Metro Bank - It's like 2008 all over again

[highcontrast]

https://www.standard.co.uk/news/uk/metro-bank-tells-customers-their-money-is-safe-after-whatsapp-rumour-spirals-out-of-control-a4140476.html

[Wayward]

Another run on a bank...oh dear!.  Banking is all about confidence.  Once Joe Public sees the wizard behind the curtain the game is up.

[scottbeard]

This is NOTHING like 2008.

This is just a fake news rumour that will blow over - in fact already has.

In 2008 major banks (not just piffling ones like Metro) were actually bust.

[Si1]

1 hour ago, scottbeard said:

This is NOTHING like 2008.

This is just a fake news rumour that will blow over - in fact already has.

In 2008 major banks (not just piffling ones like Metro) were actually bust.

The trouble with runs in banks is that they CAN end up being systemic. I do not know if this one would be or not.

[TheCountOfNowhere]

1 hour ago, scottbeard said:

This is NOTHING like 2008.

This is just a fake news rumour that will blow over - in fact already has.

In 2008 major banks (not just piffling ones like Metro) were actually bust.

It is nothing like 2008...its worse.  Those 120% northern rock mortgages are sane compared to the btl lending and the London bubble lending we've seen since. 20x salary for a flat has put the banks in a worse position than 1.2x 10 salary did. 

Add on the help to buy madness that seen price of new builds double in a short space of time and the financial problems being seen all over the country then the banks are much more bankrupt than before, only thing keeping the going is magicked up money and low interest rates. One has to wonder why rates are still low and they talk about more qe. 

 

The US subprime collapsed and it was ramped by government funded fannie mae/Freddie mac.... The UK sub prime bubble is staring everyone in the face and still people deny it. 

 

We will eventually see an enforced bank holiday, not all of them will return. 

 

Nothing has changed except its much worse this time. 

[TheCountOfNowhere]

Here's my personal list of ones to watch,imho.

 

Nationwide 

Coventry

Skipton

 

All the challenger banks. Had to jump through hoops to get money out of shawbrook recently. Skipton iirc are automatically renewing fix term bonds for the same period if you don't tell them any renewal decision. Speaks volumes to me that does. 

 

Let's hope I'm wrong and all those savvy btlers see 40x average salary property prices... 

 

 

 

[longgone]

5 minutes ago, TheCountOfNowhere said:

It is nothing like 2008...its worse.  Those 120% northern rock mortgages are sane compared to the btl lending and the London bubble lending we've seen since. 20x salary for a flat has put the banks in a worse position than 1.2x 10 salary did. 

Add on the help to buy madness that seen price of new builds double in a short space of time and the financial problems being seen all over the country then the banks are much more bankrupt than before, only thing keeping the going is magicked up money and low interest rates. One has to wonder why rates are still low and they talk about more qe. 

 

The US subprime collapsed and it was ramped by government funded fannie mae/Freddie mac.... The UK sub prime bubble is staring everyone in the face and still people deny it. 

 

We will eventually see an enforced bank holiday, not all of them will return. 

 

Nothing has changed except its much worse this time. 

everyone should move their fiat to bitcoin 

[scottbeard]

2 minutes ago, TheCountOfNowhere said:

the banks are much more bankrupt than before, only thing keeping the going is magicked up money and low interest rates

In my opinion, that was true from about 2008 to about 2012.

But now, all these years later, I don't think that's true any more.  I think the big banks are in a vastly more secure position than 2007, not least because now 2008 is within living memory of those working in them, whereas back in 2007 the Great Depression was not.  Now people KNOW that these things can still happen, instead of pretending that they've been consigned to history, they act differently.

But I guess we shall see.  The next recession will be a good test of it, I guess.  But having not had a banking crisis essentially from 1929 to 2008 I don't think we'll be seeing another in the next 30-40 years.  Not until the banks are run by people too young to have been working in 2008.

[longgone]

2 minutes ago, TheCountOfNowhere said:

Here's my personal list of ones to watch,imho.

