Northern Rock shares plunge 31%, Paragon Group drops 17%

That's a pretty crappy program IMO. The U.S. FDIC insures 100% up to $100,000 per account.

Originally posted by Chorlton

As stated, the Bof E wouldnt have dished out money to it, if it didnt have the assets to back up the loans.

Granted Chorlton...but if those assets smell anything like the junk that the U.S. Fed is accepting, since it broadened it's collateral parameters last month...then that may explain Northern Rock's predicament.

Leave it to the Brits to get Medieval with the banks

I'm reminded of a wild friend from Bristol...a bonafide hard-man. Back in the 80's a thug tried to rob him one night at an auto-teller in Venice Beach Ca.. GIVE ME YOUR #$%$# MONEY!..the would-be robber kept yelling. Malcolm repeatedly held his ground; NO! I'M NOT GIVING YOU MY #$%$# MONEY! After a minute or so of back & forth, the guy fired a round through Malcolm's car door in total frustration...and ran-off into the night

Good-On-Ya Britannia!

reply to post by djohnsto77


I don't want to get into a long discussion since I'm not an expert on the subject of deposit insurance but I felt I needed to point something out:

DRESSED UP FOR THE PROM

The FDIC deposit insurance has a number of problems. It encourages risk taking by insured institutions to a degree that they probably would not do if they did not have this government safety net. It also causes a certain neglect by depositors who simply don’t worry about their money being in a fragile bank because they are convinced that the government will print the necessary money to pay them off if the bank fails. The whole deposit insurance scheme actually backfires..

If there was a massive failure, it might take years before the FDIC could actually figure out how to get the necessary dollars to individuals. No one considers the fact that if such a scenario developed by the time you got the dollars, they might be worthless. To consider the government as the lender of last resort and the ultimate bale out of all financial emergencies is to seriously misunderstand the complexity of what can converge. Simply printing money to neutralize a crisis doesn’t necessarily have the effect that people think it does.

Ultimately who pays for the FDIC insurance if not you?

THE LIQUIDITY CRISIS OF 2007 - A Question and Answer Survival Guide

Doesn't FDIC insurance mean that bank deposits are safe now?

FDIC insurance isn't really insurance, it's a pool of money to be used to buy up enough bad loans off the failed bank's books to make it attractive to a potential buyer. It's not used to pay back the depositors.

It only works when bank failures are isolated events, and will not work in a systemic crisis.

The purpose of FDIC insurance is not to really guarantee the safety of the banking system, but to prevent runs on banks by reassuring investors that their accounts are insured. Bank failures, however, are not really an insurable event.

The FDIC can't handle a systemic banking crisis or for that matter one really big bank failure.

Market WrapUp

The deterioration in the banking industry is best illustrated in the Federal Deposit Insurance Corporation’s (FDIC) Quarterly Banking Profile. The report for the second quarter of this year was released a few weeks ago and the deterioration in bank balance sheets is clearly visible.

There were 824 institutions reporting net losses for the quarter, ... The proportion of FDIC banks that are unprofitable rose to nearly one out of every ten banks

The report suggests that eroding credit quality is spreading beyond home mortgages as all major loan categories ... Imagine what the banks' balance sheets are going to look like in the third quarter when they reprice their mortgage-backed securities.

BEHIND CLOSED DOORS

Most people look at the FDIC sticker on a bank’s door and assume that they are safe and that if there ever is any problem, the government will always bail them out. Few realize the increase in the size and scope of FDIC bailouts since the U.S. came off of the gold-exchange standard in 1971. Fewer still realize that it is completely up to the FDIC’s discretion to decide which banks it will bail out and which deposits it will insure and which ones it will not.

FDIC Insurance Scam

Former FDIC Chairman William Seidman charged that the 1980 increase in insurance coverage gave the savings and loans "a $100,000 credit card issued by Uncle Sam and made the government a full partner in a nationwide casino...."

