This is Money Blog

If Ryanair was responsible for wheel clamping?

Ryanair is notorious (see links below) for adding more and more charges to apparently incredibly cheap flights across Europe.

But this - click image to enlarge - is priceless...

 

...at least it would be if it wasn't so expensive. All credit to the enforcers for being upfront on the poster with their charges, unlike Ryanair, whose page of this-that-and-the-other-thing is buried deep enough in its website to feel like you must be being ripped-off somewhere down the line.

But look a bit closer and these Portsmouth parkies aren't quite as opaque as they first seem.

So, you overstay your welcome at the ferry terminal and they'll move your car to a non-specified destination (a post office box in Waterlooville) charging you £150 plus vat, total £172.50. 

You'll also, or perhaps alternatively, have to pay £135 to have a clamp removed - which has presumably been previously fitted. There is no charge for fitting. Clearly these pesky clamps are much harder to get off than get on. Mercifully there is no VAT on this service.

Obviously, there's a cancellation fee. This is because - and this is pure guess work - it's still illegal to rip vital organs from tardy parkers so you have to go for the financial jugular instead.

If this isn't enough - and it isn't because there's another charge -  there's a £3 fee for paying by card, targeting all those idiots who forgot to bring £407.50 in cash while nipping in to meet a loved one off a cross-Channel boat. Can't pay now? No problem. It's a snip at £27.50 a day from now on.

It gets better.

Question the staff in a way that constitutes abuse - it doesn't say which court of law decides this - and the car will be removed (again?) 'which will result in additional costs'.

And even better still.  

If your car is worth less than these wretched fines they may dispose of it. In other words, your car could be destroyed if someone feels like it! Thus entitling them to a £2,000 car scrappage bounty, no doubt. 

Private policing. It's the best way I've seen of getting the country out of recession. Now where do I buy shares?

Related

>> Share dealing service

>> VAT Calculator

>> Scandal of motorists clamped on private land (Mail Online)

>> Ryanair may make passengers stand

>> Ryanair to make passengers carry luggage

>> Ryanair charges passenger to check in

>> Ryanair considers charging to toilet

>> Ryanair share price

>> Now Ryanair charges for NOT taking a bag

Nationwide Building Society's slipped halo: Part II

In March, I asked whether Nationwide was losing its halo?

The response from readers was astonishing with 55 comments (plus a handful of other unpublishable messages!).  A previously treasured financial brand was apparently alienating many of its loyal customers. Most were hacked off with poor savings rates.

Four months on, and now questions are being asked of Nationwide's rapid expansion: Britain's biggest building society is now much bigger having swallowed up struggling rivals Cheshire, Derbyshire and Dunfermiline.

So what's your view? Are members suffering as a result of the expansion? Just pop your comments in the box below - and don't forget to vote in our Nationwide poll.

- Andrew Oxlade, Editor, This is Money

Wrath, grapes and a lesson in international isolationism

It has been a while since I last blogged on the Great Depression, but don’t worry: nothing about the thirties has changed. History can be relied on to stay roughly where it is while we pause for thought.

Which is comforting in a way. As each day brings news of another firm hitting the buffers – most recently National Express got the nationalisation treatment – at least we can look back to those past experiences as we attempt to rebuild our future.

One of the things about the Depression I’ve mentioned several times in this blog is the idea that each person suffered in his or her own unique way. The descent into poverty arrived specifically according to one’s age, skin colour, location, station in life, health, bank balance etc. – in short, it varied according to who and what you were.

Nobody is actually an average worker or homeowner, despite what media reports might ask us to believe at times. And so while the bread lines, soup kitchens, failed fiscal policies, and radical extremism did represent important characteristics of the era, talking about them doesn’t really get under the skin of what it was actually like to live through it. I’ve been indulging in a few old 1930s books recently, as you do, and the point really hits home.

