Brown (and Kaletsky) founder on Rock

Lent starts in a couple of weeks, and I'm thinking of giving up slagging off Anatole Kaletsky. In the meantime, however, his unique combination of pompousness, arrogance and shamelessness is just too ripe a target to resist.

In today's Times Kaletsky takes aim at the Government's rescue package for Northern Rock. Now, I don't disagree at all with his view (and just about everyone else's) that this is a lousy deal. The private sector buyer gets all the upside, and the best that the Government can hope for is that any downside for the taxpayer is put off far into the future.

Unfortunately (but typically), Kaletsky fails to offer any truly appealing alternative approach. I would favour bringing in someone like Branson to run NR on a franchise basis, giving him first option to buy it at a later stage, when the Government might have some hope of sharing in the upside. (Branson is quite happy to operate his train franchise on more or less this basis). Kaletsky's only suggestion is to put the company into administration and then gradually run down its asset portfolio. This is obviously unpalatable to the Government because of the inevitable job losses. The Rock employs 6000 in Newcastle alone, but Anatole airily dismisses the "opprobrium" that would follow any decision to fire them as "temporary".

Maybe he's right about that, but would the impact of removing NR from the new mortgage business be as short-lived? In the first half of 2007 the company accounted for something like one in five of all new mortgages in the UK. Given the extreme distress in the financial markets, who is going to replace NR as a mortgage lender as its portfolio runs down? How many home repossessions are going to result, through no fault of the borrowers, if alternative lenders can't be found? Does Anatole think this is a worthwhile price to pay for teaching the financial sector a lesson? How much will the UK's household wealth, heavily concentrated in property, decline, and what impact will that have on the overall economy?

Kaletsky says that all of this could have been avoided if the Government had offered a small amount of support last August to facilitate a bid by Lloyds TSB totake over the Rock. My very clear recollection is that Lloyds wanted rather more than a small amount of support: its advances were rejected in part because it appeared to want the kind of Government guarantees that have got Kaletsky all hot and bothered now. But in any case, if the Government was complacent about the problem back then, maybe the reason is that it was paying attention to pundits who thought the credit crisis was a storm in a teacup -- pundits like Gavyn Davies and, lest we forget, Anatole Kaletsky.

Kaletsky ends today's rant thusly: "The Northern Rock bailout will demolish or, at best, discredit the entire economic policy framework created in 1997. Since the creation of this framework was his one unquestionable achievement, it seems fair to say that Mr Brown's career as a serious politician ended yesterday." Given that Kaletsky failed to spot the approach of the biggest economic event of his career (the credit crunch, not Northern Rock), maybe we can say the same about his career as a serious commentator.