Ok, First off as some of you may know I work in the financial services industry, in hedge funds which often laugh at the more traditional industrie's miss fortune but, this isn't my 'proffesional' voice, this in no way expresses the views of the company i work for etc.
Instead i present you a slightly drunk rant.
Northern rock really isn't in that much of a bad shape. It just isn't.
They've got oodles of assets, just cronicly bad liquidity, going to the bank of england for an emergency loan isn't that rare, other banks have been doing it this month, the main reason is they want to be able to get new customers, as well as covering their shortfall. This could be seen as a damning indightment of the credit market, rather than Northern rock playing a broker.
First off the dear media, your causing a run on a bank, in a 1st teir country, its a statistical fact that as well as dieing sooner, northern people have a lower IQ, but what the hell are they thinking?
Ok, so england dosen't force banks to have insurance against your savings (like say the US do to the sum of £50k) instead, anything upto £34k is 95% covered by the FSA.
Whats the worry, sure you might be loosing that 5% but the odds off that happening are still tiny, think how much intrest you've already earnt this year whislt having that risk. (anyone with more than 20k in a standard bank account is stupid anyway and deserves to loose it)
Why would it collapse? The problems they where having would only effect their bottom line, borrowing money from the bank of england is only bad because of the intrest rate (and now it seams press stigma). There is no danger from any of the information thats flowing on the wire that they are even approaching going under. If they where the bank wouldn't be allowed to trade.
Also, you stupid morons, what do you think would happen if the bank was really in such a state, the governement would just let it hand out money on a first come first surved basis? No, they are all a bunch of ***king morons who have only exhasibated the slow down of our economy.
Now, whats going to happen, the credit crunch is HUDGELY over rated, the company I'm working for is still going to give house price rising friendly bonuses, as is pretty much everyone else in a way that truely makes me sick i'm bottom of the ladder. The performance this year has still been considerably well above base, considering the problems. This isn't remotely un-common, all my city friends are still planning their skiing holidays (most IB types get bonus around then, the skiing holiday is a good indicator of how good people expect the performance of the company their working for too really be).
What is going to happen is people are going to tighten up on the 95%+ LTV mortgages, also mortgage rates are going to rise, but when you look at some of the measures of inflation that have been out over the wire this week, this is somewhat needed. House prices aren't going to be falling too much in london just yet.
When you also consider that other lenders like A&L have been saying that they've got a credit surpless and they're going to be still offering competetative rates. That the much trumpeted rise by Abby has such a little effect on the average mortgage price. There is no reason for the sky to fall in yet.
But with sensationalist crap all over the news, dodgy analysists who are contradicting themselfs from 6 months ago, in a manner so blatently that even the powerful analysis of the london lite mocks them.
We're going to see a continuation of the cool down we've seen this summer, but a large fall in grossly over populated london, not today, the house price boom hasn't been fueled in this country by sub-prime, as can be seen by how few take 100% or greater loans. Companies like northern rock are nothing like the pure brokerage types who where selling these products in the US, they where mearly thinking about their sales target for that week, NR and others have been looking at the longer term, why gamble it all on house rises?


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