Northern Rock

It would seem that Alastair Darling's first problem as Chancellor has been flunked badly. Meanwhile Brown has gone down to periscope depth, even though nobody really imagines he allows Darling to think for himself.



The response to the crisis by Bank of England Governor Mervyn King was right from the outset. The government will provide enough money for the money markets to operate, and will act as lender of last resort, at moderately penal rates, to those banks who find themselves short.



Just think about it: this is no more than common sense. If I had started a bank on completely fictitious grounds, I should not now be claiming that it was a market phenomenon which had brought a run on it. It is the job of a banker to be cautious against the onset of bad times. Failure to do so is nothing more than bad banking and banking with bad bankers is stupidity and the taxpayer should not bale out the bad or the stupid.

What people haven't paid enough attention to is Northern Rock itself. It is a Labour bank, inasmuch as such a creature might be supposed to exist. At the time of the miners' strike in 1984 NR declared that it would maintain the miners' mortgages, ie subsidise their political views. You will find NR giving money to a number of charities equally espoused by the Labour Party; it is a bank of the Labour heartlands in the North, its customer base Labour election fodder.

There was no need for Alastair Darling's guarantee announcement and it is about time someone questioned why he made it. I hope it's not necessary but can we imagine the same thing happening to Cheltenham and Gloucester?