I find it disturbing to read that the Guardian can report that:

The Treasury has stepped up efforts to avoid having to nationalise Northern Rock by asking Goldman Sachs to create a financing package for a private rescue of the ailing bank.

Let's be clear; the Northern Rock business model has failed. As the FT has dramatically shown in a graph this morning (here) the market for SPV, SIV and CDO debt is completely dead. And this is the finance Northern Rock used to finance its mortgages. With the best will in the world, Goldman Sachs can't raise the money needed, even by waiving all their bonuses, if the market is not willing to invest in such vehicles anymore.

There is only one course of action left to the government to recover its debt, which is to nationalise this bank. I've been saying so for some time. To his credit, so has Vince Cable of the Lib Dems. But we still have market-heads at the Treasury believing there is a magic solution out there.

There isn't. And in the circumstances it's only a disaster for the government to step in because Gordon Brown has made it so clear as a Labour Chancellor that he thinks markets are the solution to all ills. They're not. But it would be mighty ironic if the Conservatives got in on the basis of the failure of that belief in a Labour Prime Minister. Because unless Darling and Brown show some real conviction in their own ability quite soon that's what will happen.