Panic over?

WTF?_2

Alan_M wrote: »

You're finally starting to realise through your own posts that Banking isn't actually a business in most peoples understanding of the terminology.

I disagree that they would have gone to the wall had the bank not stepped in, they would have secured funding elsewhere even if that meant a complete buy out, at what I'm sure would have been a heavily discounted rate.

You've certainly got a condescending way with words, Alan. Unfortunately it doesn't help underpin your argument.

Alan_M wrote: »

As I stated before, it simply wasn't in the countries (governments) interest not to allow them to go without short term funding.

It is for want of a better word an overdraught to solve a short term cashflow problem.

How secure the business model is can only be judged over time, or do you actually know more than the directors of this multi million pound company?

If NR could have secured funding on the markets, they would have. BoE are the 'lender of last resort' ie. No-one else will lend to them.

Now the BoE have done a complete U-turn on their previous policy and more or less anyone can have the sort of deal that NR got.

http://news.bbc.co.uk/1/hi/business/7002628.stm

The Bank of England has made a U-turn in its treatment of banks struggling to deal with the credit crunch. It has announced that it will inject £10bn into the money markets in an attempt to bring three-month inter-bank interest rates down.


They'll even accept mortgage backed securities as collateral loans,something the market doesn't even want to know about :eek:

Crucially, the assets that banks are allowed to use as collateral will be wider than usual and will include their mortgage debt.


Of course the banking system is fine, no cause for concern, nothing to see here, move on :rolleyes:

codger

Let's hear it for flowers, then.

Because I've had it with rocks -- the absence of delicasy amongst those who repeatedly seek to characterise as "panic" and "stupidity" the orderly exit of sensible souls from one particularly crumbly rock has been quaite, quaite distasteful.

bendeus

Alan_M wrote: »

What a delicate flower you are.

No.

Not so delicate that I seek to demean others in order to prop up my fragile ego, anyway.

Alan_M_2

codger wrote: »

Some wonderful flights of fantasy on this thread, not the least of 'em the contention that Northern Rock is in no more trouble than Barclays.

Really? Barclays is a bank. Northern Rock is a money seller. If that's too difficult to fathom, then substitute "sausages" for "money" and see what happens:

1) Northern Rock retails sausages at a quid a pack
2) Northern Rock doesn't make sausages or own sausages. It just has a supply of sausages.
3) It gets those sausages at 50p a pack.
4) One day though, its suppliers refuse to send through any more sausages.
5) Northern Rock hunts around for alternative sources.
6) There aren't any.
7) Northern Rock, purveyor of sausages to the nation, is out of sausages.
8) Northern Rock is out of business.

But now the UK taxpayer is here to underpin the Northern Rock sausage outfit. So that's all right, then. Problem solved -- except the sausages which the British taxpayer is prepared to make available to Northern Rock certainly ain't going to be at the 50p a pack Northern Rock was used to where its previous suppliers were concerned.

So Northern Rock is still in the frying pan, as it were, along with what's left of its sausages.

As a result of which, Northern Rock's share price is in free fall, its major shareholders are slashing their holdings, and not a single other well-known sausage supplier wants to go anywhere near it with a barge-pole. Never mind a cheque book.

And Barclays Bank is in an identical situation, then?

I base my statement that NR are in no worse a position than Barclays on the fact that they simply won't be allowed to go to the wall. Meaning bust, bankrupt, ceasing trading - not including being sold/taken over.

If they do, obviously I'm wrong, but I doubt very much that I am.

You can claim as much as you want that their business model is unsound, in fact I've said myself they're sailing pretty close to the wind.

The problem is, that institutions of this size and nature fall outside the rules of how the rest of us are obliged to run businesses.

The directors of these companies are completely aware of this and take it into consideration when considering their business strategy.

As I said I'll fully accept I'm wrong if they go bust, I wouldn't at all be surprised to see a takeover, but I stand by what I said earlier, your money is effectively as safe there as if it were invested in Barclays.

As an aside, the unilateral government backing, is not as unilateral as it sounds, it is only in place "during the current crisis" - I have yet to read anywhere the parameters of "The current crisis", that could have ended last night as far as we all know.

Alan_M_2

bendeus wrote: »

No.

Not so delicate that I seek to demean others in order to prop up my fragile ego, anyway.

Like I said, if it offends you don't read it, I'm as entitled to my views as much as the next guy, I'm also entitled to use what terminology I deem reason able and fit as long as it doesn't contravene the terms of this forum (in which case it would be censored) or what is socially acceptable.

The term Mr & Mrs Trailer Trash I actually took from a conversation on sub prime mortgages I was watching on the Bloomberg channel. It ably describes a large proportion of the uneducated people that the fringe and unscrupulous lenders targeted, in the same way the term redneck does.

I'm not setting out to offend people, I'm using terms freely used in America on a daily basis, even by the press and media.

