Northern Crock shareholders on their high horse
- Thread starter Gabba Flamenco Crossover
- Start date
crackerjack
Well-known member
We demand the right to make 100% profit in 4 months. Bloody Commies, the lot of ya.
comelately
Wild Horses
The government caved in over shareholder compensation in the Railtrack fiasco - so I can see why they're trying it on.
My flatmate is a headhunter and he reckons the economy is well and truly f***ed up. Banks have been sacking their employees left, right and centre. It's a big shit sandwich and a lot of people are gonna have to take a bite.
I'm actually hoping that things start going even more wrong for Gordon even more quickly - it may be the only way to stop the Conservatives now.
My flatmate is a headhunter and he reckons the economy is well and truly f***ed up. Banks have been sacking their employees left, right and centre. It's a big shit sandwich and a lot of people are gonna have to take a bite.
I'm actually hoping that things start going even more wrong for Gordon even more quickly - it may be the only way to stop the Conservatives now.
vimothy
yurp
Think I was a bit hard on the government yesterday, but I feel that the amount of money we are talking about is so huge and the potential losses are so dizzying (national debt is now almost half GDP -- more than even the US; Northern Rock is unlikely to be bringing in fast profits given the state of housing market and the reputation it has now acquired) that there should be some cost to the people at the helm. There is just no way that this sort of thing should happen -- it's antithetical to how the system works, or should be. What was Martin Wolf's excellent phrase, "banks have a talent for privatising gains and socialising losses"?
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IdleRich
IdleRich
But they are still potential at this stage right? Maybe I'm being too optimistic here...
But this won't matter now with a government guarantee will it?
Well, I understand that this all has to be hammered out, the other banks are going to cry foul if it has too much muscle and yet it has to be competitive as well.
vimothy
yurp
How much would you pay to recover a £100bn loan?
The way I see it, Darling hopes to turn the bank around, pay back the loans and have it privatised. How easy will that be? I assume that the executive management will be totally replaced, but even if the bank suddenly becomes much more competent than it has been, I'm still wondering how plausible this is given the state of the housing market and the state of Northern Rock's reputation. Even if it works, this will take a while, but to attract any investor the government is going to have to offer them some sort of margin, and that margin is going to be a percentage of taxpayer money, surely.
But maybe I'm being too pessimistic -- the more I read, the more I think that nationalisation is at least an improvement on the situation immediately preceding nationalisation. At least this way we get returns as well as risk.
Hopefully not, no, but people aren't always that rational and I suspect that many will be unconcerned with the actual facts of the case and will think "queues of people desparately trying to withdraw their money" every time someone mentions Northern Rock instead of thinking, "secured by the government -- cushty". In terms of real risk to customers, there's obviously little to worry about. But in terms of brand identity, I think that this must have been a real kicker.
Yeah, there are some clear upsides for the bank at the moment, and some tricky stuff to negotiate. I wish I knew more about this sort of stuff, but there's only so long I can sit and read Calculated Risk before I start to get weird urges to push pencils into my eyes.
Also worth noting that Paul Murphy thinks the government will give shareholders four times what Branson was offering.
And that this was done on the advice of Goldman Sachs, so it can't be all bad...
crackerjack
Well-known member
Best way to remove the stigma and restore confidence is to stop associating with these clowns.
http://www.kitbag.com/stores/kitbag_4_5/football/default_newcastle.aspx?CMP=KNC-Google
IdleRich
IdleRich
Presumably yes but the lost percentage of taxpayer money is surely going to be less than the £100bn figure you were quoting as already lost yesterday isn't it? I suppose the final question will be "Is the loss to the taxpayer worth it to avoid the chaos and job losses that would have occurred if it had been allowed to go under?". It's hard to calculate the cost of allowing NR to go bust but obviously the smaller the lost percentage is the more the answer to this looks like yes and the more it looks like yes the better the government's handling has been.
