Friday, November 02, 2007

Friday Open Thread

Today I'm giving a speech in Surrey to 20 NHS PCT Chief Executives on public policy reform and this evening I'm talking to Dagenham & Rainham Conservatives. I was a bit worried when I was told they were charging £40 a ticket and thought I might have an audience of two. But all credit to them; they have sold more than 60 tickets. My friend Simon Jones is the candidate there so it will help him raise money for his campaign to oust Jon Cruddas.

So I am likely to have very little time to blog today. My Blackberry has for some reason stopped receiving emails. Vodafone say that its the fault of my email providers and they say it's Vodafone's fault.

So let' s have an open thread today. I will approve comments as often as I can. Discuss what you like, but keep it fair please.

51 comments:

Barnacle Bill said...

Kicking off
I think Alistair Darling's decision to bankroll Northern Rock is sleep walking us into a financial black hole.
Better to have put it into receivership, separating out the private investors for support, whilst allowing the commercial ones to take the medicine.

Johnny Norfolk said...

I hope you take a straw poll to find out if they are happy with Camerons leadership.

Anonymous said...

Barnacle Bill - £23bn and counting is a pretty big black hole. Just throwing good money around can never be regarded as prudent and unless NR can be shown to have a strong business case, it should be put out of its misery sooner rather than later

Anonymous said...

Th Northern Rock thing was on the BBC ten oclock news last night. They wheeled out Peston, who gave a couple of sound bites. Basically he reckons that NR has borrowed £20bn from the Treasury so far and will borrow a further £10bn by Christmas.

The BBC said with GLEE - that this is nationalisation. They couldn't have been happier and use the 'N' word several times.

My view (who works in investment banking) is that this is a political decision to stop millions of Northern Rock mortgage payers (and a few savers) from being hit if NR goes tits-up in the event that they can't refinance the mortages on their books. Handing out these loans is costing the UK tax payer - simply because such gilt edged lending could receive a better rate.

This reminds me of the reason the ONLY investment bank made a profit out of the credit crunch took the winiing view/gamble that the US Government would support the lenders (by lowering interest rates) because they couldn't afford to lose the white trash/poor black vote (and symapthy for it) after hurricane Katrina.

Anonymous said...

Fair dos - after all, you have to let Guido catch up a bit in the traffic with his Friday Caption Contest - not that he's worried or anything...

Anonymous said...

Will be interested in your comments on meeting with PCTs. In our neck of the woods, we have constant problems with GPs going back decades. They won't do this, they won't do that, no matter that it's in their contract. The only way you can get a proper service out of many of their surgeries is to jump up and down and invoke the PCT Chief Exec.

Old BE said...

I can't afford to lend the Northern Rock that sort of money, how do I call it in?

Anonymous said...

Iain, when Vodafone Blackberry stops receiving emails, the usual solution is to take the battery out, put it back in after a while and usually that will clear the fault. Something to do with recognition codes confusing the mail server. It's a long-running fault that Vodafone know all about as do Blackberry but never seem to actually fix. Private companies are so much better than publicly run bodies, aren't they!

Anonymous said...

I would like to make a comment about Common Purpose, which only came to my attention when it was mentioned on the Ian Blair thread.

I find it strange that this organization provides 'leadership training' to so many public sector related bodies (including the Met, apparently) when most of these should already have pretty well established training processes in place.

It seems to function rather more as some kind of informal public sector network and (for its architects) as a means of screening senior public sector people as part of their promotion process, ie if they don't conform to the creed of double-speak, then they are not our kind of people.

It really does merit further investigation.

Perhaps other commentators have attended Common Purpose courses and can enlighten us further?

Anonymous said...

Darling is to N/Rock what Byers was to Railtrack; recklessly (I say that advisidly) throw money at the problem to save (or please) Labour face. It is simply corrupt to use taxpayer money for political ends.

Bye the way, just been to Lyme Regis, Mr D, very fine morning there, and pleased to see you will be at M/Theatre with Widders 1/12. Shall try to attend.

Glyn H

PS; ref post on Dizzy re anonimity - stopped using full name when posts kept popping up on Google!

Philipa said...

I've always liked Jon Cruddas, he's always impressed me and sorry but party politics aside, your friend has got some fight on his hands.

Roger Thornhill said...

Northern Crock fiasco:

Another £10bln by Christmas?

Seems like Gordon Brown and his mini-mean Darling have Nationalised Farepak and is robbing us all.

