Workers caught up in Rock crisis

[TrueBlueTerrier]

http://www.theargus.co.uk/display.var.2011880.0.0.php

The Government has risked between £25 billion and £50 billion of public money to rescue a private bank but is unwilling to take it into even temporary public control.

That would be the safest and quickest way to achieve maximum restitution of public funds rather than preferring a public hazard to protect the financial interests of those city gamblers and hedge funds that have at minimal cost snapped up a high proportion of Northern Rock shares.

At the same time they face down public sector workers' pay increases well below inflation, that is in effect a pay cut. It appears police, nurses, health workers, teachers, lecturers, dustmen, postmen and many who already receive below average pay are penalised to help make up some of our financial shortfall from Northern Rock. Surely a party that protects self-serving share dealers at the expense of socially useful workers, on whom we all depend for essential services, should change its name from New Labour to the Anti-Labour Party.

[TrueBlueTerrier]

I know I am clapping me own post but the original author makes good points.

[smokerjim]

http://www.theargus.co.uk/display.var.2011880.0.0.php

The Government has risked between £25 billion and £50 billion of public money to rescue a private bank but is unwilling to take it into even temporary public control.

That would be the safest and quickest way to achieve maximum restitution of public funds rather than preferring a public hazard to protect the financial interests of those city gamblers and hedge funds that have at minimal cost snapped up a high proportion of Northern Rock shares.

At the same time they face down public sector workers' pay increases well below inflation, that is in effect a pay cut. It appears police, nurses, health workers, teachers, lecturers, dustmen, postmen and many who already receive below average pay are penalised to help make up some of our financial shortfall from Northern Rock. Surely a party that protects self-serving share dealers at the expense of socially useful workers, on whom we all depend for essential services, should change its name from New Labour to the Anti-Labour Party.

How long before the Nationals take up the cause? Not long, if a local paper from Sussex ( not exactly a hot bed of militant socialism ) prints what is above!

[F0zziebear]

I listened to various debates about this and there are economic and political reasons why they didn't go down this route.

I can't hoenstly remember them, but here is Tory boy John Redwood's reasons

1. It is bad enough for taxpayers to have ?57 billion at risk in Northern Rock. Nationalising the bank would put more than ?100 billion at risk, a very large sum even for the government and taxpayers.
2. Once nationalised, taxpayers become liable to pay all the wages and salaries. Ministers would have to sanction redundancies if these are needed to cut costs, and taxpayers would have to pay for them.
3. The taxpayer would become liable for the whole pension fund, which has a deficit.
4. The management of Northern Rock appointed by the government would doubtless expect substantial new funding from taxpayers to invest in and develop the business, adding to taxpayer woes.
5. There is nothing the nationalised management could do that cannot be done now to try to cut the liabilities and repay some borrowings.
6. Nationalising would make it more difficult to persuade the management of the bank that there is a crisis which requires exceptional efforts to increase business revenues, cut business costs and sell assets to repay borrowings. It would take the pressure off.
7. Politically it would become a long term reminder of the governments failure to handle the credit crunch well. The bank is unlikely to have been privatised again before the next election.
8. Given the growing pressure on public spending ?? difficulties in finding money for police pay, hospital improvements and the rest ?? it would be an embarrassment to see spending rising on a nationalised bank at the same time as cuts elsewhere.
9. The pay of people at the top of such a bank is likely to be high even by the standards of modern higher pay in the public sector, leading to further embarrassment, especially if they do not perform well.
10. All the spending on Northern Rock would then have to be accounted as public spending, whereas at the moment it is kept off the governments balance sheet to make the public accounts look better.

[DirtyHarry]

Anti-Labour Party, a far more suitable name for the profiteering party currently in power.

[jafferpants]

Although i dont agree with the bailing out of n/rock by this rag bag government dont anyone kid themselves that anyone else in power would not have done the same because they would and the reason is simple. If they had stood by and let it go under that would have started a run on the other banks as people panicked and withdrew money which would have had a disasterous affect on the economy.