i’ve lost count if the number of times I’ve been told that.

The Northern Rock model (freeing up mortgage funding by borrowing against the money markets) made a lot of new money available to lend, removing the “mortgage freezes” that some of us experienced in the late 1970s and early 1980s.

Unfortunately, by prioritising low interest rates and then handing control of interest rates over to the mandarins at the Bank of England, Gordon Brown’s policies have brought huge sums of money into the residential property market.

Gordon Brown’s policies have brought huge inflation in the property market, which is very good news for sellers but not for the ordinary British family who have had to borrow enormous sums of money in order to fund their accommodation.

The recent tightening of supply in the money markets means that very little new money is available to fund mortages and will surely have only one outcome: rising interest rates. Now Alastair Darling may be trying to limit these effects by telling the Bank of England to print extra money for Northern Rock, but this can surely only be a short-term solution.

If Alastair Darling’s gamble pays off, the Bank of England’s loan will provide enough stability for Northern Rock until either the money market stabilises or another institutional investor takes over their business.

There could be another outcome, however. If enough people lose confidence in the Northern Rock and choose to move their savings out of residential property into other areas (for example, the stock market), this would likely result in a shortage of mortgage funds which, if it were to continue, would result in a collapse of house prices.

My question therefore is, would a reduction in house prices, making them more affordable for the average British family, necessarily be a bad thing?

I smell a rat. When Barclays borrowed from the B of E the media attacked Northern Rock.

Now other high street banks are advertising for people who ‘have been affected by Northern Rock’ in their windows and are adding to the panic.

These same banks will be cap in hand should they get affected by what is happening.

If Northern Rock does go under lots of local jobs go and more people default on their mortgages, the cycle continues.

Perhaps the banks should be more supportive of each other in such times rather than trying to kick each other while they are down.

Reply: I agree - I have criticised both these moves in the Conservative Economic Report and suggested changes.

pump money into the economy for nil return thus creating short term ‘growth’ with no long term benefits

stand up every week proclaiming a miracle economy thus encouraging the public to think its safe to borrow huge amounts because the economy is on a never ending growth path

But for Broon the political problem is only just starting. Either Northern Rock becomes a run-off business, a mortgage version of a closed life fund, or its business is absorbed into a top tier bank; a cosy merger with another medium sized/provincial institution is out of question. That means no need for thousands of people sitting in offices in Newcastle or for trebles all round sponsorships for football, cricket teams etc etc.

Final thought, I wonder if it will emerge that after the BoE had explained what was happening to Treasury officials their immediate reaction was to talk dismissively about a lot of ‘grannies’