Saturday, September 15, 2007

Northern Rock panic

I went to Northern Rock this morning to withdraw my savings. It was total chaos. Here's a short video clip I took on my mobile:

Posted by Riz

1 comments:

Shutter said...

Shutter said...

Ho.Ho.Ho.

There are two tests of solvency ;

1. Inability to pay debts as they become due.
2. Insufficient assets to cover liabilities.

Northern Rock borrows money wholesale and lends it to people to buy houses. Due to the interbank rate now exceeding Base Rate by over 1 % their sums don't add up. Loans are due for repayment and cannot be replaced. They are insolvent.

In UK law, the people who decide that a company is solvent / insolvent are the Directors. When they judge themselves insolvent they are obliged by Company Law, to undertake certain legally prescribed steps, which effectively places control of the company out of their hands - into those of receivers, administrators.

The Money jugglers of the City have shrewdly put (switched) the onus for judging insolvency upon the FSA - who are hopelessly ill -equipped to make such judgements - and of course rely totally upon the information the Directors provide them with.

If the BOE hadn't stumped up, the Directors would have had to file for Administrators to be called in. Period.

If the BOE hadn't stumped up, the Directors could not continue in business as they had lost their ability (and confidence of lenders) to raise capital to continue to fund their loans. Period.

That is the simple, clear, transparent unvarnished TRUTH.

NR will be part opf someone else soner (rather than later) administration would have yielded a greater return for shareholders - but what do the *&%$* on £1.35 MN. like the CEO care for shareholders?

4:39 PM, September 16, 2007

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