Consequently, the actions of the FSA, from the Bank of England or the Ministry of Economy, was flawless and succeeded in containing the crisis perfectly; it will be fully resolved when the scavenger on duty do its job and take advantage of this situation, to the benefit of us all. For the time being, the vultures circling Northern Rock’s dying body are Olivant, Cerberus or Virgin itself, among others. I recommend this excellent article by Enrique Gallego, who understands the situation at this bank better than almost anyone else. Although, in the end, an even more powerful and professional vulture will probably step in, recycling the spoils with the approval of the Chancellor of the Exchequer (Darling) and returning the cheque to the forced lender, much to everyone’s relief. Faced with a crisis such as that of this bank or any other, and I would go so far as to say in general:
A loan is infinitely healthier than a grant, but an investment is even better.
But what is truly scandalous is that the European Commission is seeking to boycott this welcome rescue operation launched by the Bank of England, which has averted a crisis of confidence with potentially global consequences. Officials (some call them politicians or pseudo-bureaucrats) at the Commission are threatening to scrutinise these loans to ensure the integrity of free competition. The funds lent by the Bank of England are guaranteed by the British Treasury and could therefore be regarded by these officials as intolerable state aid. Unbelievable.
It should not occur to any rational mind—be it civil servants, politicians or bureaucrats—that Northern Rock’s competitors feel they are being treated unfairly because of the cash injections received to quell the crisis of confidence in the banking sector. But the European Commission’s inability to grasp the global credit landscape is made clear by its threats to launch an investigation. Ladies and gentlemen, no British bank – nor, for that matter, any bank in the world – has been treated unfairly because of the «preferential treatment» accorded to Northern Rock through the capital injections provided by its central bank. Quite the opposite, had these injections not been administered, the problem would have spread like wildfire. The explosion could have reached the ECB, the EDF and, of course, into the pockets of the European Commission itself. The potential for a devastating shockwave was effectively nipped in the bud from the outset by the guarantee of funds from the UK Treasury. The process will soon be perfected with the acquisition of the bank’s remains by the vulture of the moment, thus completing the cycle of the global financial food chain.
These are fundamental principles of the global financial and business markets, but they appear to pose a threat to the integrity of free competition in the eyes of certain European pseudo-bureaucrats, who could do with some basic lessons in common sense, the responsibilities of their positions, and a grasp of reality.
Pure incompetence, even if it’s disguised as overzealousness.