Take a look, for example, at the accounts of the rural American poor in The Grapes of Wrath, that classic 1939 novel written by John Steinbeck, or Tobacco Road, a masterpiece of the late Erskine Caldwell. As both books poignantly recount the travails of rural farming families battling against the poverty of Depression, you start to understand that theirs was a struggle that hit entire communities but, crucially, in a deeply personal way, unique to the particular individual.

That’s the power of fiction. You feel like you can access individual existences through the intricate weavings of the prose. For sure, they are the fictional imaginings of Steinbeck and Caldwell, but there is a sense of touching the past, engaging with it in a way you just can’t do with the standard coffee-table history books of a Niall Ferguson or Antony Beevor, no matter how engrossingly they read.

You can almost feel the desperation it must take to harbour the craving for raw turnips that grips the entire Leester family throughout Tobacco Road, or the wrenching pain of injustice at the hands of a landowner as he forces your entire family to leave behind a way of life passed down through generations. As the plots of these novels thicken, today’s problems - in the wealthy West anyway - begin to seem trivial in comparison.

Back to the Depression itself, then. Having acknowledged that no society is made up of average persons, it seems almost logical that humans should think in terms of what is best for “me” rather than “us”. And exactly that happened across the world in the 1930s. Firstly, the booming free-market capitalism and stock-market lunacy of the 1920s encouraged an indiviualistic (some would say selfish) approach to wealth creation that tended towards peaks, troughs, and crises. And, perhaps as an expected progression, the response of national decision-makers was equally egocentric. In 1932 the historian-economist Paul Einzig reacted to the Bank of England’s suspension of the gold standard (21 September 1931) with the cry that “the international calamity has been accentuated by the efforts of practically every country to work out its own salvation irrespective of the interests of other countries”.

Indeed, the Bank of England’s move had crippling effects across the world. In America, for instance, the Federal Reserve’s response was to raise interest rates in an attempt to stabilise the US gold outflow that was putting pressure on banking reserves. But the actions of the power-brokers backfired and the subsequent squeeze on credit simply made corporate borrowing even more difficult.

Inevitably, more firms failed, and worse, this rippled onto the banks: they, too, closed en masse. Incidentally, banks had been in dire straights since around December 1930, when a momentous loss of confidence accompanied the collapse of the Bank of United States and its $200m of deposits. It was the largest commercial bank failure America had ever experienced and the event spread fear among depositors. For a good while it had looked pretty grim for the banking sector, but hiking rates so sharply in 1931 – it was the quickest rise in Fed history – prompted a spectacular increase in the insolvencies, and in the month following the decision a mammoth 522 commercial banks plunged out of existence.

What would have happened if there had been more cooperation between nations and President Herbert Hoover had talked to Prime Minister Ramsey MacDonald about suspending the gold standard? Maybe it would have helped the US economy avert the disaster for which it seemed destined, it is impossible to say for certain, but whether it would have had a positive effect on Britain’s financial health ... debatable. Today we live in a more globally interconnected community. Gordon Brown meets with the G8 this week knowing that conjoined efforts to avert crisis are absolutely necessary and, unlike the case was in the thirties, acting in isolation is absolutely out of the question.

- Dan Hyde, This is Money

2-for-1 Jongleurs Comedy Club tickets

Fancy a laugh? Well we've gone and done it again: This is Money has joined forces with Jongleurs, the world’s largest comedy chain, to offer every reader 2 for 1 tickets.  This offer is valid from today, right through until August 7th 2009.

Visitors will be treated to a an international comedy line-up, a range of food and drink and friendly table service.  And with entry to the after show party included in the ticket price you can round off the evening on the dance-floor without having to scramble for a taxi or queue up for a club!

You might be planning a special celebration or a night out with friends? Either way, it is a great way to save money on a night out. (See www.jongleurs.com for a full list of UK venues).

Anyone can claim 2 for 1 tickets to Jongleurs. Log on to www.jongleurs.com or call the Jongleurs box office on 0844 844 0044 quoting MONEY24109.

