Boom to Bust : A Political Bail-Out
On 12 September 2007 in a paper submitted to the Treasury Committee by Mervyn King, Governor of the Bank of England, he warned the City: “…the moral hazard inherent in the provision of ex post insurance to institutions that have engaged in risky or reckless lending is no abstract concept”. On September 13, 2007, the Bank of England, pushed by HM Treasury and with the acquiescence of the Financial Services Authority, bailed out mortgage lender Northern Rock. What caused this about turn?Nobody in the City was surprised by Northern Rock's difficulties, but many were surprised by Mervyn King's overnight U-turn. His stated policy of avoiding moral hazard was prudent and generally accepted in the Square Mile as wise and right. Foolish risk takers should suffer when they get it wrong.
In 1995 Barings collapsed. The Bank of England did not bail it out. Imagine the outrage if a Tory government bailed out the Queen's bankers, "Tory toffs looking after their own pin-striped aristocrats" would have been the charge. Central Banks should only intervene when their is systemic risk to the financial system, not to bail out shareholders when things go wrong. Northern Rock put too many eggs in the mortgage securitisation basket and offered mortgages at slim margins. That strategy is now shown to be risky and unsustainable. So why bail it out?
Northern Rock is not merely the victim of illiquidity in the money markets as Alastair Darling spins, investors knew something was wrong months ago, the share price tumbled long before the sub-prime crisis made the headlines. Nor can you argue that the collapse of the Northern Rock would cause systemic crisis. The mortgages would be administered, the householders would barely notice a change in ownership and it is inconceivable that other banks would suffer contagion.
The economic arguments against a bail out such as this have been impressively made by Mervyn King himself, the special circumstances argument is patently political spin. So isn't it more likely that this is a political decision forced on the Bank of England by Gordon Brown and Alastair Darling to spare their blushes?
Northern Rock is a regional bank from Labour's North-Eastern electoral heartlands. Labour supporting figures are on the board. Sir Derek Wanless, Gordon's favourite banker, chairs the Risk and Audit committee. Sir Iain Gibson sits on both those committees and was appointed by Gordon to the Court of the Bank of England. As far back as the miners strike it has been seen as a "Labour" bank. In the eighties Conservative ministers were furious when striking miners were told not to worry about their mortgages by Northern Rock - removing a pressure on them to return to work. The Labour movement lauded them for it and for their giving of 5% of profits to North Eastern charitable projects.Guido suspects that the Treasury pressurised Mervyn King, against his better judgement, to bail out Northern Rock for political reasons. Brown's Britain is a bigger version of Northern Rock. Gordon's macro-economic policies are Northern Rock's borrowing policies writ large. Gordon has mortgaged spending through PFI, government debt has ballooned and the consumer economy is floating on debt secured against over-stretched property prices. It can't go on for ever...
101 comments:
Wanless has merely done for Northern Rock what he did for the NHS.
This is Labour's ERM moment. The first run on a bank in a lifetime. A mortgage bank has gone bust on Gordon's watch.
We'll hear no more from him about Tory boom to bust policies. One in five mortgages last year where made by Northern Rock.
Those pictures of queues of panicking savers won't be forgotten.
Guido, what bollocks you've written. You've turned into one of those weird, paranoid bloggers. Please turn back.
WHO'S NEXT?
Many of today's papers claim there are similiar problems at HBOS, Alliance and Leic. and Bradford and Bingley amongst others?
How bad is this mess going to get and should we stil regard Gordon Brown as "prudent"?
I don't see any evidence of paranoia. Why do you think the Bank of England did a U-turn overnight?
Do you think they had no pressure from the Treasury?
Guido, what I find so fucking astonishing about this is the way these are policies which Labour have nicked from the Tories, and you are now castigating them for !!!!
PPP was a Tory policy, rejected by 'Old Labour', but when it is taken on by 'NuLabour' and badged as PFI you try and say that it is a sign of poor judgement and mis-management by Labour. I hope you will also, in the interest of balance, be slagging off the Tory that came up with it ??
And the political opportunism of Cameron, yes Cameron, to go on about the 'borrowing boom' is breathtaking in its arrogance.
The Tories are the party of free markets, who want us to become MORE like the Americans, not less. If Labour had suggested the return of Credit Controls can you imagine the wails of protests from the Tories with their cries of 'You can't buck the market' and 'We want to be free' and other libertarian bollocks like that.
