[Badger0-0]

Ok, so the government have announced the above.

Personally, I think this was always the best chance of the taxpayer getting his money back, but I accept that Branson probably would a do quicker job of turning it round. But at what cost, bearing in mind he was only in it for himself?
At least now it has the full backing of the government.

Any thoughts?

[themoid]

bet the ex-workers of Rover would have liked it to have being nationalised ...

I'm just not sure about how the distinction holds now in the future - if a company now fails will they say they should be nationalised also ? or is it only if people will lose money ? guess these types of questions will be asked in a more succinct way in the papers (well some of them anyway )

cheers

Stu

[J1mbo]

I'm very aware that my grasp of economics is not what it might be...but it seems wrong to me that any company should play the risks of the financial market and privatise it's profits when it wins , but requires the socialising of it's losses when something goes wrong.

How's that remotely fair?

[Badger0-0]

bet the ex-workers of Rover would have liked it to have being nationalised ...




And no, i wasn't one of them.

I think this is more about backing up the banking system, which if NR had been allowed to fail, was under serious threat.

We haven't heard the last of this, I'm convinced of that.

I really think people don't realise how close total collapse was.
If this had happened 100 years ago, everything would have gone, IMO.
It was only the massive PR job that saved things.
But that's another subject.

[Ed Selley]

Originally Posted by Badger0-0

I think this is more about backing up the banking system, which if NR had been allowed to fail, was under serious threat.

I am led to believe that there are a few other banks in poor shape at the moment- are we now to bail them all out? My worry is that as we watch a potentially massive global financial crisis have set a precedent we cannot possibly afford.

[Bilbob]

I think some people have missed the point... the govt. bailed out NR NOT to save the bank, but to underpin confidence in the system and to stop millions (?) of ordinary british people losing money.
Once they had put the billions into the bank to save it, they then start to look at how to get the money back, and they have clearly decided that this is the best way.

Kepp it for now, wait for the banking system to recover, NR will be worth a lot more, then sell it on. Govt get's some of it's money back on the profits the bank makes in the mean time, and the rest or more when they sell it.

Fact is, whilst it is in the nations hands, there is basically unlimited funds to back it, so it isn't going to go under now. Wait for stability to return, (which it will) then get yer dosh back.

[Badger0-0]

Don't get me wrong, I'm no economist.
My views are totally as a layman, having been formed over my lifetime.
I used to take a big interest in politics, but it has wained somewhat, through antipathy of all the main parties

That aside, that's why I asked the question.

My take is, that seeing as it came so sudden and was such a shock to Joe public, given that things were on the face of it, fine (although I suspected things were going tits up), there was no way the government could let NR collapse.
They had to bail it out and I suspect even it(the government) is totally shocked at what it's cost (24 billion with a bond of 90 billion ).

Now it's in, I feel that a private takeover would never have recovered the dough, as it's interests would have to favour the shareholders.

As for the current shareholders, I feel sorry for them, but that's the way it goes. It's all a gamble, so you win some, you lose some.

I suspect that line will come back and bite me on the arse

To actually answer your point, I'm sure wheels have been set in motion to play things down, as in "it was expected, no need to worry about this" if there's another collapse.
Yeah, right

[Badger0-0]

Originally Posted by Bilbob

I think some people have missed the point... the govt. bailed out NR NOT to save the bank, but to underpin confidence in the system and to stop millions (?) of ordinary british people losing money.
Once they had put the billions into the bank to save it, they then start to look at how to get the money back, and they have clearly decided that this is the best way.

Kepp it for now, wait for the banking system to recover, NR will be worth a lot more, then sell it on. Govt get's some of it's money back on the profits the bank makes in the mean time, and the rest or more when they sell it.

Fact is, whilst it is in the nations hands, there is basically unlimited funds to back it, so it isn't going to go under now. Wait for stability to return, (which it will) then get yer dosh back.

I love your optimism, but suspect it's totally misguided.

There is no way NR is going to recover it's share price and earn the current £24 billion in the next 20 years, IMO.
And don't forget, this is just the start of a fall in housing prices.

What irks me the most, is we can pump tens of billions into a bank, but couldn't pump a couple of billion into the economy when we were putting hundreds of thousands on the dole.
I'm trying to keep away from that, sorry

[Bilbob]

Originally Posted by Badger0-0

As for the current shareholders, I feel sorry for them, but that's the way it goes. It's all a gamble, so you win some, you lose some.

Fo rme, that sums it up in many respects... Many will bleat about how they are having their money 'stolen'... well I'm sorry, but if the Rock actually went bust, they would get sod all, at least they are getting something... that's the risk of shares..

Would they happily hand over extra money if they made mega bucks? I doubt it....

[city fan]

Originally Posted by Badger0-0

What irks me the most, is we can pump tens of billions into a bank, but couldn't pump a couple of billion into the economy when we were putting hundreds of thousands on the dole.
I'm trying to keep away from that, sorry

Ah well, you've nailed it there. Its all about prioritys. The govt thought it had to step in as they thought the whole banking system could go under. Imagine the chaos then.

A few hundred thousand on the dole, not worth a couple of billion pound. Sorry guys, just retrain and get another job

[Badger0-0]

Just been watching an article about this.
Apparently we're now into the bank for £55 billion, with a bond of £110 billion
Every taxpayer is liable for £3500.

And the shareholders are asking for £4ish a share compensation.

I wonder if I can claim my money back, when I bet on England in the rugger and lose

[Jenn]

Originally Posted by Badger0-0

And the shareholders are asking for £4ish a share compensation.