Tara Evans, journalist, This is Money

- Do you have a money saving tip? Share it on our message

Terms and conditions
1. Offer valid until August 7th 2009. 2. Maximum party size of 12 people. 3. Offer can be redeemed at www.jongleurs.com or via the box office on 0844 844 0044. Offer not available in Leeds. 4. Offer tickets subject to availability and must be booked in advance. 5. Full-price tickets may be available to purchase when all the tickets under the offer have been sold. 6. A non-refundable booking fee of £1 applies to all tickets booked online, and £1.50 per ticket when booked via the box office. 7. Food and drink not included. 8. No cash alternative. 9. Over 18s only (ID may be required).  10. Management discretion for admission applies. 11. Not to be used in conjunction with any other offer. 13. Promoter: Regent Inns,Rowley House, South Herts Campus, Borehamwood, WD6 1SH. See the website for full terms and conditions and comedy listings.

Is now the time to get out of the property market?

If you haven’t done so already, with house prices staging a mild revival is now the time to bail out of the property market?

Statistics put house prices down about 20% from the August 2007 peak (Halifax). But speak to those who live in mid to high demand areas and anecdotal evidence says we’re in a mini-boom.

Sold signs are going up outside properties that have sat on agents’ books for months, buyers are outnumbering sellers and the supply of decent property is ‘acute’ according to the Royal Institution of Chartered Surveyors.

So if you're not in negative equity, is now the time to take the money and run? That is choose a hopeful but within reason asking price, take a decent offer and put the money in the bank.

Because in my view common sense says rising unemployment, falling wages and no more rate cuts in the bag says prices have a bit further to fall.

The property market where I live, Stroud Green in North London, is just one of the many patches around the country undergoing a minor revival.

Asking prices had fallen back by about 10% from the heady days of 2007, but still there were certain properties sitting on agents books and not selling. Now sold signs are going up on these properties, without any asking price reductions. New properties on the market have asking prices about 5% below 2007 levels and sold signs go up almost immediately.

There is a serious whiff of the mania of 2006 and 2007: an ‘if I don’t buy now, I’ll miss the chance’ mood.

So should my wife and I take advantage, stick our flat on the market, sell up and wait on the sidelines? It’s tempting but I’m not so sure. There’s a number of minor reasons: principally £300 for a Home Information Pack and £2,000 worth of mortgage early repayment charges.

But the big reason is I like my home. We could protect ourselves now and gain the upper hand later, but we’d have to move and live in a rented flat.

Essentially we’d be lowering our level of happiness to take a punt on the property market falling. Would you do that?

- Simon Lambert, assistant editor, This is Money

- Interest rates: What next - news and analysis

- Property prices: What next - news and analysis

House prices debate on Radio 4 Moneybox

With house prices apparently stabilising, I was asked today to debate the issue on Radio 4's Moneybox [ listen here - at 11mins. Or the link just for house prices] with the programme interested in my previous comments about affordability measures. I think they're a misleading tool, that was used to justify inflated property values during the bubble years. To gauge how genuinely 'cheap' property is, it should only be measured against earnings.

Mortgage lenders and brokers - such as Ray Boulger of Charcol, who was part of the live debate - suggest affordability is returning. Ray says we've hit the bottom. Here are the two key factors used to justify this - and my reasoning as to why it's wrong.

'Affordability is returning'...
...Well it would be, with interest rates at unprecedented lows.  But this measure, based on the cost of mortgages and wages, is only a short-term driver on the market. Rates have fallen to near-zero so it is helping support the market now. If the bank rate were to raise to, say, 2.5% next year then house prices would suddenly become very unaffordable again.

Quantitative easing could help increase credit to consumers and this could help push house prices up - but again, this would be a short-term driver.