Trying to talk down the market, and spread fear and contagion so that you can make a quick buck from the short selling of some bank stock is sickeningly selfish & irresponsible - which probably explains why you are doing it. Oh, and a completely 'fair and balanced' and 'independent' interest in getting your beloved 'free market [sic] Tories' in at the next election..
There is nothing free market about PFI - the state just gets private contractors in to do the work off the PSBR books. It is still debt to be serviced by the taxpayer.
There is nothing free market about government debt sky-rocketing.
There is nothing free market about effectively nationalising a private sector mortgage bank.
spot on guido. in every respect. anon 10.49 re PFI. gordon has used to PFI to hide public debt off balance sheet, has used it to line the pockets of his donor chums and then lie dto the public about the miracle economy. any economy wouldgrow if you chucked vast amounts of money at it and so he has used mortgaged public money to artificially stimulate an economy with no investment return - its all been wasted on benefits, wars , olympics etc etc. the man is a fraud and an economic dullard.
Anon 10.49 - by hand-picking a group of wets/Keynesians to sit on the MPC and then choosing to make them track a measure of inflation that excludes taxation and housing costs, GB is also directly responsible for much laxer fiscal policy over the last ten years that has turned out to be sensible. The chickens comign hoem to roost now have hatched from eggs laid when the BoE, the BoJ, the Fed and the ECB chose to avoid a post-dotcom bubble recession in 2001 by flooding the world with cheap money. That decision was taken by Gordon's people, using his methodology and he cannot avoid blame for that.
Oh, and Northern Rock should never have been baled out - it is the very defintion of moral hazard to protect someone from the consequences of their own shoddy decisions.
anonymous at 10:49
- the smell of rabid rebuttal there, if I am not mistaken.
When will be next see smiling Gordon (the Courageous), one wonders? As the US free-marketeer-in-chief might say, let's smoke him out!
rapid rebuttal ? I would be constrained in my language were that the case..
In 1992 Major rescued Johnson Matthey Bank which was bust. Less well known was that he made banks keep on lending to Signet Group (H Samuel/Ratners) the jewellers which was also bust.
John Redwood is by far the best economic political commentator currently and his blog essential reading. Osborne looked better working alongside Redwood, and vice versa. He should be made more use of as the public would be reassured by his depth of understanding of where Gordon Brown has messed up.
Did you hear the people queing outside NR ? they think gordo/darlings wittering are bollox and thats how flimsy gordos "strong&stable" economy is/was cos its now fucked, the downward spiral has started and even bliars giant economy sized bullshitter campbell couldnt spin this.Anyone with half a brain knows PFI was just credit card spending and now the bill will hit the mat just as the money dries up.This boom and now bust will be bigger than most cos gordo kept it going far longer by fiddling the figures the BOE used to control inflation.
Question for Brown - where's all the gold now, when you need it? Idiot.
First of all, Northern Rock is strongly based in the North East- the same North East that with about three exceptions returns Labour MPs.
There was no way the Labour Party would let the Bank of Labour Heartland go under
Just goes to show how fuckin stuupid so called experts realy are our chancellor did nowt, gordo did nowt the BOE well that dog didnt bark so who do you trust? me im with the NR customers keep it under the mattress away from the experts.
there's no way gordon would want ordinary savers to lose out by letting northern crock crash - think what it would do to his poll ratings!
anonymous @ 11:42
'rabid rebuttal' was what I said and 'rabid rebuttal' was what was meant!
If "it's the economy, stupid" then the economy's fucked and so is Gordon.
Well he likes it up 'im doesn't he pollster?
I think you miss the point about PFI, its not that in essence its a bad thing to use such measures to build and run public capital projects. Its that the terms and conditions of the PFI.
The idea of PFI was to transfer risk, but Labout in its over eagerness to build and build and build, while hiding the costs, means that they had to make it more attractive to investors.
The way to make it more attrative an investment is by a reduction in risk.
PFIs are now practically a risk free process
all the advantages of PFI, market discipline etc are lost because the burden of risk has been reduced.
"Oh, and Northern Rock should never have been baled out - it is the very definition of moral hazard to protect someone from the consequences of their own shoddy decisions."
The moral hazard arises when such protection is expected. We have had about 10 straight years increase in such expectation - it has become the norm and institutional economic behaviour has been shaped accordingly. In fact it is what our present ponzi economy of ever-more esoteric (not to say delusional) 'financial products' has been built on. And of one thing you can be certain - we ain't see nuthin yet. The consolation? - Gordon is poised for his come-uppence
Capitalism for the masses - socialism for the bankers and their friends eh?
