The collapse of Northern Rock was the first example of a run on a British bank in over a century.

In September last year its problems became public. It received a liquidity support agreement from the Bank of England, after experiencing problems caused by the ongoing US sub-prime mortgage crisis. On the 17th February this year, the government announced that, since no reasonable offers had been forthcoming from potential buyers, Northern Rock would be nationalised. £26 billion was “lent” by the government to prop up the bank while waiting for offers to take it over. Now the cost to the taxpayer is estimated to top £50 billion.

As a side note: that amount would be enough to offer every non-indigenous Brit a resettlement grant of around £7,000 (that’s £21,000 for a family with one child).

What newspaper reports have consistently failed to touch upon is that one major reason why the bank is being propped up is to maintain public confidence. Without such public confidence there could easily be a panic in which people withdraw all their money from financial institutions, causing a major crash.

It is only a matter of time until such a crash occurs, as pressures are building up globally.

The house of cards is teetering.