Wrinkled Weasel said...

Has anybody got any proof, real proof, that the organisation called "Common Purpose UK" is a sinister cult that wants to take over the country?

I am talking here about independently validated material that supports claims like there is some kind of brainwashing going on, not the "I know of someone who went mental" or smudgy copies of copies of emails from nobodies or that they overly favour CPuk graduates?

Has anyone here any experience of it? Are they prepared to identify themselves to me and have their story checked?

If none of the above - then I am afraid its just another loony conspiracy theory.

Madasafish said...

I don't think A Darling had any choice on NRock.

Lets see: the BOE's King set "let them all go bust" - moral hazard.
That is clearly not realpolitik - cos a banking meltdown would be a disaster - but a warning to banks they should take their losses and not be bailed out by cheaper interest rates..

And lo and behold, NRK go bellyup. Now if it had gone, Javelin was right. The people with mortages would have had to go to other lenders and what is worse, the credit markets would have seized up worse.. cos the credit market lenders to N Rock - currently being repaid and refinanced by the Gov't - would have NOT been repaid and the credit crunch would have got £20Billion worse.

So M King refused to generally refinace the credit markets .. but effectivley had no choice. If he had not, then I suspect other banks and BSoc would have been in severe difficulties...

Note my commenst centre on Mr King. I think he has made a major strategic mistake which he has been forced to reverse...

and all he has achived is the obliteration of NR as a busines - which was going to happen once the credit crunch started.


As for throwing money away that's just rubbish.As long as the mortgages are repaid or refinaced the money will return eventually .

Not to good for PSBR figures tho!

(it is effective nationalisation).

The whole CDO exercise was obviously doomed to end in teras as anyone who got spam mail on mortagges from the US in the past 4 years would realise. I note the clever guys at Goldman Sachs sold out before the crash..:-)

I'm looking forward to buying Barclays shares - around £4.00 would be nice.

No doubt there's lots more bad news to come.. Banks are always the same.. like lemmings they rush over the same cliff together. They have as much sense as lemmings as well. Good get tarred with the same brush as bad.. Som egreat bargains late November

Anonymous said...

the NR debacle is driven by the desire to hold up the property market, nothing more. These clowns at a provincial building society were writing 20% of ALL new mortgages in the UK!

get your heads round that number, 20% of ALL house purchases were financed by some numpties in newcastle!

With this clown out of the market then the mortgage market can get back to normal....meaning only people who can pay back their mortgages getting them. the housing mkt is destined for a very big fall that will make 1991 look like a mere blip.

Anonymous said...

javelin, if, as you say, you work in investment banking then you will know that the mortgages and loans of a bank are assets and the savings accounts are liabilites. I fail to see how if NR goes "tits up" this can result in any material harm to the mortgagees? Unless there is (extremely unlikely if their payments are uptodate) something in the mortgage contract that allows the bank to call it early; and even then they can refinance with another lender or , much more likely, have their loans sold in an asset sale.

In all likelihood the thing that is preventing the sale of NR is that potential buyers are willing to pay for the assets (which effectively means that the mortgages are refinanced by the buyer anyway) but not the branch network or employees.

If this is the case then the assets should be sold, including property if it isn't leased, and the liabilites repaid including savers first,the government second and the pension fund liabilities third. Anything left can go to the shareholders.

The other aspect of the NR case that needs to be considered is that in all likelihood they are not the only UK bank which is receiving central bank emergency funding, it's just that the others are doing it anonymously through the ECB because, unlike NR, they have banking facilities in mainland Europe. The ECB has admitted as much.

Anonymous said...

Fire Alarms are so irritating. Grrrr

Anonymous said...

The health of my elderly mother has been declining in recent years and the service that is provided by the local GP’s has been appalling.

I dream about the possibility of getting back the tax my mother has to pay to support the NHS each year in order that she can spend it on some competent doctors.

I thought it was just me who thought that our local GP’s were arrogant, greedy, and incompetent, but to my surprise I could not find anybody who had a good word to say about the bastards.

Maybe I have been watching too many BBC drama programmes telling us how wonderful the NHS is, and how grateful we ought to be, but I was surprised by the contempt GP’s are held these days. I remember when they were highly regarded. Does socialism destroy everything it touches? I do not have children but I would not surprise me if the view people have of teachers has changed as well.

P.S. I am guessing that BBC producers know absolutely nothing about the NHS because they do not use the service.

Vienna Woods said...

