Saturday, January 19, 2008
Rock nationalisation more likely
I laughed out loud when I heard this on the radio. The substance of the release is this: "Prime Minister Gordon Brown has backed a plan from bankers Goldman Sachs to convert the Bank of England's loans to Northern Rock into bonds for sale." I realise many of you will be rolling on the floor laughing already, but for the rest of us, the punchline is that this is exactly how the sub-prime mess came about - by "selling dodgy debt". The second level of irony is that half the credit crunch is the fact no one can sell this sort of debt any more. Coup-de-grace comes with yesterday's story that the first bond insurer has been downgraded, making it nigh-on impossible to shift this stuff, even for prime companies - and Northern Rock is a zombie bank.