Northern Rock is in the mire. Customers have withdrawn £2bn. They are set to withdraw £12bn. Adam Applegarth, the bank's chief executive (salary: £1.35m), says: "Your savings are secure and there is no need for you to withdraw your money based on our recent announcement."

Can it be exepected that Mr Applegarth's money is at the Northern Rock? If it's not, can we expect a John Gummer moment - the Tory MP is remembered for making great public show of feeding his four-year-old daughter Cordelia a hamburger in the midst of the "mad cow" disease scare?

But what does it all mean? The Guardian's editorial make sense of it:

Asymmetric information is common. Supermarkets know more about their food than shoppers; employers cannot be sure prospective recruits have all those qualifications. But most markets try to correct that imbalance. Consumers should be protected by the Food Standards Agency, while licensed bodies certify exam results. There is also the power of reputation; questionable goods are swiftly recalled by any supermarket that values its good name. Whatever forms it takes, assurance is vital to buyers. Without it, markets may seize up.

Read the rest here.Although, as Stumbling and Mumbling says, "Why keep cash in a bank with a tiny risk of default when you can put it into one with no risk?"

Risk, as we know, is all.If it is risky, Northen Rock can always put their savings rates up...

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