Atilla
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translation: a reactive supervisor: FSA
I haven't seen the FSA react. What have they done so far?
Sorry Jacinto, not sure what you mean as other than the BoE agreeing to lend as lender of last resort I see no reaction?
If we have got to the last option - lender of last resort, that's pretty dire imo.
:-0 
JTrader
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http://www.prisonplanet.com/articles/september2007/160907Fears.htm
Well, you know its bad when they're discussing it on prisonplanet!
Well, you know its bad when they're discussing it on prisonplanet!
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I haven't seen the FSA react. What have they done so far?
Sorry Jacinto, not sure what you mean as other than the BoE agreeing to lend as lender of last resort I see no reaction?
If we have got to the last option - lender of last resort, that's pretty dire imo.
hi atilla,
regarding the FSA being reactive, i mean their lack of timely action (firefighting rather than preventing the fire). the more i have read about this case (i havent followed the banking sector for some time) in the last few days, the more i am thinking that the FSA will have a lot of responsibility in the problem. clearly, it is management who are responsible, but the regulator is there for a reason and it has a purpose. im affraid someone was fiddling with their fingers on this one.
regarding the "last option" part. i dont think lender of last resort is the last option. the last option is when the loan is used as capital or a proxy to capital. this is where i'm smelling something fishy.
however, i cant state that yet just because it appears that they have the lowest delinquency rates in the industry (newspaper info too). i would say that the BOE loan is starting to look more like a bailout targeting solvency rather than liquidity......it really has me thinking now.
Jacinto,
we don't actually have enough financial data to make an informed analysis of what exactly is going on with NR and the FSA. What we do know though is they have been the most aggressive uk lender in the 'late' cycle of an overbought market (evidenced by the growth in their market share this year) and that would be enough to worry me as indeed it as...absolutely no cash funds of mine were with them for a reason....couple that with their reliance for funding so intensively outside of the apathetic province of depositor funds and it would be enough to turn my hair white..I mean whiter with a little baldness thrown in....they've obviously been fixated on lowering the cost of their funds and then lending it out on the most unprudent terms available basically trying to buy market share....what a poor vision for sustainable growth symptomatic of a man in a rush...as for their redemption rates..who cares at this point given that they are a lagging indicator when a market turns 'bad'...in other words they are meaningless for evaluating the value in that business in the future.
"I'm looking forward to hyper-inflation"...I really can't grasp why anyone would wish for this never mind look forward to it.
we don't actually have enough financial data to make an informed analysis of what exactly is going on with NR and the FSA. What we do know though is they have been the most aggressive uk lender in the 'late' cycle of an overbought market (evidenced by the growth in their market share this year) and that would be enough to worry me as indeed it as...absolutely no cash funds of mine were with them for a reason....couple that with their reliance for funding so intensively outside of the apathetic province of depositor funds and it would be enough to turn my hair white..I mean whiter with a little baldness thrown in....they've obviously been fixated on lowering the cost of their funds and then lending it out on the most unprudent terms available basically trying to buy market share....what a poor vision for sustainable growth symptomatic of a man in a rush...as for their redemption rates..who cares at this point given that they are a lagging indicator when a market turns 'bad'...in other words they are meaningless for evaluating the value in that business in the future.
"I'm looking forward to hyper-inflation"...I really can't grasp why anyone would wish for this never mind look forward to it.
JTrader
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yep, you are right chump. no numbers to know the situation. just the media, declarations by the parties, the columnists, and what appears to be rumours.
its a wait and see situation.
company comment on sept 14th.
http://companyinfo.northernrock.co.uk/downloads/results/stockEx140907.pdf
its a wait and see situation.
company comment on sept 14th.
http://companyinfo.northernrock.co.uk/downloads/results/stockEx140907.pdf
Maybe, I am being naive, but I just don't see how the share price can drop further on Monday. Too many people now realise that £1.8 Billion price tag with a £500 Million profit is a very good deal for a takeover.
Of course, markets do not necessarily behave rationally.
Edit: Am I correct in thinking they have an asset book of over £100 billion?
IF that is correct, then the real question is what sort of margins do they have on those assets? Obviously 1%= £1billion revenue....... but I doubt they have a 1% margin .... probably more like .5%
Of course, markets do not necessarily behave rationally.
Edit: Am I correct in thinking they have an asset book of over £100 billion?
