Over at Guido Fawkes’ blog, Paul Staines attack-dogs Lib Dem demi-god Vince Cable, accusing him of “naivety” in relation to the Government’s botched nationalisation of Northern Rock:
What about the naive politicians Vince, who welcomed the nationalisation, without having done any due diligence on behalf of the taxpayers?
Why didn’t Vince ask the key question, what are the taxpayers billions in loans secured against?
I guess Mr Staines isn’t an avid reader of Hansard, but as any fule kno’ it has of course been the Lib Dem shadow chancellor asking just these questions of Gordon Brown and Alasdair Darling throughout the shambolic Rock saga. Let’s take, for example, this classic statement to the Commons six months ago:
I congratulate the Chancellor on brilliant originality. The Government, through their bond guarantees, are solemnly undertaking to repay the Government. The taxpayer is standing behind the taxpayer and we have a private sector solution without private money as well as nationalisation of liabilities and losses and privatisation of profits. It requires a special sort of genius to dream up such an idea and I hope that the Government’s financial advisers have been well rewarded.
Of course, Guido could spend his time asking what the Tories’ shadow chancellor, George Osborne, has been saying should happen to Northern Rock over the last nine months – but then he’d have to discover what the Tory policies have been, first. And that would defeat even Mr Staines’ research powers.
Meanwhile, Vince has issued a typically acute and trenchant critique of the Labour government today, following the announcement that the Government is converting £3.4bn of its loan to Northern Rock into ordinary shares:
Alistair Darling assured Parliament that taxpayer loans to Northern Rock would be fully secured on mortgage assets. This is clearly not true.
“£3.4bn of the Government’s loan to Northern Rock is now being converted into ordinary shares, which rank right at the bottom for repayment. Continuing losses at the bank put this money at great risk.
“Other banks have taken the cream of Northern Rock’s mortgages, leaving the rest to curdle.
“The scale of the problems at the bank underlines the extreme negligence and irresponsibility of Northern Rock’s previous management, and highlights the scale of the failure of regulation by the FSA.
“The Government should now go after the former directors who have managed to shift the bank’s losses on to the taxpayer. Ministers must also go after the auditors who failed to spot glaring problems and mounting bad debt.
“The Chancellor and the Government were totally irresponsible for failing to heed my warnings from last October that the bank should be stopped from giving out 125% ‘together mortgages’. These shocking figures show Northern Rock has £6.3bn in unsecured loans. It was clear even then that they could never be repaid in a falling housing market.”
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22 Comments
Daft ‘a’p’th.
You know what this makes me think – just how hollow all that pious stuff really was about “you should have made Vince leader”.
I’ve read similar comments to Guido’s above on the MSM talkboards – though not, to their credit, in the actual papers (yet).
Everyone was quite happy to finger-wag at us for not having encouraged Vince to stand while his stance (“nationalisation is by far the best way to manage the bank, provided the govt can assure us that the loans can be secured”) chimed in with the painfully simple political mood music.
The moment he does or says anything remotely complicated but totally consistent with his previous position (“the govt assured us that loans were secured and so took up our suggestion of nationalisation, but their assurances were misleading/wrong/lies and they didn’t take all our advice properly in implementing the nationalisation”), suddenly it’s all oh! Vince is like sooooo not with the program! he’s using sentences with more than one clause! ummmm!
I mean, I know economics is complicated but jeez.
Re: Alix
The whole ‘isn’t Vince doing well as temporary leader’ hype was always just a way of making Clegg look worse. Had Vince been the actual, as opposed to stand-in, leader, he would’ve got considerable stick both for advocating nationalisation and for boycotting the Saudi banquet, and i doubt anyone would’ve laughed at his ‘Stalin to Mr Bean’ thing.
Not to denigrate any of those things – they were all clever political moves, but my point is that the MSM’s positive reception of all three was, in my estimation, always cynically motivated.
And had Vince been the candidate rather than Nick, we’d have had a load of “why ignore your brightest young star for another doddering OAP?” etc. etc.
Exactly. It’s all just pick’n’mix to these people [she spat].
I think Vince was an idiot to support nationalisation. Obviously that was before the LibDems metamorphosed into a centre-right, smaller-state party.
Vince was actually keener on nationalisation than Gordon and Alistair. It will be an expensive disaster.
The Tories, as you say, didn’t have an identifiable or coherent policy either. Doesn’t make Vince right. Northern Rock should have been allowed to go into administration – there was no systemic risk to the banking system. This has now introduced extreme moral hazard and will cost the taxpayer dearly.
His critique after the event maybe trenchant but we might not be here if he and the Tories had said, correctly, let Bank of England put it into administration and effect an orderly wind-up.
You may be an apologist for Vince but I’m no apologist for the pathetic Tory response.
As a disclaimer – I’m no expert on this issue – but didn’t Vince propose nationalisation after the government had already propped up the bank? My understanding was always that Vince was saying – if you prop it up, it is essentially already nationalised, so it’ll be cheaper and more effective to go the whole way. Of course I may have understood, or, equally, this may have been what I wanted to hear.
