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Can the Rock challenge the big banks?

Robert Peston | 08:57 UK time, Tuesday, 3 August 2010

Northern Rock is back in profit - to the tune of about £200m - though that's slightly disguised by the break-up of the bank into two separate entities.

A clock outside a branch of Northern RockThe swing from loss to profit over the past six months looks pretty impressive: stripping out one-offs, the Rock made a loss in the second half of last year of more than £100m.

But there's a paradox. It's Northern Rock Asset Management, the so-called bad bank - the bit that holds £50bn of mortgages and isn't going to be privatised - that made a healthy profit of £350m.

It is the new bank, Northern Rock plc, the one that's to be privatised, which suffered losses of £143m - because it is not lending enough to cover the interest its pays out on deposits and other finance.

What do these results tell us?

First, that mortgage loans are going bad at a slower rate, although it is striking that there hasn't yet been a fall in the number of mortgage borrowers who are in arrears: the number of residential mortgages accounts where the borrower is more than three months behind with the payments increased slightly, to 22,837, up from 22,564 at the end of 2009.

As for the loss on so-called impaired loans, that was £278m at Asset Management and an insignificant £0.4m at Rock plc, compared with £1bn for the whole of 2009.

Second, there's an excellent chance that the taxpayer will make a profit when all those Rock mortgages are finally repaid over the coming decade or more.

And this liquidation process will be quite something, after just under £50bn of buy-to-let and other loans made by Bradford & Bingley - the other nationalised mortgage bank - are crunched into Asset Management in the autumn.

In case you hadn't noticed, the government has become quite a player in the distressed debt market, with a loan book in run-off of about £100bn, financed by loans from the taxpayer of around £50bn (although, of course, the majority of loans made by B&B and the Rock would not count as poor quality or distressed).

Finally, Rock plc is a very immature bank, with £17.6bn of deposits financing just £11.2bn of mortgage loans.

As it stands, with limited products and 76 branches, it's more a bothersome flea than a ferocious tiger in the competitive struggle against elephantine Lloyds, Barclays, RBS, HSBC and Santander.

If the government wants to promote competition in the retail banking market, which is what it claims, it is going to have to think creatively about how it privatises the Rock.

It certainly can't be floated on the stock market in its current under-developed shape. And it's not obvious that a conventional auction over the coming few months would maximise the return to taxpayers - in that the competition authorities would probably block bids from all the big players, and bids from smaller players would be derisory.

That said, the twin aims of providing a fat profit for the state and stimulating competition in banking can be achieved if Rock plc can somehow be put into an arranged marriage with the 600 branches - which have 4.6% share of the retail banking market - that are being sold (under duress) by Lloyds.

If the Northern and Clydesdale businesses owned by National Australia Bank could also be included in the enlarged Rock, then a potentially significant new bank would be born.

To be clear, mergers of banks are ferociously complicated, because their IT systems and cultures are typically incompatible. But if George Osborne, the chancellor, wants to be true to his ambition of creating genuine choice in banking for British consumers, he is going to have to be imaginative in how he sells the Rock - and ignore the tantalising allure of the fast buck.

Comments

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  • Comment number 1.

    "If the government wants to promote competition in the retail banking market, which is what it claims, it is going to have to think creatively about how it privatises the Rock." Alternatively not! It could form the basis of introducing real competition through a strong public sector banking service run in the national interest and setting standards of conduct and service that the bloated private banks would have to follow. An opportunity was missed when Halifax went into a shotgun marriage with Lloyds but there is still plenty of scope and opportunity.

    However if NR is sold I would like to bid for their lovely clock!

  • Comment number 2.

    "To be clear, mergers of banks are ferociously complicated, because their IT systems and cultures are typically incompatible"

    Absolutely true, keep an eye on HBOS into LBG for a vivid case study over the coming months

  • Comment number 3.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 4.

    Are the banking profits that are being announced this week real?
    What are the implications of asset revaluations and changes to bad debt provision?
    Were the losses last year completely real? Were write downs exaggerated to make things really bad (as everyone expected it) so that adjustments made this year would exaggerate the return to profit?
    What about the repayments to government in 2011 / 2012?
    What about mortgage defaults next year, as Robert mentions "it is striking that there hasn't yet been a fall in the number of mortgage borrowers who are in arrears"?

  • Comment number 5.

    #3, writingsonthewall

    "How can these mortgages be paid back unless you assume they're all held by private sector workers???"

    Many private sector workers have had pay freezes and cuts. We can't rely on them either.

  • Comment number 6.

    "It is the new bank, Northern Rock plc, the one that's to be privatised, which suffered losses of £143m - because it is not lending enough to cover the interest its pays out on deposits and other finance."

    So George Osbourne cannot even get a bank that the Govt own to lend to the public, how do you expect the lazy good for nothing other banks to do it?

    Also the only reason why the bad bank/asset management company has turned a profit is because the Govt has pumped the system full with money at the expense of its own public finances. The taxpayer is now footing the bill twice over! First with the bailout and now with spending cuts and rise in taxation.

  • Comment number 7.

    4. At 09:45am on 03 Aug 2010, Kit Green wrote:

    "What about mortgage defaults next year, as Robert mentions "it is striking that there hasn't yet been a fall in the number of mortgage borrowers who are in arrears"?"

    ...and don't forget, these people are those who were
    a) not obviously reckless in their borrowing(or they would have defaulted already)
    b) Mortgage holders who have been sitting on ultra low rates for a year and yet are still getting into difficulty

    This is why the BoE is scared stiff of raising rates - if they move them up by an inch then it's 'reposession city' for a huge number of mortgage holders. I mean if you cannot survive in a 0.5% interest environment (leaving out the banking racket forcing people to pay a lot more) - then how are you going to cope with rates...lets say....the level following the last recession?

    https://www.moneyextra.com/dictionary/interest-rate-history-003455.html

    15.4% Mortgage interest rates - now how many people can survive that? (except rbs_temp who has 'paid off his mortgage' with an unbelievable 'punt')

    Go and work out what your monthly repayments will be, and then consider that "this recession is worst than the last" and therefore the rate is likely to be even higher to curb hyperinflation.

    ...but of course journalists don't like to warn people of the impending danger - no they much rather wait until it happens and then claim surprise that the unexpected happened.

    Don't believe journalists, don't believe politicians, don't believe writingsonthewall - believe history and your own common sense!

  • Comment number 8.

    Thanks for your excellent commentary Robert. The economy is improving, but we need a boost in confidence. The BoE should drop interest rates to 0% to improve the recovery and then we'll make a profit on Northern Rock, Lloyds TSB and RBS.

  • Comment number 9.

    ...and this is how bubbles are created by low interest rates causing further instability and more crashes (because every bubble has to burst at some point)

    https://www.usatoday.com/money/perfi/funds/2010-08-02-funds02_ST_N.htm

    $1.1 TRILLION DOLLARS has been withdrawn and put somewhere else - either a new bubble in bonds or it's been used to pay bills by desperate Americans.

    https://www.businessinsider.com/missing-money-market-money-2010-8

    ....nothing to see here - move along, repeat ofter me.

    "These are not the droids you're looking for"
    "Recovery have we, use the force we did young Padawan"
    "Inflation is good, inflation is gooood"

    You keep churning out the stories Robert and I'll make sure these lot get brainwashed using my jedi powers.

  • Comment number 10.

    Yesterday on radio I heard a picture framer complain that his business plan was turned down by the bank, I wonder if he would expect the same bank to lend to a company making 35mm film.

  • Comment number 11.

    8. At 10:07am on 03 Aug 2010, Sam_From_Hendon wrote:
    Thanks for your excellent commentary Robert. The economy is improving, but we need a boost in confidence. The BoE should drop interest rates to 0% to improve the recovery and then we'll make a profit on Northern Rock, Lloyds TSB and RBS.

