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Housing stocks off in Breat Britain - beginning of the big plunge?

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posted on Sep, 14 2007 @ 01:47 PM
My apologies if this was posted elsewhere, I am an old man and this "new" format still confuses me somewhat.

Anyway, Northern Rock shares plunge 32% - that is one of the UK's biggest mortgage lenders. We already know what is going on in America and it seems to be affecting the UK as well. Everyone is over extended credit wise and when those banks come a-callin' it is bad news. I am not one for hysteria but any major shares dropping a full third of their value is a major blow to the world stock market.

Is this the beginning of a stockmarket crash as in 1929 on a global scale? (yes, I know that the previous one affected world markets, however, I am getting the feeling that this could be huge...)

BBC business has the full story

posted on Sep, 14 2007 @ 01:53 PM
Interesting I have been following the markets here in the US and the housing bubble crash but I had no idea that UK is still having problems in such great magnitude.

It most have been scary to see the people outside the bank after the scare of losing money.

I believe that it happened here with one bank but the fed and other banks came to the rescue.

The only reason the housing in the US is surviving is due to the fed infusions every time the markets do not look good.

I imagine that someone will come to the rescue in UK.

posted on Sep, 14 2007 @ 02:03 PM
reply to post by Marid Audran

'Lender of last resort'

The decision for the Bank of England to become the "lender of last resort" is extremely rare - and also comes after consultation with the Financial Services Authority (FSA). It is an unlimited facility, with interest rated at a "penal rate" of more than 1% above Bank base rate.

To obtain the money, the Northern Rock will have to deposit some of its customers' mortgages as collateral, which are regarded by the Bank of England as sound.

This part of the BBC article got me thinking...If you have a mortgage with NR and you default, NR has the right to repossess the asset from you, but if a mortgage-debt is effectively sold to the BoE as a mortgage against the NR bank borrowing money to stay afloat, does the BoE technically become your new mortgage-owner who would have the power to repossess to recover assets if NR defaulted on their commitment to the BoE?

posted on Sep, 14 2007 @ 02:07 PM
reply to post by citizen smith

Yes, the benefit passes to the BofE

But it wont happen. Northern Rock are a steady company that has sufficient assets, they are simply short of the readies.

posted on Sep, 14 2007 @ 02:08 PM
I just hope they continue to sponsor Newcastle

posted on Sep, 14 2007 @ 02:14 PM
AH, just came across the first post - please use that one:

Mods, feel free to lock this one. Thanks!

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