Stanislav thank Mr EmptySuit and Mr GF for analysis of too much monkeybusiness in economy figures; Stanislav say same thing for years only English not so good - how come houseprices and council tax not part of inflation ? Is cost of living, no? Cost of living rocket and neurotic fat Scotch wanker say: Oh, not really, cost of living fall, believe me I am man of God, just borrow some more money, be ok. But do it prudent, ye ken?
Also, Mr EmptySuit not mention but unbridled credit and consumption make happy stock Exchange and M&S topcunt make pay himself bonus of billion pounds but make for failure, total and utter of national moral fibre, result in crowing elite of public sector cunts -Jonathan Woss and Righteous Gerry McCann to make but two, make joke of school exams, even shitbrain Chardonnay make grade A and have picture on Telegraph in school blouse for old men wank and Fuckwit Darren go university but can't make sentence but no matter because lecturer not make sentence either; Tony Blair, prime minister never make sentence so doesn't matter; A levels and degrees only borrowed, not earned, like should be; country go down the dogs, innit? Smut and filth and lies and greed true legacy of mad gay Calvinist snot-eating onanist and bumfriends in Lobby and City.
Never mind. Pastyface Gordon make new loveboy with Dr Owen, King of Mouldbreakers and vain, bad-tempered, pouting cunt, flick hair from eyes like teenage totty. Nation rejoice at healing of rift between two petulant arseholes. Nation fall on knees in gratitude, is more rejoice in Sun over two worthless cocksuck sinners joining up to fuck nation some more than over last big news story. Simon Heffer touch up lipstick and sit down in new lingerie and let rip at wp screen; Richard Littlecock lament loss of Empire and Gerry and Kate MaCabre, sneak out of back door, make new life in Hollywood alongside Mrs Beckham (not very good but better than jail). Government continue make attack on poor for make too much borrow. Aye, right, Gordon. What a cunt. Amen.
Stansilav:
You haven't been taking your medication have you?
Stansilav works for us as a plumber - golly good chap and Felicity likes a bit of rough!
Borrowing money is not, in essence, a bad thing. However, what makes PFI a bad thing is not the principle of it but (1) the rate (that is, at appaling value for tax payers) at which the money has been borrowed and (2) the scale of the lending.
Everything about Labour has been short term (electoral) benefit for long term cost. Examples other than PFI include: immigration, spin debasing the language of politics, using the Civil Service as a job sink and excessively lax monetary policy.
It is inconceivable - incidentally - that a Conservative government, abundantly populated as the party is with real-world businessmen, would have allowed the Crown to be ripped off as Brown & Co. have done over PFI.
"PPP was a Tory policy, rejected by 'Old Labour', but when it is taken on by 'NuLabour' and badged as PFI you try and say that it is a sign of poor judgement and mis-management by Labour. I hope you will also, in the interest of balance, be slagging off the Tory that came up with it ??"
Well then, I would like to slag off Brown's incompetence as shadow chancellor, that and the fact that he did not come forward with the Conservatives to share the blame for the ERM crisis!
It appears that I naively thought that after 10 years in power Labour could grow up enough to take responsibility for its actions as a government.
For god's sake Anon, grow up and find a less petulant excuse which does not have as many holes. Schoolboy stuff. And anyway, it looks like your government having pushed the governor of the BoE into a U-turn, now wants to use him as the fall guy. Who says that this corrupt government was going to be a real change under Brown. Same old Labour, Same old spin.
One look at the finances of the Labour party itself says it all!
If you can't manage your own finances its very doubtful that you can manage mine.
Excuses don't pay the bills just ask the Inland Revenue
I am not sure I would say that Northern Rock has been bailed out! Just wait and see. The BoE has given them cash at a high interest rate and in return has received some of the assets of the Northern Rock (effectively the deeds to peoples houses). Northern Rock has to pay back the BoE or they lose the assetts forever. But how can Northern Rock pay back the money from the BoE when savers have just taken £2bn out of their accounts, and when no other financier will cough up the cash? Clearly it can't, and it is now sure to go bust. It is desparately looking for a buyer right now, but why would anyone want to buy it? The BoE will end up holding the mortgages and the house deeds that are their security. The savers that were tardy taking their money out will lose some of it. And NR wuill be no more.
