One good jibe by Vince Cable doesn’t mean he’s up to running a bank

Vince Cable is given endless airtime by the BBC to rubbish any bid or serious interest in Northern Rock and to propose nationalisation. It is typical of the BBC’s bias that they invite him, and refuse comment from those of us who have positive proposals to salvage the taxpayers money.

Mr Cable’s wish to nationalise is fatuous. His logic is flawed. He tells us rightly that ??30 billion at risk for the taxpayers is a lot of money,and the risks are considerable. He then concludes that the taxpayer should put ??100 billion at risk by taking over the whole balance sheet of Northern Rock! If he thinks the Rock is a bad bet, why does he want to more than treble it?

Nationalisation is the last thing we should want to do. Northern Rock’s assets will be worth more when the credit squeeze abates. The issue is how to get them through the worst part of the squeeze at least cost to the taxpayer. Nationalisation would maximise the risk and cost.

What we need is a Bank of England which acts as a strict bank manager, rationing the credit, setting repayment schedules and monitoring the use of the cash. They should not be letting Northern Rock put up pay, award bonuses, or make other unnecessary payments. Every action at the Rock should be husbanding cash, to maximise the repayments. Meanwhile the taxpayer needs to take plenty of collateral or asset protection. If we took over the lot, we would have to suffer the losses on the less desirable assets. That is not a game taxpayers should be playing.

Mr Cable should be ashamed of himself, rubbishing every sensible effort to save the bank, and recommending such a dangerous and stupid approach for the taxpayer.

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5 Comments

  1. Paul Danon
    Posted December 8, 2007 at 12:11 pm | Permalink

    As ever the BBC give inordinate coverage to the Liberals. They claim that airtime is in proportion to parliamentary strength and/or to the likelihood of forming a government, yet the Liberal presence is minuscule and they will probably never govern again. A man from Mars (or just France) watching the BBC in recent years would have thought that Messrs Steele, Ashdown and Kennedy were within a gnat's whisker of a Commons majority. Coverage of Sir Menzies, even before he was party-leader, was quasi-ministerial, not just in its frequency but in its obsequiousness. Imagine Mrs Beckett's getting as much coverage when she ran Labour after Mr Smith's death as Dr Cable is now getting. The Liberals have gone along with much that Labour has done (if not on Iraq) so it can't be claimed they're an alternative voice. No; we know why the BBC has always (going back to the days of Grimond and Thorpe) treated the Liberals as a potential party of government. As Greg Dyke more or less told students in Leeds a few years ago, the BBC sees itself as a campaigning-organisation with causes to fight and axes to grind. And a taxpayer-funded one at that.

  2. Tony Makara
    Posted December 8, 2007 at 12:12 pm | Permalink

    I agree, it would be a mistake to nationalize Northern Rock. As you correctly say the British taxpayer shouldn't be the guarantor of a high-street bank. It is certainly amazing how the BBC promotes Mr Cable as being a font of economic knowledge. The only view we continue to hear on this issue is that of Vince Cable. The sensible and workable Redwood proposals do not get a hearing. Vince Cable's big idea about a quick-fix is naive to say the least.

  3. Posted December 8, 2007 at 6:17 pm | Permalink

    You are right. There is nothing nationalisation would do to make things easier for us, or the customers or the staff. I suspect the shareholders would, after litigation, get a better deal, but why is it our duty to achieve that. It boils done to whether you believe sir Humphry Appleby or Sir Richard Branson are more likely to make a success of it. Cable's suggestion is ridiculous.

    I did think his wish to abolish the DTI was the sort of radical innovation the Tories could have used – but that was the last election.

    On analysis his Stalin/Mr Bean comparison, while amusing, didn't actually mean anything. Brown never claimed to be Stalin, only his oponents did that. That they have changed their mind hardly reflects badly on Brown. It scored only because it got under Brown's skin. Whatever i think of Blair I have to say that he would just have done one of his "aw shucks" grins & said how pleased he was for the promotion.

    However charming, that is not what is supposed to make somebody fit to run government.

  4. Posted December 8, 2007 at 6:27 pm | Permalink

    John,
    I read your blog a few weeks back about Cable's lack of qualifications in anything financial.
    What can be done to stop media like the BBC propogating his stupidity?
    I fear only option is to wait for him to make a bloody fool of himself.
    His temporary elevation in charge of the Liberals is one of the downsides of their boring leadership campaign.
    Quite annoying he did the Mr. Bean joke.
    ST

  5. Bazman
    Posted December 8, 2007 at 11:39 pm | Permalink

    Has anyone asked where these billions are coming from? Seems a fair question!

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    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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