So Northern Rock is to be nationalised. I've been saying this is the only solution for as long as Vince Cable has. It was obvious to those with eyes to see that this had to be the only solution to this crisis once £50 billion of taxpayers money had been committed to it.
The press is full of the most absurd comments this morning. George Osborne has apparently said yesterday was: the day:
Labour's reputation for economic competence died
Which I suppose recognises that it had one.But then he added:
The taxpayer will bear the risk of lending £100bn of mortgages in an uncertain market. We will not back nationalisation. We will not help Gordon Brown take this country back to the 1970s.
But at no time has he offered an alternative option. There wasn't one. But he's not big enough to recognise that this is a straightforward market failure. The director's failed this company. No one else did. But as is so common with those who argue from the Right (and in this he shares common ground with many,many commentators from that perspective who comment here) he ignores the facts, does no analysis, offers no argument, has no alternative but does believe his dogma is sufficient to get him through any situation. The trouble is his dogma is that the market works, and it plainly did not here. I have to describe his reaction as incompetent.
Let's be honest, Darling scores little better. His absurd belief, shared with Gordon Grown that the market could solve this exacerbated this problem. As the Guardian (again) says, this time in its editorial:
Yesterday was  a shaming moment for a government that has struggled for six months to fend off the inevitable. The chancellor's search for a third way between nationalisation and receivership was an unworkable attempt to triangulate corporate collapse. A braver government would have reached this point long before.
That's the trouble with absurd belief in markets. It gets you into trouble.
I have to say it, Vince Cable is the only person who comes out of this with any credit. That's amazing.
As for the shareholders who are now demanding £4 a share compensation when the open market valued their shares at under £1 when suspended this morning, they should muse on the fact that it was the directors who created this debacle, not the government. If the government had not intervened there would be nothing left. Anything they get above nothing is fair value. Personally, 5p a share seems about right to me. The rest of the money to be committed to this operation has to go into finding solutions, not bailing out those who knew they were taking a risk, and lost as a result.
And what is the lesson from all this? It's simple: markets can work, but do not always. We have to be open minded about when they do, and don't, and act accordingly. Brown, Darling and Osborne have all showed themselves to be close minded. That's a very poor trait for a decision maker to possess. It suggests they are all slaves to a defunct economist (Milton Friedman in this case). The time for new thinking is now.
And just for once, having a three party system has shown its benefit: another form of thinking has been shown to be possible. If only the Treasury had listened earlier so much embarrassment would have been saved. And a great deal of money with it.