Government spends more on Northern Rock than on Defence

Discussion in 'Current Affairs, News and Analysis' started by Mr._Average, Nov 15, 2007.

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  1. Ah, but its entirely different. As much as the MOD try hard to waste huge amounts on big TVs, 1000quid chairs, and perpetual procurement projects the army can only use up one bullet at a time really. Highly ineffiecient.

    If Brown really wants to blow our collective money fast he needs the help of the city boys. Nobody can throw away money so efficiently. I'm suprised he didnt think of it sooner.

    The olympics is a great cash hole, selling half the countries gold at the market low point, and the dome was a nice effort to get warmed up. But loaning money to failed financial enterprises. Thats where the losses really are. And the credit crunch has only really just started. So much potential to burn more of our taxes propping up the fat cats.
  2. So...why not ust let them die? Plenty of other banks out there.
  3. Much simplified but; If N R had crashed people would have lost their money, leading to a panic and runs on other banks, creating a chain reaction of runs on banks with a financial crises.
  4. Biped

    Biped LE Book Reviewer

    Yeah, but this is money for money we are talking about. As far as this incredibly inept gobment is concerned, anything to do with image and money is more important than defence.

    That bank is all about . . . money, and if it falls, it makes the gobment look bad as a financial centre. No spinning your way out of that one. Plus there are a lot of voters who go to banks, a lot more than join the forces.

    Simple gobment voter economics.
  5. People would indeed have lost any money above about 30K that they had invested in Northern Rock accounts.

    More importantly (from the governments perspective) a number of trade unions who are customers of NR would have been cleaned out and ceased to exist. This would no doubt have impacted badly on union donations to the Labour party.

    Now we can't have that, can we? Hence has raised twenty odd billion by borrowing to bail out Northern Rock. I mean, why not? It's not as if the Labour party, the unions or Northern Rock are footing the bill. That's down to the poor bloody taxpayer.

    The Tories really should be getting the boot in a bit harder about this.
  6. NR is a north east base company. It employs many in this predominatly Labour electing area.
    Loss of well paying secure jobs could affect Labours next election bid.

    Interesting view of the whole Northern Rock set-up.
  8. Those jobs in the NE are going to cost us a pretty penny by the time it's all over!

    BBC2 has just reported, I think, that there are 8 bidders for the wreckage... We'll see.

    Meanwhile. the money continues to flow out of the Treasury! It's like watching a slow motion car crash!

  9. An expensive car crash between a Ferarri and a Rolls Royce......
  10. The government has not lent the money for the sake of northern rock but for the benefit of economy as a whole.

    Look at the run on northern rock if left unchecked it could have caused major confidence problems.
    Think about house prices they go up in part because people think they will go up. If Northern rock had collapsed it would have skaen confidence in the city confidence in uk banking. Markets are built upon confidence. If every one thought house prices would go down they would. Finace markets could be far more volile than houses as houses are not as convienant or quick to change. People could switch from the uk rapidly. This is also ignoring all the "sheep" problems that would be created and those from a general slow down such as house prices spending etc.

    The government/bank of england dug a hole (I know the government have passed accountability to the bank of england chancellor still sets inflation targets they dont really have a free hand even on interest rates)
    they should have acted quicker and more decretley. From the situation they created lending this money was best of a bad set of options. If the bank was broken up these morgaes could be refianced and money recovered. Its by no means 23 billion writen of. Depending on what happens and what is done some money could be lost but its misleading to compare this 23 billion to 23 billion spent on something. Because of the mess that was created it was vital for the good of the economy which in turn is for the country as a whole that something was done. It should not have come this of course. Iragardless of the governments spending this loan had to be enabled.

    Of course this is this ideally would not have happened but to compare it to spending although a good headline is not enteirely pertinant.
  11. There is a big article in the FT today(15 Nov) on this subject.Various figures are being bandied about as to what NR is 'worth'.Certainly the Government will not want to see it liquidated,so that's one outcome that cannot happen.As a creditor of NR for north of £20 billion,they will have a major say,in any outcome,in any sale.Jobs will have to go,in any solution.

    It is postulated that any organisation with £20 billion to spare,could find far better uses for it,than buying NR.At the least,if the shares of NR are valueless,the government may well have to stage some kind of takeover,like it or not.

    NR calls itself a bank,yet their CEO has passed no banking exams.Since neither NR nor any of the responsible Government Agencies,stress tested the major assumptions on which NR funded the shortfall between it's deposits and the ammount of mortgages,that it was writing,then the Government must take some of the blame for the present outcomes.

    I was in NE UK the other day,listening to local businessmen winging about 'lack of Government support to NE UK'.They do not consider that £20 billion plus,forms any part of such regional 'help'!!!!!!!!!!!!!