[Guy Incognito]

Is anyone else amazed at how easily a hyped up non story can almost bring a company to its knees?

It is like voting and reproducing, some folks are just too stupid to be allowed to. The funny thing is, the Government knows it will never have to make good on the deposits because the Bank is solvent but at least it might stop idiots queueing to get their money out.

I particularly liked the woman who stood there saying "I have 750,000 and i am seriously considering doing what my mother in law did, hide it under the matterss." Bet the robbers round her way were rubbing her hands together.

I think the media should have their wrist slapped as it was reported very poorly and irresponsibly!

[pumanurse]

Our mortgage is with Northern Rock. I've got their money as opposed to all them having all of mine

[LisaDJ]

Us too ...

I can't believe that people are taking their money out - isn't that just going to make things worse. The bank of England have already bailed NR out so is there really need to panic?

[Guy Incognito]

exactly!

Lisa, the Bank of England did not "bail" NR out, that is the whole point I am making. The way loans etc work is thet your high street bank lends you money at 5 percent that they have borrowed at 3 percent so they make 2 percent on your money. That is how it has woerked for years, all NR was doing was getting the money from BofE to fund the mortgages they expected people to apply for. It was not to cover loans they had or anything like that. what got me was the fact that that was not clearly reported by anyone that I saw. the BBC used to be THE word in faiorness and well respected but now they are just woefull! If I had not studied economics at Uni I would have been really worried if I had savings there, just because of how it waas reported.

You may have noticed the plane crash in Phuket, they mention the "budget" airline as if to imply they skimped on checks or maintenance, it is lazy and leading reporting and i am sick of it!

Matt, stop editing when I am posting!

This post has been edited by guyincognito1975: 18 September 2007 - 06:41 PM

[Sex Kitten]

yes but if you analyse NR's balance sheet it is not that rosy

plus how many of you know that if god forbid it did go belly up the rules around what depositers get back?

up to 2k 100%
between 2 and 35k 95%

after 35k zip

now i dont know what you think but i bet thats surprised a few people

my mum and dad were some of the people queuing up to get their money out - they couldnt afford to risk losing it - thats all they have to keep them into their old age (unless as my dad so cheekily reminded me i fancied them moving in with me!!!!)

[Guy Incognito]

I can see what you are saying but the point is the bank did something that banks do every day, the only difference was they had to get the money from the B of E instead of from an international bank.

If that had been explained properly or better yet, the story had stayed in the FT and business pages where people reading it actually understand it then this would not have vappened. The BBC and others reported as if the bank was in trouble and as a direct result of that they very nearly were.

[spenspuma]

I dont blame people at all for taking their money out.

Put yourself in the position of someone who has worked every hour god sends ALL their lives to get a nice little nest egg so they can retire and have a carefree life - would YOU leave it in the bank and trust the government !!! haha - I DONT THINK SO!! - this is the government that said our pensions were safe !!

If i had a substantial amount of money in northern Rock i would do EXACTLY the same - its a no brainer. you have two choices 1)Leave your money in there and take a gamble that it'll still be there in 6 months OR 2) Put it in another Bank where it is GUARANTEED to be there in 6 months......in some ways you'd be a fool to leave it where it is....whatever so called 'guarantees' the government gives.

Be it speculation or not, people these days do not like uncertainty where their hard earned money is concerned. - i know i dont.

[Guy Incognito]

Spens, that is exactly my point. It has been reported so that people are worried. I should have entitled my post, how blooming irresponsible are the media.

The NR did exactly what all banks do, it is like pyramid selling. leaving your money with the NR is just as safe as leaving it with nat west or alliance and leicester. It is not even like you or i getting a new credit card with 0 percent on balance transfers, it is just common banking practice but it was reprted as being out of the ordinary leading to a run on the bank.

actually, if a mod is reading can they change the second line of the title to "grrr lazy and irresonsible reporting" please?

thank you, that was quick! x

This post has been edited by guyincognito1975: 18 September 2007 - 07:05 PM

[Sex Kitten]

done!

[Guy Incognito]

that is not turning it round, that is showing what could happen when a run is caused on a bank, which in this case would have been down to media hysteria.

[Mountain Lion]

Until yesterday, when the Bank of England stepped in and declared that they would guarantee all customers' funds deposited with Northern Rock, nobody's money was safe (nobody who had more than £2000 deposited, that is).

Northern Rock was in trouble. No bank turns to the Band of England (the bank of last resort) unless they're in trouble.

Northern Rock did its business differently than other banks. Other banks usually have plenty of funds in the form of customer's savings and investments to cover the money that they lend, and only need to buy relatively little funds from the market. Northern Rock's business model is different. Most of the funds to cover its mortgages and loans are bought on the market. Comparatively little of the funds it holds come from customer's savings and investments. When the money market dried up, so did Northern Rock.

NR's share price has been in decline since March this year, indicating that there's been a gradual loss of confidence in its business model for quite a few months now.

Personally, if I'd have had more that £2K deposited with them last week, it probably would have been somewhere else by now. If I'd have had more than £35K with them, it certainly would have been out by now. As it happens, NR is probably now the safest bank you could have your money with, although as far as I know, the Bank of England still hasn't said when it will withdraw its emergency funding.

[Guy Incognito]

you are right in that their business model is set up that way but the reason that their share price has been in decline ahs a lot to do with new buyers being priced out of the market and they were NRs main customer base.

I still maintain that if it had been reported in a more restrained fashion then the panic withdrawals would not have happened.

The reason that NR went to the B of E is because of general unease due to the US mortgage problems, not because of NR being in real difficulty, if they had been in real difficulty then the FSA would have shut them down or taken over the running.

[LisaDJ]

I stand corrected on the comments I made about getting bailed out.

I did read that mortgage customers would be in no danger if Northern Rock went belly up, as you put it.
Another lender would just come and take the mortgage on instead...

[Mountain Lion]

Comment deleted - complete b*llocks.

This post has been edited by Mountain Lion: 18 September 2007 - 07:46 PM

[Guy Incognito]

my mistake, I had read that NR had relied on new buyers for a lot of their business.

that will teach me to believe the media!

[Mountain Lion]

No my mistake - I was looking at the figures for the wrong year.

[Guy Incognito]

we are a pair of loons!