The purer wages alone vs house prices gives the clearest indicator of the 'cheapness' of property. [And old post explains why fair value is £126,000 compared to the current £160,000-ish - and see the image below]

But there is limited supply of property in the UK...
That's right. And I suspect there is a shortage squeeze happening now driven largely by the fact would-be 'downsizers' and other sellers are holding back, waiting for the market to 'come back' (there could be a flood of these coming on to the market when the owners realise prices might take years or even decades to regain earlier highs).

As with any market, supply and demand is a key factor. While supply may remain tight, demand will be undermined by a very weak economy. And the economy will remain weak because of the enormous debts we all owe (£1trillion) and the colossal public debt. This will be further aggravated by a rapidly ageing British population.

So the supply and demand is just misrepresented to suggest that a dense country will always have rising prices. But uber-compact Hong Kong had falling prices for seven years up to the early Noughties and in Japan, which has comparable population density, prices have been falling since 1989. It followed a giant debt-fuelled consumer spending boom and banking collapse. Sound familiar?

- Andrew Oxlade, Editor, This is Money

The problem in a nutshell (a little out of date but you get the idea)

Retire at 70? No chance. Our unfixable demographic problem

This demograhic problem is really coming home to roost.

It's a pet subject of mine...

- Demographic investments - I'm loving the returns (Apr 2009)
- How baby boomers will extend the financial crisis (Jan 2009)
- Demographics make emerging markets a screaming buy (Jan 2009)
- Demographics to spark a shares slump next year (Dec 2007)
- Demographics will spark a 15-yr slump, starting with London house prices in 2008 (Mar 2002)

...so I thoroughly enjoy these spells when the issue of population surges up the news agenda, given it is possibly the biggest and most immediate challenge facing the developed world...

- FSA boss says work until you're 70 (Daily Mail)
- Special report on ageing populations (The Economist - front page)

The problem in a nutshell

The post-war baby booms in Western economies (1945 to 1965) mean that a huge bulge in the population is transfering from contributing to the economy to taking from the economy because they are:
- Less likely to pay tax
- Less likely to spend
- More likely to use costly public services
- Certain to draw a state pension increasing pressure on public finances
- Likely to draw on stretched company pension schemes, increasing pressure on company finances

All these factors are then amplified by increasing longevity - life expectancy when the full state pension was introduced in the 1940s was around the same as pensionable age. Now it's 77 for men, and increasing by two years every decade.

The crest of this population bulge hits retirement age next year (or four years ago for women).

Before I trigger the hate mail/comments, I entirely accept that this hard-working generation deserves a well-earned retirement. I'm simply laying out the harsh reality of the economic impact.

And the solutions?

- Dramatically increase the pensionable age
- Dramatically increase immigration (a younger population helps pay for the old)

The first option is now impossible. The older population bulge also have the most votes - so no government would dare force them to work signifcantly longer. The opportunity has been lost. So open the floodgates to immigration? Again, political suicide.

So that's it. Just grin and bear it. The Japanese, who hit their own demographic wall 20 years before us in 1989, seem to have come to terms with the fact they're not constantly getting richer. Now we need to make the same adjustment.

- Andrew Oxlade, Editor, This is Money

- www.twitter.com/aoxlade
- www.twitter.com/thisismoney

My buy-to-let barometer swings from plus to minus

In April 2009, I launched the This is Money buy-to-let barometer, a very slightly more sophisticated follow--up to my dismal house price predictor which, in June 2007, pointed to house price falls.

How the buy-to-let barometer works

We're lucky enough to have the strength of our content recognised by Google. So when you search buy-to-let our buy-to-let guide is the top result. So if we measure the amount of people clicking on it, we can gauge British appetite for investing in property. Admittedly, the extra variable of schadenfreude BTL searchers may have a slight impact on the results.

I combine this with Google Trends, which gives a rough idea of people searching for particular phrases.

My previous views on the market

I have written recently on how the market has a lot further to fall, if the market realigns itself with the long-term trend of prices versus average salaries.. The average UK house price - currently around £160,000 (Halifax) - should bottom out anywhere between £99,000 and £126,000.

