Monday, 21 January 2008

The N-Word

No - not the racist one (regardless of how it’s spelt). The one that New Labour have such a problem with, and which they find so deeply embarrassing whenever anyone else mentions it: Nationalisation.

Instead, they've come up with a convoluted solution to bail out Northern Rock: A scheme which if I’ve understood it correctly (and I could be forgiven if I hadn’t) creates government bonds out of the money so far loaned to prop up the bank, until such time that a private sale can be arranged. The important thing though is that it is intended to protect shareholders – and this seems to have worked because the shares have gone up 42%.

But these shareholders are not little old ladies who have poured their life’s savings into Northern Rock. 80% of the shareholders are hedge funds who only brought into Northern Rock after it got into trouble in the hope that they would make some easy money out of the government’s rescue scheme (obviously they were right).

So in the space of a few months public opinion has swung from sympathy for savers and a feeling that the government should do something to protect them, to resentment that public money is being used to bail out an unprofitable business just because it’s a bank.

It wouldn’t have been too difficult to have set a threshold that protected individual savers and kept the big investors out.
Remember the old slogan of ‘nationalism with compensation only in cases of proven need' ? Very much Old Labour of course.

New Labour is so afraid of the n-word that it never featured as a possible solution; same as it doesn’t with the railways, the water companies, the energy companies, healthcare …

No comments: