Saturday, September 15, 2007

The Run on the Northern Rock

It looks like savers with the Northern Rock are panicking. Queues are forming that go around the corner.

This looks very bad. However the Northern Rock looks fairly solid.

What seems to be happening is that savers have lost enough confidence that they want their money out just in case the bank goes bust. Fair enough, but it does not look good.

Yesterday people withdrew £1 billion. That is a lot of money. I understand that the bank has net assets that mean that even if all their savers withdraw all their money then the bank can still trade, backed up by the Bank of England, so there is no need for people to panic. That said if I had a lot of money in the Northern Rock I would be moving some of it about.

The BBC has this.


Anonymous said...

Too many politicians and financial experts saying 'don't panic'. Who trusts them, panic is a sensible reaction in this case.

Anonymous said...

You are guaranteed 100% of the first £2,000 and 90% of the next £33,000 by the government. Of course if Northern Rock goes bankrupt (a major possibility) you'll be asking for your money back, along with millions of other savers. You won't see a penny for months (or possibly over a year) and will lose the interest you'd have gained if you'd transferred your money on Monday. The price you'll pay is maybe a few tenths of a percent in interest. What price is peace of mind?

Anonymous said...

See what spin does nobody believes this shower,can't blame people wanting their own money back.

Benedict White said...

Anonymous's. yes there is a deposit protection scheme but it does not pay out all of a depositors potential losses.

I also note that people are very skeptical when they are told everything is alright.

It shows a complete lack of trust in politics which makes it much harder to do things, even when they are right.