Tuesday, 22 January 2008

A Rock And A Hard Place

At the moment this is the position the British Government find themselves between. I am by no way an expert on financial matters, and find this all a bit confusing, but basically the Government must decide whether or not to nationalise the Northern Rock bank, who are the UK's fifth largest mortgage provider.

Back in September last year the bank was forced to ask the Bank of England for emergency financial support (£25 billion) due to loaning money beyond its means, because of the global credit crunch. This caused savers with Northern Rock to start drawing out there savings, leading to queues outside branches and the companies website crashing. The words "don't panic" by those in charge brought about the first run on a British bank in more than one hundred years.

At present every tax payer in Britain has provided over £2,000 to help the Government keep the bank from declaring itself bankrupt and causing a serious recession. The money lent is now to be repaid in bonds by the bank and its hoped that a private group will buy the bank, Sir Richard Branson's Virgin Group is in the running. If this didn't happen and the Government nationalise Northern Rock they would be responsible for some of the mortgages in the country, which is not a position any Government wants to find themselves in.

There's something to be said for keeping your money under your mattress!

For a more detailed timeline of the Northern Rock crisis check out http://news.bbc.co.uk/1/hi/business/7007076.stm


Unknown said...

Yes i don't know what to make of it all i do think that richard Branson will make something of it, if it all goes ahead.

Anonymous said...

I am sure the government would make a great job of running the bank, they do soooo well with everyhing else :-)

Mandy said...

eggs and baskets come to mind
not so sure about pillowcases these days though

Kate said...

All of this talk about recession on a global scale is pretty scary.

Kate said...
This comment has been removed by the author.
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