September 17, 2007 (LPAC)-- Watching the panic in the streets growing by the hour, the British government finally announced today that it would guarantee 100% of all deposits at the beleaguered mortgage lender Northern Rock. The British Chancellor of the Exchequer Alistair Darling made the announcement late Monday, after emerging from a meeting with US Treasury Secretary Hank Paulson. Darling also said that the same insurance would be extended to any other institution which found itself in similar trouble in the near future.

This move should not be read as an emergence of the General Welfare principle among the British ruling circles. British law does include some depositor protections, however it is significantly less than the $100,000 guarantee of the Roosevelt-created FDIC (Federal Deposit Insurance Corporation). Darling and Paulson are both aware of the systemic breakdown potential of the current crisis, and Darling faces the imminent collapse of Alliance & Leicester, whose stock dropped 31% on the mere rumor that it had sought emergency funding in a manner similar to Northern Rock.

Darling's actions work as well to save the Rock's investors, who were facing the possibility that their stake could be reduced to "pence on the pound," should Northern file for bankruptcy. Coverage in the Wall Street Journal raises the ghost of "the [once] prestigious investment bank" Barings, which was ultimately sold for a "token" 10 pounds, after being struck by a "rogue trader" who caused billions in losses.