I dunno, why don't they get home town hero Keegan to run the Rock, the Geordies would be flocking to invest in droves.
crackerjack
Well-known member
Mike "man of the people" Ashley could work the counter, show how he's just one of them.
vimothy
yurp
But this only holds if you take as your base a point in time after the crisis had emerged and after the government had become NR's principal creditor. Nationalisation was perhaps inevitable from that point, but still cannot by definition have been the only outcome possible (or we're all screwed). When companies make incompetent decisions they should pay the price for making them. The government could have allowed NR to go bust and protected depositors. Instead it effectively underwrote the mistakes and distortions that have lead us to this point: cheap money and disregard for risk. The bailout of NR reinforces that. "Nationalisation" is almost a red herring.
And £100bn is obviously not the amount that will be lost by the taxpayer, but regardless, any percentage of such a huge sum is still going to be pretty goddamn big.
IdleRich
IdleRich
Not really, I'm saying that, regarding the decision to bail-out the business; if at the end of the day it (we) doesn't lose too much money then I think they've done the right thing. That's not to say that there will be that happy result or to say what kind of sum would be "not too much". If they lose more than "too much" then it would appear that they should have taken another option, one of which would have been to protect simply the depositors as you suggest.
Did you read Martin Jacques' article about this yesterday? Don't think you will agree
http://www.guardian.co.uk/commentisfree/2008/feb/18/northernrock.alistairdarling
Shame they haven't still got Titus Bramble, they could definitely find a role for him - perhaps cheering up those who have seen their money disappear by showing them videos of his defending.
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vimothy
yurp
Bit bloody dramatic though! I suppose you wouldn't really expect anything else from a former editor of Marxism Today. Anyway, it is indeed a interesting geo-political picture, but regarding Northern Rock, I think if I viewed its nationalisation in the way Jacques seems to, I'd be much more critical. It's not really a nationalisation in the 1970s sense.
vimothy
yurp
A month old, but recommended:
Darling must pay the ultimate price for Northern Rock fiasco - The Business
Fawkes asks the question on everyone's lips:
Whose Home Will Brown & Darling Repossess First? - Guido Fawkes
Darling must pay the ultimate price for Northern Rock fiasco - The Business
What should have been resolved behind closed doors with one of Britain’s major clearing banks, at limited or no cost to the taxpayer, has turned into the worst economic and financial debacle since Britain’s misguided membership of the European exchange rate mechanism (ERM) in the early 1990s. The only reason the fiasco is moving to any kind of conclusion is a deadline imposed by Brussels, which is rightly concerned about the vast amounts of state aid involved; the British government has dithered, contradicted itself and taken the wrong decision time and again since the debacle began.
Northern Rock’s problems are like an infection; treated immediately, they could have been resolved with limited pain; but the longer the wait, the worse the condition and the more the disease spreads. By default, the immediate nationalisation of Northern Rock has become the least-worst strategy. As a magazine committed to free markets and private enterprise, The Business does not come to this conclusion with any enthusiasm; but given the vast amount of taxpayers’ money loaned to Northern Rock, the alternative – forcing a bankruptcy – would end up costing taxpayers even more.
Northern Rock’s problems are like an infection; treated immediately, they could have been resolved with limited pain; but the longer the wait, the worse the condition and the more the disease spreads. By default, the immediate nationalisation of Northern Rock has become the least-worst strategy. As a magazine committed to free markets and private enterprise, The Business does not come to this conclusion with any enthusiasm; but given the vast amount of taxpayers’ money loaned to Northern Rock, the alternative – forcing a bankruptcy – would end up costing taxpayers even more.
Fawkes asks the question on everyone's lips:
Whose Home Will Brown & Darling Repossess First? - Guido Fawkes
Home repossessions are already up 94% since Labour ran this poster during the 2005 general election campaign. Now the government won't just get the blame for rising home repossessions, it will actually be repossessing homes. The state will then of course be obliged to re-house them.
vimothy
yurp
This:
Absolutely, incredibly, utterly wrong! The Northern Rock fiasco will run and run - Anatole Kaletsky, The Times
And this:
Shrewd savers take advantage of Northern Rock's 'sovereign-backed wealth' - Greg Hurst, Grainne Gilmore and Patrick Loughran, The Times
Absolutely, incredibly, utterly wrong! The Northern Rock fiasco will run and run - Anatole Kaletsky, The Times
It was clear from the start that some form of nationalisation would inevitably end the Northern Rock saga. But yesterday's announcement, far from ending this fiasco, threatened to push the Gordon Brown even deeper in the hole he has dug....
