³ÉÈËÂÛ̳

Ah, the Treasury .. that place where intellects are graded like fine wines, where the cream of OxBridge go.

By strange co-incidence, it is also the place that is legendary for an almost unremitting stream of foulups.

I'll pick two at random, the refusal to fund Harry Hawker's Hurricane fighter development (a wealthy lady put up the money), which was nearly a fatal decision, and more recently; the refusal to fund the original design for the M25 motorway.

Another decision that that hits English taxpayers were it hurts.

The Treasury has exhausted its political capital with this voter.

The Treasury spokesman is saying that there is no rift with the Governor of the Bank of England. The truth will be known when Mr King is offered a further contract or not.

Mervyn King has a wealth of experience in banking and has been definitely on the ball on this growing problem of excessive liquidity propped up by dubious derivatives; Darling isn't a banker and has neglible expeience in financial markets and moreover he inherited this accident waiing to happen from his predecessor and next door neighbour Brown.
The policies that the Treasury has been following are themselves more than questionable and it seems highly likely that Darling isn't being welll advised.
Darling might reflect on the phrase: 'between a rock & a hard place'.....

The Governor of the Bank of England acted precisely within his mandate; that mandate given to him by the Chancellor's predecessor, Gordon Brown. That was a mandate to use interest rates to control inflation not to use the bank's money to prop up a failing bank.

Sadly, this all broke down because the Chancellor, aka Gordon, intervened and refused to sanction the rescue package proposed by Lloyds. This was a move which King has suggested to the previous select committee would have been given serious consideratio under the old, pre Tripartite, arrangements.

Now we have the farcical situation of one side of the Tripartite structure trying to trip up the other so blame can be apportioned. This is damaging the reputation of the City of London which generates a vast amount of the country's wealth.

The inevitable outcome of all of this is that Norhtern Rock will probably go bust before these parties get chance to rescue it. The collapse of the last ten years of credit expansion wil be musch more severe than the collapse of the Barber Boom of the seventies which was only three years long.

"Prices are opinion but debt is real" in the words of our very own Governor of the Bank of England.

I liked the way Sir John Major (disaster) tried to say we were a trillion times better off under his government. What a joke!

The CBI have already said the economy isn't going to suffer as badly as many predict and I doubt we're going to see the sort of massive interest rates that Major's government scarred us with.

In fact, I'm beginning to think maybe Major's been working as an economic adviser to Robert Mugabe for the past ten years. Looking at interest rates there, it certainly seems so.

King wanted to play hard-ball on intervention citing the risk of moral hazard for doing so.

Remember he was taking that position when all the other central banks were going the opposite way, dumping liquidity into the markets.

King must carry the can for pushing the Wreck towards the rocks.

Darling is just the patsy holding the parcel. Brown should really take the responsibility for creating a regulatory system which could spawn the Wreck.

I'm relaxed about the Northern Rock affair. I think, it was a manufactured crisis in how badly people dealt with the situation and the government is picking up the tab for that. Some people may be similarly interested in talking down government morale but I see no reason why Northern Rock and government morale can't recover. Both are fundamentally sound.

I just think vested interests like the banks and media want a crisis because it shifts blame and creates headlines. It's just froth but it's dangerous froth. Look at how the big banking chiefs reacted like truculent children when questioned, or how the media salaciously whipped up fear. Alistair Darling should ignore the lot and just do what he thinks best.

I remain seriously impressed by some of the thinking in government. It's not perfect and there's always someone who will moan but as Jack Straw argued recently, the government has a lot to be proud of. I think, that's right and looking back on these difficulties will suggest the same. So, I just encourage the government to carry on. They're doing great.

The Government is spelt with a capital 'G' Nick - standards are slipping.

Justin wrote: "I liked the way Sir John Major (disaster) tried to say we were a trillion times better off under his government."

We were better off. We are now taxed more than ever before, more of us die in hospital of acquired infections than ever before, we never had a run on a bank for 140 years, we never had a govt/treasury that spent so much money with so little effect before.

18 years of conservative govt. left an economy so strong that labour has coasted along on it for nearly 11 years. Labour followed tory spending plans for the first 2 years. The economy was so robust it did not matter whether the treasury was up to the job or not.

Now the family silver is gone, the piggy bank cleaned out and still more money is needed for Labour's crackpot control-freak schemes and at this crucial point in the economics of our country the Treasury has decided to sink £30bn into a bankrupt company.

Please explain to me how that equates with financial brilliance?

The Treasury ... in the interests of balance and fairness, they did fund 'Stuffy' Dowding's 'Chain Home' system, which did literally save us from being compelled to join to the Greater German Economic Community.

Or did it?

Corruption and ineptitude should never be rewarded. Therefore... Northern Rock should NOT be rescued by the taxpayers (Downing $treet)... and several officers at Northern Rock should be indicted for malfeasance. The Bank of England be damned.

#8 Robin;

No it isn't.

Because rumour has replaced fact in the financial markets allsorts of wrong or damaging decisions are being made.

Rumours are usually bad news for the subject of those rumours, whether its banks, borrowers or businesses. Collateral damage is also caused to innocent by-standers such as the public. We should be careful about spreading unsubstantiated rumours about rifts between the Treasury and the Bank of England.

