Well, don't say TMP didn't warn you. The unholy alliance between the UK financial industry, the housing industry and government to bleed cash from UK consumers through painfully overpriced housing has probably claimed a victim. Whether or not Northern Rock survives its current cashout crisis, the company can never be the same, and confidence can only be restored when it is taken over by someone who plainly cannot go bust. (If such an entity still exists at all?)
Chancellor Darling could have simply said "there is nothing at all to worry about - the BoE will underwrite the entire savings base of Northern Rock". Despite the current crunch, NR is one of the best run building societies with generally low risk mortgages that bear no relation whatever to the type of "sub-prime" lending that triggered the US crisis, and about to post a £500m profit to prove the point. In the world of real politics, no government could possibly allow the NR to default on its savers with all the consequences, so let's just deal with it.
However, an unelected civil servant with more practical power and immediate influence than the government, Mervyn King at the Bank of England, just could not resist the opportunity to be sanctimonious and complicated the process with a typically pompous remark about "moral hazard". TMP suspects that the pot just called the kettle black.
Moreover, NR could justifiably claim that when it got into trouble through its market borrowing tactics it was only doing what the government proudly exhorts the UK financial industry to do - namely prove to the world that it's cuter and more creative than any other.
This remains a gathering storm that could and should have been avoided by "real" old-style politicians. It belies the inexperience of the fresh-faced Brownies, and a curious deference to Mervyn King who had nothing to do with the Blair-years period of economic stability - because the outgoing Tories, lead by a former bank manager (albeit with a charisma bypass), had already done all the hard work.
For a while, the UK's overpriced housing industry was usefully sucking the spare cash and more from the legacy of the Tories overlooked economic miracle into "securitizable assets" and away from loose consumer spending. And the government has gleefully p*ss*d the rest up the vast wall of public employment and expenditure, whilst appeasing its core vote.
This was a very handy control on consumer liquidity for a Labour government staring the mother of all trade deficits and public spending inflation in the face; but then our creative financial services industry really took off, and the previously little used idea of remortgaging (remember when it used to be a last resort and something be ashamed of?) gleefully released all the cash (and more) back for consumer spending, anyway. Especially now that there is no incentive to enter old age with any capital wealth in England, you might as well spend it while you can.
Please don't forget that Government wields a massive influence over UK housing costs through its control of the planning system, and to a lesser extent through lax immigration control and social engineering towards ever more single parent households.
Meanwhile, the government has again shot itself in the foot and mouth. Who on earth can take anyone called "Debbie Reynolds" seriously? Albeit chilling words like "cull" and "slaughter" trip with consummate ease from her lips.
Overall, Gordon and his pack of Brownies must be thanking their lucky stars that David Cameron is on the margin and still spouting green claptrap such as charges for Tesco car parks. And no doubt he'll also be charging the evicted home owners to live in cardboard boxes that don't pass the HIPS inspectors' energy efficiency quota.
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