Congress needs to find ways to limit the liability of the insurance funds and the risks to the taxpayers, not increase them. There is no justification for an increase in the insurance coverage which many experts feel is already excessive and a negative influence on the safe and sound operation of depository institutions.

Spitting in the Eye of a Hurricane

The FDIC is a joke. Walk into a local lender and everybody and their dog has signs saying everyone is insured up to $100,000 on all their accounts.

...the FDIC does not have the liquidity to bail out ... without Alan Greenspan inflating the heck out of the current fraud money system. When you get right down to it, the FDIC doesn’t have enough money to bail out ... if every FDIC insured lender went belly up.

Believing that the FDIC (or the CDIC here in Canada) will come to the rescue of your money under a real economic emergency such as they had in Brazil recently or Germany pre-WWII is a bit naive IMO.

Especially, if you are counting on that money to make the monthly rent.
.

Originally posted by infinite
Check out the latest pictures of people waiting outside the branches

Customers are in panic and removing all their money from Northern Rock

1933 - The Great Depression occured right after the roaring '20's when people thought that times were good and the borrowed more money than they could afford on real estate. Sound familiar?

It turns out that interest only loans are not a new concept.

WWII followed shortly thereafter. People without hope, love to fight. What better than to create a giant world war to give them something to do and a direction to vent thier anger, other than at the elite, of course.

1933 bank run



1933 bank run




[edit on 14-9-2007 by In nothing we trust]

Originally posted by Chorlton
Well yes I agree with you, but people see the headlines in the paper and on the news and panic.
Northern Rock is a quite solvent company.
As stated, the Bof E wouldnt have dished out money to it, if it didnt have the assets to back up the loans.

The BoE does not dish out "money". It loans more debt, which is created out of nothing (book-keeping entries, figures typed into a computer, nothing more) and is paid back by taxation and repossessions of actual real live assets they didn't have in the first place. Banks rarely hold the actual assets to back up deposits, this is the fundamental basis of fractional reserve banking, which all banks practise. They can generally cover around 1/10th of actual deposits. And the only assets that the BoE ever loans out are promises of payment from taxation of the public. It never ever loans out its actual assets, which are the private fortunes of private bankers who have owned our countries for centuries.

"Banking was conceived in iniquity and born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of a pen they will create enough money to buy it back again. However, take away from them the power to create money, and all the great fortunes like mine will disappear, and they OUGHT to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money." - Sir Josiah Stamp, former Director of the Bank of England, 1940.

Originally posted by In nothing we trust
1933 - The Great Depression occured right after the roaring '20's when people thought that times were good and the borrowed more money than they could afford on real estate. Sound familiar?

It turns out that interest only loans are not a new concept.

The Great Depression, like the Wall Street Crash, was CAUSED by the banks. Or more precisely, the central banks, which create the money in the first place, as opposed to the High Street banks. ALL depressions are caused by the banks. It's very simple to do; all a depression is is a contraction (or reduction) of the money supply. There is only one institution that can contract the money supply, and that is the issuing power; the central bank. The Fed in the USA, the BoE in the UK. The great depression was caused by an approximately 33% reduction in the money supply between 1929 and 1933.

Originally posted by Paul
If NR does go bust, does anyone know what would happen with their outstanding mortgages?

I have my mortgage with them, and while thoughts of my debt being written off with their demise are entertaining, thoughts of the administrator calling in the debt immediately are not. So what happens?

Mortgages will be bought out buy foreign interest just like in the USA and everywhere else. China holds trillions of US mortages and even government debt, so welcome to the club.

Mortgages are never written off, even in the great depression there were many institutions just standing in line picking up people debts. And the ones that couldn't pay got forclosed on and evicted, then it went to auction to the highest bidder to pay off lenders, then losses would be written off after final auction selling price.

It's always the people that borrow more than they can handle that are in a world of hurt.

