Monday, September 17, 2007

Northern Bailout / Chancellor Guarantees All Northern Rock Bank Deposits

The action from officials ( chancellor, politicians, BOE etc...) reminds me of the great Smiths titel "Panic". And there is no other word to describe what is happening in the UK right now. If you can stand the CEO, chancellor, "experts" etc here is a good Media Blitz from Bloomberg / Video

Der ganze Aktionismus der "Offiziellen" ( BOE, Politiker, Chancellor, usw) erinnert mich an den Smiths Song "Panic" . Und Panik ist wohl das einzige Wort was die Lage in UK zur Zeit am besten beschreibt. Wenn Ihr mehr aus dem Munde vom CEO usw hören wollt empfehle ich diese Kompliation Media Blitz from Bloomberg / Video

With the houisng bubble just showing its first significant decline during the last few years i think the Kaiser Chiefs should press some extra copies of their I Predict A Riot..... ;-)

Wie soll das bloß werden wenn wie jetzt gerade geschehen die Immobilienpreise merklich zurückgehen. Ich empfehle den Kaiser Chief´s dringend ein paar Sonderpressungen von I Predict A Riot...... ;-)

Bloomberg Chancellor of the Exchequer Alistair Darling said the U.K. government will guarantee all deposits held by savers at Northern Rock Plc, a measure aimed at bringing to an end a four-day crisis of confidence in the bank.

``Should it be necessary, we and the Bank of England would put in place arrangements that would guarantee all the deposits in Northern Rock,'' Darling told reporters in London today.

The guarantee will be extended to any bank in similar circumstances, so long as it is solvent, a Treasury spokesman said.

> Mhhh, and who decides if Northern Rock is still solvent..... After reading news from Friday including their non existent loan loss provisisons, mortgage products etc i have some doubts ......And this at times where the housing market has just peaked.......From now on its only downhill........

> Aha, und wer entscheidet ob Northern Rock solvent ist...... Nachdem ich mir die Nachrichten vom Freitag mit den nicht vorhandenen Rückstellungen, wahnwitzigen Hypothekenprodukten usw habe ich doch erhebliche Zweifel.... Und das zu Zeiten wo der Immomarkt gerade das Top erreicht hat.... An jetzt geht es auf Sicht von mehreren Jahren nur noch gen Süden.....
Thanks to Hedgefunded

FT The UK has launched a radical shake-up of the protection offered to savers after the government was forced Monday night to guarantee the deposits of customers of Northern Rock, the troubled mortgage lender, in efforts to stem the growing crisis in the UK banking sector. Alistair Darling, chancellor, said the government would guarantee all Northern Rock’s deposits.

The Treasury said similar assurances would be apply to customers of any other lender encountering difficulty in the current turmoil. The FT has also learnt that the Treasury, the Bank of England and the FSA have begun reviewing the system for protecting savers, which only guarantees deposits up to £35,000, and are considering a US-style alternative to ring-fence deposits in event of a bank’s failure

And once again i have to quote Jeff Matthews "I´m not making this up". This ad campaign is real! Make sure you click on the link to see all ads... Link to NR Ad campaign. Comedy gold even without Photoshop

Und bei dem nächsten Link muß ich wohl ausdrücklcih betonen das dieses eine reale Anzeigenkampagne von Northern Rock ist. Undedingt alle Motive der Werbung "bestaunen" Link to NR Ad campaign. Comedy gold even without Photoshop.

And you also should read this Northern Rock- No Words Just Pictures via the UK House Price Crash Forum. There are so may excellent images and ads that a pimped up with photoshop like the following one that i really have almost laughed tears

Und es wäre eine Schande sich den nachfolgen Link Northern Rock- No Words Just Pictures vom UK House Price Crash Forum entgehen zu lassen. Dort sind haufenweise gute "Antworten" auf Northern Rock enthalten. Ich habe fast Tränen lachen müssen.

Thanks to DissipatedYouthIsValuable

Here comes another example of the famous British humor.....The reaction I got when I said I wanted to OPEN an account at Northern Rock

Hier kommt ein weiteres Beispiel des von mir sehr geschätzten britischen Humors.....The reaction I got when I said I wanted to OPEN an account at Northern Rock

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Blogger jmf said...