Nice piece Guido, and especially generous of Saatchi & Co to rustle up the ad for you on a Sunday. BTW is that Pickhead himself standing just to the right of the door in the pic? Whats that you're saying - no-ones seen him for days?
Sounds like he's having a Phil Macavity moment, then.
Arrangements are being made for a foreign predator to be PAID by the Government/BofE to take control of Northern Rock.
The company will then be asset stripped in the customary way. Losers will be NR employees (who will be sacked), shareholders (who won't receive a penny) remaining savings account holders (who will lose much of their deposits) and British taxpayers (who will have paid out for this scam and will receive nothing in return)
Brown will then instruct Darling to present it as a great victory and a clear sign of the inherent soundness and stability of the British banking system.
Then another bank will fail, then another, then house prices will go into freefall, then repossessions will rocket, then.....
Well Northern Rock was offering 1 year saver bonds for 6.71%. A high rate indeed and indicative of their desparate need for cash. so who is in the same boat?
Anglo Irish bank 6.9%
West Bromwich BS 6.86%
Derbyshire BS 6.85%
Norwich and Peterborough 6.76%
Halifax 6.71%
Alliance & Leicester 6.55%
Bradford and Bingley 6.50%
HSBC are offering only 5.5% so we can assume they aren't feeling the pinch so much.
"The Tories are the party of free markets, who want us to become MORE like the Americans, not less. If Labour had suggested the return of Credit Controls can you imagine the wails of protests from the Tories with their cries of 'You can't buck the market' and 'We want to be free' and other libertarian bollocks like that."
Actually plenty of libertarians have advocated credit controls to prevent fractional reserve banking: Mises, Rothbard etc
They view it either as a form of fraud or contractually illogical and therefore legally illegitimate.
Rumours abound that a run on Bradford and Bingley, Alliance and L and HBOS(Halifax)has already started this weekend via internet accounts.
Expect long queues outside their branches tomorrow but no big bail outs from the Bank of England this time.
I'm already with HSBC, you should be too.
on the BBC, Northern Rock are being accused of deliberately gate-blocking customers internet accounts to stop them transferring money out because they are UNABLE to meet all their financial obligations.
Any other bank doing this yet? BandB, HBOS?
I took all my cash out of Bradford and Bingley yesterday,
as I said, although I sneered at the people queueing at NR, I also remember sneering at the people queueing for petrol, in the begining of the petrol crisis, I wasn't sneering quite as much when it ran out.
I would rather be the first to take my money out, than the last.
Cluck, Cluck, Which I believe is the sound of chickens comming home to roost.
Life is going to get interesting.
W.W.
I would say that the snot eating pile of spite who thinks he is pm has missed his window on an early election.A few more days with the news full of lines at banks&building societys and even Cameron might win.
Oh and to all you nulab trolls reading this well we told you this was comming and now its here so fuck you and your turd way!!.
"Boom to Bust : A Political Bail-Out"
Well Brown and the Labour party do have a big set piece conference coming up. I don't suppose a major bank or lender going to the wall would chime with the slogan of financial prudence on Gordon's watch......
Guido,
Your dissection of this crisis is most enlightening - I especially like the way you see the problems at Northern Rock as a replicating virus spread from the systemmically-sick cess-pit of Gordon Brown's economic doctrine. Even I gasped at The Bank of England's breathtaking pirouette - brought on, one supposes, by the bleak prospect of a great northern slag heap of discontent traditional Labour voters...grassing over.
Perhaps the forthcoming war with Iran will help gordo out.
From the Scotsman:
"The Bank offered the additional cash at a borrowing rate of 5.75 per cent - the same as the interest rate but below the London interbank offered rate, which is the level at which financial institutions lend to one another."
I think they are now paying close to 7% (penalty rates.)
If this is true then they are probably insolvent.
It won't go on forever; this is the grim future for Britain.
1. A recession.
2. Massive money supply increase by treasury to reinflate economy.
3. New liquity is put into assets; utilities, precious metals etc. i.e new bubble created through fiat money.
4. Asset bubble collapse 2009/10: the Great Depression of the 21st century begins. The whole world is affected. Peak Oil becomes an ackowledged reality worsening situation. Growing crisis in Middle East. Collapse of Chinese stock bubble. Social breakdown. Labour party is destroyed.
5. God help us!
Can't John Towers come up with a rescue package?
What price the so called BOE independence?
It's beyond any politicians control as long as we give the power of money creation to the banks.