Originally posted by franzbeckenbauer
The Great Depression, like the Wall Street Crash, was CAUSED by the banks. Or more precisely, the central banks, which create the money in the first place, as opposed to the High Street banks. ALL depressions are caused by the banks. It's very simple to do; all a depression is is a contraction (or reduction) of the money supply. There is only one institution that can contract the money supply, and that is the issuing power; the central bank. The Fed in the USA, the BoE in the UK. The great depression was caused by an approximately 33% reduction in the money supply between 1929 and 1933.

The Great Depression was cause by the over extension of credit to people and business's that could not afford what they were borrowing. This caused a strain on the banking system once people started to default on credit and loans.

Originally posted by Realtruth
It's always the people that borrow more than they can handle that are in a world of hurt.

And here in the UK there will be a lot of them, mainly young first time buyers on lower incomes. Since the property boom earlier this decade, a lot of people have had to take advantage of some extremely generous lending (in terms of income multiples, rather than interest rates) in order to get a foot on the ladder.

Originally posted by Paul

Originally posted by Realtruth
It's always the people that borrow more than they can handle that are in a world of hurt.

And here in the UK there will be a lot of them, mainly young first time buyers on lower incomes. Since the property boom earlier this decade, a lot of people have had to take advantage of some extremely generous lending (in terms of income multiples, rather than interest rates) in order to get a foot on the ladder.

It's certainly not just the UK my friend. I know people here in California (and probably the whole US) were taking out "interest only" loans to buy overpriced houses and now that they have to start paying principal plus interest they are getting foreclosed on. In fact, my local paper ran a front page piece yesterday about my county having record foreclosures for this exact reason!

I really do not understand why people got the "interest only loans"? I further don't understand how the government allowed this...damn well knowing that this would happen.

The core problem:



news.bbc.co.uk...

Back to old fashioned banking.

Originally posted by CaliGuy
[It's certainly not just the UK my friend. I know people here in California (and probably the whole US) were taking out "interest only" loans to buy overpriced houses and now that they have to start paying principal plus interest they are getting foreclosed on. In fact, my local paper ran a front page piece yesterday about my county having record foreclosures for this exact reason!

I really do not understand why people got the "interest only loans"? I further don't understand how the government allowed this...damn well knowing that this would happen.

To be fair, interest only mortgages are almost obsolete here now. I know that my parents had an interest only mortgage on their house in the 70's/80's, but nowadays most british mortgages are the repayment type where you pay back capital and interest eachh month.

What happened here is that the property boom was accompanied by very low interest rates, so people were borrowing 5, 6, or more times their anual income and it wasn't so bad for them as the low interest at the time meant that repayments weren't too daunting. Now though with rising rates, people are realising that they are out of their depth.

Originally posted by Realtruth
The Great Depression was cause by the over extension of credit to people and business's that could not afford what they were borrowing. This caused a strain on the banking system once people started to default on credit and loans.

Sorry, but I disagree totally with this. People and businesses are encouraged to take out loans and credit when the economy is (supposedly) sound and confidence is high. This is something that is, and has always, been encouraged by banks and money lenders. Then, when lots of people have taken out loans, the money supply is contracted, the economy goes into recession and people default - which then allows the banks to move in and repossess assets and makes a fortune every single time. Exactly the same thing has happened numerous times - and more often (in the USA) since the introduction of the "Federal Reserve" - the very thing it was supposedly introduced to prevent. There have been more recessions since the Fed was introduced than there ever was beforehand. The Federal Reserve is NOT Federal - and there is NO reserve... And it is impossible to "cause strain" on the banking system - for the banking system creates "money" (in reality, debt) out of nothing.

It is not a bad thing to borrow money - this is something that has ALWAYS happened, and is necessary to stimulate economies. It is only bad in light of of our current totally corrupt privately-owned central banking system based upon fractional reserve banking.

Wouldn't it just be super if we somehow found out this had something to do with 9/11?
Oh boy.