*misunderstood
If I recall Vince’s line on nationalisation was that he opposes it generally but in this instance it would be idiotic to get dogmatic about it.
Which makes Guido an idiot.
Indeed, as the link under “classic statement” makes clear. The stark choices were between nationalisation and taxpayer loans swirling into a bottomless private black hole.
Sorry, the link under “classic statement” makes clear the fact that Vince called for nationalisation after the first govt loans. Not that Guido is an idiot. That requires no clarification.
Ooh, I’m rotten roday.
Does that mean I was right?
Good God, expect earthquakes.
Nice to see you all rushing to the defence of old twinkle toes – essentially saying nationalisation was the least bad option. Well that is a question of judgement. Guido does not think expropriation is the solution to anything in any circumstances except perhaps war. The best solution would have been to wind-up Northern Rock, which is what Guido said at the time and Redwood told Cable in the debate.
Sorry Guido, but by then nationalisation was not a matter of choice but already a statement of fact.
And to wind-up NR when the government was already underwriting it would have meant to have expropriated however many billions it was by that stage straight into the bankers hands – which is essentially what Vince is complaining about is happening now to a similar extent.
Really it should be no surprise that John Redwood was planning a windfall for his former colleagues in the corporate finance world considering he is still highly involved in it himself.
So firstly Guido contradicts himself and secondly Redwood exposes a clear conflict of interest.
Hmm, tories… you are past masters in using your official positions to promote your private interests and using the profits from your private interests to support your party – hand in glove at all?
Thanks for drawing our attention to your behaviour.
Don’t know where to start with Orangeboom, so won’t bother.
If I’m not mistaken that is bothering, or at least starting to bother to, until you realised you were admitting your own ignorance. It’s a shame you won’t exercise more self-discipline to stop digging your own grave.
So… little Guido is a self-confessed liar and sham artist – good for gossip, but unreliable with anything more substantial.
It must be demoralising for a man with such a large ego to know he’s just a pawn in a game of much bigger players.
In the words of the great Norman Lewis: “History is the robbery of the poor by the rich”.
Meow. Good to see LDV sticking it to Guido. No one else seems to have the bottle to do so…
> Which makes Guido an idiot.
Hardly *makes* him one… reinforces his previously-established idiot status, perhaps.
Guido is an ornament to British blogging, bless his aggravating little heart! I think that he would feel deeply affronted if any political leadership liked everything he does.
I had a go at him on this question in his lair. He ain’t listening, but when Vince first suggested nationalisation, Darling/Brown had already waded in with the first Government guarantees. The clean winding up of Northern Rock was not on offer.
I think we all agree with Guido that this nationalisation will end in tears. The quantity of tears is already greater than it need have been because the nationalisation was delayed. But once the Government had started giving guarantees, the alternatives were even more expensive and distressing- as Vince saw.
There is apocryphally a stock response when asking directions in Ireland – “you wouldn’t want to start from here”.
There is some truth in it and it applies to the situation to some extent when Darling blundered and guaranteed the wholesale money market obligations of an over-trading bank. However, and this is the nub of my criticism of Cable, just because they had started on the wrong path was no reason for Cable to say “hurry up and along your way to nationalisation”.
Hank Paulson, US Treasury Secretary, looked visibly shocked standing next to him when Darling, possibly off the cuff, made the commitment to guarantee the bank’s wholesale obligations not just Rock’s deposits, publicly in front of the TV cameras.
It was mad. Cable should have known that nationalisation was not the answer. It is not good enough now to say he was misled. Incidentally, the Tory treasury team were reluctant to stick their neck out and advocate administration, not exactly their finest hour. Cable welcomed the taxpayer being put on the hook, a far worse blunder.
Guido
“You wouldn’t want to start from here” ain’t apocryphal; I have not been much in Ireland, but I have got that response twice.
OK, none of us wanted to start from where Darling had well and truly put his foot in it; but that was the name of the game. Darling had already done the really bad bit of the nationalisation. He had put us taxpayers on the hook. At that point the only logical courses were to vote out Darling and Brown, repudiating their committment, or to do the whole nationalisation. The first alternative was optimal, but sadly not attainable. Cable therefore rightly went for the second best.
And Cable did not say he was misled. He said we all had been misled – the Treasury and Co had not done their homework. A statement of the excrutiatingly obvious, but there are moments when blatently unmistakeable bumbling needs to called by its name.
Guido is again guilty of misrepresentation, but then would he ever stake a claim to objectivity?
I think it would be better and less disingenuous if Guido made his personal disagreements clear and let readers take their own view on the practical courses of action open at the time referred to.
Otherwise dear Guido will find he is redefining the meaning of a big-mouth by trying to have his cake and eat it and have a time machine to enable him to return to that point in history to enjoy the experience over and over again.