Am I correct in assuming that the government have admitted that approximately 1.5 Million immigrants have been registered to work in the UK during the last couple of years? If this is the case, is there any estimation of just how many dependents were shipped in with them? I would think we could safely double the "registered" workers to include at least one dependent, making this 3Million. Then of course there are the "self employed" from the EU countries and I rather think that these are possibly excluded, making the figures even higher. Even at 3 Million, it is 5% of the total UK population, which is scary in such a short space of time!

Anonymous said...

Question:- 'If you were praised by Trevor Phillips for a speech regarding immigration, would you be worried?'

jailhouselawyer said...

"My friend Simon Jones is the candidate there so it will help him raise money for his campaign to oust Jon Cruddas".

And, what is wrong with Jon Cruddas which deserves him being ousted?

Yak40 said...

NR being propped up because many/most of their clients are in a solid Labour area perhaps ?

javelin "US Government would support the lenders (by lowering interest rates) because they couldn't afford to lose the white trash/poor black vote (and symapthy for it) after hurricane Katrina."

This gov never had the white trash/poor black vote and those people rarely have mortgages anyway - they rent.

As far as Katrina is concerned, most people realise that while the Feds could've done better the people 99% responsible for the fiasco were/are the state and local governments as personified by Gov. Blanco and Mayor Nagin.

M. Hristov said...

So, primary school childrens reading skills have not improved since the 1950s.

It seems to me that we currently rely upon the product of the education system of the Soviet bloc.

Ironically, this was a rigidly traditional system. Needless to say, it is now being replaced by modern methods. So, the benefit will be a "one off".

We need to sort this out fast or we will be left behind by the Chinese Communist and Indian education systems.

Newmania said...

NORTHERN ROCK

Its supposed to be about £700 per tax payer. I have thought for a long time this was a scandal that will take time to fester as the the Pensions theft did. Its astonishing sometimes how long it takes for the MSM to catch up sometimes Private eye run sagas for months before they bat an eyelid

The regulatory frame work within which Northern Rock were trading was set and often bragged about by Gordon Brown. The key point is this , their demise had little to do with sub prime which was introduced by the Government largely to muddy the waters . Not quite , but almost uniquely they had been basing their lending on short terms borrowing to a far greater extent than other building societies with a ratio that was quite obviously chancy. There was a highly advantageous bonus schedule to the managers and it was a disaster waiting to happen , showing ,as usual that the regulators count the Paperclips and miss the unexploded bomb. Northern Rock was almost a social entrepreneur by nature having strong links to the Unions and to labour going back to the miners Strikes and beyond. It is absolutely typical of the arrogance of such people that they thought they could do a better job of Capitalism that the real capitalists just as the brain dead Lefties did in Islington to the impoverishment of the local tax payers .

There was no reason whatsoever that the tax payer should have bailed out a Building Society who had brought about heir ruin any more than they should have bailed out Barings . It is estimated that it will be £30 billion before the end and that is when our national debt is at £30 billion and the off balance sheet debt is £30 billion more of PFI hidden borrowing

As we go along more people will wake up to the staggering scale pf this Save Gordon’s votes fighting fund which was caused by the Government and saved by the tax payer.


Coincidentally £30 billion is also about the size of the tax dividend to Scotland

Tapestry said...

ft says government is making UKL 2 billion profit from its NR unecessary rescue (brought about due to the unnecessary witholding of funds when banks needed emergency funding to assist through a temporary crisis - and then unnecessarily publicising NR's name when other wise it was perfectly solvent and profitabel business)

someone will now be able to buy NR on the cheap.

http://www.ft.com/cms/s/0/d65ada1e-888d-11dc-84c9-0000779fd2ac.html

Anonymous said...

Regarding the debate on school reading standards, if anyone feels like making themselves depressed then I would suggest going to the teachers' messageboard on the Times Educational Supplement's website. The standard of grammar, spelling and punctuation of many of the teachers is appalling.
No wonder so many pupils are struggling with their reading.

Anonymous said...

for anyone who is interested here is what a CDO really is without (hopefully) too much financial jargon.

Suppose I want to lend $100m to borrowers of mortgages (or anything else). I put in $20m of my own money (the "equity") and borrow the other $80m from investors by them purchasing bonds.(the "debt" or "D" in CDO).

The bond-holders collateral against their $80m loan to me is the whole of the $100m ie. they get paid back before me when the bonds mature. They are said to have an "over-collateralisation" (OC) ratio of 125% = $100m/$80m.

