Thursday, September 13, 2007

If Northern Bank collapses and the Bank of England hold their nerve this could be the start of the crash. If however the BoE slash rates I see a situation like 2005.

Northern Rock

If Northern Rock collapse and the BoE don't cut rates this could be the crash. HOWEVER, if King losses his bottle and cuts rates then the boom will continue a la 2005.

Posted by david20040_0 @ 09:47 PM (2044 views)
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19 thoughts on “If Northern Bank collapses and the Bank of England hold their nerve this could be the start of the crash. If however the BoE slash rates I see a situation like 2005.

  • Is that the sound of chickens I hear? Coming home to roost..?

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  • Dave, youre being too simplistic again, this situation is very, very complex. Imagine it’s like astrology and the planets are all of a sudden in conjunction and you will get the picture. Many factors are converging at once and there is little if anything the BofE can do to prevent the natural course of events running to its conclusion, the Tarot has been dealt.

    Tomorrow is another day and I guess you won’t be posting.

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  • Cheekie Charlie says:

    david20040_0
    Even you must be able to see this crises has more in common to 1933 than 2004.

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  • But surely is Northern Bank goes under this will be the start of a hail of sh*t.

    But the BoE slashing rates will ease the problems.

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  • crash bandicoot says:

    Are they victims of their own success? They have helped to pump the market up to where it is today and apparently now the pips are squeaking they are feeling the strain.

    I hope that the cliche police are not out tonight!

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  • David – you invest your money in houses.

    Me – I’m doing currency trading and I’ve sold the pound against a lot of currencies. Either we have a house price crash or we have a dieing currency. Either way I’m fine. I win, no matter what.

    I certainly would not want all of my highly leveraged eggs in the BTL basket. That would be suicide. Desperate attempts by the BoE to keep a market afloat? Doesn’t sound safe, does it.

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  • Thay tried it on black wednesday

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  • Inbreda I do not invest in property at all, I put my money in ICESAVE.

    I just want a house price crash so one day I can get a house.

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  • Noticed that the pound is diving with the dollar against the euro and is at a 12 month low against the big E, so tomorrow will be interesting on more than one front.

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  • Actually the ball is in the Fed’s court. Ben has a big sub-prime problem and many VIs screaming at him to drop 1.0%.

    The BofE don’t need to make any decisions untill next month. They can cut 0.25% based on the low CPI if things get sticky.

    The people I feel sorry for are those who have taken out “consolidation loans” and can’t pay them back as rates have risen for risky lenders. These folk are ready for reposession, and this can be a slow nasty process as borrowers run out of rope.

    Could we have 2005 all over again? – I doubt it, both borrowers and lenders will be more cautious this time.

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  • Does the 5% drop in Northern rock today reflect the news or is it going to get a hammering tomorrow???

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  • C'mon Correction says:

    David – “But the BoE slashing rates will ease the problems.”

    Yeah, of course why don’ t BOE just cut rates, how stupid of them to put rates in the first place !!? Why not make them 1% forever, better still 0% ?……… U truly are a moron.

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  • Brown has a problem. If he induces a devaluation he will lose the next election a la Wilson in 1967 / Callaghan in 1979 / Major in 1992.The fact is that if he believes lending will in the future have to be prudent he has to accept that jobs will go in the financial services sector. Given that the Labour Party has won elections despite massive job losses in wealth-creating manufacturing industry that shouldn’t be a problem. His real problem is that if he now believes lending in the UK in recent years has been imprudent people wil ask what did he do about it? He runs the risk of looking stupid which for a PM is death. P S If anyone enters Primarolo ( the name of Brown’s former no 2) inthe Yahoo search engine they may find an entry for Primarolo Associates, a building consultancy who amongst their other talents includes advising on cost control for London Underground and details of George Primarolo, a spokesman for the internet betting firm Bet365. Dawn Primarolo of course is well known for her involvements with the introduction of the tax credit system.

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  • David,

    ICESAVE looks suspiciously like a Ponzi scam. If you don’t know what that is, Google it NOW!…

    ~~~

    This is not (I think..) a huge disaster unfolding, but part of the wake-up call to the mortgage industry.

    NR lent money to people that other lenders declined, or wanted higher interest rates from, so their market share grew. They don’t have many savings accounts because they relied on the money markets for cash.

    Unless they were doing something really stupid, they will survive (but may be taken over) they won’t be lending so recklessly in future…

    ..and nor will anyone else..

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  • Come on guys- David has a point, the market can make the wisest man look a fool- and in this Vi manipulated market- who knows if David is right, or wrong- Its a guess either way

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  • In reply to Uncle Tom, Icesave looks like a regular bank doing regular things can you justify your comment about Ponzi please?

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  • Uncle Tom – I hope you are right about Northern Rock surviving. I’ve been trying, unsuccessfully, to access my savings with them for the last two hours… The irony is that I cleared out my Icesave account a week or two ago because I was worried about them!

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  • If ICESAVE was fully legit, it wouldn’t be based in Iceland – the interest rates they offer are too high – more than they can recoup by lending the money safely (after admin costs and sound risk pricing) – so something ain’t right..

    Ponzi offered incredible returns by using new capital deposits to pay the interest on the existing deposits, creaming a nice wage for himself in the process. Eventually of course the whole thing imploded, demonstrating the need for financial regulation.

    Icelandic financial regulation – what financial regulation? Look at the size of the place, the size of the population and it’s financial history. Why has a bleak rocky island with a tiny population suddenly become so significant in the financial world?

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  • i have my savings at Alliance&Leceister Isle of Man… http://www.alil.co.im/

    they esavings is 6.40 . and unless you tell me that Ponzi is administering this bank as well – the 6.20 offered by ICESAVE seem allright

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