Northern Rock: Spin cycle begins

Late last night, (ignoring traditional rules about making announcements prior to the stock exchange opening, but who in the Treasury cares about that) the Government announced that unless Virgin and the Northern Rock management improved their bids, then Northern Rock will be nationalised.

Given that the Rock is already on the public accounts, this is a mis-statement at best. The Rock is already nationalised, all the government are saying is that they will exclude private sector intervention from the future unless the terms are improved.

In the media this morning I see that Brown is ' bullish' about prospects for continuing with the nationalisation. My gut feel is that this is pure bravado, the government is desperate to get this issue over and done with and handing the Rock to the Bank of England is not going to do that.

Also, Olivant have already walked away because they could not work out a way to make profits without undue risk. So the chances of Virgin really improving their offer is minimal. However the threat may be designed to try and quieten the shareholders from pressing the legal button, fat chance)

Perhaps some 'movement' will be created that allows Brown to look like he actually negotiated something and Virgin to get their hands on The Rock.

It all smells of spin as normal. I will eat my cyber-hat if the government go insane and really do try to run The Rock.