UK Government to nationalise Northern Rock
London, UK
Just heard that Northern Rock is to be nationalised. Apparently, the Treasury has dismissed the latest proposals from Richard Branson's Virgin Group and from a management team of the Northern Rock itself. This leaves one "viable" option. Nationalisation.
It'll be the first time this has happened to a UK business since the socialist days of the 1970's. It has been reported that the Chancellor and the Prime Minister have been concerned about the burden on taxpayers. Yeah right!
1 comment:
i have not seen the virgin offer, but if the whole thing is contingent on taxpayers indemnifying virgin against future subprime losses than the government's actions make perfect sense.
why pay someone else to profit from assets the uk government can use to reduce potential taxpayer exposure?
ideally, the northern rock depositors would be "sold" to another bank (after the government has "made whole" any lost deposits), and then the uk government would sell off the cdos as those assets become more valuable over time than they are today.
presumably the bank also owns actual real estate, treasury securities, and other "realizable" assets that could be sold, adding to the amount recoverable by the taxpayer.
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