    -------------------------------------------------------------------------

    Where do you draw your conclusions from sir? Fall in BoE rates do nothing for the mortgage market, only rate rises are passed on. Otherwise why are banks charging 10x the base rate for a 5 year fixed deal? What benefit will a 0% have anyway, other than drawing things out even longer by borrowing and spending into perpuity? The problem is excessive leverage on every front; private, public and sovereign. Your solution will only compound the effect further and make the wake up call even bigger, when inflation soars through the roof to adjust for this massive increase in spending.

    As for making a profit from the semi-nationalised banks... thats only going to happen when the Govt stops living in the City's back pocket and forces the banks to stop doing things like this - https://news.bbc.co.uk/1/hi/business/8392147.stm

  • Comment number 12.

    I don’t believe selling the Rock is the answer, especially when the extent of the finances involved is not clear; granted we know how much it cost the taxpayer to nationalise the bank, but how much that has hit public finances in real terms is another matter. I would be interested to know how much it cost to stabilise the bank, how much it costs to operate and what percentage of that is covered by the bank’s business, and how much has to be (and already has been) repaid in interest accrued on the capital initially borrowed to fund the takeover. I would find it surprising if we were able to cover this expense through selling the nationalised arm of the Rock, even in the hypothesis proposed by Mr Peston whereby the Rock is able to acquire Lloyds branches and partner with NAB.

    My view is simple. If we are able to generate a profit out of the Rock, and a healthy profit at that, why not establish it as a model for a public sector offer in direct competition to the bloated high streets, and keep it nationalised? I believe the model to be perfectly marketable, as inherent in the public ownership of the bank is the knowledge that unnecessary profiteering risks will not be taken and through promoting good practice hopefully influence the private banks (or at least put them under market pressure to follow suit). Relative success in a reasonably short period of time demonstrates that there is the capacity to make a consistent profit over a longer term, rather than selling short. I understand that there is an argument against the Government profiteering in the longer term (in the next decade or so) as it starts to make a return on the initial payments through effectively making money off services rendered to taxpayers, but if the public bank was able to offer stable banking, without over-exposure caused by excessive risk-taking, and through offering competitive high street interest rates then surely this would be a welcomed alternative to anxious savers? We are already seeing smaller banks emerging with Metro, Virgin, and Tesco banks, and we do not necessarily need a nationalised Rock to wade in with the expectation of becoming a huge player, but being able to offer a more stable choice in an industry riddled with distrust would surely be a good thing.

  • Comment number 13.

    I do not agree at all with the Wreck being able to challenge the big banks. It is a bankrupt proposition held up with state aid.here is some cursory analysis which shows this. Time for the new broom government to ditch it.

  • Comment number 14.

    Robert,

    I am confused. We are all angry at how easy it is to profit from charging lots for mortgages (4-6%) whilst paying little on interest for savings (0.5% or less).

    Yet, the bank we own and wish to sell can't even get this bit right?



  • Comment number 15.

    Rock plc doesn't look like a practical proposition in its current guise on the basis of the figures in this article: it's small mortgage book won't generate large enough profits from usurious rates of interest over and above interest liabilities.

    And this will be on the basis of negative real rates of interest to depositers.

  • Comment number 16.

    5. At 09:55am on 03 Aug 2010, northJason wrote:

    "Many private sector workers have had pay freezes and cuts. We can't rely on them either."

    Stop ruining the only plan they've got - spoiler! - you'll upset the cloud cuckoo landers as they don't like to visit reality street often.

  • Comment number 17.

    6. At 10:02am on 03 Aug 2010, RiskAnalyst wrote:

    "Also the only reason why the bad bank/asset management company has turned a profit is because the Govt has pumped the system full with money at the expense of its own public finances. The taxpayer is now footing the bill twice over! First with the bailout and now with spending cuts and rise in taxation. "

    ...and finally they will pay through inflation...

  • Comment number 18.

    I dont see why the fact that the Government has shares in Lloyds should have any influence on their sale of branches. The bank was given four years (by Neelie Kroes) to sell down their share from over 30% down to 25% and there is still at least two years to run on that timetable.

    The shareholders of Lloyds were stiffed by the last government and I dont want to see the current one stiff us again. If Northern Rock bids the most (presumably in competition with Tesco, Virgin etc) then they can have the 600 branches to be sold. But they are not being sold under duress as you say Robert. Presumably they will include the bits of Cheltenham and Gloucester they were going to get rid of before the crisis, Birmingham Midshires, TSB and some branches in Scotland that they wouldn't have touched with a barge pole. And Bank of Scotland.

    The future for Lloyds, and us as taxpayers, looks bright at last. Our 41% when sold (prudently and properly placed) will yield a huge amount to help pay down our debts. 41% of £50bn is over £20bn and the higher the share price goes the more we get back. Some bright analyst talked about £2 per share in two years, which would yield £82bn. More realistically £1 per share yields £41bn, which would keep the unions off the streets by avoiding some of the more catastrophic cuts proposed.

    Incidentally, there are two banks doing a lot of advertising at present, Lloyds and Halifax. When all the rationalisation is out of the way, and the impairments a thing of the past, that looks like a really strong pair of banks for Lloyds to end up with. Stop talking them down as a sdistressed bank which owes the government. As far as I know they owe the government nothing in the same way they do not owe me anything as a shareholder.

  • Comment number 19.

    If it's in profit, sell our shares and bring us back the money.

  • Comment number 20.

    8. At 10:07am on 03 Aug 2010, Sam_From_Hendon wrote:

    "Thanks for your excellent commentary Robert. The economy is improving, but we need a boost in confidence. The BoE should drop interest rates to 0% to improve the recovery and then we'll make a profit on Northern Rock, Lloyds TSB and RBS."

    Yes, because that will solve the structural problems there are in the Economy - just like it did in the Wiemar republic.

    What good is a 'profit' in worthless paper money? We might get a cool billion for these banks - but if a loaf of bread is costing £100 by then - it won't be anything to shout about.

    P.s. Welcome first timer - we hope to hear more from you in future!

  • Comment number 21.

    15. At 10:42am on 03 Aug 2010, SeanBroseley wrote:
    Rock plc doesn't look like a practical proposition in its current guise on the basis of the figures in this article: it's small mortgage book won't generate large enough profits from usurious rates of interest over and above interest liabilities.

    And this will be on the basis of negative real rates of interest to depositers.

    -------------------------------------------------------------------------

    I bet right now Goldman Sachs et al are looking at how they can take out mortgages through Northern Rock and then place them back on deposit with the Northern Rock. Afterall this is the ideal artbitrage opportunity right? No value created, just skimming the surface of the real economy...

  • Comment number 22.

    'It's Northern Rock Asset Management, the so-called bad bank - the bit that holds £50bn of mortgages and isn't going to be privatised - that made a healthy profit of £350m.'

    ..........................

    You mean its the 'bit' that gambles and takes excessive risk with our money and without asking us ... and will expect 'us all' to bail them out when the next crisis arrives?

  • Comment number 23.

    13. At 10:38am on 03 Aug 2010, Cityunslicker

    Nice article, and especially this revelation (which is how they're going to claim a profit at the end of this debacle)

    "The 'Bad' Bank has also repaid £300 million of the Government loan, reducing it to £22.5 billion (erm, what happened to the £18 billion repayment, we lent the rock over £30 billion!)"

    £18 Billion just 'vanished' - Robert, dispatch your best investigators and find this £18billion - your country needs it!

  • Comment number 24.

    Whatever happened to Granite?

    It seems to have completely disappeared.

  • Comment number 25.

    15. At 10:42am on 03 Aug 2010, SeanBroseley wrote:

    "Rock plc doesn't look like a practical proposition in its current guise on the basis of the figures in this article: it's small mortgage book won't generate large enough profits from usurious rates of interest over and above interest liabilities."

    This is a very good point, people forget that mortgages (good ones) are the income for the bank. This is like ASDA making a huge loss, being bailed out, requiring it to pay back the loans from the bailout with a tiny fraction of it's previous customer base and consequently it's reduced revenue.

    Sure NR can probably stay afloat- but paying back that money? - not a chance in hell. The only possibility is that it regains it's market share through 'looser lending' than the other banks (and we know what happened before) - or it starts making excessive profits from it's existing customers (who will leave pretty rapidly).