I intensely dislike over zealous political correctness, just get a thicker skin and get on with life, no one is going to be crying into their chicken soup tonight because I've used the phrase "trailer trash" on a public forum.

free4440273

!!!!!!? wrote: »

You've certainly got a condescending way with words, Alan. Unfortunately it doesn't help underpin your argument.




If NR could have secured funding on the markets, they would have. BoE are the 'lender of last resort' ie. No-one else will lend to them.

Now the BoE have done a complete U-turn on their previous policy and more or less anyone can have the sort of deal that NR got.

http://news.bbc.co.uk/1/hi/business/7002628.stm

The Bank of England has made a U-turn in its treatment of banks struggling to deal with the credit crunch. It has announced that it will inject £10bn into the money markets in an attempt to bring three-month inter-bank interest rates down.


They'll even accept mortgage backed securities as collateral loans,something the market doesn't even want to know about :eek:

Crucially, the assets that banks are allowed to use as collateral will be wider than usual and will include their mortgage debt.


Of course the banking system is fine, no cause for concern, nothing to see here, move on :rolleyes:

!!!!!!, can i have your advice on something. What does this mean for rates and savers (i've had enough of hearing about borrowers, sorry:mad: ). Do you think the BofE will just relent and cut by .25/.50 in October? Myself? Yes:mad: Certainly, the forex market seems to be anticipating a cut. And of course the Bank now has the 'excuse' of CPI laughably at 1.8%.

ds1980

bendeus wrote: »

/off topic, but have to say it/

A very apposite and well-thought-out post.

However,

Would you refer to people on the margins of society or below the poverty line in the UK as 'trash', I wonder? Your tone appears to be sneeringly dismissive of those, both black and white, who constitute the 'have nots' in what is unarguably the most unequal 'Western democratic' (sic) society on earth. 13% of the 250,000,000 residents of the US are officially categorised as living below the poverty line, and in a country with notably low levels of social care, negligible workers' rights and job protection, which furthermore is witnessing the flight of its traditional manufacturing sector south across the Mexican border, and which has seen an increase in both real terms poverty and the gap between rich and poor under the current administration, your ill-informed choice of words are at best ignorant, and at worst, plain insulting.

I was brought up in a council house with only a single parent supporting me. Would you have regarded me as *trash*, I wonder?

in a word yes. At that time of course as you make your own way in life then you gain new status.

Gorgeous_George

Because the British puiblic are thick, lower IRs = Higher house prices.

Now, there may be some consolation. Tighter lending policies just might lead to low IRs not equalling higher house prices. This should lead to cheaper mortgages for prime borrowers. Sub-prime borrowers will be stuck in the private and public rental markets but even this can be a good thing. Renting is a good option for millions of people and with lower overheads, LLs will be able to keep rents down.

I think we will need a new generation of BTL LLs who have good credit histories. If only we could deal with the security of tenure issues.

GG

codger

Alan_M wrote: »

I base my statement that NR are in no worse a position than Barclays on the fact that they simply won't be allowed to go to the wall. Meaning bust, bankrupt, ceasing trading - not including being sold/taken over. . .
As an aside, the unilateral government backing, is not as unilateral as it sounds, it is only in place "during the current crisis" - I have yet to read anywhere the parameters of "The current crisis", that could have ended last night as far as we all know.

Alan: thanks for the clarification. And I agree with you: NR won't be allowed to go bust. There's a bail-out in place -- actually, there's now a bail-out in place for any and all lenders who, to use your phrase, are or have been sailing too close to the wind. (I'm kind of quoting the Governor of The Bank of England now.)

Wonderful though, isn't it? Socio-economics.

I remember asking my MP what the Government was going to do about "bailing out" thousands of victims of pension fund crashes -- you know, when the company schemes into which they'd paid money over a life-time turned out to be worthless as their employers scuttled for cover and left with with, well, nothing at all.

The answer was: Governments really can't get into the business of helping individuals; there's a risk in everything.

Apparently though Governments can get involved when individual savers in Northern Rock are concerned -- or rather: Governments can get involved when individual savers in a busted bank start queuing for their money and oh-Jesus-H-Christ, how's that going to play at a General Election??????

No wonder there's so much contempt for politics and politicians nowadays, and so much fully justified cynicism.

I look forward now to Mervyn Kind explaining how The Bank of England is still entirely independent of the political process, and the touch of the prudent hand of a Mr Brown.



PS: your point about the limited duration of BoE support may perhaps have been overtaken now by Mr King's decision to extend BoE lending from overnight to three months?

In which case, and taking account of the comments of certain other measured and moderate posters on this thread, someone has seen the iceberg. . .

Even if not all of us have as yet been invited onto the bridge to share that same view.

dolce_vita

Have you seen the latest government compensation scheme?

HAVE A LOOK HERE