February 8, 2008 (LPAC)--The British government's Office of National Statistics has called on Chancellor Alistair Darling to put the debts of Northern Rock bank on to the government debt. This mean adding anywhere between the 24 billion pounds the Bank of England has lent to the bank, to the 100 billion pounds of Northern Rock's total outstanding debt, to Britain's budget deficit. This would increase the budget deficit, which is now about 40 billion pounds to at least 60 billion pounds for this year alone. As far as overall debt, the government debt stands now at 537 billion pounds, or 37.7 percent of gross domestic product, and adding Northern Rock's debts would push it up to at least 45%.

Darling claimed that Northern Rock is still private and that the government is still seeking a private sector buyer, and the ONS did release a statement that the debt has not yet been formally put on the government books. The statement, according to the Guardian, nonetheless said, "The financial liabilities of Northern Rock are substantial. The decision is based on a judgment that the public sector has the power to control Northern Rock Plc's general corporate liability."

The real issue here is that if the Northern Rock bankruptcy is putting the British government deeply in debt because of its bail out. What happens to the government debt if it has to bail out the HSBC, Barclay's and all the other really mega British banks. If, or should it be said, when, that happens then Weimar style hyperinflation will be their.

Meanwhile the European Union's internal markets commission Charlie McCreevy, at a dinner at the Society of Business Economists, said that the Eurozone, with its 44 regulatory agencies, would not have been able to deal with a Northern Rock- style crisis. McCreevy apparently does not refer to the question of the lender of last resort, which is at issue here.