If there are losses on the mortgage pool due to default then these losses would have to exceed $20m before the bondholders experienced any losses on their investment.

Because this is lower risk than investing in the whole $100m their bonds are rated more highly than the underlying pool of mortgages.

That's all a CDO is. Pretty much exactly the same thing Tescos does when they issue bonds secured on their assets. If Tescoes goes bust then their bondholders get paid back before the equity holders. Same as a CDO.

There were severe problems with the sub-prime mortgage market that had to do with the misstated quality of the underlying assets but it had nothing to do with the concept of a CDO.

Anonymous said...

Guess who has his Mortgage with Northern Rock?

Got it in one Darling!

Newmania said...

Greenspam


Then why were Northern Rock so peculiarly vulnerable ?

Anonymous said...

Barnacle bill

What about the workers?

Anonymous said...

£100 fine, 3 points on his driving licence, and the claim that he was using his mobile phone on a deportation case.

The explanation is a load of taurean excreta.

Anonymous said...

A "new study" (yes, another one!) has found that bacon and ham are hazardous to the health.

I wonder who funded this study, the second highly suspect study within a few days?

A socialist think tank opines that we should scrap the religious festival of Christmas because it might offend the uninvited islamic incomers.

Within a few days we read that, after several thousand years, someone has discovered that bacon and ham are hazardous to the health, thus salaaming to the uninvited islamic incomers.

Wearing a mask or covering the face to make oneself unidentifiable on a public street in Britain is against the law. Except in the case of uninvited incomers of islamic persuasion.

Remind me: whose country is this and what is the ethnicity of around 90 per cent of the population?

Anonymous said...

So X Factor Emily is a violent bully - and a happy slapper. She should be arrested.

Simon Cowell should donate £5million to the NSPCC.

Anonymous said...

Point is are companies like Vodaphone learning from central government or is central government learning from companies like Vodaphone. How to avoid taking responsibility for anything?

Still the real point is. If the BBC does not make a fuss and the BBC and the police service and the NHS and the Local council and absolutely all politicians especially governing ones and the Prime Minister and the Banks and the chairman of multi-national conglomerates do not take responsibility. FOR EVEN MURDER

How can we honestly expect Vodaphone to give a toss about your E-mails?

Which also begs the question. Why should we the public take responsibility anymore?

Which may also explain why an ever increasing amount of the public don't.

Anonymous said...

Mortgage Backed Securities (MBS)

Another frequently misunderstood term is MBSs (or Residential MBS as they are properly know).

These are bonds that are sold where the underlying collateral is a pool of residential mortgages - ie. your and my home mortgages.

They have been around for 30 years and unlike sub-prime mortgage CDOs don't usually involve being exposed to default on the underlying mortgages. Why? Because the banks that issue them get what are called monoline insurers to guarantee them or "wrap" them as it is known. In addition they slightly overcollateralise them (see previous post) and take some risk themselves so if they f-up on the wrapping by lying about the quality of the mortgages they get hit.

Why do investors buy these bonds and what is the risk? Well normally when you buy a bond you are exposed to not only the issuers credit risk but also the general economic interest rate risk. This means if you buy a risk-free bond that you think will repay in, say, 10 years, then you will want to receive the current 10 year interest rate. If the bond repays in 8 years then you are quids up. You got paid 7% and, in retrospect you should have been paid 6.7%. Usually when you borrow money for a longer period of time (or, in fact, when the bank who sold you the mortgage borrows it on your behalf) you pay a higher rate of interest.

The risk in mbs is guessing when the average home-owner will repay their mortgage. It has nothing to do with the risk of default (unless of course the guarantor monoline insurers themselves default as well).

What happened in the sub-prime mortgage market, where the default risk was indeed borne by the bond holders, isn't connected with the normal rmbs market.

Northern Rock's mbs program was all of this type.

Anonymous said...

MBS, sub-prime, CDOs and NR.

So where did it all go wrong?

Unlike holders of normal mortgage back securities, who are exposed to general interest rate prepayment risk, the holders of sub-prime mbs are more like investors in a general pool of corporate bonds. They expose themselves to default risk in the hope that they get paid back more than what they lose on a realistic level of losses due to defaults.

In the event that the mortgages default then they believe themselves to be protected by the level of over-collateralisation ie. if you have bought $80m worth of bonds collateralised on a $100m sub-prime mortgage pool then losses on that pool will have to exceed $20m for you to suffer what is called "$1 of loss".

