Friday, December 21, 2007

Plus ca change...

Now to turn to the less urgent news. In the Lib Dem Leadership Stakes the bookies' favourite has won by a nose, or 500 votes: Nick Clegg has secured top spot in the Useless Party. Still no-one has ever heard of him, but that's a qualification for being a Lib Dem leadership contender. His task now is to make sure no-one ever hears of Evan Harris, or Lynne Featherstone, or a few others I could mention. Good luck to him in that noble effort.

During the hiatus, the Lib Dems' acting leader, Vincent Cable, has been making a bit of an exhibition of himself in Parliament in one of the MPs' periodic mock-Homeric battles over a corpse. The decedent, in this case, is Northern Rock, the bank that had to take an enormous loan from the Bank of England to avoid immediate bankruptcy. Cable wants it to be nationalised - so he says - and Gordon Brown is apparently considering it. But all this means is that this week the Lib Dems are posturing left.

Neither Cable nor Brown actually wants to nationalise Northern Rock. What they want to do is to "stabilise" it - that is, make sure it isn't about to go bankrupt by paying off its massive debts out of public funds - and then, once it's a going concern again, flog it off to a private company or consortium that can make a tidy profit out of the deal. Obviously this will work perfectly, er, just like it has with the railways.

The obvious problem, though, with a private-sector solution to the problems of Northern Rock is that it's been tried already - for the whole of the bank's existence, in fact - and it doesn't seem to have worked. Private companies are distinctly wary of bidding for Northern Rock because they'll have to pay back half the Bank of England loan immediately. In fact, let's put it more strongly: potential bidders have reacted like dinner party guests served up dead cat wuith Yorkshire pudding. Hence the turn, in desperation, to temporary nationalisation. But all parties continue to repeat, at every possible opportunity, that they insist on a market solution for Northern Rock, even when the market has so obviously and catastrophically failed.

Meanwhile, those who know what economics actually means in real life - workers, that is - have voted to strike at BAA airports over management plans to close their final salary pension scheme. Solidarity to them.

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