Sunday, February 17, 2008

Northern Rock in public ownership

Let’s be clear about the key issue here – this is not a failure of Government it is about a failure of capitalism. Of course it does not mean that the Capitalist model is defective – it means that the capitalist model is vulnerable on the margins.

Northern Rock’s failure was a failure entirely attributable to greedy and incompetent management who had no feel for their “stakeholders” or for the world in which they operated. Greed? Well just look at the obscene salaries (etc.) that they saw fit to pay themselves. Incompetent? Of course, no vision, no alternative scenarios - no hope!

How has Government handled it? Well the thought that the ridiculous Branson could be anywhere involved just shows how much there was clutching at straws. Government had assumed that there were checks and balances in the financial systems that would preclude the possibility of a Northern Rock situation. There were not. When ignorance, greed and incompetence rules then even Government cannot cope.

There was no alternative to nationalisation. That was obvious ages ago (well said Vince Cable). But let’s lay the blame where it is right to do so. On a system that trusts entrepreneurs (why?) and on a culture that allows these parasites to reward themselves obscenely before retreating in the face of “events” to their comfy houses and their generous pensions.


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