After six months of Darling and Brown dithering over Northern Rock they've finally done what is instinctive for someone on the Left to do and formally appropriate private property for the state. In this case it means we now have hundreds of thousands of homes being effectively owned by the state. Mortgage holders have become quasi-tenants, literally overnight, and should they default the Government gets to repossess the housing stock and presumably turn it into council property.
It's certainly a novel way to solve the housing crisis and need for affordable homes. Just screw up the economy, nationalise a bank and then watch the market crash and you have lots of property to dole out to people. Whilst you do it pretend that you know what you're doing because you're a politician. Price control will be next and the timewarp will be truly complete. The most amusing mess in all of this is the comment on it in some of the papers. Steve Richards in the Independent reckons that the real losers are the Tories because they are being opportunistic by saying the Government has dithered and also opposing nationalisation. That is of course bollocks.
For a start the Government has dithered. Darling and Brown, so fearful of the mere phrase 'nationalisation' have allowed themselves to be driven by events by not being convicted enough to take a decision. Brown is not the politician of conviction and long termist that he would like people to think he is. He's short term Machiavellian tactician and a rubbish one to boot, especially when the spotlight is on him and he is not operating from the shadows as he had done until last June. That is the truly significant political ramification of yesterday's news. His reputation for economic competence having rode the wave in the good times is crashing down around him in the wake.
The Tory opposition to nationalisation is not in the least bit inconsistent with pointing out Brown and Darling's shortcomings in terms of their inability to take decisions. The question of course on the lips of the anti-tory, or more correctly, anti-right though is thus 'alright clever clogs, what would you have done?'. Personally I don't know the answer to what Cameron and Osbourne might have done but were it me I would have done nothing and said I was doing nothing. I would have sat back and let Northern Rock go under.
Now some might say that would be irresponsible, what about all the mortgage holders? If the Rock went under what about them? Well the bricks and mortar would still have been there with a market value. As we have been constantly reminded, this was a liquidity problem not a solvency problem. Northern Rock, like any bank, deserves no special treatment, especially not for votes. The primary reason the Rock found itself suffering is because it tried to play a dodgy game of risky lending, pushing its customer base too fast and too high.
I was chatting with an Estate Agent the other day or is with the bank. He was noting that even through all it's troubles it is still doling out cash to almost anyone who comes to it and asks nicely. He has sold property to people that he is sure cannot survive the repayments yet they still get approved. The bank's website continues to push unssecured loans to people even though it has not, as we learned, got the traditional levels of deposit backing that the other banks have. That is where the real crux of the problem lies, and as I've said before when I first heard of the bank's problems I laughed simply because the first time I cam across them was when I was a leaseholder and the freeholder got repossessed.
The bottom line for me is that the bank should have been left to sink or swim. A rescue package from the taxpayer should never have been considered and the nationalisation of a mismanaged 'bank' into the hands of politicians flies in the face of any economc progress the country has made since 1979. Brown liked to play on his 'interest rates out of politician's hand' line, now he's just turned the state into the biggest landlord with a significant interest in those rates he has made quasi-autonomous. Add to that Darling saying it is 'business as usual' at the bank and you have a recipe for further disaster. John Hutton was spot on when he was alleged to have said Brown would be a 'fucking awful Prime Minister'.