Why It Matters : Between the Rock and a Hard Place

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Christopher Dickey

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Christian Caryl

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Melinda Liu

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Stryker McGuire

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Between the Rock and a Hard Place

Stryker McGuire

He was known, more than anything else, for his supposed economic competence. So what was British Prime Minister Gordon Brown doing standing before the TV cameras today and announcing the nationalization of Northern Rock, a failed mortgage lender? It's a complicated story, but as Brown rightly said it all leads back to the sub-prime mortgage crisis in the United States. Still the Northern Rock affair, which has now forced the government to pull the trigger on what it calculated all along was the worst possible option, has been badly handled by Brown's Labour government since the debacle came to light last August. The "£100 Billion Gamble With Your Cash" takeover (as the Daily Mail put it) is the first nationalization in Britain since the bad old days of 1970s. Back then the Labour Party dug its own political grave and paved the way for Margaret Thatcher through its association with punishingly high taxes, steep unemployment and a plague of strikes. Brown knew that to nationalize the Rock would recall those times and threaten to undermine all that "New" Labour had done to rebrand itself as business-friendly and an ally, not an enemy, of mammoth financial interests in the City of London. As he ended the press conference and headed back to his office, Brown could be deemed fortunate in only one respect: he doesn't have to call an election for another two years.

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