    Alternatively they could find a few hundred thousand new mortgage customers - but with the deposit requirements, rising unemployment and the expectation of price falls - first time buyers are a bit thin on the ground at the moment.

  • Comment number 26.

    24. At 11:09am on 03 Aug 2010, stanilic wrote:
    Whatever happened to Granite?

    It seems to have completely disappeared.

    -------------------------------------------------------------------------

    I believe Granite was repackaged as Northern Rock Asset Management, which is effectively a CDO/RMBS fund manager which is running off the portfolio.

  • Comment number 27.

    What do these results tell us?

    What it tells me is that the powers that be who split NR into two,did not,and still do not have, a clue. It was a best guess. Nothing more.

  • Comment number 28.

    18. At 10:51am on 03 Aug 2010, majorroadaheadagain2 wrote:

    "The shareholders of Lloyds were stiffed by the last government and I dont want to see the current one stiff us again."

    No - that's not true - you were stiffed by the poor performance of the board (which you duly rewarded).

    I like the way you blame the lifeguard who dragged you out of the sea and not the captain who sank the ship!

    I see your assumptions are once again consistent - they include

    The sale of a huge portion of the financial sector will not depress prices
    The spivs won't trade the shares downwards before the sale to steal yet more from the Government.
    You price of 'profit' is somewhat debateable (it's listed as £1.22 in this article)
    https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5820602/Government-sale-of-Lloyds-and-RBS-stakes-could-take-years.html
    The opportunity cost to the Government of this money being tied up for 2 years (don't forget, we could have bought a lot of gold with these billions)

    Still, of you want to cling on to the forlorn hope of returning your tax money then I won't stop you. I'm sure in the end you'll be happy to record a 'paper profit' and not a real one.

  • Comment number 29.

    > To be clear, mergers of banks are ferociously complicated, because their
    > IT systems and cultures are typically incompatible.

    That's right. Banks are just glorified computer centers. I don't mind computer programmers getting good wages because that is difficult stuff for most people (but not me). Remember - feeble-minded bankers wouldn't last 2 minutes without their IT staff to prop them up.

  • Comment number 30.

    Not everyone in the Northern Rock Asset Management - the 'naughty bank' that is currently profitable - are poor risks and not all in the 'naughty bank' are on variable rates and facing a move from 0.5% to around 6% in the open market.
    Many of the fixed rates are still running for loans in the 'naughty bank' at around 5-6% and the ONLY reason they are still there is that when the Government split off the 'naughty bank' bits they were not allowed a waiver of the early exit penalties forcing them to remain.
    A shame because allowing the waiver would have reduced the capital investment the Government made as those who wanted and could afford the open market interest rates were they to move (and avoid being bucketed with the 'naughty bank' loans) were given no incentive to leave.
    As the last of the longer term fixed rates in the 'naughty bank' end over the next 2 years the loans will migrate out of the 'naughty bank' and the loan book in runoff will reduce in quality as the stronger performing loans coming off fix leave to avoid moving to a poisonously high variable rate within the 'naughty bank' - a hangover from the incentive plan put in place to motivate people to leave earlier and reduce the Government investment.
    If the overall economy does not improve the 'naughty bank' profits of today are at risk and the defaults will rise.

  • Comment number 31.

    Psychopaths must always be judged by what they do, not what they say.

    Last time the tories were in power they privatised state owned assets by selling them off at crazy prices, allowing their mates to make big bucks as the share prices inevitably jumped to realistic levels.

    By this precedent we should anticipate snooty & wooster will wait until these banks are starting to make a solid profit then (before the tax payer can benefit) sell them off at bargain basement price. Various city spivs, tory backers and even MPs will then feather their nests.

  • Comment number 32.

    Would any part of NR past the stress tests or banks ?

  • Comment number 33.

    "But if George Osborne, the chancellor, wants to be true to his ambition of creating genuine choice in banking for British consumers, he is going to have to be imaginative in how he sells the Rock - and ignore the tantalising allure of the fast buck."
    ------------------------------------------------------------------------

    But, Robert, this is a politician we're talking about. A Politician ignoring the tantalising allure of a fast buck? When did a politician ever ignore such a thing? And then, on top of that, not turn around and declare his effort to be some sort of sensational victory?

    Mind you it is something of an eye-opener, in these low tracker rate mortgage times that, "the number of residential mortgages accounts where the borrower is more than three months behind with the payments increased slightly, to 22,837, up from 22,564 at the end of 2009." That's not good at all, for over 22000 people, at any rate. Maybe some are inclined to think 22000 people isn't enough to count as a problem though?

    But, with Basel 111 just round the corner, we'll be able to look back and think how 22000 was but a drop in the ocean compared with what we are likely to have to contend with in future?

  • Comment number 34.

    32. At 11:43am on 03 Aug 2010, ivecomment wrote:
    Would any part of NR past the stress tests or banks ?

    -------------------------------------------------------------------------

    Yes, because the stress tests are a meaningless exercise. In this case, NR has the largest source of liquidity/capital going (the UK Taxpayer). It can therefore weather any storm.... all at our cost.

  • Comment number 35.

    What's wrong with 3 now moderators?

    It was allowed and now it's not? - which member of our independent broadcaster came down and told you to remove it?

    Anyway, despite the regular removal of my posts you cannot hide the truth.
    https://www.bbc.co.uk/news/business-10850093

    ...or is the fine by the FSA 'speuclation' on my part - or maybe it might cause offence to those profitting from terrorism (not that I'm suggesting RBS are doing that - they don't need to, they wages financial war on us a long time ago)

    This is becoming ridiculous - the Beeb are showing their inability to contain the truth and the only way they can do it is through censorship.

  • Comment number 36.

    ...it's all because of rbs_temp's mortgage isn't it?

    Well he made the claim, not me. If people want to decieve by making up stories then surely they must be accoutable to the audience?

    If you want to play that game then how about this statement.

    "Last week I went to the moon, met a couple of aliens who said 'capitalism? you're not still messing around with that doomed to fail system are you? - what morons are you electing as your leaders? Don't they realise that surplus value is the reason for crises and that it's a contradiction within the system. Your failure to move on from Capitalism is preventing us from revealing ourselves to you and blessing you with ample technology'"

    Now I don't need to explain how I got to the moon or what these aliens look like - and I don't need to explain to anyone who challenges it.

  • Comment number 37.

    Returning to profit does nothing except allow the Directors to stuff more money in their pockets, at the end of the day Joe Punter pays for all of it one way or another, it's just another con.

  • Comment number 38.

    26 RiskAnalyst

    So if Granite is now part of the asset management arm how can this be deemed as being a bad bank?

    I do get a distinctly uncomfortable feeling that all is not as it should be.

  • Comment number 39.

    As others have pointed out inflation is still going to be a worry. When people stop managing to cover it up then interest rates will inevitably have to rise. 0.5% is a ridiculous level and cannot be sustained, and if you've got people getting into arrears and difficulties at that level, well, you do the maths.

    Recovery? Bah..... All that's happened is that debts have been covered up with yet more borrowing and the default lender, i.e. the government, can do no more. A lot of people are going to lose their homes, and if they don't, even more people are going to lose their homes later.

  • Comment number 40.

    I notice that the extensive use of the phrase “rescued with taxpayers’ money” has now been changed to “financed by loans from the taxpayer” which is equally untrue but at least recognises that it was intended to recover the money. However, it may be public money, the people’s money etc. but it is not “taxpayers’ money”.

    What was the purpose of those rather polemic and subjective statements about banks being rescued with taxpayers’ money because what this is saying is ‘Look the government was using your money to rescue these banks’? This is, in fact, making a political statement which is not compatible with the BBC’s reputation for objectivity. (Similar criticism may be made of the downward pointing arrow which appeared behind newsreaders heads for several months during the height of the crisis.) Clearly the government did not go round to each taxpayer and ask them for extra money to pay to the banks which would be the literal interpretation of this phase. In fact, of course, the government can and did also borrow money either on the market or allow the Bank of England to print it by quantitative easing as it is now called. In fact, the previous government did of course increased its borrowing but the intention was always to recover the money from the banks after they themselves recover and as I understand it, the money provided was regarded as off balance sheet (whatever that means).