"The stock of money, prices and output was decidedly more unstable after the establishment of the Reserve System than before. The most dramatic period of instability in output was, of course, the period between the two wars, which includes the severe (monetary) contractions of 1920-21, 1929-33 and 1937-38. No other period in American history contains as many as three such severe contractions.This evidence persuades me that at least a third of the price rise during and just after World War 1 is attributable to the establishment of the Federal Reserve System... and that the severity of each of the major contractions - 1920-21, 1929-33, and 1937-38 - is directly attributable to acts of commission and omission by the Reserve Authorities... Any system which gives so much power and so much discretion to a few men, (so) that mistakes - excusable or not - can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic - this is the key political argument against an independent central bank... To paraphrase Clemenceau, money is much too serious a matter to be left to the central bankers." - Milton Friedman

I suppose my point was that the US economy is or will be suffering just like the UK soon due to this type of lending.

Originally posted by Cobalt65
Wouldn't it just be super if we somehow found out this had something to do with 9/11?
Oh boy.

It IS to do with 9/11. Or rather, 9/11 was part of the agenda we're seeing unfolding. It's all to do with the establishment of a One World Government. The next step is the establishment of the North American Union, slated for 2010. Many researchers think that the Olympics in UK in 2012 will be a cover for the unveiling of World Government. I'm inclined to agree...

Originally posted by franzbeckenbauer
The Great Depression, like the Wall Street Crash, was CAUSED by the banks. ... ALL depressions are caused by the banks. ... The great depression was caused by an approximately 33% reduction in the money supply between 1929 and 1933.

There is an agenda for these things, besides greed.

Wars follow depressions.

War creates the motivation for change.

And the motivation for change comes from depression.

[edit on 14-9-2007 by In nothing we trust]

Originally posted by CaliGuy
I further don't understand how the government allowed this...damn well knowing that this would happen.

If you remember this (part of the puzzle) all started right after 9/11. 9/11 gave them the excuse they needed to reduce interest rates to historic lows.

They knew that a loss of confidence in the stock market, a reduction in US employment, and a reduction in the prime rate would lead to a mortage fiasco. It was predictible that investors and inexpierienced buyers would buy overpriced mortaged properties. They were setting people up for the fall and they were able to do it by using the media to spread propaganda and lies.

Most people in the US haven't known real hard times, so they haven't planned for them.

Add a destabalizing occupation into a hostile land to guard world oil reserves and a collapsing world economy and you have created the perfect storm for WWIII. They were able to keep the American people involved in the Iraq occupation by funding the insurgency. There-by ensuring that there would be a US presence in the oil fields. Finger on the tap.

WWIII is the play.

Profit is the agenda

A change in people's perception of reality is the desired outcome.

Complete global destruction and the anhilation of the entire human race is statistically possible.

The odds of the bankers bankrolling both sides and making more money is more probable than complete destruction. The benifits outweigh the risk.



[edit on 14-9-2007 by In nothing we trust]

Originally posted by In nothing we trust

Originally posted by franzbeckenbauer
The Great Depression, like the Wall Street Crash, was CAUSED by the banks. ... ALL depressions are caused by the banks. ... The great depression was caused by an approximately 33% reduction in the money supply between 1929 and 1933.

There is an agenda for these things, besides greed.

Wars follow depressions.

War creates the motivation for change.

And the motivation for change comes from depression.

[edit on 14-9-2007 by In nothing we trust]

Absolutely agree. In fact I would like to bring up the fact that not only is the UK obviously having problems with the mortgage sector.

SO ARE WE.

The largest mortgage company in the country, Countrywide, is facing bankruptcy and just recieved 2 billion from Bank of America to cover the loans being currently written. Today I heard that Countrywide is being investigated because it urged employees to buy stock KNOWING that it was in trouble financially. Remember Enron??? How about a WORLD depression. What would people do if a world depression occured? What a perfect opportunity to bring in the NEW WORLD ORDER to FIX it. Hmmmmmm????