Wednesday, February 20, 2008

Stable Cable's Able

There is no doubt, Northern Rock was a crisis waiting to happen. As was noted in a really great profile of Vince by Michael White in today's Guardian, it is he who has been warning for years of the consequences of overindebtedness.

"When Northern Rock went belly up and went to the Bank of England for help in September, Cable immediately urged nationalisation as the course for the Treasury to adopt.
Voters may not notice the nuances, though some will remember that puritan Cable had been warning against Britain's growing personal credit card debt for several years. Now Cable's early call on the Rock had been vindicated, in sharp contrast to the havering of the Conservatives. Cameron and Osborne are clever too - and have more of a political future - but they lack experience and judgment. On the Northern Wreck, Dave'n'George have been all over the shop. Osborne's attack on Monday missed its target, and Cameron has been awkward too."

At a time when a beleaguered Brown bleats wanely on about his legacy of stability, it seems to me that all he does is draw attention to the understated brilliance of Vince Cable; a fact that has not gone unnoticed in the media.

It is clear that there is a continued nervousness in the financial markets. We are looking at legislation with application beyond Northern Rock. How many banks will the government be prepared to nationalise before the country itself is bankrupt I wonder? We are already looking at a commitment in the region of £100 billion for one bank. Don't get me wrong, I fully support the nationalisation, it is our money after all. But, where will it all end? Somewhere, sometime we need to fez up and recognise the rod we have built for our own backs with our obsession with house prices. We need a local tax system that takes the heat out of the market. For those of us who already own our own homes we can sit back smugly and baulk at any legislation that may lessen the value of our homes. For those who don't, in particular young people with no prospect of parental support, owning their own home is completely out of their reach. More worrying is for those who think they can do it, encouraged by irresponsible lending (the nonsense of 125% mortgages for example) they have been lead into a nightmare, often left with not only broken dreams but broken lives and broken families too. Northern Rock is a wake up call. Vince is no longer a lone voice calling in the wilderness. Let's hope his warning was not heeded too late.

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