大象传媒

i dont really care, iam taking my money out 1st one to panic wins.

I cannot believe that anyone would think that boring, safe, risk averse Lloyds TSB has a liquidity problem. They are the only one who are actually prepared to lend to existing businesses at realistic rates

I wonder how much money is really going into the propping up the Banks.
Presumably the 10's 拢B of funding loaned to Northern Rock did not actually stay with NR, but was paid on to other banks who had previously lent money to NR (that was then due for repayment).
So this should be added to the funding made available to the system as a whole.

Keep BUYING - there are FANTASTIC bargains out there - ignore the media and hype.

Robert
perhaps we should ask which bank has a larger nominal dependence on the capital markets for funding its mortgage book, and a relative figure second only to Northern Rock? Hbos at 拢73 billion (12/2006) and 33%. Before today's tanking, you cd buy the share for a price which said book value per 拢 @ 80 pence. Only RBS is worse at 66 pence. So the market does not believe the management's numbers, which includes the stuff you refer to. After the Bear episode, would you?

Robert, it's hard to knowck 99.9% of what you write but in this instance the don't panic message is all well and good.
However until the banks come clean with their off balance sheet liabilities which they are undeniably not doing, save banks in America, everyone in eth UK and Europe has an absolute duty to protect their funds and take what ever action they feel is necessary. Lets face it the public was not wrong with northern Rock.

This is one post I am in wholehearted agreement with. When we see the shares of banks being routed it is always worth remembering it may well be because of someone looking to make a quick buck.

Of course in times like these the rumours have more edge to them than they otherwise might and causing large falls in prices is easier, traders sell first and ask questions later.

One bank falling was enough, one either side of the Atlantic was very worrying, if any more go then the contagion effect could be crippling.

I'd be more concerned for institutions such as Paragon and Bradford and Bingley ...both buy2let specialists in a market that has and continues to die.

Futhermore, wasn't the run on Bear Stearns led by institutional investor gits such as Hedge Funds wanting their cash back? It's not Joe Public panicing at the moment (not yet anyway) but self appointed 'masters of the universe'.

They have my sympathies....not!

If the heads of the largest banks are holding an unscheduled meeting with the Old Lady there is every reason to be concerned. After the problems at Northern Rock became public knowledge nobody covered themselves in glory. The system which Gordon Brown introduced for the supervision of financial institutions did not work at the Rock so why should we have any faith that Sants et al are doing a better job with the other leading banks? As the credit crunch worsens it is clear that there will be an increase in deliquency and banks will be writing off large sums. It remains to be seen just how much financial junk in the form of Mickey Mouse assets is in the British banking system. Whatever the sum it too will lead to write downs. Keeping the housing market afloat will be priority number one for Brown because house price deflation and increasing repos could finally put him under the table.

Hedge funds starting rumours and shorting certain stocks. Good article, hopefully sanity will prevail. HBOS is one of the strongest banks in Europe.

Both HBOS and Lloyds are heavily exposed to UK mortgage market, as house prices drop and eventually collapse these banks are going to suffer the full force of the credit crunch.

Very, very good post Robert. Indeed, sentiment, rumour and fear are right now more powerful than fact. The fact that Bear can topple because of rumour is an amazing thing.

I think you have also hit the nail on the head behind the driver of this speculation - hedge funds.

There are many 'long short' funds in the market who profit immensly if share prices decline. Today there is fertile ground for laying negative rumour which has sharp downside risk to share prices, so I wouldn't be surpised to see some market manipulation occuring here.

Thank you for trying to put the record straight by looking at the facts.

Well done Mr Peston.

If only more such sanity could prevail.

I love the fact that the man who started the run on Northern Rock is now asking the rest of us to "ignore the scaremongers".

Ironic or what?

Rob re Bank of England meeting

'..loans against the security of a wider range of collateral (especially mortgages)'

Is that secured debt i.e. the ability to pay off the loan - or the assets of housing stock if it were to be sold off and buyers found?

Because if the latter is 'collateral'
then why couln't I get a mortgage of K30 on a house valued at K155+ - if I defaulted the value of the house was enough to pay off the loan as there was no other loan secured against it - that should have been a State investment in me whilst I am studying - you don't need a Bank to 'facilitate'.

All this talk of Brown and transparency - where did the 拢5b go? Why did the Banks want 5x that?
Questions for Newsnight?

