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northern rock on the news begging for cash
Comments
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aparently people are queueing up at their branches to pull their cash out0
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BobProperty wrote: »Anyone with a put option must have made a killing this morning.
Lots of people in the know have been suggesting this for weeks now.
By the way, if anyone is wondering about the possibility of any other lender doing this too they might consider doing a bit of web research on Bradford and Bingley. Like NR, they are well known for offering 'sub-prime' type mortgage products.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
Whats a put option ?0
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sinizterguy wrote: »Whats a put option ?
http://en.wikipedia.org/wiki/Put_option
Basically, you buy the right to sell NR shares at a certain value up to a defined date.
If the price drops below that value during the period of the put option, you can make a killing by exercising the right to sell at a higher price.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
I'm of two minds about this.
On the one hand it's disgraceful that the finance industry comes up with ever more exotic and risky products to make themselves huge amounts of money in the knowledge that at the end of the day when it all goes TU they will be bailed out for no other reason than the central bank can't afford not to bail them out.
On the other hand - if a major bank like NR crashed it would undermine the whole pack of cards that the financial system is built on at the moment which most certainly would be disastrous for us all.
What's needed is better regulation in the financial sector so we get back to sound fiscal foundations. Unfortunately, the huge finance industry in London is based upon the premise that London is just about the least regulated market in Europe. On a similar note, the deals that nearly broke IKB and Sachsen LB in Germany were carried out 'on the sly' at their offshoots in Dublin for the simple reason that they weren't subject to the scruntiny of the German banking regulators. Dublin has copied London's lead in offering a regulation-free environment to financial organisations. Makes you wonder what sort of shady stuff is going on behind the doors of 'reputable' banks and brokerages in London.
Frankly the whole system is a disgrace. Governments have given the markets carte blanche to make themselves huge amounts of money in any way they see fit and stand ready to underwrite the whole mess when it all crashes. Either directly with taxpayer-funded bailouts or (as increasing amounts of people suspect) by abandoning decades of efforts to control inflation and going ahead with inflationary policies to save borrowers' and lenders' skins.
It's pretty disgraceful. I've worked extremely hard over the last decade to build up a decent amount of savings to buy a house. Because of the 'loan hundreds of thousands to anyone with a pulse' culture house prices have rocketed to absolutely bonkers levels requiring me to borrow a huge amount - even with the deposit I have saved. Additionally, inflation will now erode my savings.
Great - I should have just borrowed recklessly and bet on the government to bail me out.
Excellent and sensible post:rolleyes:0 -
Reports of queues of worried customers outside branches..."Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
Including me but I don't have any spare money or an account to buy puts with. :mad:Lots of people in the know have been suggesting this for weeks now.....A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
Walking up a quite high street at home about an hour ago ... 50-75 people queued up outside branch of NR!0
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The loan is not to keep them solvent its to enable them to continue issuing mortgages.
If they hadn't lent them the money Northern Rock would have stopped issuing new mortgages.
Their existing mortgage book would continue they would either run it down (ie until all were paid off) or sell them to another institution.
Northern Rocks mortgage book is worth more than their current market capitalisation at present.
http://www.david-wilmshurst.co.uk/nrk_merrill160807.pdf
Nigel
Hi Nigel, my thoughts are here:
http://forums.moneysavingexpert.com/showthread.html?p=6279742#post6279742
Can you help translate some of this stuff on the link you have posted. I'm sure it would answer my questions, if I could understand it.
Meanwhile my share are down 25% now.
Is this a buying opportunity ?
Harry0 -
i am no expert on this but !!!!!! you have made your mind up and no amount of discussion is ever likely to change it so why are you constantly posting about how dire the situation is, i suspect you might be on the bank role of another who is likely to make a killing on your negativity.
If you are posting please make it constructive. I havent read anything you have posted as constructive.0
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