Northern Rock...
is not apparently as hard as we'd been led to believe. At present we have an old-fashioned bank run, and Robert Peston at the BBC suggests it can go on for almost as long as there are savers with money left in Northern Rock, as it just about has enough cash available. Surely then however the Bank of England would end up as the de facto owner of a huge chunk of Northern Rock's mortgage business, which is perhaps not the situation it wanted itself to be in.
The one thing I don't understand is whether these savers know that bank deposits are guaranteed by the government up to £2k for100% and then 90% on the next £30k or something like that. Sure there are still pretty good reasons to get your money out if there's no major penalties, but you'd think it might be worth the government pointing this out a bit more. I suppose to do so would imply they think there's a chance of it going bust.
At this point, those who aren't shouting 'Land Value Tax' or 'Citizen's Basic Income' start to go on about moral hazard, but I suspect that wouldn't go down to well in the Northern Rock panic withdrawals queue*.
* If you were wondering whether people really were walking around with thousands of pounds in cash on them, then it appears probably not. Most of the 'run' was done via the bank's website. That must be a first in UK history.
Labels: economics, Posts with too many in-jokes
posted by Matthew @ 9/16/2007 10:41:00 AM
Comments: 3
