Northern Rock to be Nationalised

bristolleedsfan

Paul_Herring wrote: »

With one less player in the market, how is this good? It's one less to 'beat' in the league tables.

(Not that towards the end the NR Bonds were anything other than mediocre. Issue 3 only being 6.35% for example.)

In the "short term" Northern Rock will still be competing for deposits as hard as they are allowed to, hence the comment " In the Short term its good news for savers"

Paul_Herring

bristolleedsfan wrote: »

Paul_Herring wrote:

(Not that towards the end the NR Bonds were anything other than mediocre. Issue 3 only being 6.35% for example.)

In the "short term" Northern Rock will still be competing for deposits as hard as they are allowed to, hence the comment " In the Short term its good news for savers"

Either they're not allowed to compete, or they're not doing it very hard - I refer you to my parenthetical comment that you quoted

bristolleedsfan

Paul_Herring wrote: »

Either they're not allowed to compete, or they're not doing it very hard - I refer you to my parenthetical comment that you quoted

6.35% fixed with access is better than most savings products on the market from UK savings providers especially with more savings rates due to fall from 1 March 2008 ish.

Will be after March 17th Northern Rock will discover what ( if any) restrictions get put on its deposit taking.

Will be some time IMO before Northern Rock becomes totally defunct. (I wouldnt be suprised if it gets stretched out till after the next election, by which time most of the very short term fixed morgages that havent defaulted will have come to an end.)

bargains83

EalingSaver wrote: »

And no doubt there will be a long saga in court with the shareholders, and no doubt the taxpayer i.e. everyone else who is not a shareholder, will end up losing out again.

Losing out?, where exactly do you think the money will go if they manage to stabalise the bank and sell it on at a large profit. The tax-payer won't see a penny or see any benefits. The vast majority will go towards paying certain figures supposedly "working to turn around the bank" 6-figure salaries.

It's all spin, whether Northern Rock dies a death or is revived the tax payer as an individual won't see any benefits. As I stated in another thread, if the treasury was sitting on Billions to loan to Northern Rock. Why was that money not spent on Education and the NHS.

It was crisis money, that's why, so to the tax-payer it won't be missed as we'd have never seen it anyway.

The government chose to lend money to Northern Rock on a flawed business plan, therefore it is the government who are just as accountable as the Northern Rock board for any money lost.

anticlaus105

paddy2006 wrote: »

Could someone please explain what Nationalisation is and why it's negative?

I'm most probably being thick here but if the government owns it,can't they just wipe the debt?:o

Nationalisation put the company under public sector ownership. In effect all the tax payers of this country now own Northern Crock and are liable for even more of it's future failings.

I don't pay tax so the government can use the money to bail out poorly run financial institutions. Wiping out the debt would mean writing off any money lent by the government. I would like it back so they can hopefully use it to build some more hospitals/prisons/schools etc. In fact I would rather they hadn’t lent it in the first place and allowed this bank to go under just as it should have done. Unfortunately it seems I have little choice in the matter.

bargains83

anticlaus105 wrote: »

I would like it back so they can hopefully use it to build some more hospitals/prisons/schools etc. In fact I would rather they hadn’t lent it in the first place and allowed this bank to go under just as it should have done. Unfortunately it seems I have little choice in the matter.

I think you are dreaming when you say hospitals/prisons/schools. More like unemployment benefits/immigrants/war on terror, etc.

What would be nice is if the bank blossomed into profit and Gordon Brown said everyone would get a rebate in their tax deductions. Will it happen No?, Even though, some tax-payers money is spent wisely. A lot of it is also wasted, buying Northern Rock is just another step down that road.

nrsql

paddy2006 wrote: »

Could someone please explain what Nationalisation is and why it's negative?

I'm most probably being thick here but if the government owns it,can't they just wipe the debt?:o

That's in effect what's happened.
The government now runs a company which can't compete in the market as it would have an advantage.
Hence no new deposits, people taking deposits away, unable to offer competitive mortgages so no new low risk mortgages and current mortgages either leaving or defaulting.

Hence fast buyout (and legal action) or slow death.
A buyout would mean showing the loss at the time (depending on the deal) slow death would mean a liability which it would struggle to conceal as it would be fairly obvious and high profile.
The government doesn't play by the same accountoing rules as companies - it gets away with a fair bit of fiction anf fudge factors (sorry correction factor) so it will do whatever it can make look best.

curtlyb

My personal opinion is that nationalisation is the best thing that could have happened as far as the tax payers are concerned.
With lenders holding onto mortages for an average of three years then the £100billion mortgage book at the NR currently has will naturally pay back all the money the british tax payer has invested in it (£25billion?) in a couple of years, yes that will mean a natural downsizing in the business and some job losses (don't forget, their workforce has doubled in recent years) but the alternative of everyone losing their jobs doesn't really need thinking about. The private bidders all wanted their piece of the NR cake and our government obviously thought that the intervention of the likes of Virgin etc would be needlessly giving away potential tax-payers money.

Northern Rock's 'stack em high, sell em cheap' philosophy coupled with their choice in sourcing finance has lead them to the current situation and the shareholder voted management team should be held solely responsible.
As for the hedge-funding whiners who bought in after the bank hit trouble then, well, i must admit to a wry smile..... some you win !

baby_boomer

curtlyb wrote: »

the alternative of everyone losing their jobs doesn't really need thinking about.

Oh yes it does.

How many jobs could the government create by investing £25bn of taxpayers money in other areas of the economy? Far more than the paltry 6,000 employed by NR. That's over £4m of our money per job. Workers in other failed British companies can only drop their jaws in total amazement.

The annual net interest from the taxpayer's investment is £160,000 per employee compared to an average NR wage of around £25,000.

The main reason why the government will keep NR going is to keep the final bill from the taxpayer until after the next election. I gather that they have been trying to keep MPs from finding out the bill to the taxpayer on the grounds that such information would be detrimental to NR as a commercial organisation.

bristolleedsfan

baby_boomer wrote: »

compared to an average NR wage of around £25,000.

.

:eek: Nationwide BS have been advertising for customer advisors with a salary range of something like 11000-14000, Life must be good up North. :eek:

( Perhaps the stated average NR wage covers the levels from very top -very bottom. :think: )