Punters unmoved by the Northern Rock annoucement
February 18th, 2008
Is nationalisation really going to have no electoral impact?
Even though some are calling it “Labour’s Black Wednesday” there has been very little movement in the general election most seats betting following yesterday’s announcement by Alistair Darling that Northern Rock. The chart showing betting prices as implied probabilities has hardly changed on the past week.
It’s the same with the spread betting markets where punters buy and sell the number of seats the parties will get at the election as though they were stocks and shares. There was a minuscule move to the Tories yesterday but that was prompted more by the latest YouGov poll showing Labour 9% behind rather than Northern Rock.
It might be that political punters are mostly focussed on the US at the moment where there has continued to be a lot of betting activity on the Democratic party nomination. The problem for Brown-Darling is that there could be lots more bad news ahead.
Under the stark heading - “Absolutely, incredibly, utterly wrong!” Anatole Kaletsky argues in the Times that the “Northern Rock fiasco has just started, with the Government now officially in charge.”
The Guardian highlights possible political problems with the £165,000 a month money that is being paid to the two people who will now be running the back.
If ministers want cheering up then they ought to read Steve Richards in the Indy who reckons that the Tories are now “terrified” and “isolated” over the Rock. Below is an extract reproduced from the paper’s home-page. I’m not convinced.
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Absolutely right, Mike.
I’ve just read the liberal-left press on Northern Crock. The
Steve Richards article is risible. Osborne and Cameron “terrified”?
Yeah, right. I can see the scene in Cammo’s office.
Osborne: Hey, David, have you seen? The government has been forced into a hideously embarrassing U-turn, and everyone is laughing at them.
Cameron: Yes. Darling looks almost as incompetent as Gordon Brown, and this is bound to boost us in the polls.
Osborne: It’s terrifying, isn’t it? I get so scared when everything goes well for us.
Cameron: Absolutely. Shall we hide under the table?
For a true taste of how bad NR is for Labour, check today’s Guardian leader:
http://tinyurl.com/222uk3
Surely one of the most anti-Labour editorials ever to appear in the Guardian. Darling is “the worst chancellor since Lamont”??
Ouch.
PS On your other point: I think it’s unsurprising the betting markets haven’t been notably shifted by the NR disaster - yet.
This debacle is one of those slow-burners, it will take time for the implications to sink in. Already its been cooking six months - and I remember dear Roger telling us, when NR kicked off, that “it would all be forgotten by Friday”.
No, it may be months before we see the full affect of this fiasco reflected in polls and in markets. But what is happening already is incontestable: bit by bit, week by week, from nondoms to CGT to data loss to NR, the Labour government is losing its reputation for economic competence.
Seeing as this reputation was Brown’s one and only selling point, this can only be Very Bad for Labour.
OT USA: the dog that hasn’t yet barked in the night time.
Where is the great right wing conspiracy? The right-wing think tanks and swiftboaters, funded by billionaires who have done very nicely thank you out of tax cuts and bid free contracts: have they written off Election 2008?
4. So far. Most know think the Democrats will win and don’t want to waste their money. They also have little enthusiasm for McCain, knowing he would clamp down on campaign finance and reduce their ability to raise money. I think some have as their main goal at the moment is to get a pledge from him not to do this before handing him the Republican nomination, but aren’t too hopeful about it.
5. Should be “reduce their ability to raise money for candidates and influence their voting choices”.
Steve Richards may be over the top, but the Tories did not have a plan or proposal for the Northern Rock and they can’t get away from that. Vince was the man on this issue.
Just for the record…..
———————————————————
“Very good move by Darling and it will all be forgotten by Friday. I think banks are seriously cheap at the moment and as long as they aren’t badly exposed to the US then well worth buying.
by Roger September 17th, 2007 at 6:50 pm”
———————————————————
““Very good move by Darling and it will all be forgotten by Friday.”
Can someone write this down in the official pb.com list of Roger’s Risible Predictions?
by seanT September 17th, 2007 at 6:54 pm”
———————————————————
“It’s hard to believe quite how stupid some people are. Apparently people have been queuing outside NR branches all night!
Anyway it looks like the panic is over and the banking system will be stronger for this scare. Politically I can’t see it being anything other than a seven day wonder. I suspect anyone who trusted the government so little that they’d queue all night despite BOE guarantees are Tories anyway!
by Roger September 18th, 2007 at 8:37 am”
———————————————————-
“It looks as though the run has been stopped in its tracks. …
… Northern Rock appeared to be extremely safe but it put most of its eggs in an apparently stable market which stopped functioning. The cost to the taxpayer of guaranteeing that they won’t go bust is simply a self-fulfilling prophecy that should cost nothing. ….
Despite that my sense is that Cameron slightly overplayed his hand and will not get a long-term benefit from it, though he might pick up a bit in the next poll.
by Nick Palmer MP September 18th, 2007 at 9:42 am”
—————————————————————
Nuff said!!
Anyone who saw the demolition of Philip Hammond, the Tory spokesman on things NR, on Newsnight, as I did a couple of weeks ago or so, will realise the Tories are flogging a dead horse. Vince Cable got the call right from the beginning, only a shame the Govt took so long to catch up. I am quite surprised they (the Tories) are keeping on keeping on, but I suppose they do represent part of the financial and business establishment on this.
I think this is one of those really slow burn issues, and there is also the cumulative effect. I think if NR had been the only thing to occur in the last few months then this wouldn’t have been half so bad. However with data losses, Funding Scandals, Policy theft, and retreating on tax proposals then Northern (or is it National) Rock becomes devastating. The ultimate damage could be done though at the point of sale, if for instance the governent are forced to accept that they will not get all the taxpayers money back. That would be fatal. Of course they could simply choose to leave it in state hands until the general election hoping that they lose and then it is no longer their problem. Would they be that cynical I wonder?
There are a few dangers for the Conservatives and the opposing of this is just an extremely pain free way of appeasing those on the silly fringes of the party who don’t think Cameron is Conservative enough. The danger lies in the question so what would you have done then? The answer that the Osborne etc are trying to put forward is that actually the crisis didn’t start in August but is deeper seated and then tie it in to a wider economic attack. Effectively saying that NR is by-product or running the economy badly. That to me is an attack that will take time to seep in but will probably be ultimately effective.
