Just sent this letter to the Observer’s readers editor:
Re: ‘Light-touch’ reforms raise fears of new bank disaster
This article from Sunday 12 June has one of the most inaccurate sentences I’ve ever seen anywhere:
“Critics point out that it was a subsidiary of Northern Rock, Granite, that contained the liabilities that led to the collapse of the bank: Granite owned £49bn of mortgages that were sold by Northern Rock and moved offshore to the tax haven of Jersey.”
1) Granite wasn’t a subsidiary of Northern Rock, it was an umbrella term used to cover several different offshore organisations that were structured as charitable trusts and that specifically weren’t owned by NR.
2) Northern Rock didn’t have any liabilities through Granite – the whole point was that NR wasn’t liable for Granite’s debts. Rather, Granite’s bonds were secured against the mortgages that it bought from NR.
3) The collapse of the bank had absolutely nothing to do with Granite – it was because NR was reliant on short-term financing to cover the mortgages that it *hadn’t* sold to Granite, and this short-term financing dried up as the crunch began.
Perhaps Nick Mathiason should read the article I wrote on Granite last February before writing any more pieces that mention Northern Rock…
Cheers,
John Band
I’m genuinely not sure that I’ve seen a sentence that wrong-headed in a serious newspaper before, ever…
*cough* The original article about Tesco's property LLPs.
Are there any individual sentences in it as wrong-headed as the NR one above, though…?
Unsurprisingly, it's tricky to find a copy of the offending article, but numerous statements were complete bollocks – the most fundamental of which was the assumption that using a non-UK incorporated company takes you out of the UK tax net… I mean, for God's sake, the only substantative statement made by a Tesco's rep in the entire article was that 'all the companies remained UK resident' which should have given them a clue.
… And relax.
I nominate:
"As a profession, economics not only has nothing to say about what caused the world to come to the brink of financial collapse last autumn, but also a supreme lack of interest in it."
from here