Alliance & Leicester, Northern Rock Shares Rise on Guarantees

Alliance & Leicester Plc surged in London trading after the U.K. government stepped in to stop a run on rival Northern Rock Plc, the U.K. mortgage lender that last week sought an emergency bailout from the Bank of England.

Alliance & Leicester Plc, which fell 31 percent yesterday, gained 25 percent to 753 pence as of 8:12 a.m. and Bradford & Bingley Plc was up 13 percent to 314 pence. Shares of Newcastle, England-based Northern Rock rose 8 percent to 305 pence after halving in the past two days

12:47 AM  
Blogger jmf said...

Yen Gains Against Pound, Euro After Northern Rock Withdrawals

12:57 AM  
Blogger jmf said...

Lawmakers Push for Immediate Disclosure of BOE Votes on Rates

12:58 AM  
Blogger jmf said...

London Bonuses May Drop More Than 15% on Credit Woes, CEBR Says

This sounds very optimistic.....

1:00 AM  
Blogger jmf said...

Neighbors Back Northern Rock; Savers Pull $4 Billion

If you read without this without a source this sounds like a desperate spin attempt via the PR department from Northern Rock....:-)

But it is from Bloomberg.....

1:06 AM  
Blogger jmf said...

Bank of England Makes Emergency Loans to U.K. Financial System

The Bank of England made emergency loans to U.K. banks to shore up confidence in the financial system, saying it received ``intelligence'' that demand for money may prolong a surge in overnight borrowing costs.

The central bank loaned 4.4 billion pounds ($8.8 billion) of additional funds at its benchmark interest rate of 5.75 percent today in London. The bank also said it will offer the same amount on Sept. 20 in seven-day money-market loans, repeating an operation it made last week.

2:13 AM  
Anonymous Anonymous said...

Yes. It is all quite interesting, vielleicht ebenso voraussagbar. The power of fiat money. More just a reaction than implementing a well thought out policy.

A little off-topic, but this is interesting too:

Bondholders Hoisted by Petards as Corporate Sales Depress Debt


2:19 AM  
Anonymous Anonymous said...

Vergessen: Something else to be 'marked to market' -- all the newly depreciated bonds. Should also have some effect on balance sheets.


2:24 AM  
Blogger jmf said...

Moin Eh,

another domino......


Meanwhile the "core" inflation rate is "contained"....

UK Aug CPI inflation falls to 1.8 pct, last lower in Feb 2005


Elsewhere in today's release, the statistics office said the annual RPI rate of inflation, which is used in pensions payments and often used in pay negotiations, rose to 4.1 pct after July's 3.8 pct.

This rise, which exceeded analysts' forecasts for a 4.0 pct reading, was due to an increase in mortgage payments as lenders passed on July's quarter point rise in Bank of England interest rates.

On a monthly basis, RPI inflation was up 0.6 pct after July's decline of 0.6 pct. Forecasts were for a slightly smaller rise of 0.5 pct.

Meanwhile, the RPIX measure, which excludes mortgage payments, was unchanged at 2.7 pct. Expectations were for a slight slowdown to 2.6 pct.

Got gold...?

2:32 AM  
Blogger jmf said...

More from

Raw material costs are also rising. Oil prices climbed to a record $81.24 a barrel today and global wheat prices surpassed $9 a bushel for the first time last month.

Premier Foods Plc, the U.K.'s biggest producer of cakes and instant soup, said Sept. 4 it sees a ``substantial inflationary environment on food.'' DS Smith Plc, the owner of the Spicers office products brand, said Sept. 5 higher polymer costs hurt first-quarter earnings from plastic packaging.

2:36 AM  
Blogger jmf said...

Hat tip to dogbox

Kensington Mortgages (major Subprime Lender) Update, Redcuing LTV from 95% to 75% now

I've just been emailed an update from Kensington mortgages as follows:

'Given current global capital market volatility, the cost of funding adverse credit mortgages is changing daily, as is investor appetite for mortgage portfolios. Kensington's view is that, in the short term, there will be NO INSTITUTUIONAL INVESTOR APPETITE for portfolios containing hight LTV adverse credit mortgages.