It seems that the BoE is denying the meeting. Any comment?

How can an entirely man-made 'solution' cause us so much grief? After all the system was put in place so that if, for example, i wanted some milk and had a surplus of eggs i didn't have to find someone who wanted eggs AND had extra milk to trade!

I don't care what Robert says. I do not believe that investments over 拢35000 are safe in any bank at the moment. I cannot believe that the Bank od England can bail out another large bank as they did N. Rock. I am moving into N. Rock because it is now the ONLY guaranteed bank.

HBOS are very definitely overexposed to the ALT-A assets that are plummeting in value

Robert get real they are highly vulnerable- the bankers got us into this mess- you could at least stand up to them. I might even buy your new book

I agree with Robin Bruce. Up to 拢35000 of funds are protected, but in the event of failure can you imagine how long it will take to process claims - months and months. This time of year is fixed rate ISA renewal (from 6/4/08)and there will be a large amount of cash ready to move, including mine. The greed shown by the banks in the past 10-15 years is now coming back to haunt them - targets, mis-selling, etc. I was an underwriter for both a prime lender and a sub prime lender and know exactly what went on.

Hah! So the Bank of England is falling over itself to lend public money to the banks, so that the banks can then lend it to members of the public at a higher rate, creaming off a profit in the process.

Why not cut out the middle man!?

JS

With the FED returning interest rates to a level where it costs nothing to borrow money in real terms it gives the banks and borrowers breathing space to let the dust settle and set a sensible direction going forward.

I think it will probably take 6 to 12 months for banks to reduce down their risk exposure and for their shares to recover.

We still in panic mode though continuous bad news in the media, regulators, central banks and politicians taking steps in an attempt to calm the storm.

Stop the hysteria. Help identify solutions if your in a position to do so. A bit of 'victimisation'and told you so pervades alot of comment.

it just goes to show what a load of overated, neurotic,fools there are in the banks, and city institutions!

Mr Peston

Having a sensationalist headline such as "Banks: Don't panic!" may well not be a sensible choice. For those who actually just look at headlines and never get to read far down the content of a blog, they may well believe just the opposite. Some people just scan for pertinent points.

The following is also something people may well misinterpret. The brain usually fills in the gaps in memory which is the mechanism driving chinese whispers.

"However the fact of the looming meeting appears to have prompted hysteria in the stock market."

I think the word hysteria is the culprit here.

Next we have a real gem.

"Wild rumours have circulated about HBOS and Lloyds TSB both facing funding crises. HBOS's share price dropped an astonishing 20% at one stage.

The speculation is crazy. I have checked - and neither HBOS nor Lloyds are in that kind of trouble. They both have ample liquid resources."

If they don't even bother to read the paragraph starting "The speculation is crazy..." they may well by now be running to the cashier to withdraw funds.

I know you say you have checked the facts but would a bank in trouble now be telling the whole truth to a media that delighted in reporting the troubles of Northern Rock.

Speculation is like asking the question "Have you stopped beating your wife yet."

I agree with some of the posters here noticeably 2 & 5.

Shares are a long term investment and if I had some free cash I could leave for a few years I would be investing some money in UK High Street banks today.

It is going to be a bumpy 2008 for a lot of people but I fully expect the UK High Street banking sector to be much the same a year from now.

The meeting is a common sense thing and the "panic" just goes to show how jumpy some investors are at the moment.

As well as the banks Aviva the UK's largest insurer who posted profits of more than 拢 2 billion for 2007 only three weeks ago is currently trading at a p/e ratio of less than 7 and is yielding over 6%.

Look to safe reliable companies and now is the time to fill your boots with shares in insurance and banking.

FAO Robert Peston:

As you have such an excellent grip on matters can you find out what happened to Bill Still?

He produced an extremely revealing video called Money Masters which is now free to watch on Google. His video appears to be in the same league as Adam Curtis's work.

There are no other references to Bill on the internet anywhere and some of us are concerned as to why that's the case.

Don't panic!!

If you have some cash you don't need this year buy UK High Street Bank shares and UK general insurers as well.

All their shares are much lower than they should be and in the medium term (18 months to 5 years) will give you a very good return.

My own suggestion is Lloyds TSB & Aviva. Keep the faith!

