Friday, October 19, 2007

Northern Rock’s problems only going to get worse

Northern Rock’s BoE debt hits £16bn

Last sentance caught my attention, although I'm sure people will make comments about the rest of the article: "Northern Rock appeared to classify some of the underpayments in its mortgage book as payment holidays rather than arrears, Mr Chen said."

Posted by night @ 04:10 PM (1089 views)
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8 thoughts on “Northern Rock’s problems only going to get worse

  • Well that was a great investment Mr Darling!!!!

    THIS IS EXACTLY WHY THE GOVERNMENT SHOULD NOT BAIL OUT STUPIDITY!!!!!!!!

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  • I realise it sticks in our throats, but is there any real option apart from letting Northern Rock collapse ? I do not know enough about finance or this particular situation. Are the government and the taxpayers between a rock and a hard place ( no pun intended ). Maybe some one can let us know ?

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  • It seems obvious that NR will eventually collapse or be sold and every penny of that 16bn will be wasted. £16 BILLION – that’s not a small amount of money, is it, spent to achieve what, exactly? This is a national scandal, surely.

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  • If £16bn was bandied about as a figure spent on JSA, asylum seekers or single mothers, the Daily Mail would be organising mass protests. What this rotten perversion of capitalism that we have as a financial system in the country can get away with is staggering…….

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  • “16 per cent of the Northern Rock loan book could come up for remortgage in the six-month period to February 2008. Many analysts believe that when these customers come to the end of their deals, they will remortgage with rival banks offering more competitive packages.”.

    Does this not mean that NR will get all that cash back from the ex-mortgagees when they change lendors ?
    Can NR not then use this cash for their BofE loan repayments ?

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  • Good point DeadSpider and also all the people who have withdrawn capital from Northern Rock have put that capital into other banks. However, the BoE have admitted (by their actions) that we are all scammed by the banking industry.
    I don’t care personally. I want to become involved with the banks because they are my new friends where I can become rich without working hard.
    Great !!

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  • autopilotengage says:

    “Northern Rock appeared to classify some of the underpayments in its mortgage book as payment holidays rather than arrears, Mr Chen said.”

    So much for “half the industry average” for delinquency rates!

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  • Starting To Panic! says:

    I’m no financial expert I admit but the cash-burn that Northern Rock is getting through in the last 5 WEEKS seems to me to be astronomical.

    £16 billion is the same sum as the entire CrossRail project is expected to cost and that’s taken 20 years to agree; £16 B is equal to 3% of the entire UK Public Spending Budget out of which it represents more than half of all spending on Defence (defence budget is £32 B per YEAR and that includes both Afghan and Iraq wars) and more than we spend on schools each year (£11 B).

    Last year Anglo-Dutch Shell made £11 B profits; so if a global oil company couldn’t afford to pay back the Bank of England out of its entire annual trading profits how on earth can Northern Rock expect to pay back £16B from a loan book peppered with 125% mortgages to unemployed right-to-buy council tenants or even to people who don’t exist at all but were simply made up names by the Royal Nonesuch Loan Company and their estate agents or whatever fly-by-night boutique is fronting for NR on council estates?

    I may be ignorant but surely Northern Rock is the most broke company on earth if it is expected to repay £16 B (at over a billion a year in interest (at 7%) NR doesn’t seem to me to be capable of even meeting its repayments), otherwise shouldn’t NR’s shares now be hovering at around £2000 per share instead of £2 on such a vast market capitalisation if it can keep the lot (of course by the time you read this NR will have got hold of another £3B!)

    Glad I sold out at £7.70 per share!

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