But there's a big but... I've also warned on this blog of how the decline will be undulating - and the market could even see decent, sustained rises. Vast amounts of printed money - quantitative easing - have been pumped into the financial system. This is helping to increase the ability of companies to raise money and for banks to lend money. As I warned before, that could give a fillip to the market. And it looks ever more likely now that they are: [property market latest].

What does the not-so-dismal buy-to-let barometer suggest now?

In June, 2033 people searched 'buy-to-let' and clicked on our BTL guide. The figure spiked in January and fell and has hovered a little above 2,000 since then.
January: 3,322
February: 3,191
March: 2,969
April: 2,101
May: 2,024
June: 2,033

But that's not the real measure. That's because interest in BTL traditionally peaks in January and then falls (see the Google Trends chart below). The more interesting trend is year-on-year. So in January, the number of people reaching our BTL guide leapt 85% on January 2008. But that increased interest appears to evapourated in recent months and was actually down in June...
Year-on-year increase
January: +85%
February: +53%
March: +27%
April: +1%
May: +3%
June: -2%

The property market has benefited from renewed interest - several studies have reported price rises, some over several months. With the Bank of England still merrily pumping money into the system momentum may be sustained. Maybe a second mini-bubble will reinflate. However, confidence alone will not provide solid, long-term returns from property.

Investment bubbles are only fully deflated once nearly all investors give up all hope of the asset ever rising again. Like I said last time, we've got a way to go.

- Andrew Oxlade, Editor, This is Money

P.S. Moneybox on BBC Radio 4 have kindly asked me to come on the show for a live debate tomorrow at midday. Unsurprisingly, I'm arguing the case for the bears.

- www.twitter.com/aoxlade
- www.twitter.com/thisismoney

Number of Google searches for "buy-to-let"

The top 10 movies about money

Hollywood is gearing up for revenge on uber swindler Bernard Madoff, surely it is. After all, many Tinsel Town alumni - Steven Spielberg, John Malkovich and Kevin Bacon, are reportedly among those who were taken for a ride by the man behind the planet’s biggest ever pyramid selling scheme.

But retribution aside, there is a story to be told, and indeed money to be made. Given the length (20 years plus) and breadth ($64bn and counting) of the scandal, celluloid treatment must be a given.

At the end of the day, Hollywood has lavishly covered furores that don’t hold a candle to the former Nasdaq chairman’s crimes.

But while we wait with baited breath for the inevitable flick, I conducted a brief and largely unscientific survey across This is Money towers on the best movies about money, business and finance.

We ejected gangster flicks, bank robberies et al, the main stipulation was that money itself, had to be essential to the film’s plot. And that means money was almost, if not completely, a character in itself, or at least played a pivotal role in the plot and/or the environment of the story.

So, in no particular order, here’s This is Money's top 10 films about wonga:   

1. Wall Street (1987)

The quintessential cash flick. Wanting all the toys and fun that the 1980s yuppie-life had on offer, a tenacious young stockbroker Bud Fox, (Charlie Sheen) is taken under the wing of scruples-free financier Gordon Gekko (Michael Douglas) and as a result gets involved in such goings on as shadowy business deals, insider trading and generally the type of naughtiness that’s frowned upon by the authorities. Oliver Stone’s classic is also noteworthy for the depiction of brick-sized mobile phones. And a sequel is on its way.

Key quote

Gordon Gekko: ‘The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works.’

*Buy it here

2. Trading Places (1983)

Set-upon but over-privileged broker Louis Winthorpe III (Dan Aykroyd) and street hustler Billy Ray Valentine (Eddie Murphy) take on spiteful millionaire commodity traders Mortimer and Randolph Duke in a bid to make a fortune and send the pair into poverty, all by dabbling in the glamorous world of orange futures. Yes really.