Tim (9), Tory opposition to the Government’s taking over anything at all (”nationalisation”) is so entrenched in the Tory psyche that they cannot really make rational judgements about Northern Rock. They have no policies except to oppose the Government with slogans and sound bites.
That is why the Northern Rock saga, although bad for the country, will be good for the Liberal Democrats, because the line that Vince Cable took right from the beginning, has proved to be the correct one.
So while the Brown Government is seen as incompetent and insecure, and the Tories are totally lost and clueless, the Liberal Democrats emerge from this disaster with reputation intact. As they did over Irak. After all, managing the economy was supposed to the the Tories’ strong suit, as it has been Brown’s until recently.
8. lol! Very good. Perhaps this is why Rogerdamus has left us, out of sheer embarrassment.
9. Is this comment a spoof? “I am quite surprised they (the Tories) are keeping on keeping on”.
??
You are really “quite surprised” the Tories are attacking the government at a time when the government is exhibiting some unparalleled incompetence? At a time when even the Guardian says the Labour chancellor is the “weakest since Norman Lamont”? At a time when even the Guardian says the government’s economic reputation is “cracked if not shattered”?
You are “quite surprised” the Tories are putting the boot in now? Really? What did you expect the Tories to do? Send a fruitbasket to Number 11?
Yours must be the most pitiful piece of spin to have appeared on pb.com in several weeks. Given that you have stiff competition from the likes of Nick Palmer, that takes some doing.
Congrats.
11 - However that assumes that the business can be stabilised pain-free and cost free. However I suspect that when there are job losses, home repossesions and the government fails to get taxpayers money back when the business is sold or folded then having dissociated oneselves from the process may not be such a bad thing. Frankly this morning the only people who should be smiling about this are the lawyers, as there will be more lawsuits and judicial reviews around this than you can shake a stick at.
Agreed, James (13), up to a point. But what precisely would the Tories have done instead? Simply being wise so very long after the event does not give confidence in their capabilities.
13 - It is interesting that you count the fact that the Government will be associated with any job cuts or repossessions as a good reason not to nationalise. Those are disadvantages for the Government, not for the public. The public have given massive guarantees and any normal investor would expect a degree of control and a return if it can be stabilised and sold. Screw any bad publicity for the Government - this is the most prudent step.
Like the vast majority of the electorate, I don’t understand the detail of the various rescue options, so I have no way telling whether, as some posters seem to think, the government’s response has been a massive, incompetent fiasco or whether they’ve picked the least-bad out of a number of bad options.
What I do know, having lived through the aftermath of a retail banking collapse over here, is that at least right now, the situation with Northern Rock is not too bad, and could have been very bad indeed. They’ve stopped the panic withdrawals, the situation hasn’t (yet) spread to other banks, and it looks like they’ll be able to unwind the bad debts in this case so it won’t starve good borrowers of credit for years to come. The government appears to have come out of this at worst liable for the bad debts of one single, fairly small bank, and at best might even come out of this with a small profit.
As far as the political implications go, “fiasco”-related headlines obviously aren’t going to be good for the government, but I think comparing this to Black Wednesday, where the government threw scads of money at something to ultimately no useful effect, is way over the top. Add to that the fact that the main opposition don’t seem to have any coherent criticism of what the government’s done, and it looks like they’ve largely dodged the bullet on this one.
12. etc, Well, Mike’s story is about the polling reaction. If NR starts to have a negative effect in the polls then so be it, but I don’t think it will. My personal view is that the lab leadership were too timid about taking NR into public ownership in the first place because they are convinced that a large section of the voting public remembers a leftist nationalising tendency in the labour party.
I don’t think the public does now think about the labour party in this way. It is just that the Tories and their friends in the press are desperately trying to revive it.
I don’t think it will be particularly easy for the govt because there will be various legal cases from now on, brought by groups of shareholders. But public sympathy is hardly likely to lie with the shareholders who wanted to be propped up by vast sums of public money.
Presumably there will also be some job cuts and this will also be difficult for the govt, but it will have to happen.
But at the end of the day (in a year or so) the business still be sold back to the private sector under acceptable terms and the govt can now dictate the timetable.
I have to go out to a meeting now but will endeavour to respond to comments later.
“Worst since Lamont” isn’t exactly going out on a limb. Since Lamont we’ve only had 3 Chancellors: Ken Clarke, Gordon and Darling. Darling saves Gordon from getting the “Worst” tag - I guess that means he has performed part of his job description then…
14 How many times does Osborne have to say what he would do /would have done? He said months ago it should have been put into administration and closed to new business. That taxpayer funding should not have been put at risk. In fact that the Treasury should have done with Northern Rock what they say they will do in future if the situation arises again, what the Bank of England was saying before Darling panicked back in September and forced it into lending billions.
Vince Cable says nationalisation is preferable to a fire sale to protect taxpayer funds, does he though say that nationalisation should be the standard and preferred method of dealing with bankrupt banks? If not can he explain why Northern Rock is a different case from other banks? Does Mr Cable believe it is possible for nationalisation to cure the underlying insolvency of Northern Rock without cost to the taxpayer?
Sentiment in most of financial press seems to be that it will not be possible for NR to be run ongoing as if nothing had happened, that nationalisation will defer, not replace the eventual breakup and asset sale that should have happened 5 months ago.
Where does this leave Newcastle United ?
I just heard Nicky Campbell (yes, him!) basically demolish the Tories on NR - first they supported the Govt in bailing out NR, then they didn’t, then they said they were against nationalisation, then they criticise the govt for not doing it sooner!
I see the Steve Richards article as something of a side-show. His newspaper’s Leader says… “Northern Rock threatened to become a metaphor for the economy as a whole”
It concludes by saying… “From now on, it will be hard for Mr Brown to boast of Britain’s economic success or its superiority as a financial centre without someone glimpsing the sharp contours of Northern Rock behind him.”
11, 14. You Lib Dems are deluding yourselves if you think this plays out that well for your party.
Yes Vince Cable is a reasonable old cove, especially when compared to the panicky numbskulls in Labour - but that’s about it. He ain’t Maynard Keynes, he just made an arguably sensible comment about nationalisation some weeks ago.
Moreover, his voice is too timid and genteel to get heard in the daily clamour. So you might pick up one or two polling points out of this fiasco, but that’s it.
No, this plays out well for the real Opposition - i.e. the Tories.
