Wednesday, February 27, 2008

Northern Rock shareholders deserve nothing

Northern Rock: a lesson in how shares go down as well as up

Private shareholders are happy to take the verdict of the market when share prices are going up. They will have to take it on the chin when things go the other way. And, if they want to be taken seriously, they will have to grow up.

Posted by damien @ 10:27 AM (779 views)
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4 thoughts on “Northern Rock shareholders deserve nothing

  • A good article, pointing out the obvious. It beggars belief that these people are asking for compensation and that anyone would support it.

    Furthermore, it is a perfect illustration of how utterly incompetent this government is at reading public mood (and how utterly tied to pleasing the financial industry) that they may even consider compensation.

    What a joke our so-called ‘free’ market capitalism is – if it weren’t for public money in the form of tax breaks, subsidies, PFI, public service contracts and the likes of this, it would collapse.

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  • I have sme share that didn’t do too well since I bought them last year. Maybe the government will compensate me?

    Its all just another example of how f*cked up the country really is, socially and economically.

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  • Without shareholders it is hard to imagine how anybody would get paid in this country.
    We aren’t just talking about individuals, some institutions have a great deal of clout.

    Shareholders would not expect compensation for a straightforward business failure, but for a government bailout (shares still traded afterwards, in fact, perhaps even the hope that shareholders might rescue rather than continue to short the stock) which is then subsequently Nationalised? Reduced or zero compensation would amount to State theft. And how will stealing money from investors help the economy of the UK, precisely? I have to admit am confused. But when you are increasingly paying more for your weetabix in the morning, and your coffee you might want to wonder why.

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  • daopig – Without government intervention, this bank would have had a share price of 0 months ago. The intervention was to save the banking system. As far as I am concerned, the share holders should get nothing, if that is what the company’s value would have been without intervention – or perhaps a delayed payment once the bank’s liabilities have been disposed of, if there is any cash left in the pot.

    In general, I would agree with you about nationalisation often being state theft (since when has anyone under a compulsory purchase order ever gotten the true worth of their property?!), but this bank was CLEARLY heading for disaster years ago, as noted by many on this site at the time. If it was clear to us, it should have been clear to the investors. My taxes are not for compensating greedy fools.

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