Giving loan to troubled bank does not necessary cost anything to british government. But probably british goverment does not all the market interest from forced "investment" it had to make to Northern Rock. The number of losses british goverment has to to take should anyhow be less than 5 % of Northern Rock liabilities. When bank goes to bankrupt is does not mean that bank has no or little assets. Bank just has too little equity or negative equity.
"Giving loan to troubled bank does not necessary cost anything to british government."The loan will neccessarily cost the British Government and the British taxpayers. They are currently estimated to be £55b out of pocket. Doesn't that affect government finances? Doesn't the bail out have massive implications for the industry and the credibility of GB? Doesn't printing 55b have an effect on inflation? What about the fees paid to GS et al? & what about the subprime mortgage book of NR -can you confidently say that there will be few defaults? "When bank goes to bankrupt is does not mean that bank has no or little assets." Well thanks for that, but the assets could turn out to be as shitty as the business plan that NR operated on. I think that the British government would agree with you though -and you can be sure of one thing -they will put their full force behind confusing, hiding and lying about the figures.