Why? Cause even if the Lib Dems were right (which I might dispute) the fact is people don’t think that deeply about complex issues like Northern Rock. They haven’t the time or the inclination to work out the merits of part-privatisation of negotiable assets blah blah. Instead the voters go by intuition, emotion and gut feeling (and quite right too).
Right now those gut feelings will be telling voters that this government is a shambles, and it’s time to “give the other lot a go”.
The other lot is the Tories. Ergo, the Tories will do well out of this debacle.
Did I just hear that correctly?
The legislation will enable the Treasury to take ANY bank into public ownership and is not specific to Northern Rock?
WOW!!!!!! WHAT DOES DARLING KNOW THAT WE DON’T???????
Are you listening A&L and B&B?
WOW!
Re. Nick Palmer’s.. ‘The cost to the taxpayer of guaranteeing that they won’t go bust is simply a self-fulfilling prophecy that should cost nothing’
I thought at the time that was a ludicrously complacent and ignorant remark. And so it has proved - well done Mirthios for digging it out.
I also recall asking what taxes would have to rise or what schools and hospitals would have to close to finance the inevitable government losses. Perhaps we can have some words of wisdom on that subject, too?
19: Has Osborne said that taxpayer funding shouldn’t have been put at risk? If so, I take back what I said about the main opposition not having a coherent criticism of what the government did. Not risking taxpayers’ money and letting the depositers lose their savings is a perfectly coherent position.
Obviously the downside there is that once that happened, any sentient person hearing any kind of negative rumour about their bank is going to get straight down there and withdraw all their money. With more and more people using internet banking and able to make transactions in real-time without needing to queue, all the banks in the UK could have gone down the tubes before he had time to make the inevitable u-turn…
26 - No. I think the position was that the depositors savings should have been guaranteed, but the bank should have been allowed to fail in a controlled way. Ie. closing down all new business and running down the mortgage book to zero.
I’m almost certainly wrong though.
17. But at the end of the day (in a year or so) the business (can) still be sold back to the private sector under acceptable terms and the govt can now determine the timetable. - Captain Geoffrey T Spaulding.
This will be one of the prime candidates for another posting like 8 above on a gross failure in prediction.
Well, Anatole Kaletsky seems decisively to have left behind his past support of Brown:
http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article3386753.ece
Obviously this is bad news for the Government. I suspect that the betting market hasn’t really flickered for two reasons:
1) the ultra-analytical punters had already priced Northern Rock’s continuing travails into their assumptions; and
2) success-merchant punters will wait until the opinion polls move before altering their assumptions.
The real damage for Labour is not so much the bad news as the handling of it (which has been atrocious). The Tory charge of Brown dither is really gaining traction, and the handling of Northern Rock has gone a long way to cement this in the public’s mind. David Cameron’s effective characterisation of Gordon Brown as a ditherer - aided and abetted by Vince Cable’s killer “Stalin to Mr Bean” line - is the single most important political development of the last few months. All those aggressive performances at PMQs have made their mark.
I think this is good for the reputation and credibility of Cable (and Lib Dems) and bad for the reputation and credibiity of Osborne and the Tories. But this isssue is complex and not at the top of many voters concerns. Thus it won’t have much impact on the polls.
The Tories have a perfectly valid position - they don’t have one. Their sole aim now is to bash the government. This is indeed a great opportunity for them - and their cheerleaders in the press have already started. But don’t tell me that they would have done any better (letting the bank fail in a nice, orderly, quaint little way was just not on the cards last September). Indeed, they still don’t know how they would have handled it. Although the heat will not be on them but the government, so I’m sure their blushes will be spared.
Did Steve Richards pen that other great Headline?
“Fog in the Channel. Continent isolated.”
Should be a rather interesting PMs briefing today. Will Mr Darling be be the tail gunner taking all of the flak or will the Man of Courage be a loan?
And could someone explain the £15M a year taxpayers subsidy to the Northern Rock Foundation at a time when there is insufficient funds to pay £11K to save the sight of a WW2 Wellington Bomber Pilot who has been told that he must go blind in one eye before funds will be released to save the other eye. Charidee is alive and well in the North East and we are all paying for it to save Labour votes. Dither and his mate Dunce have once again robbed the Nation.
Some further evidence that the Hillary campaign had not planned on going beyond Super Tuesday: it seems her backers have only just understood the weird maths of the Texas primary - i.e. that even a popular vote win will not translate into delegates:
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/17/AR2008021702461.html?hpid=moreheadlines
Ooops….
As someone who thought that the whole idea of building societies becoming banks was stupid, I’m not surprised that this sort of thing is happening.
The government should have just let Northern Rock go to the wall, it wasn’t their responsibility to rescue it. Capitalism has its risks, something everyone should be aware of, particularly shareholders.
Now its done its done! perhaps GB, (who wants to broaden his tent) should invite Vince Cable to be CofE.
Those who are comparing this to the ERM disaster are talking nonsense, if interest rates shoot up to 12% because of Northern Rock, then you can compare it, not before.
After all, in 1971 the Tories, (We’ll not be supporting lame ducks) did the same with Rolls Royce Aero Engines.
George Osborne didn’t look terrified and isolated on News 24 last night. Where do they get this rubbish from?
I think voters were braced for this announcement, but there is no doubt in my mind that it will affect them come the next election.
http://lettersfromatory.wordpress.com
Yesterday’s YouGov/Sunday Times findings:
In general who do you trust more to raise you
and your family’s standard of living?
- Gordon Brown and Alistair Darling?: Scotland = 40% but southern England (excl London) = 18%
- David Cameron and George Osborne?: Scotland = 15% but southern England = 38%
Alistair Darling is responsible for issues such as
taxation and the future of Northern Rock. Do you
think he should continue as chancellor or be
replaced?
- “Should continue”: Scotland = 41% but southern England = 23%
Scottish Westminster voting intention (sample size = 230):
1. Lab 36% (-3%)
2. SNP 30% (+12%)
3. Con 16% (n/c)
4. LD 12% (-11%)
5. BNP 3% (+3%)
6. Grn 2% (+1%)
7. UKIP 1% (+1%)
oth 1%
Which ONE of these best describes how you feel
about yourself? (Scottish respondents)
1. Scottish 68%
2. British 22%
3. English 5%
4. Welsh 1%
oth 3%
http://extras.timesonline.co.uk/results140208.pdf
Darling dreadful on Today
36 “George Osborne didn’t look terrified and isolated on News 24 last night.”
