John Band has some thoughts about Northern Rock. So do I; more precisely, I have some thoughts about the Tories' performance in the crisis. It's been appallingly silly, irresponsible, and sometimes plain ignorant.
For example, last autumn the Tories seem to have thought that the Bank of England's loan to the Rock was taxpayers' money. This year, the Tories' alternative to nationalisation is to have the Bank of England take over the Rock; apparently BoE funds aren't taxpayers' money any more. What on earth has changed? As far as I know, the Bank was nationalised in 1946 and remains so. Alternatively, George Osborne is talking nonsense.
Now, Osborne - and presumably the full faith and credit of the Conservative Party - is behind the notion that the Rock faces a "slow lingering death" under the Treasury-appointed management team. But the Tory alternative is to put the Rock into run-off under Bank of England control; putting a financial institution into run-off is to stop it writing any further business, so as mortgage holders refinance or pay off their mortgages, they wouldn't take on any more, and the business would progressively shrink down to the actual branches and cash. This basically defines a "slow lingering death".
Worse yet, the Tories seem to be claiming that they could keep half the Rock's assets off the public-sector balance sheet by involving the Bank of England. But first of all, the Bank of England is part of the public sector. It is a state-owned company. Its employees are civil servants. Its governor is an appointee of the Treasury. The Tories seem to believe that despite this, it is not part of the public sector; at the same time, though, they seem to believe that this autonomous agency would be amenable to a ministerial directive to take over the Rock. Alternatively, they are fully aware of this and are offering a piece of positively Enron-like creative accounting.
Considered purely as a bank, however, the Bank of England is a very strange beast. Despite handling huge transactions in Government paper every day and managing the UK's foreign exchange and gold reserve, it isn't actually very big. Its broader central banking functions do not need much capital. It could only afford to take the Rock's assets onto its balance sheet by either printing an absurd quantity of money or by being hugely subsidised by the Treasury.
The good news, though, was that Osborne's performance on nationalisation day was so annoying (silly voice; shouting; North Korean organised yelling choir; pretending to fear the nationalisation of all the other banks) he's probably made a net loss of votes, which appears to be borne out by the data.