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Spikey1

Boe Gurantees All Nr Deposits

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So much for "we will not bail out lenders who have made unwise decisions with regard to their business."

The taxpayers cover the VIs stupidity eh? Brown is trying to save his **** by keeping the miracle going.

The problem is that the people don't trust the goverment anymore than they do the VIs.

Merv has gone quiet.

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LONDON (Reuters) - The government will guarantee all existing deposits at embattled mortgage bank Northern Rock, Chancellor Alistair Darling said on Monday.

"I can announce today that following the discussions with the Governor (of the Bank of England) and the Chairman of the FSA, should it be necessary, we, with the Bank of England would put in place arrangements that would guarantee all the existing deposits in Northern Rock during the current instability," he said in a statement.

He said he had taken the decision "in the current market circumstances and because of the importance I place on maintaining a stable banking system and public confidence in it."

OK, it's clear now. We are all going to pay for it. And this already with Southern T@rd, a bank that simply should have gone bust. MORAL HAZARD anyone. cgnao might indeed be right.

Edited by Goldfinger

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Gone from being the scariest place to have money to being the safest...

That's exactly what I thought! People should now all take their money out of non-government guaranteed banks and deposit it with this '100% secure government guaranteed bank' owned by private shareholders. Are the shareholders paying for the government guarantee? Is it legal under EU state-aid rules?

Every business is equal when it comes to the risk of insolvency; but today we discover that some are a different type of 'equal' to others.

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So much for "we will not bail out lenders who have made unwise decisions with regard to their business."

The taxpayers cover the VIs stupidity eh? Brown is trying to save his **** by keeping the miracle going.

The problem is that the people don't trust the goverment anymore than they do the VIs.

Merv has gone quiet.

Well, if it came to it, I'd fully support taxpayer's money being used to bail out depositors. If people can't trust a plain old deposit, which they make accepting that they'll fall behind inflation, but in return have the assurance of knowing that their money will be there whatever comes, then the economy and most of society would be gravely damaged. I can think of few things I'd like my taxes spent on more actually.

Tell you what too, there don't seem to be many threads springing up on the annoucement. Guess it's put an end to the party on here for a bit....

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Strange but true, just been watching the news on the beeb!

Ploy to stop queuing at NR offices, will it work, we shall have to wait and see. Or is it cheaper for BoE or government to save what is still in NR? Maybe someone will enlighten us on that point...

Very little said about the A&L share plunge, but I said that would be the case on another thread on here.

I still maintain no queues at A&L as they are funded differently and don't have a funding problem...

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That's exactly what I thought! People should now all take their money out of non-government guaranteed banks and deposit it with this '100% secure government guaranteed bank' owned by private shareholders. Are the shareholders paying for the government guarantee? Is it legal under EU state-aid rules?

Every business is equal when it comes to the risk of insolvency; but today we discover that some are a different type of 'equal' to others.

Indeed. Given the grave consequences of a bank failing people with deposits in plain old accounts, it's only right that they are treated as being more equal than others. To pursue a silly stance of absolute even handedness in the face of such potentially grave consequences would be a fairly ridiculous point of principle IMO.

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Anyone with a deposit at NR is going to read that as "it's gone bust, Darling lied to me once this week already, getting my cash back from the government will take forever, best get down to my local branch and get my cash."

It's guaranteed orderly queues, that's about all.

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So what happens when other banks have similar troubles? Will the gov't bail out A&L if they go t1ts up, too, for example?

They seem to be setting what could be a costly precedent...

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Guest An Bearin Bui
Dont know why they keep disappearing but Darling has guaranteed all existing deposits in NR!!!

I can't believe this - I just read it on BBC News. This is just unreal. This government wouldn't give Rover a couple of hundred million but they'll back Northern Rock to the tune of £22 BILLION (£24bn deposits minus the £2bn already taken out)?? How does that work? Have any taxpayers been asked if they want £22bn of their money to go towards subsidising an ailing bank with a sh1t business model and some dubious loans on its books?

We now know the government's priorities: they would rather bankrupt the country and spend taxpayers money on bailouts than bankrupt a bank, even one that deserves to go to the wall. NR pursued bad business strategies that worked in teh short term but their time has now come to an end due to a credit crunch. That's the free market - they lived by it so they should die by it. If savers no longer trust the bank then they have the right to withdraw their deposit and take it elsewhere. If that brings the bank down, then that's that. A shoddy business has gone to the wall, can have it assets / liabilities taken on by a buyer and then it's business as usual.

Clearly banks (especially ones that pursue high-risk lending and borrowing strategies) are now public sector institutions, despite the FSA guidelines on deposit insurance. I had no idea how dear to Gordon Brown's heart Northern Rock was - if I had I might have put my savings with them too.