Quite. The worst that can be levelled at Osborne is that he only has two settings - “smug” and “asleep”.
25: The guarantee for depositors HAS cost nothing, harry. The run on deposits stopped at once. The Government’s loans to NR have been to fund the ongoing business, because NR was unable to get its borrowing on the money markets extended. The loans are secured on the value of the mortgages, and the issue is whether that value will be fully recovered. The precise position is that the Government has lent a lot of money to a shaky bank to prevent a run, and we cannot yet tell whether it will successfully get it all back.
I don’t think the public will have a firm view on whether nationalisation was the least bad option (opinion was very evenly divided on the BBC web site thread), but it’ll do some damage in the more nebulous ‘economic competence’ sense. Because people aren’t sure what the right policy was and they sense that the Tories aren’t sure either (Osborne is certainly not majoring on his administration line, and has flirted with others) I don’t think it will have the lasting impact that our Tory friends here hope.
alex@27/28 - thanks, I get it.
Would that stop the run on the bank? If I heard that my bank was going to go into administration, I think I’d take out all my money anyway for fear that I wouldn’t be able to get hold of it and would have to wait for the government guarantees to come through.
Come to think of it, that’s not a hypothetical. When I heard that my bank - which had more bad debts than Bill Gates had money - might be going into administration, I took out all money and hid it under the tatami. The only thing that kept the bank going then was that the other depositors all knew that all the top prefectural officials had their money in the same bank, so they were confident the government wouldn’t let that happen.
Eventually the bank got nationalized, the taxpayers lost a load of money, the depositors kept theirs, the government loaned scads more money to the remaining banks on the condition that they clean up their bad loan portfolios, and the economy finally recovered. Not a good situation by any means, but the only way to stop the banks’ problems from taking down the entire economy.
If the UK housing market takes a dive I guess you’ll all be hearing a lot more about this kind of thing…
On the whole, people won’t understand what’s going on with Northern Rock and will reply on the headlines that £100bn if loans are being taken over by the govt. I doubt many people care what the Tory or Lib Dem position is. They didn’t care about Brown’s position on the ERM. Afterall, they did not have all the facts and time to plan for what should be done. The idea that Lib Dens have that this is another Iraq for them where they come out best is a little self deluding as not many people know or care what they were saying. It is another drip drip of the idea that Brown hasn’t got a grip and is surrounded by incompetent people. It becomes even more difficult if not impossible to rescue his reputation now.
I note that the ongoing rise in English national identity is yet again reflected in yesterday’s YouGov poll.
In all 3 of the all-English sample areas (for some odd reason the Midlands are lumped in with Wales) “English” was a more popular descriptor than “British”:
- Southern England (excl London): English 47%, British 44%
- London: English 44%, British 41%
- North: English 47%, British 46%
Every time I hear Darling on the radio, can’t get the image of Captain Darling twitching his eye as he learns he has to ‘go over the top’ with Blackadder.
I can’t believe it. £100bn of tax payers guarentees for a Bank that has close ties with the Labour party in the NE.
Quite laughable the efforts of some anti-Tories here to try and bleat on about Osborne’s position. If we’re getting into that territory, perhaps they could explain why Brown was so pro-ERM?
Brown and Darling are in government. The bank collapsed because of a bad business model, but couldn’t be rescued in secret because of the new regulatory system invented by a certain Scotsman. Who’s fault is that?
Why didn’t Darling reassure depositors immediately, instead of waiting days to provoke the first run on a British bank in over a century? Yes, the government whines about a global problem, so why haven’t bank runs been seen globally?
Why didn’t the government accept Lloyds TSB’s early stage offer (for around half the exposure we have presently) instead of throwing it out?
And, most damningly, when it became blatant no private sector solution could be found why did Brown and Darling dither for months instead of biting the bullet and nationalising it?
But no. You’re right. Obviously the Shadow Chancellor is *really* culpable.
The government position is supremely pathetic. They’ve presided over the first nationalisation in decades, the first bank ever to be so, and the first run on a bank in over a century. And their response? Try and blame the Opposition. Marvellous.
I don’t think that 6 months after this started, one can analyse the options for NR (administration, nationalisation, private sale, etc) in isolation and say that ‘Cable was right’ or ‘Osbourne is wrong’ (or whatever). The frightening aspect of this affair is the way that political issues have played a leading role in determining policy:
- Clearing the decks for the election that never was.
- Providing support to Labour voters in the NE.
- Ducking away for so long on nationalisation on political principle.
Against this background, whatever the Govt does is likely to be a disaster, and end up looking like the administration that would have been applied to any other bank.
Mr Palmer, six months ago - almost to the minute - you wrote explicitly:
“The cost to the taxpayer of guaranteeing that they won’t go bust is simply a self-fulfilling prophecy that should cost nothing.”
You did NOT write, as you suggest “The guarantee for depositors WILL cost nothing”.
The two concepts are quite different, as I am sure you understand.
[40] Nick is right.
Since GB has had stewardship of the public finances, they gap between what he inherited and what he is leaving to the next govt is the widest in history. By far. He will be judged harshly 3/5 years after he leaves office.
But, as Nick observes, it will cost him little at the next GE. GB’s reputation for economic competence is still intact with Sun readers. Yes, really. The reason many of them won’t vote for GB is that they find him unappealing, unattractive and out-of-date.
How can anyone expect an opposition politician to have a serious policy on NR when they have NO access to the books ?
Cable and Osbourn are both guessing on the status of the mortgage book - Darling and Branson have seen the full facts - and Branson didn’t offer very much for it - nobody else offered as much - guess for yourself.
Anyone remember this little exchange in the House - on 19 November 2007 - :
—————————
Jim Cousins (Newcastle upon Tyne, Central) (Lab): The whole House will have noted that the Liberal Democrats have as much regard for the 5,500 employees of Northern Rock in the north-east—and the 6,500 nationally—as they had for the job of their former leader. [Interruption.] Two or three faces in public, 10 in private—that is the policy of the Liberal Democrats.
Does my right hon. Friend accept that the policy of nationalisation would lead to a slow lingering death for the jobs of the Northern Rock workers, its assets and Britain’s reputation as a major financial services centre, with my right hon. Friend the Chancellor cast in the role of undertaker—and that only by finding a successor business to grow on those jobs, assets and reputations can we offer any real prospect of the taxpayers getting their money back?