    However, if we suppose that this money ultimately comes from taxpayers it is nonetheless semantically not taxpayers’ money. It is once collected the property of all of us including children or those who through age or sickness do not actually pay taxes. Judging by chapter 5 of his book about who runs Britain, Mr Peston regards this as specifically income tax payers money as he divides the 30 billion lent to Northern Rock by 30 million as he quotes £1,000 per taxpayer ignoring those who pay indirect taxes. (Why not just say “£500.00 for each of us“). Government money is the property of all of us collectively. Taxpayers may be the source but that does not give them claim to ownership implied by the phrase. To suggest that “the taxpayer will make a profit” literally means that any net gain would be simply handed round to taxpayers or at least implies a tax reduction whereas it may and perhaps should be used to reverse a small part of the recently announced spending cuts. The phrase denotes a political position which I do not think was Mr Peston’s intention.

    The real scandal is that the Government effectively paid out on insurance claims for which the banks had not paid a premium. Unless one believes in hypothecation, where the money came from is irrelevant.

  • Comment number 41.

    Northern Rock should. The real question is on long term mortgages, in the US and Euro zone fixed rate long term mortgages (20+yrs) why not in the UK?

    The reason is the banks make so much money from mortgages there is no interest in it. Sadly, this is another reason why the UK is so poor compared to the US and Europe. Instead of knowing the mo,thly mortgage cost for the next 20yrs the UK mortgagee has to guess and just pay.

    Instead his European counterpart gets more money in his salary and in most cases pays off the loan early leaving more to put into a pension or their health.

    This is a disgraceful waste of peoples money and shows racketeering by the banks keen to milk all their customers.

  • Comment number 42.

    For those who enjoy a good read and arent brainwashed with the drivel on the TV these days.

    Have a read of this article published by two Oxford University Economists - [Unsuitable/Broken URL removed by Moderator]

    The housing market looks set to stagnate for a while yet. The article even shows the number of buy-to-let repossessions over the last few years(the overnight paper millionaires that I have come to loathe), that priced everyone out of the market and are now reeling.

  • Comment number 43.

    So the bad bank is in profit and the good bank is making a loss, no surprise to me!

    I posted some time ago that I was placed in the bad bank, yes

    1 x multiplier
    200k of equity
    NO other debts whatsover
    999 / 1000 experian credit rating.

    I ask you, why was I placed in a bad bank? I believe the government used this institution to cream off the vast amjority of mortgagees who were stuck on fixed rate mortgages. When the lowered the BofE base rate to 0.5%, they simply cleaned up!

    Its a fraud what's happened.

  • Comment number 44.

    170. At 09:25am on 03 Aug 2010, writingsonthewall wrote:

    under "Basel allows banks to play the same dangerous game"

    "The Government is probably hoping to disgusie the payment through inflation - but at the same time people don't like paying £30 for a loaf of bread!
    https://online.wsj.com/article/SB10001424052748703314904575399453107793396.html
    https://news.bbc.co.uk/news/business/market_data/commodities/158426/twelve_month.stm
    (make sure you look at the 12 month chart)"

    At 11:46 the BBC produced this story on their 'news' website.

    https://www.bbc.co.uk/news/business-10851170

    Notice how the BBC blame the Russian wildfires and not the blindingly obvious 'commodity wars' which are underway.

    The next bubble is blowing and the schmucks just siot around and suck it up until they can no longer afford bread - at which point they realise what all that 'anti-terror' legislation is for.

  • Comment number 45.

    36 writing...

    In danger of 'spamming' - please calm down. You are, however, correct in all you say - but isn't this because no one wants to take 'the hit' and everyone is running around so that they are a moving target - it's coming down the line but in the end there is no more bail out money to be had.

  • Comment number 46.

    Is it too late to convert Northern Rock back into a Building Society with borrowers and lenders and no shareholders. It could lend money for mortgages at a fixed loan to value with a fixed multiple of monthly payments to earnings. All borrowers would take out reasonably priced insurance against redundancy, no self certification, self employed with 3 years verified accounts and a fixed differential between interest paid to lenders and mortgage rate.

  • Comment number 47.

    "38. stanilic
    26 RiskAnalyst "

    It's no mystery - it's just another robbery done under the watchful eyes of the idiotic Government perpetrated by the same criminals who contiue to call the shots.

    The question is how much more robbery will the taxpayer put up with. Just because the bills aren't here yet - doesn't mean they're not being racked up at an alarming rate.

    Apparently our public sector is 'bloated' - what a coincidence, we discover a bloated public sector just as the grandest robbery is completed by the oligarths.

    Seriously, anyone who believes this should not open their door to cold callers - you'll end up with a newly tiled roof, double glazing you don't need and a pristine tarmac drive!

  • Comment number 48.

    #20. writingsonthewall wrote:

    "Welcome first timer - we hope to hear more from you in future!"

    Hmm I suspect that the 'first timer' with a tag almost but not quite the same as mine is a deliberate spoiler just like the one you had last week!!!!

  • Comment number 49.

    Robert wrote:

    "Can the Rock challenge the big banks?"

    No, and it shouldn't. That was what caused it to collapse in the first place, Robert - even to ask the question indicates that you have forgotten the cause of its collapse!

    You can't add the two NRs together, as you have done - the bit that is up for sale made a thumping loss!

  • Comment number 50.

    Greed within the fake economy led to its collapse, threatening the real economy. Printing money was a short term measure to preserve the system while we found a sustainable solution.

    Printing money also preserved the *level* of parasitism reached by the fake economy during the fake boom years. This shows up in inflated asset values - shares, money, commodities and property as well as junk paper.

    Selling off the banks at a profit is an illusion created by the Weimar mentality. The underlying problem remains and will not go away until the greedy parasites have lost much of their fake wealth.

    Only then can the real work begin.

  • Comment number 51.

    29. At 11:38am on 03 Aug 2010, Jacques Cartier wrote:
    > To be clear, mergers of banks are ferociously complicated, because their
    > IT systems and cultures are typically incompatible.

    That's right. Banks are just glorified computer centers. I don't mind computer programmers getting good wages because that is difficult stuff for most people (but not me). Remember - feeble-minded bankers wouldn't last 2 minutes without their IT staff to prop them up.
    ----------------------------------------------------------------------
    Whoops! How long did you think about that before posting it Jacques?

  • Comment number 52.

    Robert - NAB in the UK is Clydesdale Bank PLC and also trades as Yorkshire Bank. They sold Northern Bank a few years back as you know.

    Thought Virgin Money were interested in the branch network of NR? Agree NR is too small to be an effective player. As well as the proposed purchase by NAB, what about another alternative in the Co-operative Bank? They recently acquired the Britannia B/Soc and add the NR plc business would be fairly easy. The Co-op already provide the sort codes and bank clearing facilities for NR. This would grow the Co-op Banks mortgage book along with that it gained from Britannia and would make the combined Co-op, Britannia, NR network a larger rival to the big banks. With it's ethical stance and non-reliance on the wholesale markets (since it funds lending on it's retail deposits) surely this type of bank is the type the government needs to see taking on the big four.

  • Comment number 53.

    38. At 12:10pm on 03 Aug 2010, stanilic wrote:
    26 RiskAnalyst

    So if Granite is now part of the asset management arm how can this be deemed as being a bad bank?

    I do get a distinctly uncomfortable feeling that all is not as it should be.

    -------------------------------------------------------------------------

    Granite was the Special Purpose Vehicle that Northern Rock held 'off-balance sheet' (or as I like to call it 'off-piste'). What Granite did was obtain funding on behalf of Northern Rock through issuing Commercial Paper and allowed Northern Rock to expand aggresively in the mortgage market, then those mortgages were repackaged (securitised) and sold to investors. As is customary in Securitisation, the packager/originator also retains a stake in the instruments. When the property market fell, the funding dried up and Northern Rock couldn't offload the mortgages it had written or pay back the creditors who had bought its commercial paper.

