The disaster that backgrounds Northern Rock
Peter Hoskin 1:30pm
Hamish McRae writes an excellent article in today’s Independent; reminding us that the Northern Rock debacle pales in comparison to the Government’s mishandling of public finances: “The much more substantial charge is that the Government has mishandled public finances, borrowing far more than it planned, year after year. We are heading into a global downturn, with a bigger fiscal deficit of more than 3 per cent of Gross Domestic Product. That is bigger than that any other large developed nation. We have a government that spends £11 for every £10 that it receives in taxation, borrowing the balance at higher interest rates than the US, Germany or France. And there is every prospect of our national finances getting worse as our economy slows. Northern Rock is a cock-up; our public finances are a disaster.”
However, I disagree with McRae’s other contention that “nationalisation is … the least bad outcome to this sorry tale”.
There are two particularly strong arguments against fullscale nationalisation. Firstly, there’s the irreparable damage it will do to Britain’s global business reputation. The likely loss of foreign investment could suck £billions from the British economy, regardless of whether Northern Rock eventually results in a profit or a loss for the Exchequer.
The second argument is half-stated by McRae himself. With the current Government being such a poor custodian of the public finances, why should we trust them to both run a bank and safeguard some £100 billion of taxpayers’ money? A Northern Rock shareholder gets it right, over at the BBC website:
“The Government is totally financially inept and I certainly wouldn't give it the keys to my piggy bank.”
The Government’s mishandling of public finances backgrounds the Northern Rock debate, and it contributes massive weight to the Tory opposition of nationalisation.
Brown and Darling are keen to lay the blame for Northern Rock’s troubles at the feet of global forces, but it’s their taxation-spending-borrowing spree which has most exposed Britain to the credit crunch’s effects. And it’s that same spree which has closed off many of the avenues of escape…
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Comments
mart
February 19th, 2008 1:51pmSorry to be a pedant, but isn't "background" a noun?
Pete Hoskin
February 19th, 2008 2:29pmmart: pedantry excused, but it can be a verb as well: http://dictionary.reference.com/browse/background
The Morning Post
February 19th, 2008 2:41pmVerb or noun it spells trouble!
The Morning Post
February 19th, 2008 3:31pmAnd trouble spells prudence!
Novus
February 19th, 2008 3:50pmAsk a proper dictionary: it's a noun only. http://www.chambersharrap.co.uk/chambers/features/chref/chref.py/main?title=21st&query=background
Pete Hoskin
February 19th, 2008 4:10pmNovus: maybe it's an American thing then, as it's in the Merrian-Webster dictionary as a verb. Either way, I enjoy foregrounding background...
Tiberius
February 19th, 2008 5:35pmThere were a number of commentators who were happy to laud Brown during the early days of New Labour. (I would hate to take his name in vain, but I seem to remember Robert Peston was one). Others tried, usually in vain, that this guy was just not trustworthy (William Hague when Tory leader). Unannounced acts like the granting of independence to the Bank, and the pensions raid were good early warnings, I suppose. Brown is a living example of a wrong 'un - they do exist even if evidence sometimes seems to suggest the contrary, that they will not be causing trouble in the future.
TGF UKIP
February 19th, 2008 7:19pmThe McRae piece and, even more, Anatole Kaletsky's excoriating analysis highlighted on Coffee House yesterday (go to Timesonline.co.uk) devastatingly reveal the extent of this Government's incompetence and perverse judgement. Once again I ask why does it take journalists to flay this Government. Given the half a million quidsworth of fellow adolescents in his office why can't Boy George even begin to match Anatole Kaletsky in summarising and pulverising Brown's dithering culpability. Has Britain ever been worse served by its politicians - a thoroughly crap government faced by the lamest, most feeble opposition.
Max Kaye
February 19th, 2008 9:22pmI really enjoyed Anotole Kaletsky's demolition job on Brown. One should remember, however, that Kaletsky was a one-time admirer of New Labour - and that there is no bitterness more bitter than that of a disappointed lover.