Tuesday, 18 December 2007
Has Northern Rock been nationalised
I know, I know, I am beginning to sounds like Robert Preston, always posting about Northern Rock.
Nonetheless the Government engaged in some classic spinning today. Early this morning it decided to back the Granite bondholders of Northern Rock, which has added at least £17 billion to the amount owed to the Government. However, this has in effect been the last straw to privatising Northern Rock.
The market in shares is now utterly false, in that the shareholders will have no claim on the company in administration, nor do they have any influence over management decisions.
Despite this de facto nationalisation, Brown spins away saying they are looking at a private solution. This is true in the technical sense that the Government wishes to be rid of its Rock, but it/we now own all the major assets and have guaranteed all the others.
Then tonight it emerges that Bradford and Bingley wishes to buy into the Rock. Well, we all have so why not. Who would not want to own a mortgage company that issues mortgages with AAA rated guarantees from the Government? Not only this, but many in the City see B&B as the next most vulnerable company after NR. So perhaps a clever play on their part to get involved now before their own model (buy to let, in this case) fails in the face of the credit crunch.
Interesting times indeed.
Posted by CityUnslicker