How the papers are reporting the crisis
Probably the good news for Brown this morning is that most of the tabloids are looking to other than the Northern Rock crisis for their splash headlines. It’s “The police case falls apart” in the Express; “The Tide turns” in the Mirror and “Kate backed by judge” in the Sun.
While Brown himself left yesterday evening’s announcement to his chancellor the Times is reporting that “Kate and Gerry McCann go straight to Gordon Brown in search for more powerful backers” in part of their effort to clear their names over their daughter. This mystery will run and run.
The Guardian‘s leader looks at the Northern Rock move in this way “…Yesterday’s announcement represents a huge change in policy: it replaces a long-standing, but limited, compensation scheme for depositors, with a government commitment to ensure every saver gets every penny he or she wants out of the Rock. For the government it raises all sorts of troubling questions. Why did it not provide such a guarantee earlier, and quell customer panic? Will ministers extend such a guarantee to other bad banks? That last question may well be asked by Mervyn King, head of the Bank of England, for whom this decision is a giant rebuff. Dr King had vowed not to create “moral hazard” by bailing financial institutions out of their own foolhardy decisions…”
The Financial Times sums it up like this:- “Yet the bail-out may give British taxpayers the worst of both worlds: implicitly putting them on the hook for the entire banking system, while not necessarily reassuring customers enough to prevent the bank run.Realistically, the government will always find it difficult to let British depositors suffer. But broadening the Northern Rock bail-out to full deposit insurance for all would be the wrong approach. It would require banking supervision to be tightened almost to the point of nationalisation, squeezing any innovation out of the system. (At this painful moment it is easy to forget that innovation will not always be a dirty word.)”
In the Times columnist Libby Purves has a different approach – “..For how dare the stuffed suits, financial and political (and indeed journalistic), use expressions like â€œDonâ€™t panicâ€ and â€œKeep calmâ€. The withdrawers are perfectly entitled to choose who looks after their lavishly pretaxed savings. Some of them actually need money right now â€“ like the chap on the news who wanted to pay his builder â€“ and others just prefer not to rely on an institution that goes begging to the â€œlender of last resortâ€..By their presence on the streets, most of it not at all panicky in demeanour, the queuers utter a resounding raspberry to the financial industry and its political masters. It is time someone did.”
In the betting there’s been a move away from Labour on the general election markets. The latest Spreadfair spread on Labour commons seats is at it lowest point for two months with a 307 seat buy price and a 304 seat sell one.
I’m not in this market at the moment. I want to see new surveys from the pollsters I most trust, ICM and Populus, before taking the plunge again.