It's the business cycle.
Money as Debt
http://video.google.com/videoplay?docid=-9050474362583451279&q=money+as+debt&total=1186&start=0&num=10&so=0&type=search&plindex=
Brown, Cameron and all the rest are just servants of the bankers.
So should I get my savings out of Bradford and Bingley tomorrow then?
I think I will
Its like Labour when they were last in power giving subsidies out left right and centre but to industrial companies. It caused stagnation that Mrs T had to sort out and I suspect the same is happening again. When the dam bursts .....
mitch said...
Perhaps the forthcoming war with Iran will help gordo out.
4:33 PM, September 16, 2007
Bang on - maybe that's why he had the maggon (PBUH) over for tiffin - in an Falklands II advisory capacity.
Too many Anons talking pig shit in this thread. At least my name really is John, I really am from Camberley, and if you want to check out all my previous posts, then you can do that quite easily.
I'm just going to bang a final nail in Anon 10.49's coffin.
PPP and PFI are completely different entities. PFI is a novel method of contracting, i.e. purchasing public sector capital projects, quite wisely criticised elsewhere in this thread.
PPP is about sale of existing public assets. When the government ran out of things to sell, water, electricity, gas etc, they still needed more money. PPP was invented to facilitate part-sale of things that the public couldn't stomach the complete sale of. The organisation that is now called Qinetiq is an extreme example.
So to recap (I know that Anon 10.49 isn't too clever), money goes out from the government in a PFI and comes in to the government is a PPP. Got it?
The only common ground between PPP and PFI is how abysmally Labour has managed them, and how every single one of them has had to be positively dripping with PR syrup before they could be presented to the public.
Thanks JohnfromCamberley . . .
Guido - I think you are being a bit hysterical here. NR was not "bailed out" - it had, effectively, its liabilities guaranteed. It may well go bellyup in the next week thanks to everybody panicking and draining its reserves, however, but that is a case of the "self-fulfilling prophecy."
Genuinely worried - I would suggest not, unless you seriously wish to force the Bradford and Bingley into a collapse. Unless you have upwards of £35,000, you're not actually risking that much, as something like 92% of that amount (100% of the first £2,000, around 90% of the next £33,000) should be stumped up by the Govt. if it went bust (see here).
As for complacent person with HSBC - I should warn you that they might well be worst affected in any slump, as they are grossly over-extended on the Chinese boom!!
stanislav 1:11pm
Thank the Lord God Almighty for you Stanislav, you're my kinda guy. You're the only poster on this blog who seems able to cut through the undergrowth of technical flim-flam and make some common or garden sense of this ferocious financial jungle. So Northern Rock's been thrown to the Lion's! How long before Gordon Brown follows eh?!!
This Brown is bad for Britain, that's for sure. And what a stupid name for a white man. I've heard on the grapevine that Mrs T only accepted the invite to No.10 to carry out an SAS style sabotage mission. Apparently, she sneaked out the parlour during afternoon tea with the PM's family, squatted down in the middle of the living room and dumped a right stinky one on their best Axminster shag-pile carpet! Only the Maggie could get away with a stunt like that! Ha bloody ha ha! Good girl! She's a real pooper! When I next get invited round to the hallowed seat of UK politics, I'm gonna drink plenty beer, excuse myself, then go upstairs and take a nice long slash in one of the palatial corridors! I'll probably also have a gander round the state-rooms and see if can't smuggle myself out a few nice gold 'n silver candlesticks. It'd be a neat little result to nick something back for good old mother Africa - either that or I could always ram one of them up right up Brown's hairy rancid backside whilst he's bending over to pick up a copper penny he's dropped from his pocket, the tight scottish cunt. I think mother Africa might approve of that too. Still, I have to admit...some silverware would make a nice addition to my collection of shiny things back home in SA - at the moment, all I've got is a bunch of strange shiny white people who're extremely adept when it comes to getting shiny things out the ground for themselves and but no use nor ornament to us blacks whatsoever.
Well! Good old Mrs T then! Even in her eighties what a fine figure of a woman! Ahha! I'd give her a good seeing to any day! All in the cause of harmonic Afro-Anglo relations, of course!!
commeth the hour commeth the man super gordo with a nappy on over his suit riding his rocking horse with his darling by his side will come to our rescue.with a flick of his mighty intellect he will...........blame the tories the BBC will agree, polly toynbee will vomit some poorly researched opinion over the gruniards chip wrapper and all will be well.Meanwhile all the poles go home cos we are turning into a 3rd world shithole(we have the voting system and gold reserves already).then oh dear we cant afford all the pfi deals and the wellfare bills and two pointless wars.did i miss anything??.oh one thing BOE independant haha dont make me laff there gay gordos sock puppets.
it's all about confidence, if the banks lose our confidence, then we take our money out.
