October 9, 2007 (LPAC)--The Financial Times Deutschland today runs a nasty, but effective cartoon, accompanying its article about the bankrupt British bank, Northern Rock, showing six locusts in black suits and briefcases, lining up at the door of Northern Rock. The grim cartoon is to signify that suddenly, interest in buying the bankrupt British Bank for a dime on the dollar, is high among speculative funds. The six locusts are in reality five hedge funds: former Goldman Sachs official J.C. Flowers, Cerberus, Blackstone, Apollo and Lonestar. At the same time, Citigroup is reported to be ready to provide a credit line of 15 billion euros! And the Citigroup bailout is coming after a liquidity transfusion of 11 billion pounds didn't work.

The impression from the FT is that a Plunge Protection Team is at work to organize a "rescue" of Northern Rock's 20 billion-plus debt obligation, which is seen as a systemic risk.

Currently, Northern Rock is de facto under central bank funding, and a transition must be arranged to a commercial bank funding. If Citigroup's commitment is confirmed, other commercial banks could be convinced to jump into the deal. Of course, all these banks are hanging on the central bank daily money-pump.

But, as the Times online today reports, "with 11 billion pounds [15.9 billion euro] of taxpayers' money lent to Northern Rock so far, any deal will be fraught with complications". Another source familiar with the negotiations said: "No one's been here before. It's a hideously complicated situation. There's going to be no simple solution". Meanwhile, the tripartite committee which is supposed to coordinate the rescue, composed by the Bank of England, the British Treasury and the Financial Services Administration, is increasingly under criticism for their handling of the crisis.

The British Bankers Association yesterday fired on the BoE for failing to loosen the rules on emergency aids two weeks earlier. And the FT today has an editorial listing "Ten questions to ask the FSA" on Northern Rock.