IF that is correct, then the real question is what sort of margins do they have on those assets? Obviously 1%= £1billion revenue....... but I doubt they have a 1% margin .... probably more like .5%
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'I just think it will be interesting. Stir & freshen things up a bit!"..LoL i have never heard hyperinflation described quite like that before..for clarity it is probably the state most likely to cause mass destruction across at least one generation and probably more...imagine that today you were paying a quid for a loaf and tomorrow you had to sell your car to make the same purchase....no heating..too expensive..no girlie mags too expensive...no wining and dining too expensive and as for shopping under lamp posts take your mortgage deeds with you ..on the plus side I would think the probability of it's occuring to be low to nil.
The few numbers I have seen are hardly precise ,but they assume with good faith and usury from the BOE NR have probably got collateral backed loans (at this time) pretty close to enough to satisfy every depositor...the problem will be if their lending business contracts and it is doing as they have already stated they have capped it then their future profits of 500m are hardly likely to be achievable...if the prop market contracts via more prudent lending practices this hardly helps the latter either as rates will rise ..redemptions will deteriorate and of course if they do then so does their collateral..vicious cycle that ,it would in it's own right mean they might become technically insolvent which would chop the lending facility.
I don't think depositors have much to concern them ,but I wouldn't wish to be a shareholder ,or bondholder....it presumes just too much for my taste.
..on the plus side I would think the probability of it's occuring to be low to nil.The few numbers I have seen are hardly precise ,but they assume with good faith and usury from the BOE NR have probably got collateral backed loans (at this time) pretty close to enough to satisfy every depositor...the problem will be if their lending business contracts and it is doing as they have already stated they have capped it then their future profits of 500m are hardly likely to be achievable...if the prop market contracts via more prudent lending practices this hardly helps the latter either as rates will rise ..redemptions will deteriorate and of course if they do then so does their collateral..vicious cycle that ,it would in it's own right mean they might become technically insolvent which would chop the lending facility.
I don't think depositors have much to concern them ,but I wouldn't wish to be a shareholder ,or bondholder....it presumes just too much for my taste.
JTrader
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'I just think it will be interesting. Stir & freshen things up a bit!"..LoL i have never heard hyperinflation described quite like that before..for clarity it is probably the state most likely to cause mass destruction across at least one generation and probably more...imagine that today you were paying a quid for a loaf and tomorrow you had to sell your car to make the same purchase....no heating..too expensive..no girlie mags too expensive...no wining and dining too expensive and as for shopping under lamp posts take your mortgage deeds with you
The few numbers I have seen are hardly precise ,but they assume with good faith and usury from the BOE NR have probably got collateral backed loans (at this time) pretty close to enough to satisfy every depositor...the problem will be if their lending business contracts and it is doing as they have already stated they have capped it then their future profits of 500m are hardly likely to be achievable...if the prop market contracts via more prudent lending practices this hardly helps the latter either as rates will rise ..redemptions will deteriorate and of course if they do then so does their collateral..vicious cycle that ,it would in it's own right mean they might become technically insolvent which would chop the lending facility.
I don't think depositors have much to concern them ,but I wouldn't wish to be a shareholder ,or bondholder....it presumes just too much for my taste.
The thing i like about hyper inflation idea is that it is a great leveller
from the homeless to millionaires - they all end up in the same boat!
Atilla
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The thing i like about hyper inflation idea is that it is a great leveller
Not sure there is flawed thought in there.
People who have asset end up having those assets valued at greater prices.
People who have nothing end up needing more money to buy those assets.
Quite the opposite imo. Polarisation in the extreme case...
Atilla
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The thing i like about hyper inflation idea is that it is a great leveller
it is exactly the opposite way. high inflation makes wealth distribution worse, not better
JTrader
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it is exactly the opposite way. high inflation makes wealth distribution worse, not better
Right, i see. I was just thinking in terms of cash being worth not a lot, and people being desperate & finding difficulty in buying menial items - whether they are rich or poor. I wasn't thinking in terms of assets & property etc. used as bargaining tools.
Note: - I am not wishing hardship on anyone - be them rich or poor
.TheBramble
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Not quite.The thing i like about hyper inflation idea is that it is a great leveller
rols
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Right, i see. I was just thinking in terms of cash being worth not a lot, and people being desperate & finding difficulty in buying menial items - whether they are rich or poor. I wasn't thinking in terms of assets & property etc. used as bargaining tools.
Note: - I am not wishing hardship on anyone - be them rich or poor
What's all of this got to do with my favourite seaside souvenir?
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Trader333
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The thing i like about hyper inflation idea is that it is a great leveller
If you want an example of the extreme effects of inflation then look at Zimbabwe. This country was one of the most prosperous in the region and the effects of inflation at 8000% has caused poverty and starvation on an almost biblical scale.
It is always wise to be careful what you wish for.
Paul
