Northern Rock

Discussion in 'Current Affairs' started by Pitfirrane, Nov 2, 2007.

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  1. So Northern Rock have 'borrowed' £20 BILLION from us taxpayers and rising.

    Can anyone tell me how they are going to pay it back?
  2. Who ever buys then will have to make a deal on paying it all back.

    Mind you it should sort of focus the BoE on ensuring there isn't a housing price crash until it is as it is all secured on houses.
  3. The First Lord of The Treasury, (otherwise known as The Prime Minister and representing the constituency next to me) the man who stole your old age, trumpets that immigration has contributed £8 Billion to the economy, yet nobody seems to have grasped that £20 billion, which in my humble opinion is down the pan, is equvalent to 8 pence on Income Tax, 2% of GDP.

    It beggars belief. Rant over!
  4. wave_dodger

    wave_dodger War Hero Book Reviewer

    Take a look at this article FinanceWeek

    The loan is actually nearer 10p on income tax, or about 10% of the entire UK annual public borrowing. Its quite an interesting topic, the amount of loans that other banks take from the Government whilst not on this scale (yet) is amazing.

    I am currently wondering whether to buy some NR shares, at £1.90 they are way undervaluing the company, somewhere nearer £3.00 - £4.00 is probably more realistic but I still cannot ascertain what happens is a buy out is unsuccesful, its not as straightforward as I first thought.
  5. That's pretty close to the annual Defence Budget. Is it time for some more trimming?
  6. Northern Rock would have borrowed that money in the markets had it been available, as that's their business model to finance retail lending with borrowing on the Wholesale market.

    The recent credit crunch has meant that they haven't been able to borrow in the markets as they would have done as financial institutions haven't been lending money to other institutions.

    Assuming Northern Rock continues trading it will repay this borrowing from the Bank of England as it would have done to any other Bank, it's all in short term loans.
  7. If we stopped paying the Jocks £1500 a year each and stopped paying for Paddys light houses that should cover it :dwarf:
  8. Northern Rock’s lending was based not so much on deposits but on the loans it could raise in the short-term credit market.

    Its deposits were worth £22 billion compared with a loan book of £113 billion.

    It raised loans by bundling its mortgages together and pledging their future income, a debt instrument known as securitisation
  9. chieftiff

    chieftiff War Hero Moderator

    Not simply loans, assets. £113Bn of mortgage loans secured on property which they effectively own until the mortgage is paid off as they hold the property deed. Northern Rock are probably good for any loans from the Bank of England regardless of what happens to the company.
  10. #

    i jolly well hope so at most of the office has bought shares in them.

    yes the BoE and therefore us now owns a bit of the mortgage book that was NR.

    with the goverment slowly taking more of NR every week then this could become nationalisation by another name.

    the difference between NR and say Nationwide is that NW has a far better liquidity ratio and therefore able to utilise this fund to smooth lumps. NR was the victim of a massive unsubstantiated rumour mongering and the USA sub-prime revolt.
  11. Do you suppose that when that miserable bugger Darling eventually raised his head above the parapet, saying there's nothing to worry about, him being a spokesperson for Nu Liarbour, it actually made the situation worse?

    Just a thought.
  12. We are really in the proverbial now. According to the BBC Business Editor it's £40 Billion they have 'lent/supported' NR with.

    Darling is now toast as Gordon, who created this situation, will not want to be associated with this. It will be McAvity all over again.

    The whole 'prudence' empire is collapsing, his ecconomic miracle is built on debt, personal as well as government. If you take into account the off-balance book PFI/PPP deals HMG is in hock to so many trillions it is completely unsustainable.
  13. Or you could cut the susidy on Londoners by 50%, how about that
  14. Shame the government have refused to help the FarePak customers.
    Oh yeah, no money or kudos in it, is there :roll:
  15. sgtpepperband

    sgtpepperband War Hero Moderator Book Reviewer

    If you go overdrawn by £20, you have to borrw that money from the bank, so you're in the shit. But if you borrow £20 Billion, the Bank's in the shit. So where's the line? At what point does it become the bank's problem and not yours? 'Cos I'm thinking of getting a loan... :twisted: :wink:

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