Sunday, September 16, 2007

How much will investors withdraw?

Bankers fear £12bn run on RockDavid

NORTHERN ROCK, the mortgage bank rescued by the Bank of England last week, could see as much as £12 billion – nearly half of its deposits - withdrawn by worried savers, experts say.

Posted by bufferbear @ 01:34 AM (1376 views)
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22 thoughts on “How much will investors withdraw?

  • japanese uncle says:

    If a few banks larger than N/R should go bankrupt, could the BoE rescue them all?

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  • tyrellcorporation says:

    Question: Why didn’t the BoE bail-out Metronet (LUL)? I don’t really get why the finance/banking sector gets lovely bailouts and everyone else can go hang.

    As I read the other day, modern banking seems to be socialism for the rich – unregulated money creation on the way up, bailouts and handouts on the way down.

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  • Its all they have left which is what represents the UK economy…

    Its like having your last card in a saloon of countries making and developing things…….

    It simply can’t be allowed to go dopwn the swanny…

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  • If the BoE does resuce banks then surely this will not teach them a lesson.

    Where would the BoE get all the money from to rescue these banks? Taxpayers?

    If all these banks are rescued then surely this will continue the bubble not allowing a house price crash to occur.

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  • yes david at the expense of the pound

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  • But the Pound is still mega high against the US Dollar, I remember when it used to be $1.60 – 1.75 to the £1.

    I don’t feel that the BoE should bail out the banks.

    They took the risk so they shouldn’t be bailed at by the BoE.

    If the BoE keeps bailing the banks out then where is the incentive to not lend irresponsibily?

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  • @ David

    How many banks are going to want to announce that they need emergency funding, considering the fact that NR’s anouncement led to a run on the bank?! They may have to apply for funding but they’ll be very worried about the consequences. Look at NR’s shares!

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  • David, the pound is not high relative to the dollar, the dollar is low compared to the pound.

    Obviously it amounts to the same thing, but the point is that the US are already having a mortgage crisis and the dollar is in difficulty because everyone is now expecting the fed to turn on the printing presses to bail out banks, or to lower interest rates – neither of which are good for the dollar.

    The pound is worth a lot of dollars because of the mortgage crisis in the US that is only just beginning here, but will be much worse.

    I have started doing currency trading, selling the dollar against the baht, yen, swiss franc etc. I am now selling the opund against the dollar. Either way, I’ll be able to afford a house soon – unlike most of the people who have bought in the last 2 years and have put all of their eggs into the property basket.

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  • I have put all my money in online savings hoping that prices would crash and I would be able to put a deposit down.

    I feel so much happier 🙂 🙂

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  • David, a house price crash must happen or the economy will be destroyed. If living costs keep rising, wages will have to rise to pay those costs, so businesses will have to pay higher salaries plus their own higher rental costs. Eventually, every business will decide it is better to trade from somewhere else or they will go bust. The firm I work for in London has lost their three most talented engineers due to rising living costs. Had the buiness been based in France or Germany, we would still be competitive. Now we are all looking for other jobs.

    This is why bubbles always burst. A house price crash would be cutting off an arm to save the body, and it happens automatically by investors money, not by government policy; all they do is take the credit or the blame.

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  • So do I

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  • You and me both, David.

    It’s been great having the guys (and Sara) on here to offer their opinions and advice. Pity more people don’t know about, or don’t bother visiting this site. I moved my savings around a wee while ago after reading the advice on here. My gut instinct told me house prices couldn’t keep going up, but I didn’t understand all the economics behind it or even realise the wider picture with banks, sub-prime etc.

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  • tyrellcorporation says:

    Su, it’s great you’ve clued yourself in on what’s going on. Time to spread the word generally about the dodgy state of the UK housing market though as millions still think house prices only ever go up.

    The events of the last few months prove us HPCrashers have been right all along – although I’ll be the first to admit we have all underestimated the public’s willingness to bury themselves in debt and prolong the madness.

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  • Tyrellcorp why bother telling others?

    If they have bought into this stupid debt pyramid and we haven’t if we keep quiet and more ppl buy in us HPCers will see even bigger falls.

    Cue Evil laugh – Mwahahahahha

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  • Oooh David, that is such an evil sound! And to think I was beginning to like you and nearly popped in for coffee!

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  • tyrellcorporation says:

    This whole edifice has been built on cheap credit and positive sentiment; We’ve seen cheap credit evapourate and now need to concentrate on eroding house price confidence.

    Just witnessing the NR debacle tells me that confidence is waifer thin – get BTL panicking and it will unravel very quickly IMHO.

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  • I am nice really.

    I just have a horrible feeling that if the BoE keeps bailing all of these banks out that house prices then won’t start to crash.

    If the BoE had allowed Northern Crock to fail then some form of house prices would have started to materialise.

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  • David, you come across as a decent guy, just a bit stressed sometimes. But worrying about it isn’t going to help. I’ve spent most of the last few years panicking as I watched prices rise. But being a mum, I’ve come to realise there’s more to life. I hope prices will crash so I can buy a house, but if not – well, I will just continue to enjoy what I DO have.

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  • Su

    The best site I know for explaining the financial basics is Mish’s blog (www.globaleconomicanalysis.blogspot.com)

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  • Agree tyrellcorporation 100%
    The fuel for the housing bubble is running out fast (cheap credit)The only thing that keeps it chugging along now is confidence.
    And i reckon most of that has been eroded this weekend by the media coverage of NR and the reported drop in house prices.
    I do believe this could be it,regardless of how brown & darling try to influence any BOE decisions.Once confidence/sentiment has gone then the games up.

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  • Sold Out. I think you’re right about confidence being eroded. Even David is starting to sound more cheerful in a positive HPC sort of way. When David starts opening champagne bottles then we’ll know that confidence has died.

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  • planning4acrash says:

    Sold out; credit is confidence of the money markets and it is their confidence that matters.

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