Thursday, 17 November 2011

Virgin on the Sublime

In face of collapse of Northern Rock back in 2008, Gordon Brown rejected Virgin's advances to buy the business.

Instead, Brown took the dead Building Society into public ownership, split it so that its toxic debt was in one company and the viable business was in the other. Now, some 3 years down the line, Virgin Money have bought the good bit for £747m (surely a coincidence with Virgin?).

On paper, the taxpayers are down by around £500m and then there is the minor issue of the toxic £21bn steaming away in the bad bank part. However, George Osborne is only doing what should have been done in the first place - let the market sort out dead banks. We are lucky to get away with the loss being only £500m to be honest.

This is the end to a sorry saga and one for which Brown will be remembered as full of knee jerk reactions to the crisis. It was the wrong thing to do at the time and all that has happened is that Virgin have bought a business at a knock down price with the bad part still in public hands.

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