Quicksand

£55 Billion in loans and guarantees. That’s how much the British government has spent to prop up Northern Rock. Outrageous when you consider that the military budget is a mere £33 Billion.
Thus, with no serious private buyers in sight, is there any other option but to nationalise the bank? No one wants it, but the government can’t afford to let this bank fail and the deals put forward by the private buyers simply don’t past muster. Not when they will require substantial subsidies for the foreseeable future.
So lucky us — the taxpayers!

Times Online, January 15, 2008
Northern Rock: the story so far
James Rossiter
Sept 13 News that Northern Rock has sought emergency funding from Bank of England (BoE)
Sept 14 Run on Northern Rock by customers; shares fall 31 per cent
Sept 17 Alistair Darling pledges government guarantee of all deposits; shares tumble
Sept 20 BoE pumps £10bn into long-term money markets
Oct 9 Guarantee to customers extended to cover all new deposits
Oct 19 Matt Ridley, chairman, resigns; Bryan Sanderson, CBE, replaces him
Nov 26 Consortium led by Sir Richard Branson’s Virgin Group named as preferred bidder
Dec 7 The Olivant Group enters race to take control
Dec 13 Adam Applegarth, chief executive, leaves; Andy Kuipers takes over
Jan 7 Goldman Sachs presents Government with proposals for a £12bn-£15bn Northern Rock bond issue to be underwritten by BoE
Jan 11 Northern sells £2.25bn of equity release mortgages to J P Morgan; money goes to BoE to repay part of £26bn of loans
Jan 12 Treasury signs up Ron Sandler to head Northern Rock in event of its nationalisation

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