The economic credibility of Gordon Brown\’s government has suffered a serious blow after the Chancellor was forced to announce the nationalisation of Northern Rock – the first time that a major high street bank has been taken into state ownership in modern times.
What\’s it been? 6 months of dithering?
Investors in Northern Rock, which has about 144,000 small shareholders, are likely to take legal action. Robin Ashby, from the Northern Rock Small Shareholders\’ Group, said: "I\’m shocked and appalled. Unless they come up with a fair compensation offer, the big shareholders are going to sue them."
That is to laugh. The shares aren\’t in fact worth anything. Absent the various guarantees that is. Darling is to value it thusly:
Chancellor Alistair Darling said an independent auditor would determine how much shareholders should get, but the bank would be valued as if it had not received any government support, indicating a minimal payout if anything.
Seems fair: the one group of people who really ought to lose money here are the shareholders. That\’s what the game is about, you earn the money if you investment prospers, lose it if it doesn\’t.
Whst do you reckon? 2p a share if they\’re lucky?