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.