As I small businessman, can I ask .... if I make some dodgy investments, motivated by greed and hypocracy ...... and they failed, would the BOE bail me out ?

It is from the small businesses in the UK that the banks are trying to recover their (not our) losses.

Whatever the outcome of this, the major lending banks need to be censured and brought back under sensible control.

At last a more balanced response from Mr Peston.
The last thing we need more of now is headline grabbing stories with no foundation to them. It is clearly in the interests of specualtors to try and short solid shares since there is no real risk in buying them cheap.

Mr Peston should remember his responsibilities when reporting in such nervous times - its not as if the media have a great reputation for accuracy - look at the Express Group.

Robert

I am amazed at your 'Both have ample resources' comment. Both have around 3% liquidity, that is if everybody asked for their money back today they could only pay out 3% of the request value. You would want to be at the front of the queue, wouldn't you?

It's pure confidence that keeps the plates spinning at the moment and like the Emperor's Clothes somebody will pop up and declare there are none I'm sure.

You cannot blame anybody for playing safe. It is the banks that got themselves into this predicament in the first place.

Robert,

You say you've checked with Hbos and Lloyds. But *why* would they tell *you* if they were in trouble? That's the last thing they'd do, surely. Queues outside a small number of NR branches is one thing. Much longer queues outside 800 Halifax and Bank of Scotland branches is an entirely different matter.

How precisely would lending the banks more, for longer and against a wider range of collateral reassure creditors and investors? Surely it would spook them more as the message is 'Hey guys you know you offered x拢bn, well we actually need xx拢bn and if you don't pay up you're really stuffed.'

It's about time these bastions of capitalism started taking a little bit of responsibiltiy for the mess *they've* created.

I have been told that a maximum figure of 拢35K is safe in any bank and any surplus (if you are that lucky) can be lost. Can any body confirm this or have I been misinformed?

I realised that all my business and personal money was held by HBOS in one guise or another on Monday. I duly opened two Northern Rock accounts (safe as houses (no pun intended!))(1 x business and 1 x personal) and have transferred the lot. Although I should say that when I tried to transfer money from HBOS at lunchtime, I couldnt get it out - it said to call an 0845 no. I opted for a lesser amount, and I hopefully assume that its because it was

Happy to keep a few 000 in HBOS and other banks - but thats it.

SHOCK headlines about "Secret Meeting", and rumours repeated with named institutions....where did it all start? Oh yes, good old "balanced view" RP and NR!

I just hope that someone finds your unfounded rumours serious enough to initiate action.

Forgive me if I take the Bank of England's assurances with a large pinch of salt.

There's an old saying in the markets - "Never believe anything until it's officially denied"

All through this crisis I can not believe how the fincial industry has behaved. As a non expert in all these things it just seem so weird and strange that business (the banks) that continue to make very large profits are somehow seem to be failing, this is more like a Homer Simpson way of running things where the core business is sound but all the "clever" little schemes that surround the banks are the the things that are stuttering. Even now it seems that all the so called write-downs are only potential ones yet the markets and experts and funds and investors seem hell bent on proving those write downs are correct where just trading in a normal sensible business manner is all that is really needed, is there anyone with a levl head out there?

Oh, you've checked the funding position at Lloyds & HBOS have you? Remarkable powers of telepathic accounting that you have developed since the fall of Bear Stearns who also had adequate liquidity...right up to the moment they went under.

The sky is falling - thats all we hear at present. Lets get real and back to normality. Stock Markets are just posh bookies - and Banks are just out for what they can take and not give. So whats new.

Oh! of course the banks are now worried about what they will loose - something they arent used to doing. All current looses should be in made in contrast to all the profits they've made for last 20 years!!!

Any other business has to ride the peaks and troughs - not so much the banks.

#4 - hmmm - so it is rational to react to rumours (defined as a mixture of truth and untruth). Nah - the run on on NR was a rational reaction to the blidingly obvious.

#7 - so house prices will collapse with HBOS and Lloyds feeling the full force of the credit crunch. Really? So Barclays, RBS and HSBC have a cloaking device? And why will the property market collapse? Slow down - definitely, dip - probably, collapse - why?

If HBOS are not in trouble then why have they called their Asset Finance and invoice discount clients to say they are taking on no new buisness at present? Reducing new lending in a turbulent market.

Sounds like liquidity issues to me!!!

