What do you really expect from this Government of morons? They lost several billion pounds when they sold off more than half our gold reserves at $300 an ounce. Today gold is $800 an ounce.

Why did they do it? Some hairbrained idea of Alan Greenspan to hold the price down would indicate there was no fear in the financial system at the time of the Long Term Capital Markets fiasco. Note the US did not sell any of its gold because they would have had to get the permission of Congress which would not have been forthcoming.

That didn't apply in our undemocratic and unaccountable system.

oldasiahand, Guildford, UK

Excellent article. Anatole to be next GOAT in the treasury!

Timothy Longman, Chester,

NR committed the cardinal financial sin of lending long and borrowing short. The directors and shareholders have greatly profitted from this sin-it is now payback time-O.Hill London UK

O.HILL, London,

Re CC, Manchester

Interesting point, however "building on clay" is what your Council's Building Control office normally approves - it is strong and stable. Perhaps Northern Rock (sic?) was actually Northern Sand? (Northern Clay would have been much safer!)

J Bustard, Craigavon, N Ireland

Why would anyone be suprised by the Elites looking after themselves?. It is their raison d'etre. The peasants do not ' understand ', it is too ' complicated ' for their ' simplistic ' minds. By the way, does anyone remember the term ' Moral Hazard ' ?.

Desmond Taylor, Houston, USA Tx

I'm no banker but Mr kaletsky's suggestion sounds ok to me. The little guys gets his money, the moral hazard of baling out incompetent bakers is avoided and damage the economy is minimal.

neil murphy, cromer,

Yes great plan, recall the debt, put the company in administration and sack the lot of the lazy blighters up there!!! Afterall they are all probably ex miners so being on the dole will just be a normal thing for them. besides newcastle is practically scotland and it won't affect anyone down in the capital. maybe the money recouped from NR can be pumped into tax breaks for all those poor city souls who are facing reduced bonuses this year (some as low as 5 figures!!!)

Ed, Newcastle, UK

Compare and contrast this with the disgraceful treatment of the Farepak savers. Or is this newspaper too high brow to consider such "litle people"?

Bill40, Blackpool,

Boy o boy. If I as a taxpayer have to pay a penny to the city filth for their greed I won't be voting Labour.

So who do I vote for then? The Tory-City relationship is well known and Liberals are nowhere.

Mike Donald, Aberdeen , Scotland

If NU Labour bail out Northern Rock we will finally know that this government is not for the people or of the people but in it for themselves and power.

The Banking industry is a zero sum game, why change the rules now.

Ever since Nu Labour came to power the financial markets here and in the US seem to think that their respective governments should bail them out when their game stops playing so that they can continue to dupe and amass fortune for the priviledged few.

Its easy for these so called Vultures to walk up and say that they will rescue the bank because the banking industry have faith in them returning a profit, but how about the small businessman who has the same faith but is turned down by most banks which suggests that bankers are one happy family i.e, you scratch my back I'll scratch yours.

Jay, London,

I really don't understand how it can be legal for dirrectors of a company that has failed so spectacularly to pay themselves bonuses. Surely there should be some external criterion which determines whether bonuses should or should not be paid- like making a profit for example. This is more than a little galling for a tax payer like me who won't earn in 5 years or more the bonuses these managers are getting (indirectly from my tax) despite their mismanagement.

V. Stoboe, London, UKU

If the Chancellor had raised the State insurance of deposits in line with inflationary monetary growth then the problem with retail depositors would not have arisen; Brown was 'asleep at the switch' and probably regards prudent depositors as stupid.

The other can be solved by cash injection by a buyer, loans converted to equity- e.g. Eurotunnel or a hybrid but with no State money.

DMM, Eastbourne,

yes, that would be a sensible outcome. But this government has an appalling record at not knowing a good sensible commercial deal in the interests of the taxpayer. Under this government, literally billions have been lost and wasted on poorly conceived and even more poorly executed schemes promoted by it. They must go and go soon!

JC, London, UK

The Northern Rock situation is an utter disgrace. Northern Rock was not "too big" to be allowed to fail - and the Government should have let it! Instead we have the potential prospect of billions of pounds of public money being lost in a failed attempt to prop up a failed institution, for the sole purpose of trying to protect the local economy in the North East which (not coincidentally!!) also happens to be an area dominated by Labour party interests. It will prove to be a misjudgement of the highest order - right up there with the Iraq War but without any of the redeeming moral justification that the evidence on Iraq appeared to offer at the time. Resignations should definitely be called for!!

Keith, Suffolk, UK

£20billion for the "for the job prospects of the bank's 5,500 workers in Newcastle and Sunderland" - that works out at over £3.5million per worker. Not a bad windfall...

But I guess its not actually those workers who are going to see the benefits of the money! Otherwise, I'm sure they'd be happy to lose their job for a much smaller payoff!

The whole thing is a con. Lets call in the loans in February, sack the directors and move on.

Adrian, London, UK

I predicted the demise of NR about 5 years ago, this was based on my gut feeling of their lightweight lending policy. I am actually quite happy to see the wheels finally coming off their empire as I hold them, amongst others, responsible for the housing boom on the back of cheap debt, 120% LTVs, self-cert, Buy To Lets etc etc...

In my lowly opinion the Northeast resembles a public sector nirvana with yet more and more pointless jobs created/invented, presumably to keep the hardcore labour voters happy. Let's also not forget the huge amount of taxpayers money that is poured down the drain into the area. Not exactly a model of efficiency.