This makes me furious. The problems being stored up for the future in terms of moral hazard are endless :angry: :angry: :angry:

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Anyone with a deposit at NR is going to read that as "it's gone bust, Darling lied to me once this week already, getting my cash back from the government will take forever, best get down to my local branch and get my cash."

It's guaranteed orderly queues, that's about all.

I don't think so. I think this latest annoucement will calm things down a lot. I reckon the queues will be much smaller tomorrow.

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Strange but true, just been watching the news on the beeb!

Ploy to stop queuing at NR offices, will it work, we shall have to wait and see. Or is it cheaper for BoE or government to save what is still in NR? Maybe someone will enlighten us on that point...

Very little said about the A&L share plunge, but I said that would be the case on another thread on here.

I still maintain no queues at A&L as they are funded differently and don't have a funding problem...

The mob are not concerned with the technicals. When they get frenzied there is no controlling them. The problem is that the average person does not trust the VIs or NuLabour who promised a boom and no more bust. The people are seeing a bust and they are going to blame Gordon so anything he says or does is of no value.

Milliband might be good for a punt as I cannot see Brown surviving this much longer. His own party know he is the chief architect of 10 years of debt binging.

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This sounds like a sensible and timely plan, and should head off a series of unpleasant bank runs.

I presume that the govt and BoE will make sure that shareholders suffer, to maintain the facade of 'moral hazard'.

The best way to deal with 'moral hazard' would be to make all Chief Execs/Board Members of failed banks personally responsible for refunding their depositors. I'm sure if they were all made bankrupt, banks would be more circumspect in future...

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So what happens when other banks have similar troubles? Will the gov't bail out A&L if they go t1ts up, too, for example?

They seem to be setting what could be a costly precedent...

How do you know? It hasn't cost them a penny yet as far as we know, right? If what was said about the NR being solvent was true, then there will be no bail out necessary, and not a penny spent. See, this is what happens when people on here foam at the mouth all day. You've already forgotten what the real situation currently is, and have substituted worst possible scenario predictions for fact.

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Indeed. Given the grave consequences of a bank failing people with deposits in plain old accounts, it's only right that they are treated as being more equal than others. To pursue a silly stance of absolute even handedness in the face of such potentially grave consequences would be a fairly ridiculous point of principle IMO.

I take your point but it's a privileged business with a special government bail out scheme, let them pay for that privilege and subject bank dividends to a higher tax rate than companies that are allowed to fail. That will help to mark them out as 'special'.

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The mob are not concerned with the technicals. When they get frenzied there is no controlling them. The problem is that the average person does not trust the VIs or NuLabour who promised a boom and no more bust.

I think you're reading this one all wrong. I think people are panicing because people are panicing. I think there is a strong chance that the latest annoucement will truely calm a lot of people down. The mood will swing back to one of jubilation. It will even occur to some that perhaps their deposts are safer than a lot of other places as a result. The whole thing will die down for now I think.

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I can't believe this - I just read it on BBC News. This is just unreal. This government wouldn't give Rover a couple of hundred million but they'll back Northern Rock to the tune of £22 BILLION (£24bn deposits minus the £2bn already taken out)?? How does that work? Have any taxpayers been asked if they want £22bn of their money to go towards subsidising an ailing bank with a sh1t business model and some dubious loans on its books?

We now know the government's priorities: they would rather bankrupt the country and spend taxpayers money on bailouts than bankrupt a bank, even one that deserves to go to the wall. NR pursued bad business strategies that worked in teh short term but their time has now come to an end due to a credit crunch. That's the free market - they lived by it so they should die by it. If savers no longer trust the bank then they have the right to withdraw their deposit and take it elsewhere. If that brings the bank down, then that's that. A shoddy business has gone to the wall, can have it assets / liabilities taken on by a buyer and then it's business as usual.

Clearly banks (especially ones that pursue high-risk lending and borrowing strategies) are now public sector institutions, despite the FSA guidelines on deposit insurance. I had no idea how dear to Gordon Brown's heart Northern Rock was - if I had I might have put my savings with them too.

This makes me furious. The problems being stored up for the future in terms of moral hazard are endless :angry: :angry: :angry:

]

That's totally naive. Taxpayers don't ever get "asked" what they want their money spent on. What makes this any different. For goodness sake, if it did come to it (and it HASN'T YET - IT MAY NOT COST THEM A PENNY IF THE NR IS REALLY SOLVENT AS THEY CLAIM), then they'd be spending taxes in the best way possible. There are lists and lists of less worthwhile uses of tax money that go on all the time. This is far more worthy than a lot of the ways it is spent and wasted.

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So I guess all of the discussion that has been had on here regarding the spreading around of STR money was in vain. You could stick the whole lot anywhere you like and the ******ING STUPID ******ING IDIOTS IN GOVERNMENT will underwrite any risk.

Government backed savings accounts now yield 7%. Not bad.

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