Were you surprised at the probs experienced by northern rock? If you were NOT surprised can you state why?

Question

Were you surprised at the probs experienced by Northern Rock? If you were NOT surprised can you state why

Answer 1

What do you mean by the problems experienced?

Do you mean the problems that lead them to difficulties initially?

The problems after it was announced there was a financial crisis?

Or do you mean any present problems there may be?

Answer 2

Yes - I (and I suspect most people) were not aware of how depended they were on borrowing from the Money Markets to finance their lending to Mortgage customers ..

Once the problems started, I guess I was not really surprised ... I'm cynical enough to believe that the Government is incapable of doing anything 'in a hurry' .. Nero may have fiddled whist Rome burnt, but good old Gorden slept whist NR burned ..

The 'slide' COULD have been stopped over the first weekend ... however repeating parrot fashion that "90% of the first £35,000 is protected" did nothing but remind people of the likely 6 month to 1 year wait to get their money back from the Government ..

... so by the time Our Glorious Leader bothered to get out of bed on Monday morning it was all over for Northern Rock .. after that, no matter what the Government said, no one paid any attention ..

Answer 3

The whole think was like an eathquake zone - Whilst a quake in Tokyo or San Fransisco cannot really be called a surprise on one level they would be a huge shock on another level; So, my answer is "Yes" I was surprised...

I was likewise surprised by the way Countrywide had to be bailed out by Bank of America in the US... I was even more surprised when Bear Stearns went under in March 2008 (although Bear's collapse was packaged by the authorities in the US as a purchase by JP Morgan).

In the case of Bear Stearns and Northern Rock there was absolutely no logic to what happened - Why them? Other banks were just as vulnerable. The fact is that the only logic that counted was that of the panicked crowd: A lack of confidence is self reinforcing but all banks are vulnerable to this...

Going forward it is a shame that in the case of Northern Rock the strongest financial hands are also the weakest in terms of mental toughness and resolve :- Our government will probably contrive to lose money from what should actually be a great opportunity for the tax payer, despite what the journalists say...

To appease ignorant journalists in the here and now (journalists who wilfully stir up an even more ignorant public with ignorant soundbites) our government has demanded the new management should sell distressed assets (i.e. mortgages) as quickly as possible and so is forcing them to be short termist. The loans to Northern Rock are literally as safe as houses. Also as a business Northern Rock only makes sense if it continues mortgage lending... It will be very ironic when the same headline grabbing journalists, and the public they lead, start complaining about how much money has been frittered away by the new management...

In years to come comparisons with Northern Rock will be drawn when Bank of America and JP Morgan start making huge windfall profits through write-backs of today's overly conservative write-offs. Unfortunately the new Northern Rock management is under orders to get rid of "the political problem" quickly and expensively and the journalists themselves are the ones to blame.

Northern Rock will be an albatross around Labour's neck despite the fact they did the only thing they could... In buying Countrywide and Bear Stearns at distressed levels BofA and JPM will surely profit hugely - Future comparisons with a lack of significant profit from Northern Rock will be pure journalistic hypocrisy:-

a) Letting Northern Rock go under would've been political suicide;

b) Selling Northern Rock at the fair (distressed) price leaving some private investors (e.g. Richard Branson et al.) to reap huge profits later would have been a recipe for future political suicide;

c) Not selling Northern Rock assets as quickly as possible to reduce the size of the government bail out as soon as possible would be politically hard to justify in the here an now...

Cheapshot journalists are the sadest and least surprising aspect of all of this.