 

Nationwide 

Coventry

Skipton

 

All the challenger banks. Had to jump through hoops to get money out of shawbrook recently. Skipton iirc are automatically renewing fix term bonds for the same period if you don't tell them any renewal decision. Speaks volumes to me that does. 

 

Let's hope I'm wrong and all those savvy btlers see 40x average salary property prices... 

 

 

 

just got a letter this morning dropping rates from a high 1.24% to 1.04%

[Captain Kirk]

5 minutes ago, TheCountOfNowhere said:

It is nothing like 2008...its worse.  Those 120% northern rock mortgages are sane compared to the btl lending and the London bubble lending we've seen since. 20x salary for a flat has put the banks in a worse position than 1.2x 10 salary did.

Agree. It's a much bigger bubble now than it was in 2008. How can it possibly not be as bad?

They should have done a soft landing in 2008, but instead chose to reflate a bigger bubble. Utter madness.

[TheCountOfNowhere]

2 minutes ago, longgone said:

just got a letter this morning dropping rates from a high 1.24% to 1.04%

Desperate to keep prices up, I'd guess because they know they're fooked when they fall. 

 

So much for vigilance. 

[TheCountOfNowhere]

5 minutes ago, scottbeard said:

In my opinion, that was true from about 2008 to about 2012.

But now, all these years later, I don't think that's true any more.  I think the big banks are in a vastly more secure position than 2007, not least because now 2008 is within living memory of those working in them, whereas back in 2007 the Great Depression was not.  Now people KNOW that these things can still happen, instead of pretending that they've been consigned to history, they act differently.

But I guess we shall see.  The next recession will be a good test of it, I guess.  But having not had a banking crisis essentially from 1929 to 2008 I don't think we'll be seeing another in the next 30-40 years.  Not until the banks are run by people too young to have been working in 2008.

Six words.... 

 

'House prices

Wages

Cost of living.' 

 

2007 was chicken feed. 

 

2 more words... Railway mania. 

 

Nothing was done about that bubble till the 2nd collapse. Read up on it. It all sounds far to familiar to be coincidence. 

 

Now ask yourself, how many times in history has money printing on the scale of the last ten years ended well? 

 

[Wayward]

This time it is different...

[Wayward]

...or maybe not.

[rantnrave]

2008 - banks had to tell the clueless authorities that they had a problem

2019 - authorities have had to tell a clueless bank that it has a problem

Big difference IMO

[TheCountOfNowhere]

39 minutes ago, scottbeard said:

 

I'll leave you with this thought.... 

 

 https://mobile.twitter.com/UkPropertyLion/status/1128271820153602048/photo/1

[scottbeard]

32 minutes ago, Captain Kirk said:

Agree. It's a much bigger bubble now than it was in 2008. How can it possibly not be as bad?

They should have done a soft landing in 2008, but instead chose to reflate a bigger bubble. Utter madness.

The bubble is bigger - but the banks are MUCH more prepared

28 minutes ago, TheCountOfNowhere said:

2007 was chicken feed. 

2 more words... Railway mania. 

Nothing was done about that bubble till the 2nd collapse. Read up on it. It all sounds far to familiar to be coincidence. 

Will read up on railway mania, for sure.

But if you truly believe "2007 was chicken feed?"  can you outline some of the consequences you're expecting from the "big one"?  As far as I'm concerned the 2007/8 crisis isn't actually over yet - it won't be until interest rates have normalized.  We're still dealing with the ever smaller aftershocks of that crisis, and will be for 20 years or more, rather than building up to another, in my view.

The big issues of today are inequality and climate change, not banking.

[hotblack42]

2 minutes ago, scottbeard said:

The bubble is bigger - but the banks are MUCH more prepared

Yes.  It will make a lot of people very cross, but some banks have de-risked and re-capitalised and could now watch impassively from the sidelines as people and businesses go bust, job losses mount, riots kick off etc..
Then they will buy quality assets 10c on the dollar.