    So to answer your question Stan, fundamentally all of Northern Rock was rotten and Granite was no exception. All the Govt has done is moved the mortgages around to create a company that will hold all the risky mortgages and a bank that will hold and issue good mortgages. But clearly as 43. At 12:33pm on 03 Aug 2010, JavaMan wrote: they didnt do a very good job of the sorting. Maybe Goldman Sachs and Paulson & Co. could have helped the Govt identify what mortgages were rubbish? Surely they missed a trick here, a company setup deliberately to hold shoddy CDO's and RMBS's!! Marcus Goldman and Samuel Sachs would be turning in their graves right now!

    This gentleman exposed Northern Rock in Sept 07 just after they went capoot - https://www.taxresearch.org.uk/Blog/2007/09/17/northern-rock-the-questions-needing-answers/

    p.s. BBC's heavy handed moderation of my comment numbered 42 removed a crucial link to a GOVT sponsored website. I shall try to resubmit the link again and hope the moderator uses a little more common sense this time - https://www.communities.gov.uk/publications/housing/modellingmortgagearrears

  • Comment number 54.

    36. At 12:05pm on 03 Aug 2010, writingsonthewall wrote:
    ...it's all because of rbs_temp's mortgage isn't it?

    Well he made the claim, not me. If people want to decieve by making up stories then surely they must be accoutable to the audience?

    If you want to play that game then how about this statement.

    "Last week I went to the moon, met a couple of aliens who said 'capitalism? you're not still messing around with that doomed to fail system are you? - what morons are you electing as your leaders? Don't they realise that surplus value is the reason for crises and that it's a contradiction within the system. Your failure to move on from Capitalism is preventing us from revealing ourselves to you and blessing you with ample technology'"


    Some places are looking more and more alien every day. The City of Bell, CA seem to be saying they don't like Capitalism in this story about 'California Official's $800,000 Salary in City of 38,000 Triggers Protests'. I heard 'Bell council members earn almost $100,000 for part-time work. ' this refers to one meeting a month.

    I heard the mega-skimmers ran away to their ranches or beach front properties. Must've been taken by surprise.

    https://www.bloomberg.com/news/2010-07-20/california-official-s-800-000-salary-in-city-of-38-000-triggers-protests.html

    The Americans seem to be really good at this 'change thing;, and from what I've been hearing on the radio about the immigrantion protestors they are being trained on how to handle the law, the banks, and even the police.

    I wonder...

  • Comment number 55.

    '49. At 12:48pm on 03 Aug 2010, John_from_Hendon wrote:
    Robert wrote:

    "Can the Rock challenge the big banks?"

    No, and it shouldn't. That was what caused it to collapse in the first place, Robert - even to ask the question indicates that you have forgotten the cause of its collapse!

    You can't add the two NRs together, as you have done - the bit that is up for sale made a thumping loss!'

    Exactly the problem. If you aren't growing faster than a plaque of bacteria on a perti dish then you aren't worth investment, the ideology of unthinking bankers/traders is old hat now. More is not better, if it was speed wouldn't kill.

    Like arsenic cosmetics, rhino horns crushed to a powder for good luck, flat earth, etc. We learn, we move on. It is what humans tend to do, those that don't are judged to be mad by moi...

  • Comment number 56.

    47. At 12:40pm on 03 Aug 2010, writingsonthewall wrote:
    "38. stanilic
    26 RiskAnalyst "

    It's no mystery - it's just another robbery done under the watchful eyes of the idiotic Government perpetrated by the same criminals who contiue to call the shots.

    The question is how much more robbery will the taxpayer put up with. Just because the bills aren't here yet - doesn't mean they're not being racked up at an alarming rate.

    Apparently our public sector is 'bloated' - what a coincidence, we discover a bloated public sector just as the grandest robbery is completed by the oligarths.


    Yeah, but listen, it is cool. Honestly. The army is bloated way beyond measure but Cheney, one of our best friends, sits on the board of this really cool company and if we can only hand over some tax-payers money they can really impress the markets and all the investors by making a great success of privatising the milit....

  • Comment number 57.

    41 DibbySpot wrote

    Northern Rock should. The real question is on long term mortgages, in the US and Euro zone fixed rate long term mortgages (20+yrs) why not in the UK?

    .....

    You can get a fixed rate 25 year mortgage from a credit union I know of(restricted to an employment 'common bond')if it can be done by one of the smallest financial providers, surely the big banks could try it.

    The provision of financial services by credit unions (who are not just there to keep consumers out of reach of loan sharks)should and could be expanded, with the help of goverment.
    There are Credit unions now who are the size of small building society's. They don't rip off customers, its about time people voted with their £££££'s. Move your money and make a difference.

  • Comment number 58.

    +++++++++++++++++++++++++++++
    7. At 10:05am on 03 Aug 2010, writingsonthewall wrote:

    This is why the BoE is scared stiff of raising rates - if they move them up by an inch then it's 'reposession city' for a huge number of mortgage holders. I mean if you cannot survive in a 0.5% interest environment (leaving out the banking racket forcing people to pay a lot more) - then how are you going to cope with rates...lets say....the level following the last recession?
    +++++++++++++++++++++++++++++++++++++++++++++++++
    The Northern Rock standard variable rate which the bad bank uses is 5.79%
    nearly 12 times the BOE base
    People are already dealing with high rates
    (suggests you don't have a mortgage)


  • Comment number 59.

    WOTW

    I admire the majority of your posts on here, however you are clearly over qualified to waste your time merely amusing the rest of us 'sad time wasters'
    Are you Robert Preston in disguise? Is that why so many of your posts get hit by the moderators? Why not get a proper job? Maybe head of the Banking Ombudsman or even the Bank of England.

  • Comment number 60.

    47. At 12:40pm on 03 Aug 2010, writingsonthewall wrote:

    Apparently our public sector is 'bloated' - what a coincidence, we discover a bloated public sector just as the grandest robbery is completed by the oligarths."

    Are you honestly contending that the public sector is not overstaffed? Really? Even after all of Brown's vote buying? We currently have cities and entire regions (Swansea are areas of Scotland) where the majority of the workforce is employed by the state.

    2 questions:

    - What can they possibly all do?
    - How is this possibly sustainable?

    No conicidence that these areas are in the Labour heartlands of course.

  • Comment number 61.

    writingsonthewall

    Your memory of the Lloyds TSB/HBOS takeover is not the same as mine. True, the Board led by Blank and Daniels went into it with something they thought was open eyes, as did the big institutional shareholders. They are the joint culprits. Yet the real catalyst, as everyone knows who remembers what happened accurately, was the meeting between Blank and Brown, and subsequent meetings between Blank, Brown, Darling, the FSA and the MMC. Plus Europe (Neelie Kroes's people in Competition).

    The shareholders of Lloyds TSB were stiffed because everyone connived to use Lloyds to save the Government's bacon by taking over what turned out to be a dead duck. In full and open contravention of our takeover rules. It has never happened before that a bid giving one player over 30% of mortgages and savings (or any other market you can name) should go through ours and Europeans competition rules without any referral of any kind. If you had been at the meeting of shareholders before the bid went through you would have seen the anguish of ordinary shareholders at what was happening (together with the other 2m plus shareholdewrs who couldn't get in). And the institutional shareolders went along with it because they owned shares in both banks. The toxic stuff was already in the open well before the bid went through, yet they ploughed on, in the "National Interest".

    I dont care who buys the bits that Lloyds has to sell off, although I do care that it is done to maximise the return and not as a fire sale. I am much more sanguine than you about how the government exits from its 41%, although clearly it must be done in a way that does not flood the market and defeat what it trying to do, namely get back as much as possible from its stupid invetsment - remember it paid all of the first rights at £1.73 whereas the rest of us got them for 37p. Some wizard that Gordon Brown. In the meantime, more by luck than judgement shareholders who got their last tranche of shares at 37p are getting a bit of a feeling of relief at getting out alive from having their company used in the way that Lloyds TSB was. And eventually if the analysts are right our 41% might take on the mantel of Crown Jewels?



  • Comment number 62.

