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Northern Rock & Giant Space Rocks......
Comments
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grizzly1911 wrote: »Because it have over extended itself.
I worked on a securitisation project running up to the mid noughties it was an accident waiting to happen.
Quite. As NR's accounts for 2008 revealed. "Total equity attributable to equity shareholders" at 31 December 2007 was £1663.5m; at 31 December 2008 it was minus £402.2m. Or as the directors so helpfully put it "Capital resources have been negatively impacted by the reported loss in 2008. Regulatory core Tier 1 capital fell to minus £17.1 million at 31 December 2008..."
Ooops, there goes the bank.:)0 -
Graham_Devon wrote: »This thread needs some context applied.
Car accidents happen. We do our best and spend lots of money trying to prevent them. The only way you can irradicate them is to irradicate the car.
That does not mean though, that we shouldn't do our best to minimise the impacts when a car does crash and instead just abandon trying to reduce the impacts and fatalities. That includes removing known problem cars from the road.
.
To follow up with that analogy then, reducing the speed that accidents occur at does reduce the chances of death and serious injury.
We have seen the progressive lowering of many speed limits in the UK over the last few decades.
Many country roads that used to be 60mph are now 50mph, and many areas in towns that used to be 30mph are now 20mph.
The safety campaigners will no doubt continue to campaign for limits to be reduced still further.
How far is too far?
At what point does the loss of time, money and convenience become an unacceptable price to pay for every greater safety?“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Regulatory core Tier 1 capital fell to minus £17.1 million at 31 December 2008..."
Ooops, there goes the bank.:)
Having more capital on hand wouldn't have saved Northern Rock.
By December 2008 the damage had already been done, and it wasn't a lack of share capital that caused it.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
What we need is three large space rocks.
One to fall on Brussels, one on Luxembourg, and the other on Strasbourg. We would then be sure this is a 'sign' from 'someone out there.0 -
HAMISH_MCTAVISH wrote: »Having more capital on hand wouldn't have saved Northern Rock.
By December 2008 the damage had already been done, and it wasn't a lack of share capital that caused it.
You utterly miss the point.
The scale of the impairment losses recognised in 2008 were sufficient to bring the Northern Rock down. Ergo NR would have failed whatever. The fact that the immediate cause of its failure was that a securitisation issue scheduled for the 17th September 2007 had no takers is immaterial. There was a reason why no one wanted to buy.:)0 -
Loughton_Monkey wrote: »What we need is three large space rocks.
One to fall on Brussels, one on Luxembourg, and the other on Strasbourg. We would then be sure this is a 'sign' from 'someone out there.
Leave Luxembourg out of it. We don't want to take Amazon offline. Strasbourg and Brussels should be enough.
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Many in the financial services industry knew the securities being traded were near worthless.
just didn't want look too close and rock the boat as they knew the whole thing would come crashing down0 -
HAMISH_MCTAVISH wrote: »Nothing wrong with securitisation.
Provided the BOE fulfil their obligation as lender of last resort to maintain liquidity in times of crisis.
Nothing wrong providing there is someone there to bail them out when we get it wrong.
Distance responsibility for actions and it is no surprise that actions become irresponsible.
Wrapping turds in fancy paper doesn't make them any more desirable."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Loughton_Monkey wrote: »What we need is three large space rocks.
One to fall on Brussels, one on Luxembourg, and the other on Strasbourg. We would then be sure this is a 'sign' from 'someone out there.
Just add New York, Washington and Berlin and call it full house."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
You utterly miss the point.
No, I really don't.The scale of the impairment losses recognised in 2008 were sufficient to bring the Northern Rock down. Ergo NR would have failed whatever.
The actual defaults on mortgage lending were nowhere near enough to bring down Northern Rock.
The (needless as it turns out) panic over what those defaults might have been, was however, more than enough to trash the value of the assets still on the books and cause the bank to technically become insolvent.The fact that the immediate cause of its failure was that a securitisation issue scheduled for the 17th September 2007 had no takers is immaterial. There was a reason why no one wanted to buy.:)
Nonsense.
It's extremely material.
The credit crunch had started by then, and the reason nobody wanted to buy is precisely because Northern Rock had already gone to the BOE looking for funding in August as the wholesale markets froze.
Merv knew about the NR cash squeeze at least as early as August 14th, and they could have prevented the run on the bank and it's subsequent tailspin into oblivion had they acted earlier and more decisively.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0
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