Northern Crock shareholders on their high horse

vimothy

yurp
I don't really think that's that important though, it's just a general moan, Labour never specifically promised not to nationalise anything. For everyone who claims that Brown is not "free-market" enough there are a million who claim that he is too far the other way. Every step to placate the city has been viewed as a betrayal by the left, now he acts in a Labour way that you might think is more consistent with the views of the people who voted Labour into power and it's another betrayal.

But the extent to which Labour is (or was) regarded as the party of economic competence and the preference of business, is the extent to which it has (or had) abandoned the politics of the pre Blair and pre Thatcher era.

Well, as we already said, it depends on how it's done doesn't it? The fact that the other banks seem relatively relaxed about it (or did yesterday, has there been any change?) seems a good pointer because they would go on the attack at the drop of a hat if they thought that they were going to lose out.

I think it's going to be hard, for reasons that I'll go into at the end of the post.

Seems like a reasonable point but the question ought to be more like "why didn't they help then?" rather than "why do they help now?".

That whole piece reads like ideological anger in response to a nationalisation - none of his arguments are based on economics are they? The hyperbolic language hides the lack of content.

The arguments against nationalisation are solid economic arguments and I take them as given. Regarding the article itself, Anatole Kaletsky is a good finance and economics journalist and is worth listening to in general, IMO.

Yesterday you were complaining that the brand name was so tainted that no-one would save with it - I guess you must be pleased that your fears proved groundless.

It's not that simple, though, is it? This is the problem I alluded to at the top of the post. The fact that city bankers are rushing to take advantage of the government backed rates doesn't mean that everything's fine and dandy. The way I see it, there are forces acting in opposite directions: the bank's "brand recognition" has taken a pretty hefty beating in the eyes of the public and the city, so the government needs to make it competitive and successful. That's why it offers 125% mortgages, despite the fact that no one else in the country will. The degree of distrust will influence the degree of unfair advantage given to the bank. It must. The incentives now exist for the government to err on the side of caution, to give the company the competitve edge it wants, and therefore to inject moral hazard and to distort the market. It's already happening, and it's only day 2!
 

IdleRich

IdleRich
"But the extent to which Labour is (or was) regarded as the party of economic competence and the preference of business, is the extent to which it has (or had) abandoned the politics of the pre Blair and pre Thatcher era."
By some.

"The arguments against nationalisation are solid economic arguments and I take them as given. Regarding the article itself, Anatole Kaletsky is a good finance and economics journalist and is worth listening to in general, IMO."
What I'm saying is that, despite what he says, he is not arguing about the nationalisation of Northern Rock, he's talking about nationalisation in general. How could the government have nationalised Northern Rock in a way that would neutralise his arguments about not nationalising Marconi or betraying their principles?

"The way I see it, there are forces acting in opposite directions: the bank's "brand recognition" has taken a pretty hefty beating in the eyes of the public and the city, so the government needs to make it competitive and successful"
True. It's going to be interesting to see which direction wins.

"That's why it offers 125% mortgages, despite the fact that no one else in the country will."
As of yesterday. Presumably Northern Rock didn't know that everyone else was suddenly going to stop offering them. What I mean is, it's not as if they suddenly came in with a new product, it's the fact that everyone else pulled theirs.

"The incentives now exist for the government to err on the side of caution, to give the company the competitve edge it wants, and therefore to inject moral hazard and to distort the market. It's already happening, and it's only day 2!"
Well, we all agreed it remains to be seen how this is going to work out. The EU will have their eye on what's going on. At the moment I see that there are potential problems but none have arisen as yet.
 

vimothy

yurp

I think that the broad consensus that Blair rode to power would have been impossible to build without the (disputed, I admit) changes in Labour that he initiated.

What I'm saying is that, despite what he says, he is not arguing about the nationalisation of Northern Rock, he's talking about nationalisation in general. How could the government have nationalised Northern Rock in a way that would neutralise his arguments about not nationalising Marconi or betraying their principles?

It's the fact that the situation had been allowed to develop such that nationalisation was the least worst option that everyone is so annoyed about, I think.

As of yesterday. Presumably Northern Rock didn't know that everyone else was suddenly going to stop offering them. What I mean is, it's not as if they suddenly came in with a new product, it's the fact that everyone else pulled theirs.

That's exactly it. NR no longer faces the same constraints as other UK banks. It is probably impossible for them to act otherwise, especially given the events which led up to its nationalisation.

Well, we all agreed it remains to be seen how this is going to work out. The EU will have their eye on what's going on. At the moment I see that there are potential problems but none have arisen as yet.

I'm not so optimistic, but it will be interesting to see how it does pan out. I'd love to see a cost-benefit analysis of options at the different stages over the last six months, after the bank has been privatised or closed, whenever that is.
 

IdleRich

IdleRich
"It's the fact that the situation had been allowed to develop such that nationalisation was the least worst option that everyone is so annoyed about, I think."
OK. How did that happen? Because they bailed them out?
Thing is, if they can steer a course through competition regulations and sell the bank while recovering the taxpayers' money they will be vindicated. Of course that's a big if but let's not condemn them before they've failed.
 

vimothy

yurp
Fair enough. If they succeed Brown and Darling will def. come out of this smelling of roses. We'll have to wait and see.
 
There was a nice letter in the Times today suggesting that any Northern Rock borrowers who default on their mortgages could have their homes repossessed by the govt., who could then rent the house back to the defaulter, thus saving the costs of selling the house and evicting and rehousing the former owners.

The scheme could be given a name such as "council housing".

:)
 
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