    40. At 12:18pm on 03 Aug 2010, kafw

    Welcome new guy - lets hope you stick around.

    I don't understand the point you're making, it's not taxpayers money because it's been printed? Well I can assure you, after it's over, that printed money will need paying back with real wealth - wealth created by the only means possible - production. This is the production of taxpayers who will be asked to foot the bill.

    What you suggest is that if I extend my mortgage - the equity I take from it isn't "my money" - because it hasn't been paid back yet! Lets hope you don't apply the same logic to your own mortgage.

    "ignoring those who pay indirect taxes" - well indirect taxes are only paid with consumption - now what do you know about consumption in recessions? Robert may be assigning it to those who are paying income tax - but this is guaranteed as it's PAYE - tell me how much VAT is paid in a 'cash transaction'? - something you'll see a lot more of when VAT rises to 20%.

    You can criticise the BBC for a lot of things, but for having a graphic of a 'downward arrow' during stock, currency and financial crises is not one of them. Mot importantly having an upwards arrow wouldn't change a thing.

    ...but then I'm guessing you think this can all be resovled with some 'confidence' - the sort which Charles Ponzi relied on - yes?

  • Comment number 63.

    42. At 12:26pm on 03 Aug 2010, RiskAnalyst

    This should cheer up those blues...

    https://www.businessinsider.com/10-luxury-properties-with-a-markdown-of-more-than-a-million-dollars-2010-7

  • Comment number 64.

    zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

  • Comment number 65.

    45. At 12:37pm on 03 Aug 2010, Japanbytes wrote:

    "In danger of 'spamming' - please calm down. You are, however, correct in all you say - but isn't this because no one wants to take 'the hit' and everyone is running around so that they are a moving target - it's coming down the line but in the end there is no more bail out money to be had."

    Calm down - calm down? eh, eh, eh, eh caaaaam dowen....but despite what you say - it's not my job to point out the complete idiocy of the bailout - that's an economics journalists job.

    When you see one - let me know.

  • Comment number 66.

    59 creditunionhero: WOTW, the Middle-England Marxist is really Pesto. Love it
    Can't see it mind you

  • Comment number 67.

    59. At 2:02pm on 03 Aug 2010, creditunionhero

    If WOTW really is Pesto, then he'd be wasted at the FSO. We need him our here educating us, investigating them that fail us behind the waffle.

  • Comment number 68.

    I am not buying their figures. The 'bad bank' is simply not repossessing properties or writing off loans that are far enough in arrears already to make it plain that the debts are well and truely bad.

    It is all part of government policy to support the housing market at any cost. Why? because further falls in prices only make things worse for our indebted population with £1.3trillion in personal borrowing (more than 100% of GDP and the highest in the world - bar none).

    Its not going away. Once hundreds of public sector workers are laid off many more defaults will suddenly appear. Millions of people in this country have arranged their finances so precariously that missing one or certainly 2 paychecks will push them into the void. That is why banks are not lending; they dare not.

    Also all the small business people moaning about their banks who they claim on the one hand have turned them down for a loan while refusing to put their own houses on the line obviously are trying to gamble with other peoples money. When they win, they win but if they lose the bank loses. I would not lend anyone a penny who did not belive in themselves to the extent that they would bet their own house on themselves. We should applaud those banks that have finally decided to act responsibly.

    Quality banks like HSBC simply will not lend money on UK residential property unless you have a 25% deposit. That is why they are cleaning up. They lend to quality borrowers at a healthy margin and have operations all over Asia and Latin America storming ahead. Perhaps not all bankers are quite so stupid as the Northern Rock former CEO.

    The weak and the foolish will perish which will create new opportunity for others.

  • Comment number 69.

    60. At 2:11pm on 03 Aug 2010, SmilingEdBalls

    Or no coincidence these are the areas flattened during the Thatcher era and failed, utterly failed by the private sector, the marvellous private sector that failed to create the jobs....

  • Comment number 70.

    If my bank sold off my local bank to another bank my bank account would not move. The whole conecpt of "branches" is old fashioned.

  • Comment number 71.

    #53 This world wrote
    The Northern Rock standard variable rate which the bad bank uses is 5.79%
    nearly 12 times the BOE base
    People are already dealing with high rates
    (suggests you don't have a mortgage)

    A rate of 5.59% isn't high when you consider in the 1980's rates got above 15.75% on svr .Try living with that.Dealing with a rate of 5.79% should be easy!!!!!

  • Comment number 72.

    58. At 1:58pm on 03 Aug 2010, ThisWorld wrote:


    "The Northern Rock standard variable rate which the bad bank uses is 5.79%
    nearly 12 times the BOE base
    People are already dealing with high rates"

    That's why I said "leaving out the banking racket forcing people to pay a lot more"

    I am well aware of the fact that many people are paying high rates and just because I'm not - doesn't mean I don't know it's going on.

    ...and regulars know that I was a Northern Rock customer who was 'booted out' because they went bust and could no longer offer any mortgages - except their SVR rate.

    I was fortunate as I managed to grab one of the few remaining HSBC BoE+0.35% tracker before they closed that deal (having less than a 90% LTV was the only way I could obtain this mortgage). I don't mind admitting it was pure luck I was offered the mortgage on the last day of the offer (unlike some who would claim it was their brilliance in 'finance')

    However, unlike some others (who I am not allowed to mention due to the BBC stasi crackdown on catching out liars) - I DO appreciate that many others are stuck on crippling rates which is making the bankers profits and bonuses.

    You see what you need to learn about me is I'm not on here for myself - I am actually doing very nicely from Capitalism and the ending of it will cripple my finances - however just because you're benefitting from something - IT DOESN'T MEAN IT'S RIGHT. Unlike the other Capitalist lazy layabouts who want to earn money without effort - I do not fear post-Capitalism because I am not a 'one trick pony' - this is why those in power desperately cling on to the system. The poor will survive (they're good at it) - the resourceful and bright will survive - bankers, economists, politicians - totally screwed. Without their power they are empty shells and they will soon realise that their 'friends' never actually were - like them, they were only interested in what they can get out of it.

    I say bring on the downfall and we shall sort the wheat from the chaff.

  • Comment number 73.

    @ 60. At 2:11pm on 03 Aug 2010, SmilingEdBalls wrote:

    > Are you honestly contending that the public sector is not
    > overstaffed? ... What can they possibly all do?

    They work in nationalized banks thanks to the Sir Greedies of this world!

  • Comment number 74.

    59. At 2:02pm on 03 Aug 2010, creditunionhero wrote:
    WOTW

    I admire the majority of your posts on here, however you are clearly over qualified to waste your time merely amusing the rest of us 'sad time wasters'
    Are you Robert Preston in disguise? Is that why so many of your posts get hit by the moderators? Why not get a proper job? Maybe head of the Banking Ombudsman or even the Bank of England."

    WOTW writes a lot of prose, but generally displays significant knowledge gaps, especially when trying to discuss derivatives. Hope this helps.

  • Comment number 75.

    #60

    Your forgetting that most of the Banking Staff in Scotland are also "Public Sector"

  • Comment number 76.

    58. At 1:58pm on 03 Aug 2010, ThisWorld wrote:
    The Northern Rock standard variable rate which the bad bank uses is 5.79%
    nearly 12 times the BOE base
    People are already dealing with high rates
    (suggests you don't have a mortgage)

    I think WOTW is merely pointing out that if base rates move up then so will banks' lending rates or don't you think so?
    Give the guy a break. He makes sense on most stuff.

  • Comment number 77.

    59. At 2:02pm on 03 Aug 2010, creditunionhero wrote:

    "I admire the majority of your posts on here, however you are clearly over qualified to waste your time merely amusing the rest of us 'sad time wasters'
    Are you Robert Preston in disguise? Is that why so many of your posts get hit by the moderators? Why not get a proper job? Maybe head of the Banking Ombudsman or even the Bank of England."

    Bitterness is so unattractive.

    I had a proper job, but Capitalism made me leave it and work in finance because (under the rules of Capitalism) - the best are rewarded the most. I'd much rather be doing something 'useful' than 'useless' - in fact I'm patiently waiting for the pitch-fork wielding crowds outside so I know it's finally over.

