Northern Rock

The people who had mortgages won't go bankrupt, they will still have to repay the money they borrowed but possibly to someone else. People who have invested in the bank deserve no sympathy. Anyone who invests in a company without researching it is a moron. Stop using the shoe shop as a denigrating example. If you work in retail (like you know I do) It is worrying to see so many companies seemingly in trouble without the prospect of a government bail-out
 
In fairness to Shads, she did preface her posts on this thread with the statement...

"I know next to nothing about the ins and out of the Northern Rock case..............."

Which in itself, does say a lot. :P :D
 
It's not just mortgages and you know it - people who have any type of investment in NR will lose out. Besides, and well you know Bar (stop taking the p*ss!!) it's about wider economical implications when a bank goes under, which is my point as I'm sure you can see. Unless you're also comparing a shoe shop to a bank?!? :D

Ovverbruv, behave. You work in a coffee shop. Your career is hardly under threat.
 
Different rules apply for banks, and as unedifying as it is, they always have, it is at least pragmatic though.

For a start customers = voters
voters want a scapegoat, the BoE is the lender of the last resort, so the Government has to step in.

Also the damage done by a bank going belly up has a ripple effect which a high street retailer frankly doesn't. If there's a run on other banks confidence collapses and your currency becomes worthless.

In the early 80's US interest rates went through the roof, and South America defaulted. Now this left the free market mandarins of Reaganomics something of a problem. Manufacturers Hanover, Cotinenetal Illinois, and Chase Manhatten were all left with massive defaults and questions over their survival. The federal reserve had no option but to step in. The equivilant in the UK would be something like Barclays, HBOS, and HSBC all going bust within a 2 week period.
 
Originally posted by Shadow Leader@Jan 23 2008, 07:23 PM
It's not just mortgages and you know it - people who have any type of investment in NR will lose out. Besides, and well you know Bar (stop taking the p*ss!!) it's about wider economical implications when a bank goes under, which is my point as I'm sure you can see. Unless you're also comparing a shoe shop to a bank?!? :D

Ovverbruv, behave. You work in a coffee shop. Your career is hardly under threat.
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Of course it is, if there is a recession people will have less disposable income so those of us who work in an industry that requires people to have disposable income (which I believe includes you) are under threat.
No industry should be given protectiom from bankruptcy. What is to stop a different bank taking even more risks safe in the knowledge that the government will bail them out. I stand by my previous statement that the market should have killed NR which is exactly what was supposed to happen.
I suggest a bit more background reding here SL
 
"Background reding"? What's that then?

Tell you what, I suggest that you are a little less patronising and look at the bigger picture. I may be no financial expert but it seems pretty clear to me that once banks start going bust the implications on the economy could possibly be catastrophic. Shoe shops closing will cause hardly a ripple.
 
Lets be honest OB. If banks operated in a 100% free market then our opinion of them and our opinion of the safety of our money would be somewhat different.

However it is patently obvious they they don't. They operate in a regulated market with conditions designed to prevent exactly this sort of this happening.

When that framework fails - as it clearly has somewhere along the line with Northern Rock - extraordinary recovery actions are necessary.

How good, bad or indifferent a job the government has done with the handling of recovery remains to be seen (and to some extent is a moot point). I imagine that they want to be in this position even less than we want them to be.

The critical thing here is not that Northern Rock failed, but that it was able to fail when others didn't expect that to be possible.
 
Imho HMG did the right move in supporting NR but, and it's a big but, they almost blew the play and certainly exacerbated size of the problem by not fully defining the extent of their guarantee immediately they moved. People were unsure and the full positive PR impact of their action was largely negated.
A failure of NR might well have caused depositors to withdraw their money from many other institutions and severely damaged the strength of confidence in the UK banking market. Given the importance of of the sector to the UK economy this could have been catastrophic.
On the other hand the failure of Dolcis, whilst regrettable for the employees, has a minimal impact particularly since it sold mainly foreign goods. Indeed its demise might mean a better chance for other shops in that troubled sector.
 
Originally posted by Shadow Leader@Jan 25 2008, 07:44 PM
"Background reding"? What's that then?

Tell you what, I suggest that you are a little less patronising and look at the bigger picture. I may be no financial expert but it seems pretty clear to me that once banks start going bust the implications on the economy could possibly be catastrophic. Shoe shops closing will cause hardly a ripple.
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Reading any post from you telling someone else not to be patronising has got to be one of the most unintentionally ironic posts ever found on the internet.

Particularly as you are strongly putting forth views on something by your own admission you know nothing about.
 
...yet which the views expressed by others, more informed in the area, seem to support. My views on this subject would be no less informed than those of Ovverbruv.

As for the patronising comment - he was, as he often tries to be, patronising towards me. Knowing him as I do, I resent that. So butt out, FU.
 
FFS i made one spelling mistake.

As for "knowing me" you met me once so i am not too sure what that comment is supposed to mean.

You continue to make comments about "shoe shops" but when a chain of 130+ shops goes bust something has obviously gone wrong. Why should they not be propped up like NR was? A business needs to know what the rules of the market are, NR knew the rules, cocked up badly and were bailed out (wrongly in my opinion) by the government. It should not be one rule for one type of business and one rule for another.
 
"I know next to nothing about the ins and out of the Northern Rock case..............."

So, I'm not going to contribute to this thread.............oh!, I just have.

Bugger!!
 
Did I really say I wouldn't contribute to the thread? I'm no financial expert, true - but a blind man can see that a bank going bankrupt has far wider implications than a shoe shop going broke.

So tell me Colin - what are your thoughts on the matter? Or are you just nit-picking and shite-stirring as usual?
 
The simple fact is that if a bank doesn't have the reserves to cover it's liabilities, then the people who deposit with them don't have any money either, hence why they try and withdraw it. What percentage of the UK population bank with Lloyds TSB, HBOS and HSBC do you think? If all these people were to lose their savings in the space of a few weeks it would close down about 90% of the high street, yet alone the odd shoe shop. With the resulting flight of capital no one would know what the currency was worth and the whole concept of money as a store of value would be wiped out over-night, you could conceviably present cash and be refused. No one would engage in international trade with the UK either as they couldn't guarantee being paid with so much uncertainty.

Quite apart from anything, the BoE is still the lender of the last resort and by proxy therefore the Treasury is obliged to support an ailing bank to some extent. Thank God you're not French mind you!!! Their second biggest bank could be looking at a 50Bn Euro exposure
 
OB - Your basic operating premise that banks are operating in free markets is seriously flawed. For instance, the price of their materials are centrally set by quasi autonomous Government agencies such as the Fed, BOE or ECB. Their output is also regulated. They don't have total flexibility on the colour and style of the shoes they manufacture.

I agree with TS that the management of the crisis was cack handed, but if the final bill for stopping the domino effect of a run on your banking system that would undoubtedly diffuse into other regions is £25Bn (and it won't be anywhere near that) will be seen as cheap. Keep an eye on the big picture.
 
For anyone interested NR have opened a "limited availability" Bond that looks, on the face of it, quite attractive. Not sure that the catch is :suspect: , if any but if you are a saver and like to keep an eye on what offers are available you may want to take a look. Pays 5.52% net on annual interest and 5.36% net on monthly interest.
 
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