Shares in Northern Rock were suspended on Monday morning on news of the government’s decision to nationalise the troubled UK mortgage bank. And here is what some commentators are saying:
WSJ: Using the public purse to put the Rock in a position of strength versus other banks that have been battered by the subprime crisis but didn’t ask taxpayers to bail them out would be a travesty. Talk about moral hazard. Visitors to Northern Rock’s Web site after yesterday’s nationalisation announcement were greeted with an alert that began: “BUSINESS AS USUAL.” If that’s more than PR spin, Britain’s Northern Rock nightmare is far from over.
Lex: There are risks to this extraordinary move. What the government hopes is a “temporary” home under state ownership could end up being Northern Rock’s final resting place.
Anatole Kaletsky in the Times: Nobody in Parliament has yet drawn the obvious comparisons between the largesse being directed at Northern Rock and the tough love practised on far more important and famous British companies such as Rover, Leyland and GEC-Marconi. But this silence merely testifies to the political bafflement and financial confusion created by the disaster.
Martin Jacques (visiting research fellow at LSE) in the Guardian: The political terrain is shifting. Attitudes towards the US are a case in point. The move towards neoliberalism in Britain was intimately bound up with the embrace of the US as the country to be aped and copied…..How perceptions of the US have changed: a country living beyond its means, dependent on large helpings of Asian credit, characterised by huge inequalities, its great financial institutions guilty of huge folly, forced to rely for their salvation on the sovereign wealth funds of China and elsewhere. And, remember, we are only at the very beginning of the biggest geopolitical shift since the dawn of the industrial era.
Alistair Osborne in the Telegraph: the Government’s reputation for financial competence is in tatters and the best that can be said of Darling is that he is a dead man walking – not least given his twin fiascos over capital gains tax and non-doms.
Steve Richards in the Independent: In the 1980s a simplistic consensus formed in which the state was always a menace. Now there have been cries across the political spectrum for the state to intervene and widespread condemnation at the light-touch regulation of the past. Suddenly the state has a role again. But the Labour Government is at least as terrified of the implications as the Conservatives.
Martin Wolf: Nationalising Northern Rock was the right decision - but it came far too late. It should have happened months ago. As soon as it became evident that the stricken bank could only survive with generous public sector guarantees, any so-called “private sector solution” was a mirage. This has finally become evident to the government itself, albeit far too late. The bank should be nationalised and then closed for new mortgage business. That is the only way to ensure that its continued existence does not distort the mortgage market as a whole. It would be the least bad end to this depressing saga.
Related links:
Fury over Rock nationalisation - FT.com
Modern precedents for public ownership - FT.com
Questions of compensation and market strategy - FT.com
New challenge for ‘Rocket Ron’ - FT.com
FT leader - Chained to a Rock