    I've been accused of being RP many times before - but I can assure you if writingonthewall was RP then those pieces on the 10 o'clock news would have you all riveted to your screens - and some of the complete hogwash representatives from the finance community have spouted on our screens in recent times simply wouldn't go unchallenged (as it does now)

  • Comment number 78.

    60. At 2:11pm on 03 Aug 2010, SmilingEdBalls wrote:
    "Are you honestly contending that the public sector is not overstaffed? Really? ... We currently have cities and entire regions (Swansea are areas of Scotland) where the majority of the workforce is employed by the state.
    2 questions:

    - What can they possibly all do?
    - How is this possibly sustainable?
    ===================================================

    Many of them in swansea are doing grossly unnecessary things like driving licenses and passports. Absolutely obvious no modern nation needs nonsense like that. Sack the lot.

    Personally I would love to know what all those hundreds of thousands of spivs in the city of london do? What do they produce? How much have they cost the taxpayer over the last 2 years? - a bit more than the odd passport clerk I think.

    City of London - now there is 'bloat' we could really do with cutting. Unfortunately they are the ones bankrolling snooty and wooster, so don't hold your breath.

  • Comment number 79.

    #60 At 2:11pm on 03 Aug 2010, SmilingEdBalls wrote:
    47. At 12:40pm on 03 Aug 2010, writingsonthewall wrote:

    Apparently our public sector is 'bloated' - what a coincidence, we discover a bloated public sector just as the grandest robbery is completed by the oligarths."

    Are you honestly contending that the public sector is not overstaffed? Really? Even after all of Brown's vote buying? We currently have cities and entire regions (Swansea are areas of Scotland) where the majority of the workforce is employed by the state.

    2 questions:

    - What can they possibly all do?
    - How is this possibly sustainable?

    No conicidence that these areas are in the Labour heartlands of course.
    -------------------------------------------------------------------------

    No coincidence? that these areas were once the engine room of manufacturing empolying nearly 30% of the workforce, making things that could be sold? adding value to the economy?
    How many public sector jobs are located in the south east/London?????
    The public sector is over-staffed with overpaid civil servants tied to the Metropolis.All those staff employed by the BBC that are moaning because they have to move 'Up North' to Salford. It's a funny old world.

    All those bank jobs in the 'City' saved by the bail-out from goverment,why
    Your second question
    How is this sustainable??????????????

  • Comment number 80.

    60. At 2:11pm on 03 Aug 2010, SmilingEdBalls

    How basic can I make this?

    THE PUBLIC SECTOR ONLY EXISTS TO MAKE UP FOR THE INABILITY OF THE FREE MARKET TO MAKE PROVISION FOR ALL IN SOCIETY.

    You want to blame someone / thing for the 'bloated public sector' - then look no further than the private sector (who coincidently are the main critics of the public sector)

    - What can they possibly all do?

    In the main, they do the jobs which the private sector view as 'non-profitable', you know, keeping people alive, keeping people safe, making people educated etc (notice the common theme - people)

    - How is this possibly sustainable?

    It's not - but until we stop expecting the free market to do anything (which it clearly won't) - then I'm afraid it's eventually curtains as the public sector will continue to grow to fill the gaps.

    You see what the critics of the public sector don't realise is that without it half the workforce would have died of dysentry or ricketts (like they used to)

    The free market is self destructive as the chase for profits results in the damaging of that which is 'freely available - i.e. Labour. You cannot extract profit from technology, you cannot extract it from Capital (unless you monopolise the use of it - like banks are trying to) - so the only source to combat diminishing profit is LABOUR - pay less, make more money.

    What the free market buffoons don't realise is that worker = consumer - and then guess what happens every so often?

    Worker / consumer can no longer afford your goods and services - overproduction occurs and then we get devaluation of assets - i.e. recession. Too many goods, not enough demand.

    If you're going to attack the public sector - make sure you come armed with some decent arguments and not that Daily mail nonesense.

  • Comment number 81.

    61. At 2:20pm on 03 Aug 2010, majorroadaheadagain2

    You keep telling yourself it was all the Governments fault if you think it will make you feel better.

    The fact is the entire banking industry did not see the giant black cloud on the horizon because they were all too busy congratulating themselves on 'controlling Capitalism with the new financial weapons of mass destruction'

    All they did is store up the crisis to be bigger in the future.

    All that codswallop about being 'strong armed' into the takeover is merely PR from the banking industry. I mean the last chancellor asked them nicely and this one has told them several times - LEND MORE - and have they done that? - NO.

    ...so what chance is there that Lloyds board took on the merger on the Governments say so?

    it's just more lies from those who wish to protect their jobs - I mean would you be admitting it if you were a self interested member of the Lloyds board? - look even now the NR board are being fined and banned - but still don't seem to be accepting responsibility.

  • Comment number 82.

    Only economist could make statments like: the public will make a profit. The taxpayer will never see any of that money and only on some back room set of off books will these figures be calculated. Don't understand how cuts in services, higher taxes, assuming a trillion or so in bad loans from banks can be balanced by up selling some mortgages. What is that song: Looking at the Bright Side of Life, or something like that. This sounds like a political speech: The water is only up to your nose,you are not drowning......yet.

  • Comment number 83.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 84.

    69. At 3:36pm on 03 Aug 2010, copperDolomite wrote:
    60. At 2:11pm on 03 Aug 2010, SmilingEdBalls

    Or no coincidence these are the areas flattened during the Thatcher era and failed, utterly failed by the private sector, the marvellous private sector that failed to create the jobs...."

    So your solution is state sponsored jobs for all eh? No wonder we are so much in debt with attitudes like this.

  • Comment number 85.

    67. At 3:34pm on 03 Aug 2010, copperDolomite wrote:
    59. At 2:02pm on 03 Aug 2010, creditunionhero

    If WOTW really is Pesto, then he'd be wasted at the FSO. We need him our here educating us"

    !!!!! What's he going to educate you on? How to waffle inanely about subjects he only has a (sometimes) passable grounding in? :D

  • Comment number 86.

    The clever banks have managed to create a massive margin between the base rate and their lending rates, probably becuase of the confusing messages from the politicians, Vince included I'm afraid i.e. you have to lend more and you have to stop risky lending. There are of course also fewer players now.

    Can you imagine their profits if they manage to maintain that differential in rates if things pick up?

    The above is glaringly obvious to everyone yet the point is never meaningfully made in the media. Why not?

  • Comment number 87.

    74. At 3:42pm on 03 Aug 2010, SmilingEdBalls wrote:

    WOTW writes a lot of prose, but generally displays significant knowledge gaps, especially when trying to discuss derivatives. Hope this helps.

    -------------------------------------------------------------------------

    and that my dear is where the problem lies... Everyone in the banking world understands the upsides of derivatives, but not many can explain the downsides. I do this for a living (hence my username), but I see the pyramid scheme for what it is and am planning my exit route.

  • Comment number 88.

    70. At 3:37pm on 03 Aug 2010, tom_p_willis wrote:

    "If my bank sold off my local bank to another bank my bank account would not move. The whole conecpt of "branches" is old fashioned."

    Until you need to find one in order to queue up outside to get your money back (but of course that could never happen!)

    When the Icelandic banks collapsed I can assure you that the icesave customers would have been much happier queueing outside something which cannot simply be 'switched off'.

  • Comment number 89.

    84. At 4:05pm on 03 Aug 2010, SmilingEdBalls wrote:

    "69. At 3:36pm on 03 Aug 2010, copperDolomite wrote:
    60. At 2:11pm on 03 Aug 2010, SmilingEdBalls

    Or no coincidence these are the areas flattened during the Thatcher era and failed, utterly failed by the private sector, the marvellous private sector that failed to create the jobs...."

    So your solution is state sponsored jobs for all eh? No wonder we are so much in debt with attitudes like this."


    So what is your solution? Let them starve in the hedgerows? No wait, the free market is going to save us all. Awesome.

  • Comment number 90.

