Northern Rocks

When is the right time to buy a house as me and Jo are just about to do? Perhaps not now given all the turmoil in the markets. Here’s the FT take on the Northern Rock issue. It is understandable for the BoE to back all UK bank accounts – without the confidence that depositing money in a bank is a safe bet the whole banking system is under threat – but you cannot expect the man on the street to understand that the management of the Northern Rock had based their entire business model on a risky strategy and therefore punish them by refusing to save with them. That pressure has to come from shareholders and other investors in the bank who invest in NR bonds etc not the holders of retail products. Therefore if the NR does become insolvent the BoE should only guarantee the retail customers – the managers, shareholders and other bodies who lent money must suffer – otherwise there is no incentive for sound business strategy.

BTW if I had money in NR I would take it out ASAP. As the article says it’s all very well for the government to guarantee the money – but the devil is in the detail and this government has not got a great record when dealing with the little people……

As for us we need to move out of the school flat and get settled in Chester so I guess we’ll just have to keep our fingers crossed that there is not a houseprice crash.

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One thought on “Northern Rocks

  1. Pingback: Northern Rock II « Round the world in 7 weeks

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