Big deal if 5000 jobs are lost, that's what happens when you build an empire on clay. If there aren't any punishments, how will we ever learn?

CC, Manchester,

I agree with this article, but I have to wonder: is this the same Anatole Kaletsky who was the biggest cheerleader for cheap money, and constantly wrote that home equity withdrawal (the flipside of excessve mortgage lending) was a positive influence on the UK and US economies. He even used to castigate the ECB for not cutting rates and thus not allowing Europeans to join the party. I bet they're glad they didn't take his advice.

Jim, St Albans,

Are people still trying to blame Mervyn King for this fiasco? NR got in to trouble because it pushed harder than any other lender in a lunatic lending market. When it became clear the bank's lack of solvency had to be exposed, The Treasury stepped in with a vague guarantee - and now we see the result of all these slippery dealings. King is the only one who acted with integrity.

shtove, dorset,

The British welfare state has expanded to the point that it now includes wealthy bankers, accountants and lawyers. This plundering of the public sector is the scandal of our times.

Paul Lay, London,

At last the truth is coming out, although I doubt it will out comrade Brown. Any small entrepreneur who suffers financial problems goes to the wall; no banker or government cares less, in fact they contribute to their failing. So why are the taxpayers supporting these incompetent bank directors? I have a conscience when spending others peoples, unlike politicians.

Michael, Sheffield,

The original panic was stayed, and plenty of time has been allowed for a bid to emerge for Northern Rock.

As Anatole points out, the process might now be viewed as an opportunistic potential milking scenario, with taxpayer funds provided to avert public panic having purpose diverted (possibly using misleading reasoning) to provide ongoing financing (albeit at slightly above market.)

If we are to be in for a period of credit contraction as compared with the recent past, it would be inevitable that corrections proceed through the system, and an orderly disposal through Administration would seem appropriate.

That might also demonstrate that respect for the concept of moral hazard remains, in a token, if not vestigial way.

dr venables preller, Warminster, UK

The whole NR 'rescue' plan was a complete debacle from the start. Initially we were told that it was purely an emergency measure to ensure that depositors didn't lose their money. Then we were told that it was to secure NR a line of credit as some people in the US had loaned irresponsibly (like NR hadn't?) and credit had dried up. Then we were told it was a bridging solution until a private buy-out could be arranged.

And now it seems after all that the bank's directors want a handout from the taxpayer so they can keep their shoddy business going and not lose out on any bonuses. I thought the reason these City people got paid so much money was because their jobs were 'high-risk' and subject to the rigours of the free market? Obviously only when it suits them.

NR is a disgrace - Kaletsky's plan for it is the only sensible solution I've heard since the saga began. What is it that's stopping the politicans from seeing sense? Bribes?

MB, Edinburgh,

If the Government has to do any favours for the ultimate buyers of NR it should insist on a share of any future success so should insist on some sort of debt for equity swap

Chris, Birmingham,

I understand that the problem with Northern Rock was caused by poor interpretation of EU rules by the chancellor at the time, Gordon Brown. If this is true no wonder they got the bail out loan on two grounds. One he caused the problem and two he wants to keep the fact quiet.

D Cage, Highworth, Wilts

Advisers to Northern Rock are Citigroup (sub-prime losses 8-11 billion) Merrill Lynch (loss 8 billion) and Blackstone (don't know apart from a third quarter loss of 113 million). The blind are leading the blind and all of them are hoping for a Fairy Godmother's wand in the form of the British taxpayer. The loan should be called in, Northern Rock placed into administration and share dealing stopped - not in February, not in 2010, today. And let's stop using the rather innocuous word 'billion' which has become so commonplace that its effect is lost. The Rock and its gathering vultures want THIRTY THOUSAND MILLION POUNDS from you and me to fund their incompetence and maintain their multi-million pound salaries and bonuses. They should be told in no uncertain terms to get quickly and comprehensively lost. Then the Bank of England should start calling in the other suspects, Barclay's (is the 800million all of it)) Alliance and Leicester and RBS and see where this criminal rat's nest extends

eric campbell, harrogate, uk

Corporation Tax yields £28 billion and we give £23 billion as taxpayers to preserve Labour seats in Newcastle.....now why didn't Gordon call that election ?

Cynical Voter, Leeds, England

For some reason the Rover sell off comes to mind.

chris, Manchester, uk

Good article but it'll be a handout, too many Labour constituencies around there and don't the Lab/NR ties go back a long way too ?

Stan(expat), US, USA

Excellent clarity.

The largest risk is that another mortgage bank goes wrong in the meantime. The sustained and dramatic weakness of Alliance & Leicester does not bode well.

J Mack, London,

I completely agree except for one point - why wait until February? Northern Rock's failure could not now cause any wider financial collapse so the Treasury's should ask for it's money back immediately. The concept of a lender of last resort was never intended to be of such magnitude and it's high time the company was brought to account. It is inexcusable that taxpayers money is being put at risk while the shares remain unsuspended and the company still under the control of the directors.

Matthew Fletcher, London, UK

When I first heard of the rescue package I had an inkling the financial vulturess might come circling.

Good aticle, Anatole.

Will the Government do what you suggest ? Knowing how this 'corrupt' Government functions I wouldn't hold your breath waiting. They won't do what is right for the countyr but what they consider most politically expedient to keep themselves in power.

Brian, Rugby, U.K.