deem to be important enough to be threatening - to the Labour party.
They wouldn't bother otherwise .

Thats a compliment indeed!

verity said...

6:23 - "Closely argued non-points". That is wonderful and sums up the whole socialist edifice. Closely argued non-points!

Oscar Miller said...

Interesting timing for this announcement - did the government think they could bury it on a Sunday afternoon? Another thing they've got wrong. The BBC are doing their best to damp down the humiliation and ludicrously said it was the "end" of the story. Oh no it isn't ...

Malcolm Redfellow said...

Well, it's sure good to get that little load of phlegm out on the pavement.

But ... so what?

We've been waiting in patient expect(or)ation for a credible Tory alternative.

It's no good blaming the tripartite system. Everyone was happy enough with that until the crowd no bigger than a man's hand started to appear outside the Northern Rock offices.

Nor does it wash to say "told you so". As far as I can recall, the 18th-baronet-to-be was quite happily associating himself with A.Darling esq.'s initial handling.

Nor, again, is it wholly convincing to bleat on (as the Beeb does) about opinion polls and such frothy trivia.

So, come on: let it all out. Do you wave your arms in surrender to hedge-fund blackmail? Or is there some cunning plan? A panting populace yearns to be let in on the Great Conservative Plan.

Or are you just blathering on to fill space or because it makes you feel good?

Pete Skelley said...

I am fascinated by the timeline and spin here - yesterday the web was full of positive stories about the Virgin offer, detailed negotiatiosn etc. and yet today the "Nationalisation Bear" finally came out of the cave - what really drove them overnight o this decision?

Anonymous said...

Odd isn't it how all right-thinking people urge light-touch and/or self regulation until things go belly up. Then it's all the government's fault...

Iain Dale said...

Regulation by the Bank of England had worked for decades and there hadn't been a run on a bank. Brown changed the system and there was then a run on a bank. Complete coincidence. Yeah, right.

Oscar Miller said...

Or are you just blathering on to fill space or because it makes you feel good?

February 17, 2008 6:32 PM


For consistently insightful and constructive commentary about NR read John Redwood's blogsite - Redwood, btw, had been predicting the crisis well before the shit hit last summer.

Trumpeter Lanfried said...

Good news for Northern Rock mortgagors. The Government will NEVER repossess their properties for fear of adverse publicity. So they no longer have to keep up their repayments.

Conversely, we taxpayers are now saddled with billions of debt 'secured' by unenforceable mortgages.

Broon's Talking Bawgie said...

This is a rich vein to mine. Northern Crock should have been allowed to fail, but was not allowed to do so because its failure would have exposed the uselessness of Broon's last remaining "achievement".

This scab should be picked at until Labour drowns in the blood.

Colin said...

'Bottler' Brown and 'Dithering' Darling have made a complete horlicks of the whole NR fiasco from the off. The correct, but politically courageous, decision would have been to let the Rock and its rotten business model sink without trace - and for Applegarth and his crew of overpaid execs to have spent time explaining themselves to the SFo and other interested parties.. True, the Geordies would have been up in arms, crying into their Newcastle Broon, and a few careerist North East MPs would have harrumphed loudly and to little effect, but it would have blown over. Who weeps for Rover now?

But they didn't. Now we are all in hock for £3000 a pop, the bank goes on its merry, economically incompetetnt and illiterate way - and the Govt can't even offload it to the bearded wonder, Branson. Cable witters on anbout nationalisation and now NuLab have taken the bait - as 'the least worst option'. What crass incompetetence! What a load of horsesh*t.

The chances of NR trading back into profitability and positive net worth are now negligible. The brand is bust, the assets would fetch zip in a fire sale, so the wretched, broken Nulab NE heartland has just had £100 billion of illegal subsidy at the expense of the rest of the country. How do the rest of us feel about that?

Brown and Darling should be howled down this coming week in parliament. Will any of 'Dave's' tieless team be prepared to put down a confidence motion, at least against darling if not teh whole government? Because no one outside Westminster can any longer have 'confidence' in thisincompetent, mendacious, sleaze-ridden poxy adminstration or its chancellor who is clearly completely out of his depth - and its time they started to feel the heat.

