It had to happen.
Gordon Brown finally couldn't resist the temptation of turning Northern Rock into a British-Lite version of Fannie Mae, the organisation at the root of the world's financial crisis (along with its masters in the US Congress).
It's difficult for me to do it, but I'll try to think in an "orthodox" way for a few moments, to get all of this into perspective:
=> Northern Rock had to be nationalised to prevent it from failing, because if it had done so, it would have led to a meltdown within the British banking system - there are some companies which are simply too big to fail (though why any such company is allowed to exist in private hands, when it is really backed by the taxpayer, for the moment escapes me)
=> Once in this temporary nationalised state, to get Northern Rock back into private hands the government had to clear Northern Rock's mortgage book of everything except fully prime mortgages, to eventually sell Northern Rock back to the market and to preserve some form of return for the taxpayer
=> The government would encourage every mortgage customer to leave Northern Rock and clear the mortgage books by making sure Northern Rock didn't abuse its favoured financial position, via its access to unlimited Treasury funds printed on the Bank of England's presses
=> Within five years Northern Rock would have been back in the private sector
=> To encourage all of this "mortgage cleansing", Northern Rock staff would receive large bonuses related to their ability to get rid of Northern Rock mortgages, despite the political difficulty of following this incentivisation policy
But no, the government entirely reversed tracks on Monday, and will now be using Northern Rock as a vehicle to provide counterfeit cash to any of its supporters who need sub-prime mortgage relief.
Now the memory hole rationale behind the nationalisation of Northern Rock has transmuted into the following:
=> To hell with protecting taxpayer returns
=> Let's just protect Gordon Brown's back
=> And that's it!
I presume Northern Rock staff will now receive bonuses for building their mortgage book back up again! Talk about double bubble.
For more on how Fannie Mae lay at the root of this financial crisis, check out the following Lew Rockwell article, here. Click through this article to the interview mentioned, with the long-time credit controller of Fannie Mae, Edward Pinto, who is refreshingly honest in his opinion about what has really been going on.