It also means not just that the mortgage has defaulted but the security on that mortgage ie. the property itself, must also have lost considerable value.

For example: if 40% of the mortgages have defaulted and each property was a 100% loan of the value of the property (or loan to value ratio = 100%) then the market value of those properties would have to be less than 50% of what they were originally paid for before the investor lost any of their money. Given that recovery rates on defaulted mortgages have historically been between 85-110% the default rate would have to have been close to 100% for the CDOs to have experienced a first dollar loss.

Again, nothing like this happened to Northern Rock. There has been no suggestion that default rates on their mortgages are any higher than expected on any other current UK mortgages. They certainly were not heavily involved in the sub-prime mortgage market.

So what went wrong? Only two more posts to go....

Anonymous said...

Simple lesson in economics for moron Tories posting their dribbling misunderstandings to this blog. The taxpayer is not bailing out Northern Crock. It is borrowing money at higher rates than normal from the Bank of England. It therefore is borrowing money from the taxpayer, not being bailed out. Clear enough? Or shall we do it in Ladybird book style?

Barnacle Bill said...

miles,
by workers I presume you mean the employees of Northern Rock?
Whilst it would be extremely hard for them to loose their jobs. Especially with the forthcoming festive season.
But it would also be better for them to have "closure", and get on with rebuilding their lives.
I am sure the government would do all they can to help.
At the moment we have a black hole centered on Northern Rock, with the effects of it and the artificial support from the government, rippling out into other areas.
Also bear in mind any future owners of Northern Rock will probably look to downsize the whole operation - with job loses.

Anonymous said...

barnacle bill

We are not sleep walking anywhere.

We are rushing head long with both eyes wide open straight down into the infinite abyss. If you could see how much my order book has fallen from last year the evidence for such would be self apparent that we have already arrived.

Sure it would have been far far far better to have done that. That is precisely why the government did not do it.

NR was only following government and Bank of England orders and doing a perfectly fine job at obeying them to the absolute letter.

Do not give the BASTARDS any benefit of even the slightest doubt.

If you ever start to believe again even a little bit that it may be a cock-up and not a sinister conspiracy again. Pinch yourself hard and remember this very good well meant piece of advice. I repeat.

It is nearly never a COCK-UP and almost always a conspiracy. When it comes to government.

ESPECIALLY when big money and big power is concerned. Where it is ALWAYS a conspiracy.

In fact it may be a good idea to tattoo that little gem of heart felt WISDOM on the back of your hand.

Still you got to laugh really. Cos apart from buying gold and praying there is nothing we can do about it now. The die is set and the plan is long since planned.

Anonymous said...

I wish Simon Jones good luck. A friend of mine has the misfortune of working with a staunch supporter of his in Oxfam, Councillor Bance. This creature is being employed Oxfam to lead their campaigns and media work on social exclusion and poverty issues in the UK. She tried to get this friend to vote for Jon Cruddas in a formal meeting in Oxfam. He happens to be a Tory. He later discovered that Antonia Bance had declared her interest to Oxfam in a written statement, from which I quote: "I have a personal interest in the Labour deputy leadership campaign. I'm listed on Jon Cruddas' website as a supporter in my personal capacity and as a former PPC and current Oxford city councillor, and am expecting to be in the manifesto he publishes when he announces his candidacy. It's also likely that I'll do some media work for him at some point. I've clarified with Cruddas' campaign team today that my employment with Oxfam will not be mentioned." It's enough to make one vomit.

hatfield girl said...

'On Liberty' by Gordon Brown may be read, recast in verse by popular demand and Nick Drew, on Angels in Marble.

Anonymous said...

Anonymous 10:50 a.m. You're right.

All these public sector parasites would have already received training, so what do the Common Purpose "training sessions" offer other than brainwashing?

If these people weren't already trained for their positions in the public sector, we need to find out why not and why such a shadowy organisation has been brought in to fill a perceived - deliberate? - gap.

Anonymous adds, with towering naiveté: "Perhaps other commentators have attended Common Purpose courses and can enlighten us further?"

Uh-huh. Of course they will!

WW - did you see the tape?

Anyway, this is no fun any more. The time lag produces a total disconnect.

Tim F said...

Your chum Simon Jones is, I'm sure, an excellent fellow, but Jon Cruddas is potentially more of a thorn in Gordon Brown's side than any Tory MP could be.