With centuries if practice they are good at milking everyone else mercilessly and ensuring society picks up the bill when things go awry.  Its spectacularly profitable.  Why would they stop?

[highcontrast]

1 hour ago, Si1 said:

The trouble with runs in banks is that they CAN end up being systemic. I do not know if this one would be or not.

This. Plus much more prevalent use of social media/messaging these days. The word contagion springs to mind. 

[Captain Kirk]

9 minutes ago, scottbeard said:

The bubble is bigger - but the banks are MUCH more prepared

So they have enough capital for a drop of how much before they are wiped out?

[simvastatin]

I have moved money out of metrobank to monzo

 

[scottbeard]

1 hour ago, Captain Kirk said:

So they have enough capital for a drop of how much before they are wiped out?

Well, it varies from bank to bank - I'm sure you could Google the exact capital figures for each bank.

Also different banks will have different levels of exposure to different risks so you can't just come up some single figure of X% drop across every possible asset or market that every single bank could or couldn't sustain.

If you're actually interested rather than just trolling the BofE stress tests are a good starting point, which model things like a 41% drop in UK share prices and a 33% fall in UK house prices.  https://www.bankofengland.co.uk/-/media/boe/files/stress-testing/2019/stress-testing-the-uk-banking-system-key-elements-of-the-2019-stress-test.pdf?la=en&hash=9F5CF1B969F5987CE2DBE1F1EA50D7ED5786AB4F

But that doesn't mean that suddenly a 34% drop in house prices wipes out any banks, just that this is the BofE's suggested test of stability (which a few years ago several banks failed, but now I believe they all pass).

[TheCountOfNowhere]

12 minutes ago, scottbeard said:

Well, it varies from bank to bank - I'm sure you could Google the exact capital figures for each bank.

Also different banks will have different levels of exposure to different risks so you can't just come up some single figure of X% drop across every possible asset or market that every single bank could or couldn't sustain.

If you're actually interested rather than just trolling the BofE stress tests are a good starting point, which model things like a 41% drop in UK share prices and a 33% fall in UK house prices.  https://www.bankofengland.co.uk/-/media/boe/files/stress-testing/2019/stress-testing-the-uk-banking-system-key-elements-of-the-2019-stress-test.pdf?la=en&hash=9F5CF1B969F5987CE2DBE1F1EA50D7ED5786AB4F

But that doesn't mean that suddenly a 34% drop in house prices wipes out any banks, just that this is the BofE's suggested test of stability (which a few years ago several banks failed, but now I believe they all pass).

.... If you believe them. 

 

After 10+ years of their lies I wouldn't trust them as far as I could throw Gordon brown. 

[Captain Kirk]

17 minutes ago, scottbeard said:

If you're actually interested rather than just trolling the BofE stress tests are a good starting point, which model things like a 41% drop in UK share prices and a 33% fall in UK house prices.  https://www.bankofengland.co.uk/-/media/boe/files/stress-testing/2019/stress-testing-the-uk-banking-system-key-elements-of-the-2019-stress-test.pdf?la=en&hash=9F5CF1B969F5987CE2DBE1F1EA50D7ED5786AB4F

Yes, I'm interested cheers. I've never trolled. Disagreeing or not being on the left politically is not trolling.

[scottbeard]

18 minutes ago, TheCountOfNowhere said:

.... If you believe them.   

After 10+ years of their lies I wouldn't trust them as far as I could throw Gordon brown. 

Fine, well if you're not going to disregard relevant information then no wonder you have come to the wrong conclusion.  There's no more it's worth me saying.

10 minutes ago, Captain Kirk said:

Yes, I'm interested cheers. I've never trolled. Disagreeing or not being on the left politically is not trolling.

Thanks.  I feared a troll not based on your views (I had no idea in fact what they were) but based upon the habit of some people to ask a question just as a rhetorical device to allow them to sneer at the answer.  It's nice that you are actually interested in the answer.