Those rumours make good copy but are probably newspaper inventions.

I do feel sorry for King because he's charged with controlling inflation with monetary policy but he's really in the dark over fiscal policy which is set by Chancellor.

Therefore in the face of a slowing economy he's come under increasing pressure to reduce interest rates while the tax burden remains high to cover the huge spending pledges made by The Government.

There will need to be real terms cuts in spending and restrictions on government borrowing in the near future to stave of inflation and ultimately to avoid a "bust".

Northern Rock fascinates so, precisely because the crisis has left both the baby boomer politicians and their central bankers without a fig leaf - the wild beast of unfettered free market capitalism, it would seem,not such a one way street after all.

If sides must be taken on this one,then I think that I am on the side of the central bankers - individuals who at least bought into capitalism from an early age and set out to build a career in this field of endeavour.

By contrast Mr Darling is a provincial solicitor by profession and Mr Brown a TV researcher by trade. And neither had a good word to say about capitalism in their youth- quite the contrary.

Mr Kinnock, it is recorded, thought that young Mr Darling was an unspeakable Trot; Gordon Brown and his student gang, unbalanced and fascistic in their loathing of the capitalist cause.

Daily these braying, long haired yobs would put the boot in when the handsome, clean cut, promising youth of globalisation - the one they now so admire even if now a bit squidgy round the edges - was already down for the count after a quick one two from that gulf dwelling bruiser Sheik Yamani.

Edifying it was not.

Thirty years on, Burnt out Brown and dithering Darling must learn some humility and for once just leave it to the professionals. They are the ones who are more likely to have the instincts to sort out the whole mess.....before the next one comes along. And there will be many. After all, it has been quite a party, has it not.

The real question is, had the treasury known then what they know now about the state of Northern Crock's business model, would they have made the same decision to wade in and effectively buy the bank four months ago (yes already four months ago)?

Mervyn King's predecessor Eddie George created the irrational exuberance that drove banks to take unprecedented risks, and the FSA allowed them to base a whole business on unsustainable money rates.

If the answer to my question is no - and I really think it should be for the sake of the reputation of the UK's banking sector - then someone really, really should lose their job over this. As usual no-one's stepping forward.

Didn't Gordon Brown set up the tri-partite arrangement between BoE, the FSA and the Treasury which clearly didn't work in the case of Northern Rock. I understand that the responsibilty to monitor NR actually rested with the FSA under this arrangement. Obviously the Treasury is not responsible for anything in the long run - it's not our fault Guv.

Spot on, Nick. There is no great story here. You'd expect a tripartite system to have some tensions sometimes. And they do seem to have been pretty careful and mature about how those disagreements were handled.

Usual bandwagon stuff from Osborne and the Tories. What a joke they are.

As lots of more sensible people are pointing out, there's no obvious answer to which (if any) of the 3 parties - Treasury, Bank and FSA - should have the ultimate authority in decisions like these. In fact all have massive financial/banking knowledge - the Bank *perhaps* having an edge there, but HMTreasury being publicly accountable in a way the bank is not.

Responding to the Northern Rock crisis was a very finely poised and difficult judgement, as many commentators have shown. I find it a mark of great immaturity that it becomes the occasion for political mudslinging.

Has anyone picked up yet that the two Deputies at the Bank are ex-Treasury? Neither is a banker. One has form from the Home Office and the other is an undiluted Darling apparatchik. Oh for the days of Steady Eddie who needed no Treasury meddling in dealing with the Baring's crisis!

Has no one spotted that both Deputy Governors at the Bank are ex-Treasury? One has 'previous' at the Home Office and the other is an undiluted Darling apparatchik. Oh for the days of Steady Eddie who needed no Treasury meddling to sort the Baring's crisis!

Justin must be a paid up member of the NuLab spin machine from the way he is intentionally mangling John Major's words. What he actually said was that either one of the disastrous decison to sell off our gold reserves at rock bottom prices or the complete mismanagement of the Northern Rock situation will likely cost the taxpayer more than was lost in supporting the pound prior to its exit from the ERM. Don't forget Labour was in favour of ERM entry at the time too (not to mention the Euro!) - so it would have been no different for them.
The real disiaster is NuLab's waste of public funds on a monumnetal scale. The govt plans to borrow £150bn over the next 5 years (excluding billions more of borrowing they have hidden under PFI initiatives) - whatever happended to balancing the budget over the economic cycle?

Remember Mr Boom and Mr Bust - well Gordie is going to have exceeded anything the Tories achieved - and all on his own! I can hear the sound of chickens coming home to roost as I type!

This seems to be an unmitigated disaster right from the beginning. If only Alistair Darling knew what to do back then and supported the Rock in an attempted buy out by Lloyds, then this would not have happened. Now we are exposed to a value of £100 billion, yet there is still no solution been tabled that is workable. Easy to knock the government, but they have dithered significantly and exascerbated this situation.

#8 Robin.

No it isn't!

You are obviouly the one without standards - "government" isn't a proper noun.

'Many of the things that have been written about for the last few weeks would be forgotten quickly...'
Gordon Brown referring to government incompetence earlier today.

If only we could forget Gordon and 'Dave' and the whole lot of them!