To use nationalisation to keep the bank in business and its staff in state-subsidised employment would be a travesty of all the economic principles that “new” Labour has claimed to believe in. It would represent a grossly unfair distortion of Britain's banking business and would make a mockery of all the arguments Mr Brown has vociferously advanced in Brussels against state subsidies and protectionism elsewhere in Europe. Worst of all, the provision of £100 billion of state guarantees to a grossly mismanaged and insolvent mortgage bank would be a gross insult to the hundreds of thousands of workers in businesses from coal, steel and textiles to performance cars and advanced electronics whose jobs could have been saved with Government guarantees or “temporary” nationalisations costing one-tenth or even one-hundredth of the £100 billion that the Government is now devoting to just 6,000 jobs at Northern Rock.
Nobody in Parliament has yet drawn the obvious comparisons between the largesse being directed at Northern Rock and the tough love practised on far more important and famous British companies such as Rover, Leyland and GEC-Marconi. But this silence merely testifies to the political bafflement and financial confusion created by the disaster. Now that the financial uncertainties about who will own and control the company have been resolved, the question is why it should continue to stay in business with public support.
Why should a Government that has consistently refused to offer public funding for potentially viable commercial projects of real national importance - aerospace, public transport, nuclear power - now be spending tens of billions on supporting a bust mortgage bank? Is it because Britain is short of mortgage lenders, lacks employment opportunities for bankers or suffers a deficiency of financial innovation?
To use nationalisation to keep the bank in business and its staff in state-subsidised employment would be a travesty of all the economic principles that “new” Labour has claimed to believe in. It would represent a grossly unfair distortion of Britain's banking business and would make a mockery of all the arguments Mr Brown has vociferously advanced in Brussels against state subsidies and protectionism elsewhere in Europe. Worst of all, the provision of £100 billion of state guarantees to a grossly mismanaged and insolvent mortgage bank would be a gross insult to the hundreds of thousands of workers in businesses from coal, steel and textiles to performance cars and advanced electronics whose jobs could have been saved with Government guarantees or “temporary” nationalisations costing one-tenth or even one-hundredth of the £100 billion that the Government is now devoting to just 6,000 jobs at Northern Rock.
Nobody in Parliament has yet drawn the obvious comparisons between the largesse being directed at Northern Rock and the tough love practised on far more important and famous British companies such as Rover, Leyland and GEC-Marconi. But this silence merely testifies to the political bafflement and financial confusion created by the disaster. Now that the financial uncertainties about who will own and control the company have been resolved, the question is why it should continue to stay in business with public support.
Why should a Government that has consistently refused to offer public funding for potentially viable commercial projects of real national importance - aerospace, public transport, nuclear power - now be spending tens of billions on supporting a bust mortgage bank? Is it because Britain is short of mortgage lenders, lacks employment opportunities for bankers or suffers a deficiency of financial innovation?
And this:
Shrewd savers take advantage of Northern Rock's 'sovereign-backed wealth' - Greg Hurst, Grainne Gilmore and Patrick Loughran, The Times
Alistair Darling tried to placate mounting concern yesterday that state ownership will allow Northern Rock to trump the loan and savings rates offered by banks and building societies.
His intervention came amid signs that investors were heeding the advice of analysts to take advantage of Northern Rock’s deposit accounts, some of which are among the best in the market.
Northern Rock is also about to become the only mortgage lender offering 125 per cent deals after four major lenders selling similar deals pledged to pull out of the market....
The British Bankers’ Association said that a straw poll of its members showed concerns over competitition issues, with analysts saying the threat was greatest to smaller banks such as Bradford & Bingley and Alliance & Leicester.
