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Foreign Exchange

Bank of England's swerving Mervyn

I must confess, I do feel a bit of sympathy for Bank of England head honcho Mervyn King. After all, the bank is meant to be the lender of last resort, not the bailer outer of first resort to banks that misread the market. Still, the Northern Rock saga has developed into such a sorry tale that old Mervyn is going to have to do a lot of swirving if he’s to avoid the sack.

After a serious run on the bank, Northern Rock has effectively been dug out by UK taxpayers after a guarantee was given that all deposits were safe. As a taxpayer – and incidentally I also have some money in a Northern Rock structured product – I think this is outrageous. The UK supposedly has a socialist government, so why didn’t it nationalize Northern Rock? We’re told the bank is solvent, but at the moment UK taxpayers are exposed to the downside, with no potential upside benefits, including the imminent dividend.

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