If HBOS has ample resources why did it last week have to issue subordinated bonds to the tune of a 拢750m? To compound this, they were so worried about lack of buyers for the bonds that they offered a staggering 9% return. A mere 3.5% above base rates.

So either HBOS are in more trouble than they appear or they have taken an expensive gamble on the value of future interest rates if the credit crunch worsens.

Look at LIBOR and other interest rates and we are seeing money properly priced. This government has consistently under-priced money with it's politically motivated artifical level of Base Rate benchmarked on a nonsensical measure of inflation. I'm increasing irritated with talk of the 'good times' and 'Prudence Brown' when his guy has been personally responsible for racking up government and personal debt - talk about a failed business model and no Scheme B other than to blame the global credit crunch. The domestic credit crunch is smaller but just as painful for the 85% of individuals who are short of life skills and financial knowledge.

Mr Curious... no need for telepathic accounting to see their liquidity position - look at their most recently audited accounts, and the level of deposits they have as a funding base. You will find it is significantly more than either NR or Bear, both of which ran funding models which relied almost entirely on wholesale markets. This is not the same for HBOS.

By the way, it looks like the FSA is starting a probe into short selling and market manipulation to find and fine who has been behind and profiting from these unfounded rumours.

I can't believe people are even thinking about whether their deposits are insured with HBOS. Talk about sheep mentality.

Sentiment is the only factor governing investment decisions. They have neither the capacity nor skill to understand the fundamentals of financial analysis let alone put them into practice and, unfortunatley the mob rules.

43. It's called prudent, when you are in a hole the first thing you do is stop digging and assess the situation.

Various other comments on the "collapse" of property... Demand is far too strong for that to happen. Prices have been artificially high due to cheap borrowing so an adjustment is to be expected.

A run on a bank is a self-fulfilling prophecy. No bank has sufficient cash to meet a suddent run. That is the whole point of the banking system, look up the money multiplier.

According to the article on the 大象传媒 Business website 鈥淔SA probes 'false' share rumours鈥�:

鈥溾�� the Bank of England also denied that any UK banks were in trouble, and said it had had no meetings with banks鈥�.

Meanwhile, the 大象传媒 has learned that the chief executives of major UK banks will be meeting Bank of England governor Mervyn King on Thursday鈥�

The 大象传媒's Business Editor Robert Peston said the banks would like the Bank of England to lend them more money for longer and taking a wider range of assets, especially mortgages, as security.

"The intention would be to reassure creditors and investors that there is not the faintest chance of any British bank suffering a funding crisis of the sort that did for Northern Rock," our correspondent said.鈥�

Are you sure that this wish list is merely a public relations exercise? A stronger implication might be that these banks can only avoid N.Rock鈥檚 fate if they receive support that was not available to N.Rock.

At least the bland reassurances about the health of Northern Rock are not being repeated. Instead we are getting something altogether more lurid:

An HBOS spokesman said: "These rumours have not a shred of substance whatsoever. They are lies."

I hope the police are called in to investigate any false information deliberately circulated for the purposes of short selling. Sounds like fraud to me (if it isn't illegal anyway) and very irresponsible fraud at that.

Fear of the unknown is driving the panic so tackle the fear first. Pass emergency legislation requiring banks etc to declare their full exposure to subprime debts etc on pain of imprisonment. Then when the full picture is known back the prudent banks and let the imprudent ones go to the wall.

Mr. Peston, there are market rumours about, and various banks have been named at different times. Anyone remember the whole buzz about Barclays being in big trouble towards the end of last year? The general expectation is that there will be at least one other big financial institution in the US that will go the way of Bear Stearns - bet are being taken as to who that will be. Looks like the guessing game has spread to the UK as well. In such an environment, your checking with the banks and receiving an "everything's ok" answer does not really mean that much - or are you not aware of the statements a senior Bear Stearns executive (the CEO?) last Thursday (three days before it had to be bought by JPMorgan) that everything was fine and that Bear had no liquidity issues? The speed with which things unravel is phenomenal. The one good thing is that even if one of these banks does suffer problems, the government and the Bank of England have hopefully learnt a lesson from the whole Northern Rock saga and will handle things quickly and quietly.