Fred said...

House Prices to crash -40%.
A credit crunch in the offing.
Inflation about to rocket.
Debt at its worst in living memory.
And the British folk just now noticing a rise in their cost of living.
Get ready for the "rockiest" ride ever on the back of this nationalisation.
The city will have a tarnished outlook of Browns Government and capital flows will all but cease along with a jumpy stock market on opening tomorrow.
Boom and Bombed out will be Browns inheritance in this 11 years of government of DELUSION.

Anonymous said...

Easy political points really.

Vince Cable has emerged well out of this with his clarity on issues. Osbourne's done his usual "if I bleat on enough about this perhaps nobody will notice I've never had a real job in my life".

Malcolm Redfellow said...

Pete Skelley @ 6.36pm has a point in being:
fascinated by the timeline and spin here - yesterday the web was full of positive stories about the Virgin offer, detailed negotiations etc. ...

As I have suggested elsewhere:
What would be interesting, in these days of post-Conway “transparency”, is to know how many journo’s lunches and other “opportunities” have ended up on those same [hedge-]funds’ PR and expense accounts.

Yak40 said...

NR would have failed ages ago if it was in, say, Surrey or Sussex and not in the Labour NE Empire. Simple as that.

When will this scum be voted out ?

Phoney Blare said...

Darling had a mortgage with Northern Rock, who else in the Government has borrowed from them?

NR should have been put into administration and sold off. No ifs, no buts, no nationalisation.

Bill Quango MP said...

TO Pete Skelley @ 6.36pm

It is a good question and one I can answer.

What prompted this final climbdown was that the last ditch attempt to rescue 'The Rock' failed at a recording studio this afternoon.

Sure of a good reception from Evan Davis, Darling Balls and Brown decided to take northern rock onto Dragon's Den.

The pitch was to take a mortgage book of unspecified value, backed by government bonds of an also unspecified value and hand the whole lot over to the real business world in exchange for ..

And here is the final scene from the show.

Deborah Meaden : What exactly is the proposal ?

Balls : erm

Duncan Bannatyne : What profits have you projected for this business in the next 5 years ?

Brown : erm ,, quite a lot. "erm ...dynamism and power of what I see as the great forces of change in British civic society: the growing role of social enterprise, the expanding corporate social responsibility of companies. the proliferation ..

Duncan Bannatyne : No . I said what profits, not talk. have you made any future growth projections ?

Peter Jones : do you have a business plan Mr Darling ?

Darling : Erm..

Deborah Meaden : Are you basing the figures on any specific economic forecasts ?

Balls : Erm..

Deborah Meaden : Have you factored in the current slowdown in the economy in your plans ?

Brown : erm .. 10 years of growth .. erm economic propesterity .. erm Lowest crime for 5 years..

Deborah Meaden : I'm sorry ?

Theo Paphitis : let's cut to the chase what do you want for this 'Northern wreck'

Darling :Well
Brown : One Hundred Billion Pounds



Theo Paphitis : I'm out
Deborah Meaden : I'm out
Duncan Bannatyne : I'm out
Peter Jones : I'm out

Brown : Bollocks.. let's try the apprentice.

Titus said...

March 12th - Budget Day

February 17th - Bodge It Day

Lee Griffin said...

While it may show a weakness in making the right call earlier, and while it puts a whole lot of debt on the taxpayers shoulders, we need to be careful of what we're all arguing about.

If the opposition parties come out this week going on about Brown and economic records they are vastly missing the point and the truth. Northern Rock failed because they were bad at business, not because the economy as sculpted by Brown has let business down...otherwise we'd have a lot more banks in this situation.

If they come out, however, talking about how indecisive Labour have been, and how they've tried to mislead the public over the impact this will have, then they'll have the support of people out there like me.

Rohan said...

This is not good news for those with mortgages taken out with Northern Cock. Or HMG.

The government might be spinning this as a temporary nationalisation with the bank being open as usual but the fact is that EU law and the other banks will not let this happen.

