Ron Sandler, Northern Rock's new chairman, admitted
that the bank may remain in public hands for 'years'
Posted on 02/18/2008 5:59:29 PM PST by bruinbirdman
The cost of the Northern Rock crisis has reached the equivalent of £3,500 for every taxpayer as experts warned that the nationalisation rescue of the bank was bound to fail.
* Leader: Labour's Rock problems are just beginning
* Rachel Sylvester: Darling won't walk the plank alone
Taxpayers' exposure to the beleaguered bank has doubled since the beginning of the year and now stands at about £110 billion - more than the annual budget of the NHS and the equivalent of 27p on the basic rate of income tax.
Ron Sandler, Northern Rock's new chairman, admitted
that the bank may remain in public hands for 'years'
The newly-installed chairman has been forced to admit that the bank may remain in public hands for "years" - undermining claims by Gordon Brown that the nationalisation was only temporary.
Plans are being drawn up to lay off thousands of bank workers, reduce the savings rates of a million customers and sell branches in an attempt to persuade the European Union to sanction the biggest nationalisation in Britain's history.
As the full scale of taxpayer liabilities became clear it emerged that more than 800,000 people with Northern Rock mortgages are now effectively in debt to the Government. There were growing concerns over the Government's ability to run the bank competitively, with senior City figures claiming that the business would end up being killed off.
David Cameron called on Gordon Brown to dismiss Alistair Darling, the Chancellor, before the end of the week following a series of Treasury crises that have rocked Britain's reputation for economic competence.
And their market is screaming on this news. Go figure.
Sheesh, now they're concerned about good management. They probably can't do any worse than the previous owners.
However, given the choice between losing what is in their Northern Rock accounts, and 3500 pounds, I wonder which the citizens would freely choose?
My opinion: sell it to the Hong Kong or Tawian soverign wealth trusts. Real business people who won’t take those kinds of risks, and have the cash to do the deal.
“And their market is screaming on this news. Go figure.”
I figure that this is inflationary, which is good for equities until the money spigots are turned off ala Paul Volker.
ping
Within some time frame, it is inflationary, longer term, IMO deflationary. Effectively, this is just feel-good nonsense. The common shareholders have already been practically wiped out, and longer term, the UK currency will have to be debased (like ours) to conceal the conclusion that there’s really not enough money to bail out everyone. But Wall Street will inevitably get theirs first, so I consider that a pretty safe bet...as long as you understand it’s a trade and not an investment. Personally, I think almost all the bank stocks will be cut in half by the time the current crisis is hitting the seventh inning stretch. With the possible exception of GS, which will lose 30-40 points over the mid term. With another exception of Citi, whch pretty much already has been cut in half.
There were buyers for NR, it was a publicly traded company. The government started yapping "intervention" and the stock just about doubled overnight (well from around 6 up several points, est.).
This is why buffet got in the mutual fund business. To take the profitable assets off the hands of distresed monolines.
UK's Labour Party (Friend of Hillary) denies the capitalist opportunity, siezes the Socialist opportunity, and nationalizes the bank.
yitbos
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