Bank of England to prop up Northern Rock

Has the BoE given up all pretence of indepence now that Alistair Darling speaks on their behalf and announces their policy?
Also, it seems the govt has made the guarantee that it will cover savers deposits 100% based on the assumption that this is a scenario that will not occur.
Should it occur, I would imagine the NewLabour spin machine will go into overtime to reinterpret their promise and thus find a way to back out.
How can we have any confidence in the financial system when these politicians are pulling the strings?
Buying NR shares is either brave or stupid...
 
Quote from forestfire:

Buying NR shares is either brave or stupid...
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only time will tell.

by the way the bank is completely solvent - to compare it to CFC is a joke. It was rated A- by Fitch with a stable outlook only yesterday....it has almost zero subprime, only high quality assets. The only real (big) problem is the funding.
 
Quote from dhpar:

only time will tell.

by the way the bank is completely solvent - to compare it to CFC is a joke. It was rated A- by Fitch with a stable outlook only yesterday....it has almost zero subprime, only high quality assets. The only real (big) problem is the funding.
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sorry but it is in worse shape than that. NR is highly TOXIC. Fitch ratings are worthless. NR business is totally DEAD ! they have absolutely no room to continue what they were doing, the best case scenario for them is to service the existing loans and that's it and that values the stock at 180p.
No bank is enough stupid to buy this crappy aggressive business model without sound foundations. Too few branches and a public image destroyed. I really don't see any good reason to buy this worthless company.
 
that's why we have markets. i respectfully differ.

also you state something but you don't back it up by any facts. For instance why is it toxic? why is the business model dead (which very well may be)? this is just media parroting. Of course your opininion on credit quality of NRK matters to me more than that of Fitch.
 
Quote from dhpar:

that's why we have markets. i respectfully differ.

also you state something but you don't back it up by any facts. For instance why is it toxic? why is the business model dead (which very well may be)? this is just media parroting. Of course your opininion on credit quality of NRK matters to me more than that of Fitch.
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Why is it toxic ?
Because obviously 99% of it's peers think the same. The british financial system is even more exposed to the credit crunch than its US counterpart (see the tensions on the LIBOR). If NRK turned to BoE it's obviously because no other bank was willing to lend them even at higher rates. It seems like the general feeling in the City is that NRK is a walking dead. No surprise then for the 2 days of utterly severe selling and bank run.
Maybe i'm brainwashed by the media, but if it was a bargain i guess buyers would have shown since friday. No buyers in the stock market, et no direct bids to take the business.
 
even if all this panic, bank run stop, the business of NRK is unsustainable. Their business model was build on aggressive lending/borrowing with very thin margins. The money marketdefinitely changed. The housing market has turned also. All the CFC, NRK, mortgage/housing/banks with aggressive schemes are doomed from a business point of view. They will go BK, or enter a coma phase for several years. Best case scenario is a bigger whale eating them for a huge discount.
 
Quote from dhpar:

excerpt: "Until last week, almost nobody in the markets had heard of Northern Rock PLC"

and on Monday this guy is an expert on the whole english banking system. typical.
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Seriously I cannot believe any market commentator - even a non UK based one - would write something like that *and* then state that they are in the top 5 of the UK's banks!!!

The company are listed in the FTSE 100 !!! That's the top 100 listed companies in the United Kingdom on market cap!

That is inexecusable ignorance; and even if that dsecription was only used as hyperbole it is enough for that writer to be quite discredited.

And as for throwing dynamite sticks into the sea until a whale pops out... @@ ... what sort of analogy is that ?

Rant over.

I hope your trade is going ok dhpar and that you are perhaps now out of your position and that you haven't relied too much on that writer for your trades!!! At least you were honest enough to state your position on a public forum. Good luck!

abc1
 
Quote from abc1:

The company are listed in the FTSE 100 !!! That's the top 100 listed companies in the United Kingdom on market cap!
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well actually it is now exactly the 100s :( meaning it is going to drop from index within next 3 month almost for sure.

anyway - I lost everything on this trade the first day (from 500 to 300 monday morning). there is no reason to bail out now. the intrinsic value is about 180p which gives me some comfort - of course it can go to 50p though.
If market settles next week NRK will survive - if it does not I doubt its existence. In terms of odds I would make this trade now if I already have not done so, i.e. I am staying.
It was a bad trade but fortunately not large in terms of my account. If I was following my rules I had only 1000 stocks - that is the mistake I am pissed off about.
 
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