Finally, Something Sensible

Weeks and weeks ago it became obvious that the solution to the Northern Rock banking crisis in England was to nationalise the bank. Instead, the government cast about for bidders whilst throwing biliions and billions of taxpayers' money at the failing institution. It did so whilst bosses of the bank obtained bonuses and payments vastly in excess of the median wage and their normal salaries.

Why did it do so? The answer seems to be that, like German and Spanish governments recently (and for all we know, others too) the establishment in this country cannot allow a bank to fail. We have a western world now predicated upon credit and debt at all levels (and I'm no angel in my personal finances) like rarely before, and to an extent never before seen.

So the past few weeks have seen Spanish banks gain huge facilities at the European Central Bank. German banks joined in later with vast government-backed bailouts. The process has now become general, to the level of trillions in asset-based security pledges, low-interest rate loans, and money auctions.

The taxpayers' interest in this country was that for each pound given to the banks an equivalent portion of their share should have passed to the government. This crisis was caused in part by banking 'sivs' or structured investment vehicles, and hubris, and the no-doubt cocaine fuelled risk taking of the young men that banks hire to gamble our money and tell us that the public service is for losers. It is at least only fitting that when things go wrong the rules they apply to others should apply to them.

Northern Rock is going to be nationalised.

There is a fitting synchronicity. It is 25 years since the privatisation of British Telecommunications was mooted by the Thatcher government. That privatisation, which took place in 1984 (which no one would reverse as yet) kicked off the stock-exchange driven political agenda based on borrowing at all levels that we all suffer under now. Decent people make things. This is one of my prejudices. Banks are apt to go mad in a hypocritical sort of a way. This is another.

However, we are now at a point when all the consultant driven nonsense about how automatically awful nationalisation was, and how only the chthonic soil of the capitalist banking environment could be trusted with money, is melting faster than antarctica.

Finally, even if still afraid and only if because backed into a corner, the government has seen sense.