The shares were worth 90p each at the latest figures and they want over 4 times that?? Should have let the bank go into administration and the government takes over, then they'd have lost everything !

I can't stand people who don't seem to understand shares: you win some you lose some.

[Reign-Mack]

Originally Posted by J1mbo

I'm very aware that my grasp of economics is not what it might be...but it seems wrong to me that any company should play the risks of the financial market and privatise it's profits when it wins , but requires the socialising of it's losses when something goes wrong.

How's that remotely fair?

You have pretty much defined how most of PPP(Public Private Partnerships) groups like to operate Look up Metronet.

[nwgarratt]

It would probably make people start taking their money out again. Very few has confidence in the bank now plus how many people really understand what nationalism means. I wouldn't want my money in it.

[Sonic67]

Northern Rock sponsors Newcastle United. So are we all sponsoring Newcastle now?

[Shady]

Originally Posted by Sonic67

Northern Rock sponsors Newcastle United. So are we all sponsoring Newcastle now?

...perhaps they can melt down some of their silverware to help out - oh, hang on...

[la gran siete]

Originally Posted by city fan

.

A few hundred thousand on the dole, not worth a couple of billion pound. Sorry guys, just retrain and get another job

Thank God our government isnt entirely Thatcherite then.

[Squiffy]

Originally Posted by la gran siete

Thank God our government isnt entirely Thatcherite then.

Absolutely.

I look forward to the government continuing to prop up failing companies.

[city fan]

Originally Posted by la gran siete

Thank God our government isnt entirely Thatcherite then.

No, there's the problem. What a total shambles from Brown and Darling. The tax payer is now proping up a failed business. The Govt should now be shutting the thing down putting customers savings into National Savings for example and re-couping money from re payment of mortgages.

It's made a rod for its own back, what happens to the next failing industry. Like mentioned before it wasn't done for Rover, Britsh Leyland etc.. why now?

So what happens now? A bank lending and taking money with total state support. What are the likes of Barclays, HSBC and the like going to say about it?

The thing is a fiasco, and no doubt will fail in the end. There can be no doubt the Govt has made a grave mistake in this and they'll have egg on their face in the future. Unfortunately it's the tax payer who loses out.

Could this be the straw that breaks the camels back? Yet another tale of economic imcompetance...the Tories must be loving it....

[Miyazaki]

It is a shambles.

Brown should cut the company up into chunks and sell off each bit individually.

[Squiffy]

Originally Posted by city fan

Could this be the straw that breaks the camels back? Yet another tale of economic imcompetance...the Tories must be loving it....

If there is a housing crash, just wait for the political fallout of the government owned bank repossessing peoples homes.

[city fan]

Yep, it beggers belief.

I think all Northern Rock mortgages holders should default on their mortgages and see what happens. Perhaps I should go first, as I'm one...

[waf-tastic]

Originally Posted by city fan

Could this be the straw that breaks the camels back?

Well, the poor camel has got a hell of a lot of logs and some thick branches on it already. Let's hope so.... Thank God Brown was so prudent - imagine what it would have been like if he was dishing the cash out

(oops - sorry, it's not Brown's fault - now it's Darling....)

[Wild Weasel]

Originally Posted by Squiffy

I look forward to the government continuing to prop up failing companies.

They'll only be propped up if they're in a Labour stronghold.

[steptoe]

shouldve nationlised fairpak .could have give us all a hamper as dividends

[Badger0-0]

Some interesting points

My view is that this will be nothing like the Nationalisation of the old days.

The fact is, nationalisation totally goes against the grain for this Labour party (or should that be new conservative party) and I bet they're highly embarrassed about doing it. Wrongly so, IMO, but there you go. It was obviously the lesser evil.

No, whereas nationalising in the 70's was better than putting people out of work and paying them to do nothing, IMO, thatcherism didn't care a stuff about people.

The talk is already of slashing the workforce and downsizing, to make NR pay as soon as possible.
Whilst not totally agreeing with that, I do think a balance can be achieved and nationalisation in this case is probably a good thing.

As for blaming Brown or Darling, well that's just laughable.
The board of NR were appointed by the shareholders and they were the ones who messed up by piling too many eggs into the subprime market basket.
Brown and Darling had to pull NR out of the proverbial, as has already been discussed, it's as simple that, IMO.

[la gran siete]

Agreed letting NR go to the dogs would have been the worst option not only in terms of lost jobs and losses to shareholders and investors but the implications to the wider banking arena.Darling had a very difficult choice to make, a gamble but one I think he had to take .Lets hope it succeeds otherwiseThank God Thatcher isnt around today.

[MikeTV]

I think nationalisation probably is the best option for the taxpayer in the long run. It doesn't mean that it will cost the tax payer £3000 each. But it does mean that NR can effectively borrow at the lowest rate available (but this is at the expense of the UK tax payer).

NR's market cap was £380 million. I suspect that it will cost the taxpayer a lot more than that (in interest) and so shareholders should receive a much reduced price (<£90/share) and consider themselves lucky. If any other company were to suffer in this way, the shareholders would lose everything.

The government had no choice really. Technically, a bank "could" solve a liquidity problem simply by repossessing houses, but obviously this would be disastrous for the economy. Banks can call in loans whenever they want, for any reason (it's in the smallprint). But this would simply escalate the crisis within the UK.

The biggest danger is that there may be other banks with similar problems, waiting to be discovered. So I can't help feeling we are heading towards economic recession in the UK.

[steptoe]

more too the point whos going to sponser newcastle united when the deal runs out

[geomuss]

Fractional banking !!!

Its amazing that a bank, any bank can loan money backed with .... nothing, zero, nada.