More Northern Rock stuff

A few more thoughts. Are the people the same people queuing, who when faced with a bank holiday rush to the shops like there is no tomorrow. The same people when faced with extreme weather and told by the police to only travel if necessary and then get themselves into trouble. I am it has to be said a bit of a grumpy old man when people act like sheep. It has always amazed me how completely rational individuals act like nut jobs together.

Let me here you say "Baa!".

Mind you playing devil's advocate the press do have a tendency to mislead everybody. If the weather is extreme they blame the government for not doing something about it and making it safe for everyone. How often do the media mock severe weather warnings from the met office giving it little attention but then complain that no one was warned when it all went wrong.

The bank of England ensures stability in the economy by guaranteeing what could be termed an overdraft facility but the news term it as an emergency loan and start talking about when banks go bankrupt. What can you expect but a belief by the public that there money is at risk.

Of course now that the Northern Rock is the only bank backed by the Bank of England what about the other banks.

News reports suggest that over £1 bn was taken out of Northern Rock accounts yesterday and even more today. Now either the money is being kept under a pillow or the money has been put into another bank. Now the new bank is not guaranteed by the Bank of England, what if it has the same hidden problems or is exposed to the sub prime problems or even in the worst case both problems. What if another bank goes down and the bank of England decides that the new bank isn't as big and wont cause structural economic problems. In a worse case scenario a investor could take money out of Northern rock and put in another bank only to loose the money when the new bank goes down.

That is probably what some commentators have been thinking when they have suggested that Northern Rock is now one of the safest banks in the country.

Exactly how safe is your money now?(The Times -Anatole Kaletsky)

Ever since A level Economics I have respected Anatole Kaletsky, in fact he was essential reading for current economic events. Here is his take on the Northern Rock story:

"Because of the unlimited overdraft facility granted yesterday, Northern Rock’s management is perfectly justified in saying that the company is now a safer place to keep money than any other bank in the world."

-Anatole Kaletsky, The Times

Anatole in the rest of the article succinctly states what the actual problem is or was. The article is written with no hype or scaremongering This is my kind of writing, full of integrity, impartiality and clearly explaining the facts.