£50bn Bill to ‘Nationalise’ Northern Rock
January 14th, 2008“Sterling holders, consider reducing or eliminating your exposure to GBP denominated assets immediately…
The British government’s guarantee might seem like good news to the average sterling holder, but think about how the government would guarantee those funds, in practice.
Printing presses.”
—September, 2007: EMERGENCY: U.K. GOVERNMENT TO COVER 100% OF NORTHERN ROCK DEPOSITS
I don’t use the EMERGENCY label often. When I do, I’m not kidding. That Northern Rock situation was as close as we have come to the curtain coming down on the whole show. Of course, the British government just bought some time, and everyone who has held sterling got screwed even worse than those who held the doomed dollar!
Like many of the other crises out there, this one if far from over.
And imagine my shock that Goldman Sachs is behind the latest machinations related to getting the British people to pay for this disaster!
Via: Telegraph:
Northern Rock faces effective nationalisation by the end of the month at a potential cost to the taxpayer of over £50 billion.
Mr Darling, who has appointed the City banker Ron Sandler to chair the new company, will justify the move by claiming that the Government is using “state oversight” to run the bank while it tries to sell its assets.
But by failing to find a private buyer, Mr Darling has been unable to reduce the billions of pounds in loans that Northern Rock has received from public funds.
So far the Government’s attempt to rescue the bank is threatening to cost each taxpayer £1,800 – a combination of the loans and public guarantees to investors.
The move towards nationalisation, which will add more than £50 billion to the national debt, will be a major blow to Labour and the Chancellor. Last night the Conservatives said it would evoke images of Labour governments of the 1970s.
Philip Hammond, the shadow chief secretary to the Treasury, said: “This would be a damaging admission that the policy in September had failed. It is hugely damaging to Britain’s reputation.
“The idea that London calls itself the premier banking centre and yet needs the Government to step in to nationalise a bank sends out the wrong message completely.”
Northern Rock will hold an extraordinary general meeting tomorrow at which shareholders will try to limit the board’s power to sell off the bank.
But Treasury sources say this is unlikely to be the trigger for the Government putting the bank in state hands. Instead it is likely to be another point within two weeks.
The Goldman Sachs report is understood to have concluded that there are no viable private buyer options open to the Treasury.
Related: Sterling Takes Bigger Beating than the Dollar
I guess I know what’s driving Merck down now.
Sterling,sheesh, another stone.