Key quote

Louis Winthorpe III: ‘You make no friends in the pits and you take no prisoners. One minute you're up half a million in soybeans and the next, boom, your kids don't go to college and they've repossessed your Bentley. Are you with me?’

*Buy it here

3. Glengarry Glen Ross (1992)

No doubt put millions off a life in the seemingly lucrative business of real estate. This anti-American dream allegory depicts the hell of working for the titular US firm, where backstabbing, ritual humiliation and failure are all in a days work, as a ruthless boss, Blake (Alec Baldwin), piles on the pressure and then some.

Key quote

Blake: ‘A-B-C. A-Always, B-Be, C-Closing. Always be closing, always be closing!’

*Buy it here

4. Boiler room (2000)

Seduced by the promise of enormous wealth by young millionaire Jim Young, (Ben Affleck) college dropout Seth Davis (Giovanni Ribisi) naively joins a firm of crooked stockbrokers, J.T. Marlin, whereby he leaves his morals at the door and is fast-tracked to super-salesman status, until the FBI come knocking, that is.

Key quote

Jim Young: ‘Anybody who tells you money is the root of all evil doesn't f**king have any.’

*Buy it here

5. Rogue Trader (1999)

Former ‘trainspotter’ Ewan McGregor, swapped smack for cash in this biopic of the notorious Barings Bank trader Nick Leeson. While his employers believe he is one of their hotshots in Jakarta, Leeson is in fact losing money hand over fist and covering it all up. Leeson’s creative accounting eventually brought the bank to its knees and put the ‘wide-boy’ trader behind bars.

Key quote:

Nick Leeson: ‘I, Nicholas Leeson, have just lost 50 million quid, in one day’

*Buy it here

6. Risky Business (1983)

Squeaky-clean US teenager Joel Goodson (Tom Cruise) is left the keys of the kingdom while his parents go on holiday. But during his few days of blessed freedom, following a dalliance with call-girl Lana, he manages to drown his father’s beloved Porsche in Lake Michigan. In a bid to drum up the cash to repair the car, he goes ‘pimp’ and turns his parental home into a den of iniquity for the weekend.

Key quote

Joel Goodsen (regarding Lana): ‘It was great the way her mind worked. No guilt, no doubts, no fear. None of my specialities, just the shameless pursuit of immediate gratification. What a capitalist.’

*Buy it here

7. Hudsucker Proxy (1994)

Back in the mid-nineties, the Coen ‘No Country for Old Men’ Brothers dipped their zany toes into the murky world of business. Following the suicide of the Hudsucker Corporation boss, gormless post-room worker Norville Barnes, (Tim Robbins), is rocketed to the status of company President by scheming director Sidney J. Mussburger (Paul Newman), who believes the feeble Barnes will drive the cost of the stock down so he and his greedy cohorts can scoop it up at a bargain basement price and take over the company. Unfortunately Barnes invents the hula-hoop and the group’s shares rise quicker and louder than a 10-year-old on Christmas morning.

Key quote

Sidney J. Mussburger: ‘One month; to make the blue chip investment of the century look like a round trip ticket on the Titanic…What we need now is a new president who will inspire panic in the stockholder.’

8. American Psycho (2000)

The film adaptation of Brett Easton Ellis’ classic piece of 1980s fiction, is anchored by anti-hero, investment banker, Patrick (‘I’m in murders and executions’) Bateman (Christian Bale), who has a lively penchant for slicing, dicing and even chain-sawing all who cross his path. The film easily sits as the ‘darker’ cousin of Wall Street, (same period – same place) and effortlessly depicts the shallow, soulless vacuum of 1980s high-flyers in New York’s financial district, where image and the bulge of your bank balance are everything.

Key quote

Patrick Bateman: ‘I have all the characteristics of a human being: blood, flesh, skin, hair; but not a single, clear, identifiable emotion, except for greed and disgust.’