It's my money if I want to take it I shall, if NR or B&B go bust thats their problem.
nelson 6:15pm
I'll probably also have a gander round the state-rooms and see if can't smuggle myself out a few nice gold 'n silver candlesticks
Sorry to have to break this to you Nelson old chap, but I reckon Gordo's sold off most of the silverware already.
Never mind all this economic blather, my names's dave and me and ming my new mate are absolutely fed up with people saying nasty things about us.
I agree, stop talking about the economy, wait, look over there! It's the Loch Ness monster! (scurries to withdraw cash and leave country)
should be stumped up by the Govt
up to a limit I think...
A friend in the mortgage advising line tells me that Northern Rock and many other lenders were merrily offering rates in advance. People would get a a guaranteed rate before they started looking for a house. Given how high the market has gone it can take a long time to find the right house. Northern Rock is having to give loans as we speak for sub 5% to people who booked them last year.... Apparently there is a fair amount of this around. Worse yet, some (all?) wasn't figured into the risk figures for banks........
What all of you on here seem to have missed is that the economy was strong and doing really well for ten years while Gordon Brown was Chancellor but this new fellow Alistair Darling has only been Chancellor for a few weeks and already banks are going bust and the economy is heading for recession.
This Darling chap must be about the worst Chancellor on record. Perhaps aswell as being Prime Minister Gordon Brown should also be Chancellor then we will have some stability and sanity restored to the UK economy before it's too late?
Famous last words:
"I did not have sexual relations with that woman" Bill Clinton.
"I did not have sexual relations with that rocking horse" Gordon Brown.
Say what you like about Blair, but he is one lucky bastard.
Ten years of sleaze, lying, illegal wars, and general incompetence, And he gets a standing ovation from all sides when he goes.
Poor old Gordon ten years picking his nose next door, he gets the keys, and in six months has had nothing but bombers, floods, the plague, and financial meltdown.
You know what they say better to be lucky than good, Brown is neither.
God help us all.
W.W.
http://www.youtube.com/watch?v=2t8YTvdYXws
this is so appropriate.
Don't blame the weather on global warming, blame it on Gordo.
I predict the worst winter in living memory.
Whats Gordo's middle name Jonah?
W.W.
So, what chance of an early election now?
I reckon Brown must be shitting himself.
Ha ha.
Tuscan Tony 2:30 p.m.: I do believe Guido has blagged that photo from Getty Images.
Anyhoo, the NR queues demonstrate just how little confidence people place in the word of
(a) Financiers and
(b) Politicians
A hopeful sign.
If NR wanted to avoid panic and ques outside their branches they should have allowed people to make withdrawls through their website.
That might have given them some credibility.
If it wasn't for the scenes of the ques and if people had been able to make withdrawls in the normal way people may have felt happier to keep their money with them.
As it is they can tell everyone not to panic as much as they like but the question remains "why can't I have my cash if everything is ok?"
Shutting down the website has had exactly the opposite effect of what was intended and shows how thick the NR management must be.
dennis 8:00pm
Financiers and politicians are great people to deal with as long as one is 110% aware that anything and everything they say and do is purely in their own self-interest and not yours. That out of the way, their words and actions become crystal clear and one can do business.
If Northern Rock were solvent but short of cash why didn't they stop lending?
Time for the gold standard methinks.
In the words of Jilted John
'Who's this bloke I asked her
goooooordon she replied
Not THAT puff I said dismaid
yes but he's no puff she cried - he's more a man than you'll ever be
oh, she is cruel and heartless
to pack me for Gordan
Just cos he's better looking than me
just cos he's cool and trendy
but I know hes a moron , Gordon is a moron
Gordon is a moron, gordon is a moron
Tuscan Tony:
When I am king, people who say "I'll give it 110% of my attention!" (etc.) will be sent back to school to learn sums. At the moment they seem to be running our banks & building societies.
But I am not likely to be king any time soon, because overacting hunchbacks are specifically excluded from the succession.
Guido its not just Gordo: the MPC have been blatantly negligent for the last 3 years.
