With news the embattled mortgage lender Northern Rock is being nationalized by the British government, until it can find a buyer, the question arises whether this is a good move or not?
Analysts at Bear Stearns said that the government's move is positive for the sector. The expected managed decline in the Northern Rock balance sheet should create less competitive mortgage market conditions," said analyst Robert Sage.
Who is this positive for? Certainly not the consumer. Competitive mortgage markets are the best thing that can happen to a consumer. Why should the consumer have to pay higher mortgage rates? Does this analyst think that the government setting mortgage rates is helpful in anyway? Let's not forget that the banks are responsible for this whole mess. Had they actually been careful in their lending practices, we wouldn't be in the mess we are currently in.
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