Mr. Darling: I agree with my hon. Friend. It is regrettable and surprising that the Liberal Democrats never seemed to support our earlier proposals to keep Northern Rock open.
————————-
“A slow lingering death … ” - how prescient of Mr Cousins
Osbourne is like Keegan all attack but will walk away when it gets hard.
He has no defence as he doesn`t know what he would have done.
But most northerners know what he would have done shafted them as previously.
50: yes, the Liberal Democrats come out of that one (unusually) well…
51. Looks like we can kiss away our chances in Newcastle East and Wallsend then. That really is a headache.
45: “Yes, the government whines about a global problem, so why haven’t bank runs been seen globally?”
http://www.google.com/search?q=countrywide+bank+run
Probably more accurate to call the UK’s situation contagion from a US problem. But like I say, if the UK housing market tanks…
I’m a bit surprised that the betting markets haven’t shifted on this. Although it’s looked like the government might make this move for some time, the actual decision - and the bad publicity that’s gone with it - should have some effect on the polls.
I disagree with those who say the Lib Dems will benefit most from this ‘because it’s proved to be the right policy’. Well, it hasn’t proved that yet; it’s just proved to be the one the government has gone for. The Lib Dems are now like the fan in the football stand who calls for a manager to make a particular substitution during a match, and then finds the manager doing just that. Now not only the manager’s judgement, but that of the fan too is open to scrutiny. If nationalisation proves to be lingering, expensive and embarrassing, then the Lib Dems will now share in the blame.
One other interesting clue as to how this government works this morning. There was a Five Live interview with Alistair Darling which went something like:
Nicky Campbell - “Why did Gordon Brown order you to nationalise Northern Rock”
Darling - “We took this decision …”
Didn’t even bother to correct the allegation that it was Gordon’s decision except by the very weak method of starting with a different pronoun.
53. Hopefully you can kiss you chances and your ar*e too in a lot more other places including outer York.
Where hopefully they might prefer the Lib Dems and Vince Cable economics than the usual slash and burn you advocate.
I think the truly laughable thing is that National Rock mortgagees now effectively part owe themselves the money on their mortgage as they in effect part own NR’s mortgage book. The idea that the government can at arms length run a bank without being anti-competitive is silly. If NR offers competitive rates with other banks then the fact that they are state owned effectively gives them an edge and would be challenged by the other banke, if they don’t offer competitive rates then the other banks will get the business. NR cannot effectively function any longer as a viable business. All nationalsiation does is allow Darling/Brown to dither longer before coming to that realisation.
So the UK government has taken on £100,000,000,000+ in liabilities to protect around 5,000 jobs mostly up in the N.E. That is £20,000,000 a job. This must be a record surely. I am sure most of the employees would have been happy for a 30 0r 40 grand pay off. It would have been a lot cheaper.
Well, it’ll come as no surprise to my fellow Peebies that I take the view that this is the “least bad” decision.
Letting NR go to the wall, even with guarantees for the first £X of savings, looks good in theory - but it’s the expectations effect that means that it isn’t practical politics. A Tory government wouldn’t have done it - although with its greater credibility in the City, it might have been able to find a private buyer (and/or set less stringent standards for what an “acceptable” deal looked like). But it hardly matters - as with Labour in 1992, the main thing is to be grateful someone else has to sort it out and take the flak.
I think there is a case for having a State-owned High Street bank, to keep the others up to the mark (i.e. as a regulatory technique). It could be managed by up-and-coming bankers from other companies on 3 or 5 year secondments, to ensure cultural coherence.
I suspect that NR will be turned round, and Osbourne will sell it a tidy profit in due course…
Osbourne has been very clearly stating exactly what should have been done. As noted above, firstly guarantee the deposits to stop the run then close the books and put the dying business into administration and maximise assets as with any other failing business. Given the scale and complexity Osbourne has said that the B of E should be the administrator.
Very sensible and we would not be talking about this now if Darling and Brown hadn’t been worrying about NE Labour voters specifically and a wider election generally.
Nationalisation was always the very worst option and the fact that Cable was suggesting it from early on does him no credit whatsoever despite the dellusional nonsense from the LabDemers above.
Oh..and I was also reading the BBC blog and agree with Nick that comments were split. About 90/10 against the governments catastrophic return to Old Labour and the 70’s. Our very own ‘life on Mars’ thanks to McSporran and the Magpie.
55. Well we will see. Interesting how aggresive the nice party is on here isn’t it.
Even though I think rescuing the Bank is wrong, if the Tories do oppose it, Northern voters may think, ‘If it had been called Southern Rock, bet the Tories would have been all for nationalisation’
The reason Osbourne looks worried, is because everytime he appears on TV, he knows all over the country, people are nudging each other giggling and saying, ‘Of course his real name isn’t George its Gideon’ then collapsing into hysterical laughter.
61 - Yes because everyone is desperately concerned about the name of a politician.
I don’t understand that comment of yours, Woody (60). I don’t remember anybody ever before describing Labour as the “nice party”.
But then, you Tories are getting very confused indeed. Having been described by your Party Chairman no less as the “nasty party”, Mr Cameron is doing what he can to rebrand your image. But some of the Tory posts above just reinforce the nasty image of Cameron’s Conservatives.
Very odd. But perhaps they are spoofs.
61
There are some pretty desperate posts on here today from the usual Labour crew. Of course Osborne and Cameron are to blame for the Northern Rock debacle, of course they are! It’s all Osborne’s fault everyone knows that. It’s because his middle-name’s Gideon (snigger, snigger, chortle, oh what larfs!!)
Keep it coming boys, if it makes you feel better in your desperation and despair.
So the dreams of Benn & Foot all those decades ago are finally realised, the UK has a State Bank operating in the commercial sector.
Mr Darling (supported by Mr Cable) wants us to believe it will be a short transition back to private ownership, that there will not be restructuring, job losses and re-trenchment, that the competition will not cry foul if it continues to offer BoE backed low cost mortgages and higher rates of interest to savers, that authorities in EU will not be concerned that a commercial bank has access to lower cost credit as its backed by a central bank.
