THE whole Northern Rock fiasco has been a mucky business from beginning to end.
What was, a year ago, the darling of the Stock Exchange, with shares priced at over 1226p each, is now a crisis-ridden mess with shares priced at under 90p.
Despite all of the hot air pumped out by the money-men in the stock market, this fiasco is solely and exclusively the responsibility of greedy, profit-fixated speculators prepared to take any risk for a fast buck. And, boy, have they come unstuck.
Chancellor Alistair Darling claims that he is now “nationalising” the bank because that is the only way that the taxpayers’ money, which he so freely used to underwrite the failing enterprise, can be safeguarded.
But those of us who hold nationalisation dear, as a step towards the elimination of speculation and predatory capitalism, must step carefully here.
What Mr Darling calls nationalisation holds about the same relationship to the real deal as a farmyard chicken does to a golden eagle.
Bear in mind our treacherous Prime Minister’s description of the Chancellor’s brand of nationalisation. “We want,” he said, “a successful company that we can pass onto the private sector at the earliest opportunity.”
He insisted that the problems in the US sub-prime mortgage market which, he claimed, had led to the collapse of Northern Rock, could not have been foreseen.
But, despite all the talk, it was not merely the US sub-prime crisis that triggered Northern Rock’s problems. It was British banks losing their nerve and pulling the rug out from a company that had taken one gamble too many.
And it is not Mr Darling’s brand of nationalisation that will save it.
The issues that are important in this situation are the jobs of Northern Rock employees, which the unions are rightly concerned about.
And don’t forget the stability of the British economy, which will hardly be guaranteed by stripping out the problems of Northern Rock and handing it back to the same gang of speculators that screwed it up in the first place, the vultures of the City.
Putting Ron Sandler in charge of the company at over £1 million a year, with a deputy on very little less, is hardly a good sign.
It is to hoped that Mr Sandler’s reputation for toughness will mean that he can stand up to the hedge-fund profiteers who, having bought and increased their shareholdings after the share price dropped through the floor, are now the loudest in their protestations that the government is trying to rip off shareholders and demanding massive compensation for their supposed losses.
Hedge funds RAB and SRM involvement in campaigning for a fair deal for shareholders has raised eyebrows in light of the timing of their purchase, with many of their shares bought after the bank’s troubles began last autumn.
The hedge funds have, in fact, been increasing their stake in recent days and clearly hope to talk their sticky fingers into the public purse.
It will help if Mr Sandler resists both that and the temptation to cut jobs in order to slim the company’s costs.
But any real solution rests on messrs Brown and Darling resorting to real nationalisation, not the cosmetic exercise that they are contemplating.
And the chance of that happening with this new Labour gang is about the same as a farmer rearing golden eagles in a chicken run.
THE whole Northern Rock fiasco has been a mucky business from beginning to end.
What was, a year ago, the darling of the Stock Exchange, with shares priced at over 1226p each, is now a crisis-ridden mess with shares priced at under 90p.
Despite all of the hot air pumped out by the money-men in the stock market, this fiasco is solely and exclusively the responsibility of greedy, profit-fixated speculators prepared to take any risk for a fast buck. And, boy, have they come unstuck.
Chancellor Alistair Darling claims that he is now “nationalising” the bank because that is the only way that the taxpayers’ money, which he so freely used to underwrite the failing enterprise, can be safeguarded.
But those of us who hold nationalisation dear, as a step towards the elimination of speculation and predatory capitalism, must step carefully here.
What Mr Darling calls nationalisation holds about the same relationship to the real deal as a farmyard chicken does to a golden eagle.
Bear in mind our treacherous Prime Minister’s description of the Chancellor’s brand of nationalisation. “We want,” he said, “a successful company that we can pass onto the private sector at the earliest opportunity.”
He insisted that the problems in the US sub-prime mortgage market which, he claimed, had led to the collapse of Northern Rock, could not have been foreseen.
But, despite all the talk, it was not merely the US sub-prime crisis that triggered Northern Rock’s problems. It was British banks losing their nerve and pulling the rug out from a company that had taken one gamble too many.
And it is not Mr Darling’s brand of nationalisation that will save it.
The issues that are important in this situation are the jobs of Northern Rock employees, which the unions are rightly concerned about.
And don’t forget the stability of the British economy, which will hardly be guaranteed by stripping out the problems of Northern Rock and handing it back to the same gang of speculators that screwed it up in the first place, the vultures of the City.
Putting Ron Sandler in charge of the company at over £1 million a year, with a deputy on very little less, is hardly a good sign.
It is to hoped that Mr Sandler’s reputation for toughness will mean that he can stand up to the hedge-fund profiteers who, having bought and increased their shareholdings after the share price dropped through the floor, are now the loudest in their protestations that the government is trying to rip off shareholders and demanding massive compensation for their supposed losses.
Hedge funds RAB and SRM involvement in campaigning for a fair deal for shareholders has raised eyebrows in light of the timing of their purchase, with many of their shares bought after the bank’s troubles began last autumn.
The hedge funds have, in fact, been increasing their stake in recent days and clearly hope to talk their sticky fingers into the public purse.
It will help if Mr Sandler resists both that and the temptation to cut jobs in order to slim the company’s costs.
But any real solution rests on messrs Brown and Darling resorting to real nationalisation, not the cosmetic exercise that they are contemplating.
And the chance of that happening with this new Labour gang is about the same as a farmer rearing golden eagles in a chicken run.