Northern Rock, according to the FTs 28 June edition, ’surprised the City yesterday by saying it had been caught out by the effect of higher funding (i.e. interest rate) costs…warning that profits would be below forecasts…

‘Adam Applegarth , chief executive said: ‘If anyone had forecast a 70 basis point increase in two-year swap rates and a 40 basis point increase in Libor we’d all be in Monte Carlo driving Ferraris …..’

Excuse me: I, together with many other distinguished economists, predicted rising interest rates in my book, ‘The coming first world debt crisis‘ published by Palgrave in October, 2006. But no-one, so far, has rewarded me with a house in Monte Carlo and a Ferrari!

More to the point: how can the chief executive of a mortgage bank have been as unprepared as this for a rise in interest rates? How ignorant can one be, to qualify for the role of overseer/chief executive of a massive lending operation – and to borrow money on international capital markets? And how ignorant can one get away with being, and be registered/deemed acceptable by the Bank of England and other regulatory bodies?

Recklessly ignorant it seems.