Alistair Darling - Don't be fooled

Flynn_2

EdInvestor wrote: »

That's why they now don't believe what the regulators say.Once bitten twice shy.

Ed, if you are saying that all those people waiting outside NR had previously invested and been "bitten" by Equitable Life, I'd think that is rather unlikely. I doubt many could remember much about it.

Some were there rationally taking their money out because there was no reason not to. Others were there irrationally because they didn't understand the situation and were spooked. Either way, just an illustration of human nature rather than a careful thought process.

Agri47

I think the Moneyweek Editor Merryn Somerset-Webb says it all in this article:

http://www.moneyweek.com/file/35088/how-your-money-could-bail-out-northern-rock-savers.html

Old_Slaphead

Tim_L wrote: »

Equitable Life was essentially running investments for pensions, but had a guarantee of returns that was completely impossible to sustain. They were told by the courts that they couldn't remove the guarantee, so were left in an impossible situation.

It's a completely different situation from Northern Rock, which is running deposit savings accounts, and which remains solvent. The government can make this guarantee quite happily, because it knows there is not a snowball's chance in hell it will actually cost them anything.

There is a fundamental difference between gold plating the security already offered to users of low risk savings accounts, and providing guarantees for riskier investments, which no-one would do. The point is to try to improve customer confidence and stabilise the situation, it's not a long term thing. It would actually cause more harm than good longer term as essentially banks would know they had a one way bet on risky strategies.

Of course it's a different situation -

Point I was making was that the hypocritical government were saying one thing but MPs were doing another. So much for trust.
Do you think the Governments actions helped stabilise the Pensions Industry?

Anyway savers are given reasonable protection so why do they need it goldplating? I'm aware of the rules and spread my investments accordingly so didn't have £30000+ in my Northern Wreck account (and certainly didn't queue up to withdraw any).

tonyivb

I tend to agree with you Steve!

As ever with this Government, the statement by AD is more about being seen to be doing something rather than actually trying to put things right... ie spin!

Over the weekend it was reported that the BoE/NR predicted the level of withdrawals would be greater than the £2bn already taken out, so it begs the question: -

If the level of withdrawals are less than predicted, why is the Government introducing this measure?

Extract from the second sentence of AD's statement (http://www.hm-treasury.gov.uk/newsroom_and_speeches/press/2007/press_95_07.cfm)'...because of the importance I place on maintaining a stable banking system and public confidence in it...'

As we are told the levels of withdrawals are lower than predicted, this suggests that the trigger for the statement was not the amount being withdrawn.

So the Gvt's action has nothing to do with wanting to keep people's money safe and everything to do with trying to control people's actions (sound familiar?).

Can we expect to see AD dragging his son/daughter into a NR branch and forcing them to open an account?

Finally...if Gordon Brown did have an Autumn election planned then he wouldn't want the fallout from this messing things up!