The preverbal is beginning to hit the fan as more details of the Northern Rock crises are revealed, the Guardian leads today with a header, ‘Revealed Massive Hole in Northern Rocks Assets’. ‘Massive Fraud’ might have been a more appropriate headline. The papers correspondent Ian Griffith’s reveals that £53 billion of mortgages, over 70% of its mortgage portfolio is not now owned by the bank, but by a separate offshore company Granite.
The mortgages are now owned by this Jersey based trust company after having been used to underpin a series of bond issues to raise cash for Northern Rock. It means the pool of assets available to provide collateral for Northern Rock’s creditors were it to go bust, including the Bank of England, is dramatically reduced, calling into question government claims that taxpayers’ money is safe.
Were the UK Government and Bank of England aware of this fact when it offered the Northern Rock a line of credit of 20 billion pounds to keep the bank afloat. If not then by not revealing this should not free-market fundamentalist Matt Ridley, the heir to Viscount Ridley and chairman of Northern Rock and his board of directors at the time be having a visit from PC plod and end up in the dock of the Old Bailey. I will not be holding my breath but if there were any justice they would..
If one thinks back to when the Government leaned on a reluctant Governor of the Bank of England to bale out Northern Rock, one of the claims the Treasury made at the time was that tax payers coin was safe, as the loan to the struggling bank was secured against a healthy mortgage asset portfolio. Now we are being told not only was the Northern Rock’s mortgage assets portfolio not as healthy as the Chancellor claimed, it was 70% lighter than the public were led to believe.
If the government were unware of this fact when they lent billions of pounds of tax payers cash to the Northern Bank; the question to be asked is why not! As surly before instructing Mervyn King the Governor of the Bank of England to organize the line of credit, someone in the Treasury glanced at Northern Rocks accounts, after all this could not have been that difficult to do as the Guardian’s Ian Griffith’s seems to have had no trouble in doing so.
Many of the problems that are beginning to return to bite this Labour government are due to the fact that since 1997, the Blair/Brown duo at its helm has become far to close to big business. It uses it and trusts it implicitly, seemingly oblivious to the fact that the whole essence of capitalism for good or bad is having people over, and this is especially true of today when Big business operates in an increasingly unregulated world hence its love of globalization. Of course it is no accident that the company Granite that took on 70% of the Northern Rocks mortgages as collateral for loans is based in Jersey.
The Labour Government seems to have little real interest in how those businesses it signs contracts with actual operate at the coal face, beyond bringing the projects in on time that is. It almost has the attitude of saying to the contractors ‘enrich yourselves at the taxpayers expense’. We have seen this with the Dome, which Blair should have scraped when he first came into office, the maintenance contracts on the railways and London Tube and countless other project’s like City Academies, The Thames Gateway Project and the 2012 Olympics.
Just how deep this government is in bed with these Robber Barons, Bankers and Multinationals was demonstrated when they refused to even consider taking the Northern Rock into public ownership until the heat died down, when they could if they wished put the bank back on the market, ensuring the tax payers investment. Instead the Chancellor hawked the Northern Rock Bank around the City last weekend to no avail, as the Governments pals the Bankers, new they could knock down the price still further if they acted like a cartel. Remember, these global magnates for all their swish City Offices and Saville Row tailoring, have proved in Iraq just how brutal and light fingered they are. Thus they are demanding of the Government that it picks up the interest on the bank loans at the very least before they dig Gordon Brown out of his current hole.
Could it be that Big Capital having bled the British Exchequer dry under the Blair/Brown duo, now believe there are richer pickings to be had from a Conservative Government. If so, it cannot be long before Britain’s barometer of whom Capital supports, The Sun, throws its full weight behind David Cameron and starts demanding a Tory Government.