Monday, February 18, 2008 

Gotta go back in time.

When you walked out the door this morning, did anything feel, slightly different? A bit greyer, perhaps? Was Radio 1 rather than Radio 2 strangely playing Yes? Come to mention it, wasn't the car itself slightly older than you remember it being when you parked it there on Saturday? Was the previously colourful area where you live apparently transformed into a faintly sinister Stalinist architectural hell-hole, indicative of the lack of investment that public ownership practised by a socialist government inevitably brings? And, most horrifying of all, was that person really wearing a waistcoat and flares?

Yes, we've gone back to the 70s in the Tory time machine! Whether a result of the tardis twirling through time commanded by Dr "Dave Cameron" Who, or due to the De Lorean driven by George "Doc" Osborne, we're back in the bad old days of the 70s, where the unions are strong, the 3-day-week is still a recent memory, the comedians are racist without calling it ironic or post-modern, and where Margaret Thatcher was still a threat of what was to come rather than a legacy surrounding us. Oh, and where the gap between rich and poor had yet to stretch further than the distance to the moon.

Perhaps then Gordon Brown and Alistair Darling did wake up this morning asking themselves whether they were mad, in a coma or back in time, but then again, Brown probably does that every morning anyway. Or maybe it was just a befuddled haze from the night before: "Urgh, did I really nationalise Northern Rock? What was I thinking?"

As you can tell from this hackneyed post, when the government decides that the best course of action is to nationalise a private company that has been technically insolvent for almost six months, it brings out the caricatures like a cartoon exhibition. The Tories still haven't quite chanced upon the best adjective to describe the desperate measure of nationalising Northern Rock, but they're keen on both catastrophe and disaster, when they're not doing their level best to try and suggest that New Labour, the party that took selling off its assets to such an extreme that HM Revenue and Customs, the department of government meant to combat the use of offshore tax havens, sold some of its properties to a company based in Bermuda, has dragged us all back to the 1970s with their cack-handed attempts to first sell Northern Rock to a bunch of chancers you wouldn't trust running a jumble sale, then finally giving in and accepting that Vince Cable had been right all along.

This is of course a matter of great and fundamental importance, seeing as every single one of us unfortunate taxpayers now has the equivalent of £3,500 of our own money in keeping Northern Wreck afloat before it is eventually returned to the private sector, but I'm more interested in just how opportunist and shameless the Conservative party can be. With both its leader and shadow chancellor never having to have wanted for anything, and with Dave's wonderful record of having been involved behind the scenes of the Treasury on Black Wednesday, you wouldn't think they'd have the slightest clue what to have done with Northern Rock, and you'd be right. All they know is that nationalisation is a scandal and an outrage, and despite having the best part of six months to come up with a solid policy on what they'd do or have done if they'd been in power, that's as far as they've come. Their wheeze today, presumably written on the back of Cameron's fag packet, was that the Bank of England run Northern Crock down, but as the inestimable Mr Cable has pointed out, this is just nationalisation by another name. For a party that screams, moans and gurgles if Labour so much as shows the slightest sign that its decisions might be influenced by dogma, "old-thinking" or ideology, the Conservatives have relied on their most base prejudice, that being that state ownership is always wrong and unacceptable regardless of the circumstances. Their allegiance to the tenets of neoliberalism, however badly it's been singed by the huge fallout from the sub-prime crisis, is absolute. Just to be awkward, and despite initially supporting the government in more or less whatever it did, they'll also vote against the emergency legislation being hurried through parliament authorising the nationalisation. When in opposition you can of course be as opportunist and shameless as you like in your thinking, but if there was a clear sign that under Cameron the Tories still haven't got the first clue of being able to govern, this was it.

