Sunday, Sep 16, 2007
A little history
Telegraph: Why Northern Rock was doomed to fail
The upstart from the North East thought its wheeze of securitisation backed by a lean machine with great IT was a licence to print money. Alas, the world changed, writes Iain Dey
'The world stopped on August 9," says Adam Applegarth, the chief executive of Northern Rock. "It's been astonishing, gobsmacking. Look across the full range of financial products, across the full geography of the world, the entire system has frozen."
Posted by bufferbear @ 01:31 AM (888 views) Add Comment
13 Comments
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1. little professor said...
Greta article, exposing how flawed their business model really was. I can't believe applegarth is still moaning about how unexpected it was that his ponzi scheme went titsup.
2. su said...
I don't suppose you guys would prefer to use "pear-shaped" instead would you? What is it with men and their fascination with tits!
3. Quiet Guy said...
If memory serves, Northern Rock was adverstising 6x mortgages in its front windows not long ago. At the time, I wondered how they could do that. Yes, it was just a matter of time before things went pear-shaped (su).
4. tyrellcorporation said...
How about 'legs-up' or 'feet-up'? 'Pear-shaped' and 'tits-up' are quite gender specific and don't really make sense when talking about a bank going bust (fnaarr, he said bust!).
5. su said...
Very funny Tyrell! :-) You guys are so witty! I love coming on here - really cheers me up!
6. Orwell said...
Do you think David Smith read this?
7. whiteknight said...
1. The world has not changed or stopped. It was precisely the same on August 10th as it was on August 1st. What happened was the entirely predictable result of yet another bubble.
2. Bubbles have simple drivers and people only ever miss them because of peer pressure, greed and because they over-complicate things
3. I could never previously understand how people could live through a bubble and not notice it. Now i do. I will write a tedious thesis that nobody will read on it some time.
8. whiteknight said...
The other fallacy is that this is going to be somehow limited to Northern Rock.
Northern Rock is just earlier in the chain.
Typically the mainstream journalists wake up and still report the facts in the moment, without understanding the inevitable consequences of the path. (and the path is not a straight line).
9. Ticktock said...
So the lending of over 6x pay, on 125% mortgages, with a crazy & unsustainable funding arrangement , and in combination with the now obvious end of the 'properteee boom' has nothing to do with it then?
While not 'too big to fail', I think that the Government might not have liked the conclusions that would have been drawn had NR been left to its deserved fate..
10. talking rot said...
Bubbleconomics.
I wonder what the next bubble will be and how the Fed will engineer it. The Fed must be running out of things to inflate. I know one thing: It probably won't be Bank Shares.
11. mrmickey said...
talking rot good point we seem to have bubbles in everything government spending, fat people, stupid people, wars, speed bumps, government surveilance, shares, houses, drink fuelled violence, exam results, depression, trerrorism you name it there's a bubble in it.
12. talking rot said...
mrmickey
There's never a bubble in my pay packet.
13. Smoke'n'mirrors said...
GMAC-RFC SOLD 12.2 Billion mortgages in 2006.
Why has there been no mention of these?
US Sub-Prime issues.... Wake up to the UK. GMAC-RFC sell their mortgages on within 3 months to other institutions.
The UK problem has only just begun................