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Ah! The mendacity of governments is a wonder to behold:
Chancellor reconsiders savings pledge
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/01/cnsavi...
If they cannot uphold their word at this early period in the financial crisis, then what are they going to be like when the full on chaos of global financial, climate and energy chaos hits?
This is a bad mistake.
Not only do people now know the government will not bail them out if a bank or building society is in trouble; they know that the word of government officials is even more worthless than they thought it was before. They weren't exactly falling over themselves to trust it then.
Net result is any suggestion that a financial institution is in trouble and you need to get you funds out immediately.
I’m gonna open a new account , I’m walking down the street and there is a Northern Rock at my left – and on the other side of the road there is a Bank-X – Q; Where do I go ?
You covert the cash to gold and silver, then split it into multiple parcels and hide it well around your home.
There were two other banks that took a beating around the same time the whole Northern Rock thing got started. I've been using the Google for a bit and I can't find their names and I'm not having much luck tracking down a good blog that covers British banking. This sort of thing won't happen here because we simply don't save but I recall some postings indicating the infection will be most visible in the U.K. and Spain ...
http://ml-implode.com had a link to this tidbit comparing UBS's troubles to Citigroup.
How big of a price? UBS is taking a $690 million loss and firing 1,500 workers due to the $3.4 billion writedown of the value of its MBSs(mortgage backed securities) -- but I think it's curious that it still has $19 billion of MBSs with which it is "comfortable."
http://www.bloggingstocks.com/2007/10/01/why-ubss-ubs-pain-exceeds-citig...
Economic conditions alone would make a mess of that $19B in "assets", and this is before one factors in AGW and PO ...
Alliance & Leicester and Bradford & Bingley. It was the run on A&L shares on the Monday which persuaded the government to give their blanket assurance, I believe.
Someone on another forum reckon that they are only half as bad as Northern Rock, and so won't run into the same sort of finance troubles as NR for a few weeks,
Peter.
Alliance & Leicester, and Bradford & Bingley were the other two.
The initial promise of guaranteeing 100.000 pounds solved a first crack, but now that it's lowered again, Chancellor reconsiders savings pledge, who knows how people will react? They're looking for safety. 35.000 pounds does not spell safety, Northern Rock has many mortgages and pension holdings, which easily go beyond that number.
It's not realistic to think these three are the only UK banks in trouble, like NetBank will not be the last US victim.
Northern Rock, 11.42 am EDT:
LON:NRK 134.00 -45.20 (-25.22%)
Guess that set of guarantees didn't help much.
NetBank 11.58 am EDT
OTC:NTBK 0.04 -0.03 (-45.59%)
NetBank has officially filed for bankruptcy (protection).
It seems to me that one reason such a safeguard would be withdrawn, is that Brown knows that more banks are heading for trouble and he simply cannot afford to guarantee the money in all of them. Otherwise, why backdown when it would attract such bad publicity with a possible election in the offing? As mentioned above, doing this almost guarantees that there will be a run at the first rumour of trouble at any bank.
Assuming I go back to work this week (fingers crossed) I'd like to start banking in some fashion where I can use euros rather than dollars. I hear Everbank is an alternative to Netbank ... does anyone have an opinion on which bank will give me a cash card but let me store the funds in the euro? The $1,500 minimum for an Everbank account isn't such a stretch but I would probably shy away from anything much larger than that.
Actually, there's a connection here: NetBank folded after Everbank declined to purchase them. Letting them go down, and then buying assets, must have been cheaper.
I have a question for some of you who are certainly more economically intelligent than I. Citibank just bought out ABN AMRO's La Salle Mortgage group. What happens to those morgages (mine included)if Citibank goes belly-up (before it sells their mortgage group to someone else, that is)?
I don't understand all this slicing and dicing of morgages enough to even imagine an answer, but it sure does worry me.
Thanks for any answers.
Linda
You occasionally see stories about people who've been "lost" as mortgages change hands. You keep a copy of every single bit of paper you get, especially canceled checks, and if your payment destination goes missing you open a separate account and keep paying into that. These stories popped up every five years or so during "normal" times and I expect we'll see a lot more of it going forward. The Mexicans blow up pipelines ... here I'm waiting for the first infowar poisoning of a mortgage lender's data pool.
To me the more interesting question is what happens to my mortgage if the the dollar fails as a currency?
One scenario I see is a hyper-inflated dollar where I pay off my 180K mortgage with a single oz gold coin.
But what happens if the dollar no longer exists, and its not just a matter of conversion into some new US currency, but perhaps the US federal gov't no longer exists?
That is a LOT of what ifs! What if a giant rock hits the earth tomorrow, or there's a massive earthquake. Can't worry about every remote possibility.
http://static.grupthink.com/answer/1/15731e89fcb141b77d313502628a84ad
No, actually only one "if" - what if the federal gov't fails.
Ever read the classic story "When Worlds Collide?" or its follow-up "After Worlds Collide"? Great fun. And certainly an argument for not throwing away thought experiments about what might happen IF some highly unlikely event occurs.
http://cgi.ebay.com/HIGH-QUALITY-ROMAN-COINS-WITH-BONUS_W0QQitemZ3001564...
A systemic failure like that is a potential but I think its a long shot ... at least this year.
I think it'll be a case of where "everything we know is wrong". If one person loses their house its bad luck or bad judgement, if an entire nation starts losing their homes it becomes political. Political good for the consumer in some ways, but be sure there will be some protection for those mortgage holders as well - I don't think anyone gets a free house out of hyperinflation.
The dollar is a consensual hallucination. If we all snap out of it at once ... well ... interesting times strikes, eh?
I'm not worried about me being able to pay the mortgage. I'm worried about what they will try to hold onto if they are going belly-up like Countrywide did. CW was apparently trying to hold onto the tax/insurance escrow files and people were losing their houses because the taxes/insurance wasn't being paid.
Citimortagage takes an auto payment out of my checking acct. each month that includes escrow payments, "the mortgage payment" and an extra $50-100/mo. to go on the principle This lets the taxes and insurance be paid automatically and with the extra on principle we've been able to pay the morgage down by about $2000 per year.
I worry that if CM goes bankrupt they might pull a stunt like Countrywide did. Is that usual in that sort of situation?
Linda
That's when they break out the UAV predator drones and/or remote mind control weapons.
All right now, Matt. STOP that - LOL.
Linda
sorry, I just couldn't resist. =)