Mr Darlings acceptance of Mr Cousins prescription that “the policy of nationalisation would lead to a slow lingering death for the jobs of the Northern Rock workers, its assets and Britain’s reputation as a major financial services centre” still applies. In 5 months the Government has been unable to produce a satisfactory replacement for the failed tripartite banking regulation regime, 5 months and we still have no answer to what if it happened again.
61. Good god that’s pathetic. If 2% of the public know he changed his name I’ll be amazed. Next blame shifting attempt please.
Governments should only nationalise industries for strategic or wider economic reasons.
NR is not strategic.
NR is not a major bank so if it went into administration someone would be able to pick over the bones and buy the viable bits.. leaving the shareholders and employees to bear the costs.
Letting the taxpayer do it shows muddled thinking.
So what’s new for a bunch of third rate politicians ?
62
Ah! but there could a a Freudian reason why he doesn’t use his real name, something that hides some dark aspect of his character.
Apparently he doesn’t use it ‘cos he thinks it’s too posh. Wow! Gideon/George, we wouldn’t have noticed you’re posh, honest!
68 Coldstone, here’s some advice: when in a hole, stop digging.
68 - I’d be really, really surprised if he’d adopted “George” only when he became an MP. Probably a school thing - even at public school (St. Paul’s, from memory?), “Gideon” would result in serious p1ss-taking.
68. He hated the name and changed it. So what. I suppose Elton John and Michael Caine are descended from the devil as well. And what what our great leader James Gordon Brown!!
55 - Interested in your choice of Outer York. Is James Alexander really already without hope? I’m interested, partly because I used to live there, and partly because I think that it could be quite a good three-way race.
Wondering who else is intrigued by doughnut-shaped constituencies - would be a great subject for a Sean Fear Friday article, as if they become more common, that would have an interesting effect on the demographics of the constituencies of several mid-sized towns and cities (consolidating the suburbs and commuter belts, but also consolidating the city centres into a single bloc).
I love how Labour supporters are trying desperatly to drag the Tories into this mess, as though what the Tories would have done/will do, would make one iota of differance. Fact is, Labour is in government. Labour is presiding over this disaster. End of story.
When Brown try’s to turn this around on Cameron at PMQ’s, I hope Cameron will remind him of excactly which one of them is in government and that if he wiches to ask questions to the Opposition, then he should call a general election.
40. Very entertaining to see you wriggling, Nick.
Interestingly looks like Gordon has bought forward his monthly press conference, should be fun!
74 Nick’s been having to do a lot of that recently and will probably be doing even more in the future. It’s a shame really because he seems like a basically decent fellow who must be tearing his hair out at the dishonesty, dithering, and incompetence of his self-styled Great Leader.
69
What has never ceased to amaze me, is how easy it is to wind up a Blue Harpie, make any comment about any senior Tory politician, no matter how light hearted, and down they swoop, quicker than, ‘Shit slides off a shovel’
Northern Rock! as I said, the government are mad to get involved.
Banks should be Banks, Building Societies should be Buildingg Societies, Gas should do Gas, Electricity should do Electricity etc etc. When businesses start doing things they don’t really understand, ‘There’ll be tears afore bedtime’
Labour as usual resorts to spin and smear to try to cover up its own failures, even having a go at its pet businessman - Branson - for being ‘greedy’…
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/18/ccrocknat118.xml&CMP=ILC-mostviewedbox
SeanT, Time to stop “talking your book”- you are talking out of your crack. Vince Cable is proven spectaculaly right, and I suspect that this will be generaly duly noted.
BTW, this is not because the Lib Dems support nationalisation per se, it is because it is the only solution to get the taxpayers money back after the unbelievably reckless decision to give a full guarantee including lending to NR, and not just protecting the NR depositors. The Tories are in the same dock as Labour- they have no other ideas that could get the chestnuts out of the fire. It does make Osbourne look a bit inadequate, though obviously Darling looks worse.
Meanwhile, the numpty award for stunning one-eyed provincialism goes to… Stuart Dickson. For the tenth thread in a row.
Would Osborne have been ‘brave’ enough to put NR into administration? I don’t know, and it doesn’t matter.
Administration works particularly well when most of the assets involve freeholds, cash and debt. (They are at their least effective where there is substantial WIP, but there is none here).
A big weakness of having only professional politicains (from all parties) is that very few of them will have had direct dealings with recievers/administrators/liquidators. So they will only have a thoeretical rather than a practical understanding of the system.
77 But winding people up for the sake of it is just infantile and childish Coldstone as I’m sure you know. Not that I’m implying that you’re infantile and childish, oh dear me no. Is his middle-name REALLY Gideon? snigger, chortle, snigger, hah hah, oh that’s dead funny that is sooooo amusing.
“The Tories are in the same dock as Labour”
Are you delusional? Get a grip man or at least some prospective..
Tories here are guilty of “groupthink”. Yes, this is clearly damaging for the government, but the Tories have no answers either. Be honest!
79, Cable will be proved right or wrong when nationalisation ends and the costs/benefits are weighed up.
79 - Cable will only be proved right if nationalisation works. If it doesn’t then he will be sunk with it. If the government cannot refloat the bank or makes a loss on the taxpayers funds then it won’t have worked.
72,No in all honesty he is not.
I wouldn`t say its a three horse race, more a two horse one with the Conservatives favourites.
Believe they have a good chance in the general election as the Lib Dems are currently in control of the City of York Council which covers outer York.
Also the Lib Dems had a terrible result in Rydale 05 GE, which used to cover part of the new seat.
Hugh Bailey should hold the City of York for Labour, he has held it since 92.
York used to be a swing seat, but the Conservatives have been a long time out of the frame, but they are slowly making a return into council seats.
Probably on the back of a Lib Dem council and 3 term government.
It’s amazing how many of the government’s problems stem from the non election. CGT, nondoms, Northern Rock… all these panicky and crap decisions are now having to be painfully reversed, at fatal cost to Labour’s reputation.
To think Brown was regarded as a master tactician and brilliant strategist. To think Nick Palmer said we were all “underestimating” him!
The problem is precisely the opposite. We all overestimated him. Brown is an idiot. Truly an idiot. And an unlikeable, dishonest, embarrassing and arrogant idiot at that.
The thing is, some people knew this all along: his fellow Labour ministers like Clarke. Why did they let him become leader??
78 Brown should be more careful than to accuse Branson of being “greedy”. I’m sure the saintly Richard could tell quite a few tales about Gordo if he wanted to.