And as for all those who still think Robert Peston caused the run on Northern Rock - perhaps try understanding how markets work. NR ultimately sank, not because its individual investors tried to withdraw their money, but because wholesale capital markets (where it used to raise its funds) stopped buying its paper. Individual investors withdrawing money, while a short-term strain, was not what brought Northern Rock down. It was their business model - they borrowed money from international markets, and lent that on to individuals as mortgages. When the markets turned, they found it hard to raise new funds, which meant that their future business prospects went down. When that happened, bankers/financiers who had lent NR money in the first place realised that without new business, the possibility of NR paying back would be lower - so they decided to withdraw their money as quickly as possible. This is just a feature of how capital markets have been operating - with spreads (i.e. cost of borrowing) low, businesses thought that they had hit upon a goldmine - lend for a long term (to individual mortgage holders) at a specified rate, and borrow short-term (at a lower rate) from the markets. All worked great as long as it was easy to regularly borrow short term to finance the long term debt, there was a lot of easy money to be made. Not so good when the markets stopped working, as they did in the middle of last year.

Robert
Whatever is going on only time will tell but what's this farce about the FSA investigating rumours? Slightly pathetic don't you think, rumours can be an opinion after all..... Surely the FSA would be far better doing something useful, perhaps amending the market to disallow short-selling of any UK listed stock unless the seller actually has paid and owns the stock - as I understand it many are 'borrowed' to enable short selling. Perhaps you could start a campaign for that, to encourage probity and reduce volatility in shares listed in London. Surely be good for business?

The fractional reserve banking system is inherently flawed in that it allows two separate claims on the same money at the same time - the owner of the deposit can withdraw his money without notice at the same time that the borrower has been lent the money for a period of time.

So, maybe it is just as well that a 'bank holiday (look it up in a banking glossary)' is coming along now.

The good old BoE will keep on generating money out of thin air, as is its wont, to keep the system going but ... who will be willing to buy all those gilts that are going to be dumped on the market this year?

Apart for 'forced' buyers like pension funds of course.

Money for old rope?

Methinks the old rope is more useful than a fiat currency.

Gordon Brown tells us he is going to see us safely through any recession. Gordon Brown sold 415tons of gold at $275 oz. That is 415 x 32,000 oz = 13,280,000 oz. Gold is now $1000.00 oz, a difference of $725.00 oz or a staggering $9,628,000,000 loss.

I don't think I need to write anything more

What a pickle the banks are in.

OK hindsight is everything, but surely such a rapid increase in Fed Rates over the last 2 years was going to put the US economy under severe pressure.

Then we are hit with the surge in oil prices a commodity which is used in part for anything we use or eat.

With these pressures we were always going to feel the heat.

Our institutional desire for property ownership on both sides of the Atlantic (when rates were low) led to speculative lending (in the hope rates would stay low)

The real issue in my opinion has been the destabilisation of trust by the US govt in both the political and Social arena, which has become all to visible to the temperate Europeans...sadly socio-economic pressures have just begun.

The banking crisis could just be the catalyst of commercial mutation

#41. "So house prices will collapse." Why the scepticism? Many potential buyers who could have obtained mortgage finance a month ago cannot obtain it now. This is either because they can afford a 10% deposit, but are now being asked for 25%, or because the rate they are now being asked to pay is higher, or they are simply being refused point blank as being in a high risk category. So demand for housing is reduced. There is nothing in the present situation to reduce supply. Elementary theory of markets says prices will fall. So collapse of house prices in USA starts the credit crunch, and the credit crunch then leads to further falls in house prices. For many this is a vicious spiral. For some, who hope to become first-time buyers in the medium term, it is a virtuous spiral.

I find in amazing that some of the posters above are claiming that house prices will not fall. WHAT.. open your eyes.. look around, All agents are now discounting properties, in fact there are EA offices that are now closing. The market has turned, prices are falling, its just that this isnt being reported as widely.

The greed of the banking sector that has been feeding the pyramid scheme that UK housing became the last few years is what is now causing panic in the markets. There is a long way to go before confidence returns and many more banks will collapse in the process. Unfortunately the bonuses have already been paid and those that caused the mess will have long gone to their bolt hole in the sun.

I work for Lloyd TSB and can say that out off all the other banks we are the least affected by the credit crunch as Lloyds Tsb mainly concentrates on the UK and other banks such as HSBC have a global network therefore it has more of an impact on them. So whoever said that is obviously trying to scare us!