In short, to allow the bank to carry on as usual would represent unlawful state aid and competition. The other banks are going to be watching this like hawks and will be filling complaints with the Commission at the first sign of trouble,

These warm words that HMG is peddling are pure spin. I suspect that they realise that the bank is finished. The brand is tainted beyond rescue. So they will be looking over the books and parcelling up the mortgages etc for sale shortly. In this way the govt will act within EC law and recoup the taxpayers money. For example the sub prime holders of the 'Together' package peddled by the Cock (125% mortgages) will find their mortgages sold in all probability by people who ramp up the rate to ring out the money or pressure them into default so they can repossess and sell the property. One man's nightmare is another's profit.

HMG wants a sale of the assets asap. First, there is a huge hole in the public finances and the Cock is not helping. Second, all of this needs to be swept under the carpet by the next election.

Trumpeter Lanfried said...

Branson has called the Govt's bluff. They were asking too much for this damaged company and they knew it. But they dare not sell for its true value, because then it would have been clear how many billions the taxpayer was left to pick up.

They still haven't really made a decision. Darling announced 'a temporary period of public ownership'. In other words, a further period of procrastination.

Anonymous said...

Isn't this another case of Brown announcing plans to the press instead of parliament? Also isn't it against the law to announce this stuff before the London Stock Exchange is told?

It's not just the debt that we as taxpayers have to absorb but the shareholders will undoubtedly take the government to court for full compensation.

Captain C said...

Im sorry but I would trust the Government marginally more than an obviously clutching at straws sale to Richard Branson and V*rg*n for crying out loud. Darling's made a brave decision to make a state attempt to stop the rot, the far easier option would have been to sell Northern Rock to the vultures and watch fortunes either decline further and tax-payers expense or else £ichard lick the cream of tax-payer funded risk.

КАЛИНИНГРАД said...

Paddy Briggs said:

'There was no alternative to nationalisation. That was obvious ages ago (well said Vince Cable).'

No, there were three options six months ago. First Lloyds offered a lifeline - if the Bank of England would fund it.

Administration was an option too. Or if not, Nationalisation.

A private rescue was never a real option. No one in a similar business (B&B) would touch the wobbly NR portfolio. Branson would pay a pittance at best.

Here you witness the indecision of Brown. He could have overruled the Bank of England on the Lloyds offer - but that would mean a U-Turn on his giving the Bank its independence.

He could have gone for administration - but that would have had bad consequences for the Labour heartland. (6000 jobs lost, plus small savers.)

Or he could have taken up Nationalisation then. But again, with political consequences.

So as a result? He didn't do anything. Only NR shares plummeting last week forced his hand.

I commend to all of you Tom Bower's biography of Gordon Brown.

http://www.amazon.com/Gordon-Brown-Tom-Bower/dp/000717540X/ref=pd_bbs_5?ie=UTF8&s=books&qid=1203283927&sr=8-5

Millions were paid to Goldman Sachs et al for advice. But the guy either can't take advice or, if he does, can't then make a decision. I'm afraid it's typical. And very costly for the taxpayer.

CityUnslicker said...

More in detail on my blog, but this is just the start, this whole sorry mess will likeey be inherited by the next government oo

Howard said...

On momentous day!

What progress under New Labour. Devaluation on a Saturday, nationalisation of a bank on a Sunday. What will happen on a Monday?

This is not the end of the beginning, not even the beginning of the end, but the end. Job losses to follow in Labour’s heartland. My guess now is that after the furore dies down, legal action will follow and more importantly Blair’s people will break cover.

All we need now is for savers to start querying on Monday.

This is the day the Tories won the election!

Cameron has now got to go for the jugular and twist the knife.

КАЛИНИНГРАД said...

iain dale said...

Regulation by the Bank of England had worked for decades and there hadn't been a run on a bank. Brown changed the system and there was then a run on a bank. Complete coincidence. Yeah, right.

Absolutely. There hasn't been a run on any European bank either. Brown's assertion that it's 'all to do with the global economy' is false. As incredible the claim he once made about petrol prices being due to Hurricane Katrina.