Dennis,
The people who 'give 110% of their attention' are the same people who will lend 125% of the value of an asset in a falling market.
No wonder people are taking their money out.
Anyone that stupid shouldn't be running a burger bar never mind a Financial Institution.
As to who's to blame, they all are.
The one consolation is that at least in a financial crisis Gordo's can't even blame Bliar for it.
George Osborne's just said Brown has built a hollow economy based on debt.
Tell us summat we don't know George, like where Gordo hides his rocking horse these days and who has to change his shitty nappies.
"Central Banks should only intervene when their is systemic risk to the financial system, not to bail out shareholders when things go wrong."
The Northern Rock bail-out was to protect depositors not shareholders, you twat.
Protect depositors my arse!
It was to protect the mollycoddled but fucked up UK banking system, you stupid twat.
Sky News are saying British house prices could fall by 30 to 40% over the next couple of years.
BUT THAT NICE YOUNG CHAP DOWN THE ESTATE AGENTS TOLD ME THAT HOUSE PRICES ONLY EVER GO UP.
Anomymous 2.47 makes a good point. Beware very high returns on deposit accounts (remember BCCI???).
The Bank of England is protecting Northern Rock depositors. If there were no depositors, the Bank would have taken no action.
The FT editorial yesterday was correct to say "Northern Rock and its shareholders cannot be allowed a happy ending. The Bank of England's job is not to nurse the institution back to health, but to tide it over until it can be sold to a strong buyer, for whatever price it will now fetch."
For me the most concerning recent news for the UK economy (and mortgage banks in particular) is that house prices are falling (see rightmove's report tomorrow and last week's RICS survey). For evidence of falls in house prices, look at www.housingsnake.co.uk
The implications are extensive.
Robin Savage
Equity Analyst
Anyone with £35,000 sitting in one of the dodgier banks don't be too confident that the FSA or the Government will compensate you for the first £31,700 in the event of a bank failure.
There's no concrete guarantee of anything, it's all spin.
Robin Savage 9.30pm
I think you mean:
http://www.propertysnake.co.uk/
dear mr fuckwit, I will have you know I am situated in an exclusive new development and so I am quite certain estate agents are highly skilled professianals with a difficult job to do, and their professional organisations are of the highest caliber too, so leave them be!
Alan Greenspin, Mr Bubble himself, predicts big falls in house prices in tomorrows FT: UK falls will be far bigger IMO............
US house prices are likely to fall significantly from their present levels, Alan Greenspan has told the Financial Times, admitting that there was a bubble in the US housing market.
In an interview ahead of the release on Monday of his widely-anticipated memoirs, the former chairman of the Federal Reserve said the decline in house prices “is going to be larger than most people expect”....
Doh! The Bank of England does not have to provide an additonal lending facility to protect deposits. the deposits alread enjoy (limited) protection.
The BoE stated that "This liquidity facility will be available to help Northern Rock to fund its operations during the current period of turbulence in financial markets while Northern Rock works to secure an orderly resolution to its current liquidity problems."
Then the fun will start - in this country we have had "trust based regulation". We trust that they are nice chaps. In the US they have SOX - be good or do 10 years.
The financial community here love to snear at SOX. I wonder what expression they will use when their companies fold and they discover that the US claims jurisdiction due to incorporation in the US, being listed on US exchanges and trading there... The Serious Farce Office won't be able to save them by screwing up the proseution....
A quandry for the tories and NuLabour types -
"To what extent is the government prepared to nationalise the mortage market in order to prop up the housing bubble, given that the government is surely out of business if there is a crash?"
http://www.bbc.co.uk/blogs/thereporters/ro...nt_be_sold.html
Nobody has had anything to say about Widows & Orphans. I'm an orphan in my sixty ninth year and thought that all these so called 'banks' were building societies. It's all 'Northern Rock' this and 'Bradford and Bingley' that, not 'The Northern Rock BANK' and 'The Bradford and Bingley BANK'.
What a bugbear it all is, and I'm finding it extremely difficult to know what to do for the best now that my mortgage is payed off and I've a few bob in a building society. (thinks, I'd better check that it is still a building society and not some shyster bank).
Still it does make sense of Lady T's visit to Downing Street the other day. I expect Prudence was picking her brains.
For the record, my pension fund was managed by Equitable Life.
Hey Ho. Mind you, my house is worth upwards of half a million. (Or was last time I checked.)