*Buy it here

9. Slumdog Millionaire (2008)

The multi-award winning Mumbai based fairytale finds 18 year-old orphan and ‘slumdog’ Jamal as a contestant on the Indian version of Who Wants to Be a Millionaire, with his lessons and experiences of life guiding him through the answers. But is he interested in the millions of rupees potentially heading his way? Apparently no. It’s merely a ploy to reach out and rescue, Latika, the girl whom he loves but has lost. However, despite being questioned, interrogated and then tortured, for suspicion of cheating, it all comes good in the end as Jamal goes the distance, after which, his lost love comes a running. No doubt the same would have happened had he run out of lifelines and washed out after question four. 

Key quote

Who Wants to Be a Millionaire presenter, Prem Kumar: ‘A few hours ago, you were giving chai for the phone walahs. And now you're richer than they will ever be. What a player!’

*Buy it here

10. Brewster's Millions (1985)

Montgomery Brewster (Richard Pryor) is a small-time baseball player, set a task which in this day and age, the Paris Hilton’s of the world could do in a single morning – he has to squander $30m in just 30 days, because if he does, he’ll inherit $300m from his eccentric relative.

Key quote

Montgomery Brewster: ‘Gentlemen, do you think I'm a lowlife?’ Tailor: 'Oh no, Mr. Brewster. Not with these clothes.'

*Buy it here

- Philip Scott, (resident film buff),This is Money

Will Tesco buy Northern Rock and why would it?

Will Tesco buy Northern Rock? A report in today’s Times claims the supermarket giant has expressed ‘provisional interest in buying the bank’.

There's nothing really in the report backing up the story, so essentially it's a rumour, although a Treasury source is there giving a steer on offloading the Rock.

But it would certainly make sense for Tesco to nab itself a bigger slice of the UK banking pie, as it is pushing hard to expand its bank having bought out RBS’ 50% share of joint venture Tesco Personal Finance.

But will this latest report turn out to just be another 'Northern Rock to be bought' red herring?

There have already been plenty of rumours circulating about bidders for the collapsed bank, taken into state control last year after months spent trying to find a buyer. The list of those, along with Tesco, who reckon they could make a go of the bank includes Sir Richard Branson and private equity groups.

But, if no one wanted the bank enough to take it over at a knock down price as it floundered early last year, why would they want it now?

Well, the Government is pretty much a distressed seller, it is strapped for cash and would dearly love to be able to turn around and say 'we made a success of the Northern Rock rescue' before the next election. This theoretically means a canny buyer could potentially name the price and conditions.

The problems our big banks still face is that they got too clever for their own good and rushed gung ho either into investment arms that they believed could never fail, or ramping up their mortgage books on foundations made of sand. But strip away these problems and retail banking is a highly profitable industry.

In April, Tesco revealed record profits of £3.13bn profits: to make this cash it has to run a colossal global retailing organisation.

In January 2007, before everything went catastrophically wrong for it, Northern Rock announced profits of £588m: it was just a UK-based mortgage lender.

Obviously, you would hope, Tesco wouldn’t be pursuing the madcap money market strategy that led to Northern Rock’s collapse, and it shouldn’t need to. It has increased the amount of savings deposits it holds from £2.5bn in mid-October 2008 to £4.5bn this spring, has struck a new insurance deal, and is priming itself for a launch into the mortgage market that should pick up steam as the housing market recovers and interest rates rise.

So that’s why Tesco could want Northern Rock, and why Virgin could too and others also reckon they could make a go of it. The UK banking sector is hamstrung by bad debts, taxpayer investment and a lack of trust, so there are potentially very rich pickings for any fresh blood entering the market.

The only problem is that surely the one lesson to learn from the crisis has been that banks mustn’t be too big to fail. And does a bank owned by the country’s biggest supermarket and retailer not also fall into that too big to fail pot?

- Simon Lambert, assistant editor, This is Money

- How Tesco and Virgin can be the new giants of banking

- Video: Supermarket banking - will it work?