Even the financial regulators that were in place were actively dissuaded from regulating. Brown's cynical policy has been to engineer a debt mountain economy - to shift national debt to personal debt. NR were encouraged to lend 120% of valuation on 6 times unverified salaries. There has been no other economy created under New Labour except borrowing.

Of course it was going to end in tears.

Man in a Shed said...

George Osborne has this right. Now the government will have direct control over jobs in constituencies it needs to win at the next election and over mortgages. When a commercial outfit might foreclose - will a Nationalised body do so ?

The experience with Rover shows us Labour are shameless with tax payers money when it comes to buying votes.

I don't agree with Paddy Briggs - though he is on to something about the system that allows people to take large risks that they don't have to cover personally to further their career.

Like Nationalising Northern Rock perhaps .....

Dave Cole said...

That sounds like a challenge, Iain.

Paddy Briggs is sadly mistaken, as the government either believes in capitalism or believes it has to operate within capitalism. Take your pick depending on how charitable you're feeling.

However, everyone expects the Tories to oppose what the government's doing because, well, they're the opposition and that's their job. Equally, Cameron is a little too close to Black Wednesday for the readers of the Daily Mirror. The LibDems can only say that they agree with the government. Meanwhile, deposits are secure - individual depositors will be aware of that - and people who pay in, well, just keep paying in as they were. There are a few outraged headlines and blog posts and everyone gives up because it's too complicated.

As to the taxpayer's hit, the government has time to work out a deal behind the scenes and then announce it as a fait accompli that guarantees the taxpayer's investment.

Whether I agree with the above or not, I'm not sure, but I don't think it's as much of a done deal as you suggest.

xD.

verity said...

"... 'all to do with the global economy' is false. As incredible the claim he once made about petrol prices being due to Hurricane Katrina.

Wot? They have oil in Mississippi? Where do I buy shares?

Dave Cole said...

In fairness, there were refineries damaged by Katrina.

Anonymous said...

Paddy Briggs said...

"Let’s be clear about the key issue here – this is not a failure of Government it is about a failure of capitalism. ...
Government had assumed that there were checks and balances in the financial systems that would preclude the possibility of a Northern Rock situation. There were not."

Yet more of the never-ending twaddle from Briggs.

Before the fool Brown nulabbed the system the Bank of England would have stepped in and solved the problem overnight. Brown made it illegal for the BofE to do that.

КАЛИНИНГРАД said...

"Before the fool Brown nulabbed the system the Bank of England would have stepped in and solved the problem overnight. Brown made it illegal for the BofE to do that."

On the contrary. The BofE declined to step in and assist in Lloyd's plan. It thought it unwise to throw 30 billion at a flawed and failed business model.

However, it's true that it would have solved the problem, since NR would have gone into administration.

Paddy Briggs said...

Methinks Briggzy is not simply a wrong headed loner. He talks crap but it is glib crap with closely argued non-points.

methinks he works for Labour HQ and has been detailed to provide an auto rebuttal service for them on the blogs which they deem to be important enough to be threatening - to the Labour party.


Thanks for the compliments! I don't work for the Labour Party or any other Party. Actually I don't work for anybody. My views are my views. You may not like them. fine! . But they are mine and mine alone.

Anonymous said...

КАЛИНИНГРАД said...

"On the contrary. The BofE declined to step in and assist in Lloyd's plan. It thought it unwise to throw 30 billion at a flawed and failed business model."

Do keep up my dear chap. They declined to act under the current rules. Quite right too - it would still have been a mess and then the BofE would have been blamed. Under the old rules the BofE would have got it sorted before (almost) anyone knew there was a problem.

Sabeen said...

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It is indeed easier to turn a deaf ear, blind eye and point a finger to others, rather than evaluating the mortgage options. It’s never too late to make amendments and get back on track and may be all that is required is right direction to tackle the mortgage problem. So do not let things go out of hand when filling a simple form would give you instant access to a financial advisor who will be able to guide you through.