The really good news is that one can get a reasonable bottle of plonk from Tescos for less than a fiver.
All is not lost.
A quandry for both Tories and NuLab types -
"To what extent is the government prepared to nationalise the mortage market in order to prop up the housing bubble, given that the government is surely out of business if there is a crash?"
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2007/09/rock_cant_be_sold.html
Where da fred on Ali Darling gone, Mr Forks?
Ain't crashed like de 'ousin market am about to, is it?
Err...if the building soc/bank lending has to tighten considerably, then it's much harder for first time buyers. And we might see for the first time in 10 years mortgages turned down because the bank valuation won't give the green light.
It's all fucked, isn't it?
My brother's street in mid-Lancs is a bloody regatta of estate agent signs. And he can't shift his house, either.
Wonder if the 'independent' BoE will start slashing as the born-to-rule middle class liberal establishment realises that Northern Rock was a near-miss for confidence UK economy.
Capt Darling assures that he's 'going around again' for another attempt at a soft landing at Credit Crunch International.
But very soon, we're going to hit the runway. And hard.
Guido, your last article disappeared just as I tried to leave a comment??
hold on a minute here
apart from one of the more intrigueing questions of what happens when you go to the bank of england and ask for your 10 pounds (says on the note i promise to pay the bearer) what this actually is .
everyones worried about losing there savings, and proper building societies look good.
but if things go as tits up as it looks like , wont our cash devalue if infation appears or if we have to devalue.
dont forget what cash is in this arguement, never mind your savings being vunerable , cash could be vunerable ,golds already rocketing.
if re earlier post metals/commodities shoot up then cash will lose its value.
sorry if its bit simple for you city experts.
my god how can you screw a national ecnomy like this, could it be construed as fraud or treason? , ime hopeful the latter is still on the statute books but after stalin and alli (word play on stan and ollie) who should be getting preped for there visit to tyburn gate ??
thanks
pig farmer
Well done Guido. This is clearly a political fix.
Days after Mervyn King bragged about his tough love in an open letter to MPs, he's bailing out a reckless bank.
King's a joke in the City this morning. His image as a monetary hardman is worth nothing: he's been spit-roasted in a rape session by Brown and Darling.
sp now 320p having been as low as 290p.
"Anonymous said...
It won't go on forever; this is the grim future for Britain.
1. A recession.
2. Massive money supply increase by treasury to reinflate economy.
3. New liquity is put into assets; utilities, precious metals etc. i.e new bubble created through fiat money.
4. Asset bubble collapse 2009/10: the Great Depression of the 21st century begins. The whole world is affected. Peak Oil becomes an ackowledged reality worsening situation. Growing crisis in Middle East. Collapse of Chinese stock bubble. Social breakdown. Labour party is destroyed.
5. God help us!
4:35 PM, September 16, 2007"
Labour party is destroyed? In every cloud there is a silver lining.
Darling sounds like a stuck record 'Strong'n'stable economy....low interest rates'n'inflation"
He's clearly an financial cretin, who's sounds as if he's had a 2-hour crash course in economics from some Treasury advisor when he was dumped into the Chancellors job
Great post Guido - you can tell how much it hurts them by the shrill comments from the Labour trolls.
You rabid foaming torie dim-wits make me laugh. You are so desperate to have a go at browns economics that you jump on any old banwagon with no real understanding.
Whats Nothern Rock got to do with PFI, PPP, Gold Reserves or any other apocolyptic B*&$ox that you are spouting on about. Once the over reactive savers and foam spitting tory ignorants calm down, NR will return to normal as it is now massivly undervalued and backed up by the BOE.
You lot (Guido especially) are misinformed, uneducated and desperate for panic.
All of you whingers about Gordon did this and Gordon did that, tories know how to run an economy. More Bo$%^&x. Boom to Bust - Where is the bust, no recession in over 10 years, unlike the previous 10!!!!
If you think this is the worst thing to happen to an economy, then the economy isn't in a bad state.
Why don't you all read some books before you spout out your partisan intellectually bankrupt nonesense!!
anon 12:39,
The bust begins with Northern Rock as the first raindrop in the coming flood. The government is now having to promise to honour deposits in a bank about to go bust. And when the next domino starts to tumble, it will have to guarantee that bank's deposits too.
When that guarantee gets called in, it's going to need to pay for it from somewhere. Now, it might be useful to have a load of gold reserves to do this, since gold is one of the fe