The Chancellor says there is nothing to worry about. The Bank of England says there is nothing to worry about. So does the British Bankers' Association, the shadow Chancellor and various other bigwigs. So there was no real reason for people to queue outside Northern Rock to get their money back. Right?
Well, actually, I think that is right. Sorry for being uncontroversial, but while Northern Rock's business model has been shown to be seriously flawed, I don't believe there is a danger that its customers will lose their life savings. The bank is still solvent, still profitable and there is no sign of a housing crash in the UK that might exacerbate its difficulties. If it is forced to dip into the emergency funds provided by the Bank of England (and at time of writing it had not) then it will pay a financial price for doing so. The company's shares have plummeted and there is every chance that Adam "calm down, dear, it's only a credit crunch" Applegarth will get the boot and walk off with a large bag of swag into the sunset of his career. Northern Rock may well get taken over by a rival such as HSBC and that will be that. It would be a suitable punishment. Justice would be done.
A matter of trust
Much has been said about reckless lending in the UK. Indeed, the country's combined debt is more than its GDP. But this is not the US, where loans were handed out to anyone who wanted one.
In the past decade, those who have been able to get on the property ladder have benefited from rising house prices. That includes Northern Rock customers, who were able to buy a first home with a 100 per cent or even a 110 per cent mortgage. It is important to note that the bank is in trouble now not because those loans are looking dodgy, but because of market circumstances outside its control. Northern Rock will undoubtedly revise its product line-up, and if house prices start to dip, then 100 per cent plus mortgages, which do not require any deposits, will disappear from the market. This, depending on your viewpoint, is either a very good thing because it encourages sensible lending, or a very bad one, as it unfortunately makes it harder for first-time buyers to get on the property ladder.
What is certain is that Northern Rock will struggle to undo the damage done to its reputation. As a brand, it will no longer command the trust that is a pre-requisite for consumers looking for a loan or a mortgage. It will always be seen as the mortgage provider that was bailed out by the Bank of England.
Large mergers and acquisitions in the City have ground to a halt, as bankers sit on their hands and wait for the credit crisis to work its way out of the system. There must now be serious doubts as to whether Delta Two, the Qatari-based fund, can push through a takeover offer for J Sainsbury, and the market was awash with rumours on Friday that Royal Bank of Scotland will be hard pushed to raise the capital it needs to complete the acquisition of ABN Amro.
Back to basics at ITV
Michael Grade's ambition to transform ITV into a programming powerhouse will take more than words. For every decent show the broadcaster has made in recent years, it has churned out a donkey. The company needs to stop imitating the BBC and go back to its roots of making solid, original television with mass market appeal. It has to stop being obsessed with celebrity and start treating its audience like intelligent human beings.
Grade's comments that ITV must make more money on the internet is not really new. Charles Allen, his predecessor, started ITV's journey into multimedia with the acquisition of Friends Reunited. It was a bold deal that puzzled analysts at the time. But since it bought Friends, it has done too little with it. Allen lacked a masterplan when it came to the internet, and acquisitions were made on a piecemeal and opportunistic basis. What ITV lacks, and must endeavour to find, is a strong brand presence that will make it stand out on the internet among its dozens of rivals, from Google to YouTube and every broadcaster in between.
Grade knows that ITV has to become a multimedia company in order to survive. But every other media organisation is pursuing a similar strategy, regardless of whether their starting point is in TV, radio, newspapers or the web. ITV's acceptance that it has to evolve to compete is correct, but Grade has to execute his plan to perfection. He is absolutely right that it will be first-rate content that will separate ITV from the pack. But finding effective ways to monetise that content will be key.