Northern Rock, Granite and MP's

I have tried really hard to keep up with the NR saga. I have a passing interest in finance and personal investments and up to date I have just been able to keep my head above water. However this Granite SIV and its implications is starting to get fiendishly complicated.

On the one hand we have Watt Tyler over at BoM saying its a mess and we tax payers are holding the baby. For example:

Are we all up to speed with Northern Rock's offshore financing vehicle Granite? It has featured heavily in the debate this week as it finally dawned on everyone that a socking great chunk of NR's mortgage assets has already been pledged to Granite as security for its wholesale borrowings, and they are therefore excluded from the assets being nationalised.

Now John B has a detailed post explaining how its not a problem:

The good folk of Commentisfree have gone even further to town, uniting socialist idiots and right-wing idiots alike in a chorus of “someone somewhere has carried out a rather large fraud and I would like that someone prosecuted“-type comments.

There’s only one tiny problem with this kind of commentary: it’s bollocks. The mortgages in Granite are exactly the same quality as the mortgages that stayed in NR, nothing untoward took place anywhere along the line (well, not involving SPVs), and NR isn’t liable for Granite’s debts.

These are just 2 examples from the blogosphere but if you turn on a radio TV or open a paper their is similar analysis, although most of presented in soundbite form.

I'm quite happy to let these 2 slug it out as they both have professional connections with the finance industry; but they can't both be right can they? And as an outsider with a bit more than a passing interest and a reasonable head for figures how should I work out who is right or even whether they are both wrong

Now, if I am confused how is the average MP supposed to decide whether or not taking NR in to national ownership is a good move or not? I have met many a city banker and they are all extremely sharp characters and this sort of arrangement is fairly easy for them. I have also met a number of MP's and civil servants. Well meaning as they generally are the vast majority have nowhere near the intellectual capacity of a city banker.

So, do we really want the Government, of any persuasion, dealing with something this complicated?

Poor Darren Minnikin

I made the point about the first Rocker to be evicted yesterday would cause a bit of a stir and now Guido is reporting that a Mr Minnikin is going to get his 15 mins of fame in a way that he probably wasn't expecting:

Government to Make Darren Minnikins Homeless

In Bishop Auckland right now the "People's Bank" is attempting to make Darren Minnikin homeless.

Claim 8PA12900:
Northern Rock plc versus Mr Darren Minnikin

Congratulations Mr Minnikin. You are the first victim of socialist economics today...

If this gets stopped you can expect the loan book to look a lot worse very soon now as the rest of the mortgage holders start to miss payments

Northern Rock

I didn't catch it all of Darling's interview on Radio 4 this morning but what I did hear was dreadful. He tried to make nationalising NR sound like the only reason he was doing it to protect us, the tax payers, and that what had gone before was irrelevant. It didn't occur to him that it was Labour's incompetence, and especially that of his former boss that got us in this mess in the first place.

Darling and the rest of New Labour proved the Peter Principle when they drew their second breath.

Does anyone seriously believe that the new management team will really be left to get on with running the business? Apart from the deluded fools who think that Brown was responsible for 10 years of economic growth.

Can you really see foreclosures being allowed when people default on their mortgage? Just wait for the first one to hit the headlines, it will probably be some hard done by single mum with 3 kids and a sob story, and this shower of shit for a Government will be round at the bank before you can say PR disaster telling the managers what to do.

The there's the job losses; are they really going to happen? Well, given this mess was about protecting jobs I thing we can safely say no to that one.


This has got 60's and 70's wild cat strikes and other protests written all over.

Northern Rock offers to olow

It appears that the offers for Northern Rock are too low according to this beeb article

Northern Rock has said the proposals received so far from potential investors were "materially below" the stricken bank's current share price.

Well what do they expect, for fucks sake. The share price is artificially high because everyone expects the Govt to bail them out, so why sell now? Especially if you bought at the peak of £12, you may as well hang and see what happens. A quick look at share trading this morning shows volumes of 40,00 shares have traded, that's out of approximately 500,000,000 (I had to do some quick assumptions to get to this figure) or less that 0.08% of the shares so it is hardly a true indicator of what the company is worth.

This all goes down to the old adage of something is only worth what somebody is prepared to pay for it, which is how we got in to this mess in the first place with the overvalued load books.

Government's duty on Northern Rock

I have read and heard some real bollocks this weekend. Two particular pieces spring to mind:

This morning in an interview on the radio I heard a Labour MP (unfortunately I didn't catch his name as I was driving) say that the Government's priority was to protect jobs. No, no, no and no again. Haven't you fucking idiots learnt anything from the history books, you fucking dimwits? Its only as recent as the 1960's and 70's that Governments poured good money after bad in the pursuit of "protecting jobs" and look where that got us!

I know its harsh and nobody likes seeing people lose their jobs but this institution is well and truly fucked and the Government has one priority and one priority only: to get our tax payers money back as quickly as possible, preferably with the interest paid, but I'll settle for capital only at this stage.

Which brings me to my next point, what the fuck is the Government doing worrying about shareholders, as reported in this article:

"If he (the Chancellor) is prepared to leave the financial prop in place for three years - subject to not falling foul of EU state-aid rules - existing shareholders might recoup some of the losses they've incurred," said Robert Peston, the BBC's business editor.

No, no and thrice no. The shareholders were laughing all the way to the bank when the share price was £12 and good luck to them. But if they were so fucking greedy that they allowed the management to continue with its obviously flawed plan thinking they would make even more money then that's there fault and not mine.

I find myself hoping the EU steps in and forces the Goverment's hand under Competition rules - how desperate is that FFS!