50. Selective quoting from a tory poster? - surely not!
Here’s the full quote from Alastair Darling
“I agree with my hon. friend. It is regrettable and surprising that the Liberal Democrats never seemed to support our earlier proposals to keep Northern Rock open. It would also, however, be a mistake to shut off all other options and simply go for one at this stage; that does not seem to me to make any sense at all.”
Source: Hansard, 19 November 2007
77:
“Banks should be Banks, Building Societies should be Building Societies, Gas should do Gas, Electricity should do Electricity etc etc. When businesses start doing things they don’t really understand, ‘There’ll be tears afore bedtime’”
Wish I’d said that. May I quote it?
79 - “The Tories are in the same dock as Labour”
Really? I had thought Labour had won an outright majority at the last Election and subsequently formed the government that presently presides over situations such as this - to suddenly learn that in fact the Tories have power-sharing ever since 2005 is, to put it mildly, slightly surprising.
83 How can the Tories come up with the “answer” when they can’t look inside NRK’s books to see the true state of their business?
79. We shall see who is right as only time will tell. That is why nationalisation is such a poor option.
Its effectively an enormous punt using our money as the ante.
If it all works out fine and the market turns around and the business is satbilised then that is obviously a good result for all of us.
However, there is a significant risk that it will cost us all a great deal of money. Darling and Cable are betting with tax payers funds and I think that is a very poor decision what ever the final outcome ism.
40: Nick, you probably have more chance holding onto your seat by distancing yourself from the government over NR not spinning for them.
77: It amazes me how quickly some revert to the same repeatative stuff about the Tories every time Labour screw up. Can we have some new material please?
9, 11 and others. I don’t think the Tories are terrified, but they have no credible policy and has been seen, whenever THEY are put on the spot about what they would do they flounder completely. Therefore, the Tories are praying that the press just goes for Darling/Brown, and they will reap the indirect benefit. However, if the intelligent media keep remembering to ask Osbourne exactly what his plan is, the Tory gain will be muted because they have none other than they would have offered NR on obscenely generous terms to make sure it was snapped up, thereby ensuring a private company gets to walk away with a massive windfall in a couple of years.
mirthios: Excellent trawling to find those quotes
. I think that knee-jerk response to the Lib Dem question could really come back to hurt Darling (and the NuLab robo-clone that asked it). That Darling himself said nationalisation would lead to a slow lingering death is something that the Tories can use against him every day now… Maybe it will teach ministers not to be so childish and flippant in the chamber. I doubt it though.
79. “The Tories are in the same dock as Labour”.
???
Oh dear. Oh dear oh dear oh dear.
This statement is so jarringly absurd it is symptomatic of cognitive deficiency. My guess is early-onset Alzheimers.
95. Selective quoting from mirthios. See the full quote showing Darling NOT ruling out nationalisation at 89.
84. 85. We have to be clear what ‘nationalisation’ means here - as a strategy rather than a concept. There are two possibilities.
Firstly, it could be used as a sort of medium-term variant of administration, with the aim being to run the bank down in an orderly way and recover as much taxpayer value as possible in the process.
Secondly, it could be used as (yet another) stopgap measure, aimed at holding the bank in stasis until such a time as it can be refloated.
Sadly it is this second option that the government is aiming at. This is replete with risks -
Firstly, with no commercial entity wishing to touch NR with a sh*tty stick despite lavish subsidies, the public may now decide its condition is so bad that further withdrawals of deposits occur.
Secondly, the bank will now become an even bigger political football, with dullard Labour MPs from the NE demanding no job losses as the election approaches. The chances of it being run in a rational manner over the next couple of years are low.
This could simply be the start of a new act in this tragi-comic story.
97, so what? All that means is that a slow, lingering death is now the path the government has chosen.
Oh No …………….
Hold the front page ……………
Sell Obama Now …………….
Billy Rees Moggy says Obama will win !!!!!!!
http://www.timesonline.co.uk/tol/comment/columnists/william_rees_mogg/article3386292.ece
GIN@74 and a few other people who have been asking why the Tories’ position is relevant here.
From the point of view of who’s actually right about what should be done, of course it’s relevant. And if you’re Gordon Brown defending against a criticism, obviously what the person making the criticism would have done instead is relevant. But this board is more about political outcomes, so here’s how it’s relevant to that:
There are three things that can be damaging to a government when it has a problem:
1) Having some kind of mess.
2) Looking like the government screwed up.
3) The opposition looking like it could have done better.
In most cases, I think it’s fair to say that (1) and (2) are the most important issues. People have commented rightly that on Black Wednesday, it wasn’t clear what Labour would have done differently to the Tories; At the very least they’d wanted to have gone into the ERM, and when the thing started to unravel I can’t remember them saying that the government should have thrown in the towel earlier.
But to really increase the damage, it’s a great help if the opposition can put a persuasive case together for what they would have done instead. Partly because somebody articulating a convincing alternative helps demonstrate (2) - that there was a better course than the one the government took. But also because although it may not have that much effect on short-term polling, if people aren’t convinced by the opposition they’ll tend to revert to supporting the government when the election approaches. (See other threads for Rod Crosby’s “swingback” theory which, if correct, points to a hung parliament, not a Tory win.)
If you can’t see how (3) is important, imagine that how much stronger Labour’s position would have been if prior to Black Wednesday Labour had repeatedly, publicly warned that staying in the ERM wasn’t sustainable - or that before the speculative attack on the pound, they’d said repeatedly and publicly that the government needed to drop out of the ERM to avoid losing money in a speculative attack…
As far as the impact goes in this case, I think what people can understand best is the big, expensive mess. A big, expensive mess is not good for the government. But to be really damaging we would need some kind of evidence that voters can understand suggesting that it was the result of a gruesome government screw-up. And to justify a bet that the Tories are going to win significantly more seats in a general election, we would need some sign that they can convince people that they would have done things better.
97 - Read Nick Robinson.
83. Who gives a flying f*** what the Tory plans for NR were? Or are?
No one. Just like no one cared that Labour supported ERM entry, along with the Tories, prior to the ERM disaster of Black Wednesday.
The government is in power, so it has to govern. The Opposition is in opposition, they are meant to oppose. If something disastrous and embarrassing happens while the government is in power, it doesn’t make much sense to blame those who could do nothing about it.