There are two legitimate and damning criticisms of the government's response to Northern Rock's collapse, and the first is that the Financial Services Authority was never given enough teeth or powers in order to regulate the banks and their unsustainable, founded on pure greed business models in the first place. The light touch scheme so beloved of the City, which nevertheless complains bitterly about the slightest amount of bureaucracy or checks and talks darkly of business moving overseas if any more is imposed comprehensively failed. Again, the Conservatives have no answer to this and can't make anything out of it because John Redwood in his economic policy paper had recommended removing all the current red tape from mortgages entirely. Second is that it even bothered looking for a private-sector solution when it was obvious from the beginning that only those with very deep pockets looking to make a cheap buck would be interested in taking the liability on in the short-term. While the government dithered, hedge funds bought huge quantities of Northern Rock shares at rock bottom price, and are now going to be the first at the front of the queue demanding compensation. They don't deserve and are not entitled to a single penny. The "saviours" that did emerge were the private equity firms that would have stripped the bank to the bone, employees along with it in record time and far quicker than the government will. Oh, and there was Beardie, the grinning Cheshire cat of the piece, with Gordon Brown prostituting himself to the eternal Virgin, ignoring his tax-dodging, use of offshore havens and numerous failures and lesser offer than that of Olivant, purely because, well, he's Richard Branson!

What has in fact always been the least worst move is now being portrayed as a complete and utter disaster. For this Labour has no one to blame for itself: Brown has been so desperate to avoid being portrayed by the Tories as the throwback to Old Labour that he has opened himself right up to their other similarly mostly idiotic charge, that he dithers. He certainly has dithered over Northern Rock, and for all the wrong reasons. The other truth of the matter is that New Labour has become so beholden to City that even the slightest move towards finally making it actually pay its dues have been watered down. £35,000 a year after seven years for non-doms who pay the same amount of tax as the cleaners of their buildings do? Scandalous! An 8% increase in capital gains tax even though Labour had cut it from 40% to 10% to begin with? A disaster for the aspirational! It's little wonder then that it spent so long looking for the private solution which was never to arrive. Anything less would have been unforgivable and an abuse of power. With it has gone any authority that Alistair Darling had as chancellor. If the previous chancellor was the most powerful and strongest in living memory, than Darling is certainly one of the weakest, but then whoever was given the job always had a poisoned chalice Whether Labour can recover its record for competence might depend on how quickly his services are dispensed with, pathetic Tory calls for his head or not.

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Tuesday, September 18, 2007 

Put it under your bed in a Northern Sock.

As Mike Power also suggests, it's not often that I can find something to agree with the Scum on. Today's leader on Northern Rock, or at least the latter part, has it entirely right:

Here are the facts: Northern Rock will not collapse — the Bank of England will not let it. And now the Government has guaranteed all your savings.

So there you are. Whether you continue to panic is up to you.

The real threat to Northern Rock was not probably in actual fact from its temporary lack of liquidity, which the Bank of England provided help with on Thursday evening, but from its savers who rushed to take their money out at the first sight of banner headlines and and the 10 O'Clock News's exclusive. Who could possibly have blamed them though? It's very easy for those of us with little in our own bank accounts to point the figure and either laugh or imitate the crying of fire, but who could begrudge those with their life savings potentially under threat acting prudently, if not rationally? Many of those questioned why they didn't trust what Darling/Brown were saying mentioned Iraq, and again who could pass denunciation?

Speaking of prudence, there was very little of it on show when Alistair Darling made his statement that the government would underwrite not just the deposits of savers in Northern Rock, but any bank affected by the current "financial instability" kicked off by the sub-prime mortgage crisis in the United States. It was probably the right move in the circumstances, but was the equivalent of a kick in the face for those who lost their pensions whom the government have refused to reimburse, at far less the potential cost of bailing out NR or the other banks' if it comes to that. You could caricature it as a panicked reaction to err, a panicked reaction and you might have more than something of a point, but faced with rows of those most likely to vote Labour queuing outside their local branches (especially considering its base in the north) and that bastion of knee-jerkers, the city, losing their nerve in the usual fashion, there was little else they could have done, and the other political parties have been critical more over the time it took than it was done at all.

While it's absolute nonsense that the last few days have been anything like "Black Wednesday", especially seeing that no one except shareholders in NR and those subsequently mugged/burgled of their money on the way home has lost anything at all, it's the first real major dent in Labour's previously uncrackable economic facade, and for what exactly? Essentially, what Labour has done is not just a sign a blank cheque, but informed the banking sector that they can continue to take on vast amounts of debt and that if it all falls apart, it'll be alright because the taxpayer will pick up the pieces for everyone affected, including chief executives paying themselves £1.4 million a year. We're not just living beyond our means environmentally, but also fundamentally economically as well. To come full circle, it's also not going to be very often that I agree with the Burning Our Money blog, but Wat Tyler's right: we're going to be the ones paying for it all.

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