But the Chancellor admitted that the Government faced a dilemma over the issue saying that, to carry on trading and so repay the £55 billion it owes to the Bank of England, Northern Rock must be able to compete....
Abbey and Alliance & Leicester announced that they would stop selling loans of up to 125 per cent of the value of a property, as did Coventry Building Society and Godiva Mortgages. Birmingham Midshires, owned by Halifax, indicated that the future of its 125 per cent mortgage deal was not secure. It said the product was “under review in light of events”. This may well leave Northern Rock as the only place for borrowers who want to borrow more than 110 per cent of the value of their home. A Northern Rock spokeswoman said: “Our Together mortgage is still available and we are considering this position.”
The beleaguered lender is also attracting hordes of savers with some of the most competitive savings rates on the market. It is paying the top rate on its account for the over50s at 6.49 per cent. It is also offering a guaranteed rate of 6.45 per cent on its one-year savings bond, a rate only beaten by one other institution.
James Baig, 27, a City banker who deposited money at the Moorgate Branch of Northern Rock in London yesterday, said: “I ran straight to put my money in and a few of my colleagues have too because the rates are extremely competitive for what is essentially sovereign-backed wealth.”
His intervention came amid signs that investors were heeding the advice of analysts to take advantage of Northern Rock’s deposit accounts, some of which are among the best in the market.
Northern Rock is also about to become the only mortgage lender offering 125 per cent deals after four major lenders selling similar deals pledged to pull out of the market....
The British Bankers’ Association said that a straw poll of its members showed concerns over competitition issues, with analysts saying the threat was greatest to smaller banks such as Bradford & Bingley and Alliance & Leicester.
But the Chancellor admitted that the Government faced a dilemma over the issue saying that, to carry on trading and so repay the £55 billion it owes to the Bank of England, Northern Rock must be able to compete....
Abbey and Alliance & Leicester announced that they would stop selling loans of up to 125 per cent of the value of a property, as did Coventry Building Society and Godiva Mortgages. Birmingham Midshires, owned by Halifax, indicated that the future of its 125 per cent mortgage deal was not secure. It said the product was “under review in light of events”. This may well leave Northern Rock as the only place for borrowers who want to borrow more than 110 per cent of the value of their home. A Northern Rock spokeswoman said: “Our Together mortgage is still available and we are considering this position.”
The beleaguered lender is also attracting hordes of savers with some of the most competitive savings rates on the market. It is paying the top rate on its account for the over50s at 6.49 per cent. It is also offering a guaranteed rate of 6.45 per cent on its one-year savings bond, a rate only beaten by one other institution.
James Baig, 27, a City banker who deposited money at the Moorgate Branch of Northern Rock in London yesterday, said: “I ran straight to put my money in and a few of my colleagues have too because the rates are extremely competitive for what is essentially sovereign-backed wealth.”
vimothy
yurp
For added irony, Ron Sandler, the executive charged with turning Northern Rock around, and who will pull £90,000 a year in salary for working for the nationalised bank, is a non-domiciled UK resident for tax purposes. Ann Godbehere, the bank’s new chief financial officer, is another "non-dom".
IdleRich
IdleRich
I don't really think that's that important though, it's just a general moan, Labour never specifically promised not to nationalise anything. For everyone who claims that Brown is not "free-market" enough there are a million who claim that he is too far the other way. Every step to placate the city has been viewed as a betrayal by the left, now he acts in a Labour way that you might think is more consistent with the views of the people who voted Labour into power and it's another betrayal.
Well, as we already said, it depends on how it's done doesn't it? The fact that the other banks seem relatively relaxed about it (or did yesterday, has there been any change?) seems a good pointer because they would go on the attack at the drop of a hat if they thought that they were going to lose out.
Seems like a reasonable point but the question ought to be more like "why didn't they help then?" rather than "why do they help now?".
That whole piece reads like ideological anger in response to a nationalisation - none of his arguments are based on economics are they? The hyperbolic language hides the lack of content.
Yesterday you were complaining that the brand name was so tainted that no-one would save with it - I guess you must be pleased that your fears proved groundless.