The Tories carried the can for ERM, and rightly. Now Labour want to blame someone else for their crass ineptitude on NR. Sheesh.
It’s amazing how many times Labour seek to do this: to blame someone else for their incompetence. It’s always the little guy in the office. The poor bloke in the Treasury who wrote the non dom rules. The cleaner who foolishly opened the false think tank for Peter Hain.
This is one of the most repulsive aspects (and there are many) of New Labour. The complete inability to admit personal responsibility. It is the classic sign of the immature mind.
In terms of child psychology and moral development Labour is at Kohlberg Stage 3: they have the ethics of the average twelve year old.
90
You have my permission, and my blessing!!
If Northern Rock was still a Building Society this situation would not have arisen.
Mind you, I once had a mortgage with the, Bristol & West… well I’d better not go there, they’d probably sue me for defamation, it was a nightmare.
‘..It’s amazing how many times Labour seek to do this: to blame someone else for their incompetence. It’s always the little guy in the office. The poor bloke in the Treasury who wrote the non dom rules. The cleaner who foolishly opened the false think tank for Peter Hain….’
I think it’s called ‘courage’, isn’t it?
Sorry, Gabble - Darling might not have ruled it out but that’s how he described it, and he can expect the Tories to use it back on him!
BTW, I note the hypocrisy of these “furious” NR shareholders. They only reason they didn’t lose everything back in September was because the Govt and therefore the General Public stepped in to protect the company with public cash. Now they are moaning that all they will get is compensation (as opposed to nothing at all if NR had gone under, which some people argue well back in September that it should have done).
As usual, institutional shareholders want their cake and to eat it. They want the public to protect their risks. They want the public to pay for the loans upkeep. Then THEY want to walk away with the profits at the end! Disgraceful. Risk-free capitalism at its worst. Mind you, shareholders of NR stood by whilst the company ran a dangerous business model, I guess that says something about them. Too hungry for the money, I think…
106. Darling was obviously agreeing with the last proposition in the question:
“…and that only by finding a successor business to grow on those jobs, assets and reputations can we offer any real prospect of the taxpayers getting their money back?”
He would still agree with this today.
Two video links…
To hear more from Steve Richards about his position. Watch last nights “Head to Head” programme where he discusses the issue with Anne Leslie.
http://www.bbc.co.uk/iplayer/page/item/b0092jdn.shtml
Without doubt the Tories will benefit from this, despite the fact that they have had little constructive to say on the issue. But that’s politics. The way the govt has positioned itself to take the blame for this private sector failure is breathtakingly awful.
For other Labour supporters out there. This insightful video says it all IMO …
http://www.youtube.com/watch?v=CwyrGwM4a7M
104 - on your logic, Nokia should still be a paper mill and rubber manufacturer and Shell should still be selling sea shells to enthusiasts. There’s nothing wrong with companies diversifying intelligently. The problems arise when they diversify unintelligently.
107 - What rot, if someone asks a question and you say an unequivocal ‘I agree’, you agree with everything. He never dissociated himself from the characterization of nationalisation as a disaster.
gabble - 107 - selective agreement from a socialist poster? Tut!
110. “He never dissociated himself from the characterization of nationalisation as a disaster.”
Yes he did! He said in relation to nationalisation:
“It would also, however, be a mistake to shut off all other options and simply go for one at this stage; that does not seem to me to make any sense at all.”
106
What amazed me, was how picky the shareholders were, ‘Oh we don’t like this deal, we don’t like that’ obviously the term, ‘Beggars can’t be choosers’ meant nothing to them.
It reminded me of those Lloyd’s names a few years back, who
said the government had a duty of care towards them: really, don’t think so!
Those poor buggers who were in that Xmas scam that went tits up, Yeah I’d give them some government money, they deserved it, but the shareholders at Northern Rock, tough shit! thats capitalism, ‘When its good, its very very good, when its bad, f***ing well look out’.
107: Keep spinning. You’ll need to twirl much faster to get out of this one
I note that Darling lied when he was pressed on this quote - he said he had never said that.
Oh gabble, I love it when you squirm.
110: Spot on.
111. mirthios, your original post at 50 was pretty dishonest. You knew the full quote would destroy your argument, so you ommitted it. Typical tory!
112 - All he did was not rule out the application of nationalisation he didn’t say that it would not be a disaster if it was applied. He did not dissociate himself from that characterization, therefore he implicitly agreed with it.
Meanwhile the FTSE powers on up today seems the city doesn’t share Osborne’s view that NR nationalisation is a disastrous move , is there any chance the Conservatives will get a shadow chancellor who knows anything at all about economics and business .
119. Maybe a real expert like yourself could give him a few hints, Mark.
119. I stand to be corrected here, but I suspect the FTSE probably powered upwards when the pound got dumped out of the ERM. It didn’t do the government any favours though.
105. Aye, and a fish rots from the head down, as they say. Labour has serious problems with morality and truth: and it starts with the leadership.
I knew Gordon’s government was going to be obnoxious, slimy and crap as soon as Gordo told that whopper of a lie about the non-election: “the polls had nothing to do with my decision to cancel the election”.
How could a prime minister come on TV and just lie through his teeth, lie so badly journalists openly laughed at him - and do it even though he knew we all knew he was lying.
Someone who is prepared to lie like that - with self-destructive obviousness - has issues with self respect. They just can’t afford to lose face because then all their hidden but vicious insecurities might surface.
Many of Brown’s problems stem from this: he can’t bear to lose face. This is why he’s so crap at PMQs. He is monstered by Cammo every time, which just makes him so angry, and the angrier he gets the worse it is.
He would rather lie than admit an error. He’d rather blame someone else - anyone else - than admit ineptitude. He is so insecure he would rather surround himself with blatant mediocrities like Darling than suffer any rival - hence disasters like NR.
I repeat. What on earth was Labour thinking when they elected him unopposed?
Doh!
Mark Senior, the city likes stability, the decision to Nationalise NR achieves this, it is not an explicit approval of that decision.
btw, Osborn is not the Chancellor of the Exchequer, do try and remember which party has c*cked up again
123 I agree the government c*cked up by delaying the nationalisation by 5 months , Osborne would have c*cked up by not having a clue how to handle the cisis in the first place .
O/T Us election.
In case you missed these little campaigning Music Videos from the Black eyes peas will.i.am … The McCain one is worth a look and shows a glimpse that he may have problem or two come Novemb