Northern rock nationalised for £110 bn

So, they finally did it, and to the tune of £110 bn.

http://news.bbc.co.uk/1/hi/business/7250023.stm

What disgusts me is they never talk about why the bank popped in the first place. They never mention the fact that it's not this bank's policies, but all bank policies that are the same, and what's worse is the entire system of FRB was institutionalised by the government. And yet that article has this comment: "It's easy to knock the government but they didn't cause this problem". That sentence almost made me puke. How ignorant can people be nowadays?

Besides, here's the funny part, they say that the £110 bn is going to be at the expense of the tax payer, but the UK government is already running a yearly deficit of around £40-50 bn, and they're definitely not going to raise taxes, so where will the emergency funds come from? The same system by which Northern Rock went bust, more fractional reserve banking and creating the money out of thin air. But none of this is mentioned, and of course, neither are the inflationary consequences.

Any reasonable human being who reads this article should ask himself: why did this happen in the first place; and where is the government going to get £110 billion from. But reading the comments sectionpeople are completely oblivious. How does one go about teaching people this? How can you actually make all of these people aware of this?

Btw, I dug up some M3 figures for the UK. They run at around 12% per year.

I wonder, would this count as an instance of Mises' view that when the government can't regulate (in this instance, the interest rates), that it attempts to directly control the means of production (in this case by nationalizing the bank)?

I guess it's part of the slippery slope argument of interventionism.

For example: The government puts a ceiling on the price of bread, which in turn bankrupts the marginal producers (creating a shortage), whose costs have risen. The government then puts a ceiling on their costs, say on the price of flour, and eventually what started as a well intentioned attempt to lower the price of a good below the market equilibrium, ended up with a whole series of interventions at the end of which a huge shortage is created.  In this case, the government, blaming the free market entrepeneurs rather than itself, usually ends up nationalising the industry. From a cynical perspective, one could say that the initial intervention was done precisely for that eventual purpose.

In this case, I think this move had more to do with the government protecting its monetary system. Remember, the central banks have a pact with the commercial banks to buy them out in the case of bank runs, so that's what's going on. Though i'm not really sure why nationalisation was necessary, since they were already going to provide them with the necessary funds.

Has anyone seen an article on Northern Rock arguing or even acknowledging the Austrian perspective, problems with central banking, viability of free banking?  There seems to have been a fair amount of such writing, but focusing on American banking crises (understandably) by American authors in American publications.  My experience of talking to people with mainstream political views is that these analyses are not really considered serious, but rather apologetics for the super-rich, and only considered by a small group of crazy Americans anyway.  If I could point to some Brits holding these views perhaps they would be taken seriously.

In Europe I think the institution of central banking is something pretty much everybody takes for granted. The few times I've brought up the issue of the gold standard vs. fiat currency I've been well-received, but it's not something that gets talked about.

The political climate is such that some government institutions are just beyond question, to the extent that most people will not be aware that counter-arguments even exist. Central banks are one of those institutions. The paper money system dominating all of Europe now through the European Central Bank seems to follow a relatively conservative Germanic model, but the long run signs are not at all good.