    66. At 3:29pm on 03 Aug 2010, ejSwede wrote:

    "59 creditunionhero: WOTW, the Middle-England Marxist is really Pesto. Love it
    Can't see it mind you"

    Can you define 'middle england' - or is it just something you "wread in der paper"?

    I thought Middle England was Birmingham, or possibly Stoke - or are you confusing it with Middle Earth?

  • Comment number 91.

    So the good bank is now the bad bank and the bad bank is now the good bank ?

    O gawd !

  • Comment number 92.

    74. At 3:42pm on 03 Aug 2010, SmilingEdBalls wrote:

    "WOTW writes a lot of prose, but generally displays significant knowledge gaps, especially when trying to discuss derivatives. Hope this helps."

    Well that's a shame, considering I am actually qualified as an IMC which covered derivaties. I also have completed and passed the Securities insititue exams for derivatives - but then of course you know all about those - being an expert I mean....

    Care to discuss straddle strategies?

    However none of these were hard compared to A-level physics and Maths - I mean these derivatives may seem complex but I can assure you that volumnes of revolution and their practical uses are far more difficult to master.

    Jacques can fill you in on the rest.

    So do tell us SmilingEdBalls - how do derivatives reduce risk? Seems to me all they do is smooth short term risk but ultimately store it all up and create massive long term risk - because for every position taken someone must take the opposite in order for the contract to work. When the market is obviously going in one direction - who plays the part of the loser?

    You get 3 guesses - then you're out.

  • Comment number 93.

    78. At 3:54pm on 03 Aug 2010, jon112uk wrote:
    60. At 2:11pm on 03 Aug 2010, SmilingEdBalls wrote:
    "Are you honestly contending that the public sector is not overstaffed? Really? ... We currently have cities and entire regions (Swansea are areas of Scotland) where the majority of the workforce is employed by the state.
    2 questions:

    - What can they possibly all do?
    - How is this possibly sustainable?
    ===================================================

    Many of them in swansea are doing grossly unnecessary things like driving licenses and passports. Absolutely obvious no modern nation needs nonsense like that. Sack the lot"

    ROFL!!! You are telling me to maintain and issue Driving Licences requires............AN ENTIRE CITY?? hahahahahahah!!! :D

  • Comment number 94.

    Robert to quote from Blomberg,

    Net income was 358.8 million pounds ($572 million) in the first six months of this year, compared with a loss of 740 million pounds a year earlier, the Newcastle, England based bank said in a statement today. The size of the loan owed to the government was little changed at 22.5 billion pounds."

    We're still a long way to get that £22 bn paid back from the bad bank. My feeling is that whatever the headline profit in NRAM, until the 22bn is paid back we the taxpayer are still holding a loss.

  • Comment number 95.

    84. At 4:05pm on 03 Aug 2010, SmilingEdBalls

    State sponsored job? No, that wasn't possibly a state factory I worked in and was made redundant from in 1982. No really. You mean that guy who was the boss was only pretending to be the owner, taking all the profits for himself when there shouldn't have been any!

    What do you want to do, privatise the NHS, the tax centre in Scotland, the government in scotland and wales, the education system, the museums, the wsimming pools, the trading standards office, the courts, prisons, the army barracks, the national parks, the universities....

    If you don't like state workers, then you will no doubt have been delivered by a privately paid for midwife and will have a private crematorium/graveyard on your way out will you? Make sure the hearse doesn't drive on any of those state-owned, state instepected, state maintained roads will you... Thanks, that's ours and you aren't too keen on it anyway. It's be earlier than you think if you have private sector scientists swearing blind the water you drink isn't contaminated by the boss and his chemical factory up the road, and their won't be anything you can do about it because the privised judges are off on holiday at the chemical factory owner's safari park villa in Botswana, and all you can afford to do is offer to sweep his floor, or sew the buttons on his shirt.


  • Comment number 96.

    79. At 3:55pm on 03 Aug 2010, creditunionhero

    Yes, what smilingEdBalls hasn't worked out yet is that the 'bloated public sector' just increased in size with thousands of RBS, Northern Rock and Lloyds staff joining the payroll.

    Now tell me smilingEdBalls - is that also the fault of the public sector?

    Let's not mention the UKPI (or whatever the acronym is) - the body who's managing "our stakes in the banks"

    ...or lets leave out the numerous public sector workers employed in the regulatory industry - FSA, Ofcom, OFwat, OFgem - who's sole purpose is to stop the private sector blowing itself up.

    ...or the teachers who educate the workforce so the private sector don't have to employ better educated frenchmen, or Chinese workers.

    Those who can only see out of their window will always have a restricted view on life.

    I'd love it if we could switch the public sector off for a day - then we'll see how we all get on and how much we really use it. It's testament to it's integration that so many people use it without even realising it - so much so they think it won't be missed unless if it's taken away.
    What a shame the private sector isn't like that - we all know it's there because it fell over like a baby and cried about needing public money to prop it up (in the main that was finance)

  • Comment number 97.

    85. At 4:07pm on 03 Aug 2010, SmilingEdBalls wrote:

    !!!!! What's he going to educate you on? How to waffle inanely about subjects he only has a (sometimes) passable grounding in? :D


    Where's your logic then?

  • Comment number 98.

    87. At 4:23pm on 03 Aug 2010, RiskAnalyst wrote:

    "and that my dear is where the problem lies... Everyone in the banking world understands the upsides of derivatives, but not many can explain the downsides. I do this for a living (hence my username), but I see the pyramid scheme for what it is and am planning my exit route. "

    Exactly - but apparently smilingEdBalls has the solution - we're all waiting Ed....

    Of course the whole premise of derivatives is that the contract loser can afford to pay (or fulfil) the contract at delivery point.

    So what happens when I don't have 600 Tonnes of cocoa to deliver and there is no more left in the market to purchase?

    What if a cash settlement is not suitable - or infact unaffordable at the current prices?

    If you sit back and watch - you're going to find out. I realise nobody else is concerned by the derivatives market is bubbling in commodities - and that really will affect every last one of us.

    The derivatives market is based on a creaky foundation - one which states that nobody will expose themselves to bankruptcy.

    ...well what happened with LTCM then Ed?

  • Comment number 99.

    80. At 3:57pm on 03 Aug 2010, writingsonthewall wrote:
    60. At 2:11pm on 03 Aug 2010, SmilingEdBalls

    How basic can I make this?

    THE PUBLIC SECTOR ONLY EXISTS TO MAKE UP FOR THE INABILITY OF THE FREE MARKET TO MAKE PROVISION FOR ALL IN SOCIETY."

    This latest post of yours is your usual jumble of ideology and mumbo jumbo. Firstly you make a clumsy attempt to explain the public sector, before branching off into an irrelevant rant about wage supression and the impact that has on growth.

    Let me summarize for you:

    The public sector exists to provide services and products that would NOT be provided by the private sector, for obvious economic reasons. Roads, street lights, police, fire service etc etc.

    It does NOT exist to provide jobs for those who can't obtain a job in the private sector.

    Its fairly simple to be honest, perhaps you can grasp this.

    Your posts are uniformly ill informed and verbose. And judging by the amount of posts you register, you seem to not do a lot of work in your chosen finance role.

  • Comment number 100.

    89. At 4:28pm on 03 Aug 2010, toni49 wrote:
    84. At 4:05pm on 03 Aug 2010, SmilingEdBalls wrote:

    "69. At 3:36pm on 03 Aug 2010, copperDolomite wrote:
    60. At 2:11pm on 03 Aug 2010, SmilingEdBalls

    Or no coincidence these are the areas flattened during the Thatcher era and failed, utterly failed by the private sector, the marvellous private sector that failed to create the jobs...."

    So your solution is state sponsored jobs for all eh? No wonder we are so much in debt with attitudes like this."


    So what is your solution? Let them starve in the hedgerows? No wait, the free market is going to save us all. Awesome. "

    My solution is lets see what the true level of unemployment in the country really is. We pay them a wage to do nothing, or we pay them benefits. What is the difference? Its all a burden on the taxpayer.

 

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