Bailing out Northern Rock bank

David Osler isn’t happy with the bailout of Northern Rock bank:

If you or I exceed our overdraft limit, we get hit with a shirty letter and a £25 penalty charge. When Northern Rock effectively does the same thing, chief executive Adam Applegarth taps the Bank of England for an emergency lending facility instead.

The ‘mortgage bank’ – as demutualised building societies like to be known – raised three-quarters of its funds from the money markets rather than savers, and lent it out as aggressively as possible. Loan-to-value ratios of up to 125% were freely available.

Now interbank lending is drying up, and NR cannot refinance its maturing positions. Step forward Mervyn King, doorstep loans merchant to the sink estates of the banking community. So far this isn’t actually costing the taxpayer anything. The BoE is acting as a lender, not a donor, and expects to get the money back. The question is, are NR’s assets good as collateral for the cash? That’s a judgement call, and I’ve no inside information either way.

But there is no doubt that NR management was wilfully reckless in both borrowing and lending practices. So there are few good reasons why the state should ensure the company’s survival; indeed, there’s one over-riding reason why it shouldn’t [...] ultimately, there is no way of getting round the question of moral hazard. If bankers believe that they will always be saved from the consequences of their own folly, they will continue to act with doltish ineptitude, unable to see further than the trough in which their snouts are so firmly buried.

I have a different suggestion: the Bank of England could have lent the money to Northern Rock, but on the condition that Applegarth and his entire board of directors be immediately sacked with no compensation (if that isn’t legally possible, I’m sure a law could quickly be put through parliament to rectify that).

Sally Field is sexist and wrong

Norm Geras quotes Sally Field as saying:

If mothers ruled the world, there would be no more god-damned wars.

This is making the claim that if someone is female and has gone through a process roughly equivalent to shitting a melon, one is therefore an inherently virtuous person. This claim is of course sexist and bigotted.

It is also demonstrably untrue: there has been in modern times one polity where men’s and women’s votes were counted separately, so that we know if and how the sexes voted differently. That polity was the Weimar republic in Germany, and during the later Weimar elections that brought Hitler to power, women disproportionately voted fro the Nazis.