There's a run on a bank system in the UK...

[4dsc]

I wonder if anyone is paying attention to this little matter that's going on in the UK?? Is this the start of the worldwide run on banks??

Northern Rock withdrawals at £2bn($4billion US..)

http://news.bbc.co.uk/2/hi/business/6997264.stm


People with accounts at the Northern Rock have withdrawn almost £2bn since Friday, the BBC's business editor Robert Peston has learned.
And the firm is bracing itself for more withdrawals in the coming days.

It is also understood that Northern Rock nearly sold itself to rival bank Lloyds TSB, before seeking emergency funding from the Bank of England.

However, the deal fell through because of the difficulty of borrowing money in the current financial climate.

[ThomWV]

1. It won't happen in this country - we'd just print up more bills and hand them out like candy

[rucky]

3. Until the investors decide that government paper is worthless, too. n/t

[AndyTiedye]

4. That's "Helicopter Ben" Bernanke's Job

[burrowowl]

12. It won't happen here because

most here have nothing to withdraw after paying the bills, no savings or anything.

[malaise]

2. We had a thread here on Friday

but it sank like Bush's poll numbers.

[muriel_volestrangler]

6. There's 1 thread directly about it in LBN

and another there that touches on it (about British house prices, which is somewhat related), there was another about 16 hours ago in GD, and of course there's a thread about it in the UK forum.

[malaise]

9. I think it's time for me to take early retirement

and grab my pension quickly.

[Rainscents]

5. Everything is going to hit the fan world wide!

Bank is going to claps... right on schedule leading up to 2012! Mayan Calender talked about this happening... Politics, corporation, all claping!!! Anything that is NOT harmony with Mother Earth will all claps and make it wave for NEW AGE!!!

[NightWatcher]

7. Good News: US Treasury Secretary to save the day

http://observer.guardian.co.uk/business/story/0,,2169906,00.html

Fears grow for British economy as panic over Northern Rock spreads


Experts warn that a decade-long borrowing binge has left Britain dangerously exposed to the fallout from the global liquidity crisis

Heather Stewart and Heather Connon
Sunday September 16, 2007
The Observer

US Treasury Secretary Hank Paulson flies in to London tomorrow to discuss the worsening global credit crisis with Chancellor Alistair Darling, as fears intensify that the lending squeeze could be the last straw for Britain's buy-now-pay-later economy.
Thousands of anxious customers queued outside branches of Northern Rock to withdraw their savings this weekend, ignoring calls for calm from Darling, after he helped broker an unprecedented emergency loan from the Bank of England to rescue the bank.

[bbinacan]

8. Not on the whole system

just one bank. They seem to be withdrawing the money from Northern Rock and depositing it in other banks. So, hardly a run on the bank system.:think:

[enid602]

10. And the UK is experiencing a rise in foreclosures as well.

http://www.nytimes.com/2007/08/24/business/24home.html?ex=1190088000&en=993a4da6482b7a5d&ei=5070

This article is a bit dated (from 8/22/07), but it shows the possiblity of a housing bust in the UK. Only 5% of Britons take out fixed-rate mortgages!

"LONDON, Aug. 22 — Susan Whittaker was desperate. Four years ago, she purchased her first apartment in the town of Rochester, less than two hours east of London. But then interest rates started to rise, and the income from the small shop she ran with her partner no longer covered their adjustable-rate mortgage.
In British society, “we encourage people to take on debt,” said Frances Walker, a debt adviser.
Facing foreclosure, and determined to avoid moving in with her mother, Ms. Whittaker found a way out in an increasingly popular arrangement here known as a “sale and rent back.”

A private company bought her home, allowing her to avoid foreclosure; then the company rented the house back to Ms. Whittaker and her partner and they did not even have to move.

The catch is that the company paid the couple less than the value of their apartment.

Such deals are uncommon in the United States, and mortgage brokers say they discourage them because of the possibility of unscrupulous and dishonest lenders exploiting distressed homeowners.

But desperate times call for desperate measures. While Americans fear an epidemic of foreclosures, brought on by the subprime mortgage meltdown, Britain is already suffering one.

Foreclosures here are at an eight-year high; lenders have repossessed a record 14,000 properties in 2007, 30 percent more than at the same time last year, according to the Council of Mortgage Lenders. An additional 125,100 households are behind in their mortgage payments.

And personal bankruptcies are at an all-time record, caused largely by a crushing increase in mortgage debt. The situation has grown so dire — as has the threat of desperate homeowners being exploited — that the newly installed government of Prime Minister Gordon Brown is trying to change the fundamentals of the mortgage system.

Whether they can is an open question, especially given Britons’ attachment to home ownership, adjustable-rate mortgages and personal debt. British consumers are the most indebted citizens of any Group of 7 nation, and television shows devoted to real estate and debt advice are among the most popular programs in the country.

“We live in a society where we encourage people to take on debt, and there is lots of pressure to get your foot on the housing ladder, which has proven quite a fruitful investment for some,” said Frances Walker of the Consumer Credit Counseling Service, a debt adviser, in London.

Currently, only 5 percent of British home buyers take out fixed-rate mortgages. The norm here is a mortgage with a fixed rate for the first two years, and then a floating rate for the duration of the mortgage.

[enid602]

13. most indebted

Oh, and I forgot to emphasize the following passage: "British consumers are the most indebted citizens of any Group of 7 nation." Aren't we part of the G7? Here I've been lying awake at night, thinking that the world will hate us even more if they think a worldwide recession will be triggered by unfettered US capitalism, and gluttonous, credit-crazy US consumers.

[originalpckelly]

11. OMG! An old fashioned bank panic!

Wow! This is really stupid, why doesn't the UK have some type of check on this like we do in our banking system? (Think FDIC.)

[TahitiNut]

14. Eeek!

[SammyWinstonJack]

16. ...

:spray:

[TalkingDog]

15. THERE IS A RUN ON THE BANKS IN THIS COUNTRY!!!!!!!

It's just not by the American public. You don't see them lining up outside banks because most of them haven't been saving enough to bother with.

But large financial institutions, including banks are frantically trying to get the monies they have invested in other banks. That's where the run is.

American Home Mortgage- Bankrupt. One of more than 50 lenders that are now in bankruptcy. But, 2 differences 1) American Home Mortgage was bigger than most of the other lenders, second in size only to New Century Financial Corp.

2)Unlike New Century and most of the other bankrupt lenders, American Home Mortgage was not a "subprime" lender. Almost none of American Home Mortgage's $58.9 billion in home loans last year were to subprime borrowers.

Countrywide Financial Corp. is close to bankruptcy. They were also a PRIME RATE LENDER.

Just because you can't see a sinkhole forming, that does not mean you will avoid being sucked down when the crust gives way.


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