As a result of market conditions, we will be refocusing our resources in the short term on our Prime mortgage range and capping our adverse range at 75%, increasing adverse rates at the same time.

We will be looking out for the moment at which cost of funding starts falling again to ensure that Kensington products remain competetive in a changing market'.

No link available.

Only the beginning.....

3:37 AM  
Anonymous Anonymous said...

adverse credit mortgages

That's a new one.


3:38 AM  
Blogger jmf said...

Well done....

Northern Rock Debt Risk Drops on Government Guarantee

Northern Rock Plc credit-default swaps dropped after U.K. Chancellor of the Exchequer Alistair Darling said the government will guarantee the bank's deposits.

Contracts on the Newcastle-based company fell 70 basis points to 150 basis points, according to JPMorgan Chase & Co. The cost of credit-default swaps falls as creditworthiness improves. ....

4:32 AM  
Blogger Edgar said...

The mealy mouths at the UK gubbermint always leave themselves an out. As long as the banks stay solvent...
I think that is the point in a nutshell. How can these people keep so much money in uninsured bank accounts? Idiots.

6:41 AM  
Anonymous Anonymous said...

How can these people keep so much money in uninsured bank accounts? Idiots.

Probably because they believed it to be safe. And they see the government as the guarantor of last resort; in fact, they feel positively entitled to have their money (deposits) guaranteed in this way, whether there was a standing contract about that or not. One can predict the outrage should their ignorance of the business practices of Northern Rock cause them financial loss. I think the general populace feels this way. After all, if something goes wrong it's not their fault, and it's pretty much accepted that blameless people should not suffer when the financial markets tank. It's a lot trickier to organize a bailout in such a way that those responsible also do not profit/receive succor, if only as a PR matter.

There is a lot of fundamental ignorance amongst the general public about the nature of fractional reserve banking (not to mention fiat money).


8:31 AM  
Blogger jmf said...


here is a good take from the Economist

Blinking in the face of trouble

This offers full cover to a depositor with any one bank for the first £2,000 (almost $4,000) and then 90% of the next £33,000—a total of £31,700. The protection compares unfavourably with that in America, where depositors get full insurance up to $100,000 under a federal scheme created in 1933 in response to the failures of the depression years. Furthermore, American depositors get their money back within days whereas compensation in Britain may take up to six months......

The difficult consequence is that all depositors with British banks might feel entitled to such a bail-out even when the current instability in the financial system ends. This would encourage them to put their money in high-rate accounts offered by unsound banks.

The government will have to counter this moral hazard by overhauling the deposit-insurance scheme so that it offers full cover but still retains an upper limit. The worry is such a reform may no longer command credibility. Now that Mr Darling has blinked, depositors will expect the Treasury to blink again

9:31 AM  
Anonymous Anonymous said...

Who was shadowing Darling at announcement, Hank Paulson... where will he turn up next??

11:16 AM  
Blogger jmf said...

Moin Anon,

excellent point!

11:20 AM  
Anonymous Anonymous said...

Perhaps over at the Fed to celebrate the rate cut

11:22 AM  
Anonymous Anonymous said...

Nothing like a good crisis as cover for a drama

11:23 AM  
Anonymous Anonymous said...

Maybe he was there to take the months order for Treasuries ;)

11:29 AM  
Anonymous Anonymous said...

Helicopter Ben joins Swervin' Mervyn at the money trough

2:36 PM  
Blogger Edgar said...

Hi jmf,

I know you like cartoons. I thought you might enjoy this.

9:00 PM  
Blogger jmf said...

Moin Anon & Edgar,

Bernanke is doing the "Greenspan"...

I have linked your great cartoon to the post

Fed Cartoon Special

10:51 PM  
Anonymous shtove said...

Are bear blogs suffering shock after Ben-dover's 50 point rescue thrust? No posts for two days?

12:43 PM  
Blogger jmf said...


don´t know what you are talking about

John Steward Is Nailing Greenspan And The Fed / A Must See

Fed Cartoon Special :-)

The Coming Storm / Pimco on UK

Who is under shock ;-)

The only shock i got was that gold and the miners are hitting new highs :-)

10:04 PM  
Anonymous Contractors Indianapolis said...

The Bailout was a waster

8:35 PM  

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