northern rock

    Rock and No Roll

    The people who are queuing outside branches of Northern Rock are fooling themselves, and if anything are likely to trigger the problem they fear.

    I must admit that, if you had asked me a few days ago, I would probably have said that I thought that the Bank of England already backed the banks to the extent of protecting people’s deposits. Naive of me, perhaps; but after the Bank extended its line of credit to Northern Rock, and particularly since last night’s guarantee by the Chancellor, that their money will be covered by the government, it’s clear to an uninvolved bystander that they’d be better off staying at home and waiting. If the government can’t cover anything that might happen to NR, then we’ve got a much more serious problem than one wobbly bank on our hands.

    Like the collapse of the pound.

    And it would take the euro down with it; and probably the US dollar, and hence the world economy.

    I’m not an economist, and you can call me complacent; but that’s not going to happen.

    So leave the queues, people, and go on home (if you’ve got that much in savings, you obviously don’t have to go to work). And next time, remember that proverb about eggs and baskets.