If he's got his party's interests at heart, Mr Jones should endeavour to throw this match. Or is politics now like tennis, and you can be penalised for not trying hard enough?

Tapestry said...

redwood on why labour's management of the credit crunch is woeful.

http://www.johnredwoodsdiary.com/2007/11/02/the-flight-of-the-pound-and-the-plight-of-the-dollar/

Roger Evans said...

A fine evening in Dagenham last night. Iain was on good form and the crowd were younger than we often see. By the end we had made a substantial sum of money to support Simon's campaign, which is certainly not lacking in enthusiasm and energy.

Alex said...

Anonymous said...
"Simple lesson in economics for moron Tories posting their dribbling misunderstandings to this blog. The taxpayer is not bailing out Northern Crock. It is borrowing money at higher rates than normal from the Bank of England. It therefore is borrowing money from the taxpayer, not being bailed out. Clear enough? Or shall we do it in Ladybird book style?"


Some simple lessons in economics for an anonymong from an investment banker.

1. If NR could borrow more cheaply (or oerhaps borrow at all) from the market rather than from the Bank of England then they would do so.

2. If the market thought that the "premium" rate being paid by NR on its borrowings more than justified the risk of lending to NR, then they would do the same or lend at a marginally lower rate.

Since neither 1 nor 2 above accord with the facts, the government is intervening to bail out Northern Rock.

Anonymous said...

There is a big can of worms in Northern Rock methinks!! Ed Balls and Yvette Cooper are in it upto their necks already. How many others?

see here:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=60181

Is this why the Bank of England was ordered by Brown to bankroll them with a blank cheque to the tune of £23 billion and rising. This is already the equivalent of over half the total NHS bill with no end in sight.

Does anyone imagine any of this money will ever be paid back when Northern Rock are already struggling to meet the interest payments alone?

It will take more than the sweating, shifty looking Tim Congdon on Newsnight to keep the lid on this almighty mess which could end up bringing down the government.

Anonymous said...

I think this citation in the times is significant. It implies that a crack has appeared between Brown and Darling over the handling of the NR crisis. It mightbe something you want to chase up on Iain ( though I do realise you try to avoid the money stories)

http://www.telegraph.co.uk/news/main.jhtml;jsessionid=EACUKKDZRFM1HQFIQMGCFF4AVCBQUIV0?xml=/news/2007/11/03/wciti103.xml

Another banking source said: "I am told there is a lot of frustration at Number 10 and among senior civil servants with the Treasury and the way it is letting the Northern Rock situation drift. Nick Macpherson [the permanent secretary at the Treasury] is under particular pressure."

Anonymous said...

verity @ 1:19am

If you are interested in Common Purpose, it is worth looking at this blog for detailed information about spending in Govt departments on their leadership courses:

http://thejournal.parker-joseph.co.uk/blog/_archives/2007/10/5/3271746.html

It would seem that many people, from various walks of life, do attend these courses. So it would be no great surprise if some readers of this blog had been on a Common Purpose course.

However, there are courses and there are courses. Some may be innocuous, everyday-type affairs and some rather less so. It is not unusual for course leaders, running the more high-powered sessions, to be asked to vet participants for their suitability for promotion, for example. Everyone knows this happens and behaviour is modified accordingly. But only those genuinely amenable to the prevailing (PC) groupthink can keep up the pretence for several days, ie the more independent minded (the genuine leaders) get weedled out by the process.

But quite why the MoD needed to spend £87k on Common Purpose leadership courses last year is anyone's guess. Isn't that what they have Sandhurst for?

Madasafish said...

Imo Tim Congdon was being misleading on Newsnight. Just beacuse NRK's mortgage book on average is less than the value of the assets mortaged does not mean individual cases will not become bad debts.

Like all averages - and this is the killer... the rpoblems arise at the extremes : where mortages are equal to or less than the aseet values . i.e 100 and 120% mortgages.

Unless you have a detailed analysis of NRK's lending, you CANNOT tell what the Bad Debts exposure or risk is.

Congdon was talking bovine excrement. And he knew it.

I think it's a case of both major parties being scared in case there is a proper financial crisis caused by panic. The LibDems would not be in the loop.

Don't worry . LOTS more US writedowns to come and a few UK ones. Rocky 6-9 months. Not the end of the world but scary...

Tapestry said...

Redwood posts again on Northern Rock. He explains it better than anyone.

http://www.johnredwoodsdiary.com/2007/11/03/mr-cable-should-apologise-to-northern-rock-and-to-taxpayers/