Northern Rock - 23bn borrowed so far and rising...

Guy_Montag

C'mon Generali, get on board. We'll make you far richer than Tiny Hedge Fund.*


*Guy Montag is not responsible for you making stupid life decisions. Should you end up in debt or prison due to advice received here, Mr Montag is not responsible. Richer is a relative term & may not involve monetary wealth.

[Deleted User]

Moorepart wrote: »

The UK is knackered, isn't it?

It's as simple as that.

Not half as nackered as america is at the moment :rotfl: :beer:

But yes its pretty nakered, mainly due to the ethics that the government has induced on the people.

Dont bother yourself working, well give you social security pay your landlords mortgage and get johnny foreigner to do your work for you. Here have some lottery tickets you might get rich, if you dont heres some fags and booze to cheer you up. Its ok when the booze makes you angry well let you calm down in a 5 star police hotel, when it makes you ill well give you free medical assistance to help you get better. Hell why not say thankyou to the working people that help you by borrowing there goods to sell on the market, or having a spot of fun in their cars.

Middle class = working class
Working class = upper class

I think they got the labels mixed up.

Moorepart

Yant1 wrote: »

Not half as nackered as america is at the moment :rotfl: :beer:

But yes its pretty nakered, mainly due to the ethics that the government has induced on the people.

Dont bother yourself working, well give you social security pay your landlords mortgage and get johnny foreigner to do your work for you. Here have some lottery tickets you might get rich, if you dont heres some fags and booze to cheer you up. Its ok when the booze makes you angry well let you calm down in a 5 star police hotel, when it makes you ill well give you free medical assistance to help you get better. Hell why not say thankyou to the working people that help you by borrowing there goods to sell on the market, or having a spot of fun in their cars.

Middle class = working class
Working class = upper class

I think they got the labels mixed up.

Quite agree
Looking at the bigger picture this has been a busy week :
Obvious stuff about the credit crunch
USA gets its .25 bps rate cut
Further upward pressure on oil / $ decline
China increases petrol prices by 9 or 10%
LOts of other stuff on Global inflation
Pressure on domestic energy supplies
Lots of damning figures on immigration and its true cost

The list goes on and on.


Have you seen the new game of monopoly, sums up the state UK finances really, Sterling really is monopoly money. :rotfl:

WTF?_2

Yant1 wrote: »

Well according to the market NRK has 500 million value. 23 bn to bail out a market where supply (of money) cant meet demand, obviously money is too cheap!!!

Gold has the value of about 800 dollars per oz. If you were to buy 23B you would shift the price on average youd prob have to pay more like 2000 dollars an oz. Equally on the sale you would flood the market so would get more like 400 dollars an oz. Should you wish to get your hands on a gram of Californium-252 be prepared to shell out a radioactive $27 million.

Just because you dont understand commodities and the market demands dont automatically assume it is stupid.

Warren Buffett
"It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

He is currently betting against the dollar. He is rumoured to have the worlds largest store of silver.

I can certainly see the reason for why the BoE had to do something to stop NR from going 'pop' and precipitating a wider banking crisis.

However, we are now entering very dangerous territory indeed whereby the government is essentially payrolling an unviable commercial financial institute. Plus, the extent of exposure is ever growing - take a look at this:

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2007/11/rocks_wholesale_run.html

To be clear, the extent of public sector support goes beyond those direct loans. The Treasury has also indemnified a further £20bn odd of deposits.
So we are talking about total public-sector exposure to the Rock of £40bn - equivalent to around 3 per cent of our entire economy. And that exposure could become much bigger, as other loans to the Rock fall due for repayment.



This mess is just growing bigger every day as Northern Rock continue with a business model that just doesn't make sense in today's markets and borrow seemingly infinite amounts of money from the Central Bank to do so.



What's more the Central Bank is supposed to be impartial and independent from other banks and the market yet it now finds itself in a position where it is in the mortgage business via Northern Rock, holding billions of pounds worth of mortgage bonds. Yet it makes the decisions on what base rate to set based on its supposed independence from the market as a whole - doesn't inspire confidence if this mess goes on much longer.




Meanwhile, Northern Rock continues to flog 125% LTV mortgages and larger than average salary multiples :mad:

Generali

The £40bio exposure isn't really correct though - the only way that the BoE will be footing that bill is if all NRK's debtors default in full and their security (houses for the most part) has nil value.

Worst case scenario? Say 3% default rate on the loan book and a 50% fall in house prices. The loan book is about £15bio max so max possible loss would be £225,000,000

[Deleted User]

Yep they are in a dangerous position, some clever ultra rich financial hot shots might have some sort of tool at their disposal to bring down the UK economy and profit from just like they have done before.

Meanwhile, Northern Rock continues to flog 125% LTV mortgages and larger than average salary multiples

As with any pyramid scheme the moment its no longer fed the pack of cards falls down

free4440273

This is not a level playing field: If, say, another institution were to be in the same predicament as NR, would that institution be bailed out?? Unreservedly NO.

[Deleted User]

Yep its rather wierd we let banks, take as many risks as they want and even invent new magical schemes such as super duper SIVs which they are allowed to lie about the security and play pass the parcel with the garbage in order to make more paper profits and bag bonuses.

When the whole thing goes tits up, we bail them out. Enron didnt get bailed out when it created its magical reporting system.

Its ok maybe NRK can release more equity against their loan book to pay their loans surely? With that money maybe they can take out a bit more, get that much needed holiday, home improvements or the hot tub that they deserve.

WTF?_2

Yant1 wrote: »

Yep its rather wierd we let banks, take as many risks as they want and even invent new magical schemes such as super duper SIVs which they are allowed to lie about the security and play pass the parcel with the garbage in order to make more paper profits and bag bonuses.

When the whole thing goes tits up, we bail them out. Enron didnt get bailed out when it created its magical reporting system.

Its ok maybe NRK can release more equity against their loan book to pay their loans surely? With that money maybe they can take out a bit more, get that much needed holiday, home improvements or the hot tub that they deserve.

When it comes to banking it's a case of "Privatise profits, nationalise losses".

Since the state/public is invariably required to bail out failed banks and it appears that the regulatory system in this case was not sufficient (or was deliberately bypassed using 'innovative' financial products) then I think it's only fair that there should be new regulation or legislation drafted concerning the financial markets.....

free4440273

free4440273 wrote: »

This is not a level playing field: If, say, another institution were to be in the same predicament as NR, would that institution be bailed out?? Unreservedly NO.

For all intents and purposes: NR IS now nationalized.