Funny I thought about this very thing yesterday, in theory banking stocks should have been up today but because of some malicious rumours they are down. I just hope my hedge fund manager is taking advantage of the situation.
At present you can buy shares in say RBS and earn approximately 10% in dividend payments over the next year. It sounds crazy but true. However on a serious note if anyone is caught spreading rumours they should be prosecuted severely.
One further point - the problem at the moment with the UK market is that no one is talking it up and therefore everything seems like doom and gloom. As an investor I look at the US and I see George Bush acting swiftly to restore confidence in his financial markets, it鈥檚 the same with the Federal Reserve but here I haven鈥檛 heard any positive vibes coming from our government or the Bank of England.

Funny I thought about this very thing yesterday, in theory banking stocks should have been up today but because of some malicious rumours they are down. I just hope my hedge fund manager is taking advantage of the situation.
At present you can buy shares in say RBS and earn approximately 10% in dividend payments over the next year. It sounds crazy but true. However on a serious note if anyone is caught spreading rumours they should be prosecuted severely.
One further point - the problem at the moment with the UK market is that no one is talking it up and therefore everything seems like doom and gloom. As an investor I look at the US and I see George Bush acting swiftly to restore confidence in his financial markets, it鈥檚 the same with the Federal Reserve but here I haven鈥檛 heard any positive vibes coming from our government or the Bank of England.

Hmmm, as of 7pm tonight it is reported that US firm Thornburg Mortgage need to raise rapidly USD1bn as extra capital in cash to keep creditors at bay or they will have to file for bankruptcy protection. This isn't rumour, the company itself has filed a report stating this.

Listed as it's major creditors are Bear Stearns, Citigroup, Credit Suisse, Royal Bank of Scotland and UBS.

There is an awful lot that the finance industry is still not coming clean about. It has now reached the stage where the UK & US governments should tell all the big banks and lenders to publicly come clean on their liabilities by a set date or the ones that don't are on their own. That in turn will kick the shareholders into demanding they comply.

The longer this goes on, the less and less believable the banks and the governments become. They simply have no credibility left and this isn't going to stop until they regain it and become men of honour again instead of crooks, spivs, liars and spin merchants.

Remember Michael Fish? Remember the weather computers running trillions of probability calculations a second.

Remember, "Earlier on today apparently a lady rang the 大象传媒 and said she heard that there was a hurricane on the way. Well don't worry if you're watching, there isn't."

All the banks have their prime loans in one basket. Property! I wonder which way the wind is blowing?

A very smelly fish indeed.
This whole property/credit mess makes me think of insider dealing involving leading politicians around the world and many, many new Billionaires.

If you have over 35,000 then I would certainly look at moving your money to either the National Savings or the safest bank in the world...Northern Rock! (they could do with extra funds, which would repay the bank of england quicker, not need to encourage so many mortgage redemptions and reduce the 'risk' to the taxpayer) Win, win situation!

Might upset the likes of TSB et al who are probably heavily reliant on depositors funds at this present moment.

Lloyds TSB is as strong as a UK bank can be. It has a AAA rating and was listed by Global Investor as one of the 10 safest banks in the world.

In these troubled times, it has not changed it's credit policy as it maintains it's 'boring' stance to look after it's customers through the full economic cycle.

#20 'John Pritchard'

Bang on mate! The whole system is teetering so I've just moved every penny I own into Northern Rock.

Every other high-street bank is on the brink or is bust already (including, I'll bet, HBOS whatever the BoE is claiming with its Soviet-era phoney 'conspiracy theory' about speculators manipulating HBOS' stock).

But even if the banks weren't underwater (which they are) NRock is still effectively offering 6.15% on Treasury Gilts! I mean where else on earth could you get that?!

Grab it while you can!

Let them explain to one another tomorrow why when too low interest rates for too long got us into this position that interest rates should now be lowered.

Do they take us all for idiots?

An economy that does not reward savers for saving gets what it deserves - financial chaos.

If they will pay nothing for money it is not worth anything!

(End of rant!)

Let them explain to one another tomorrow why when too low interest rates for too long got us into this position that interest rates should now be lowered.

Do they take us all for idiots?

An economy that does not reward savers for saving gets what it deserves - financial chaos.

If they will pay nothing for money it is not worth anything!

(End of rant!)

Billions lent to banks who were gready to pay their debts. I am not in deby myself, but what about the people who fell pray to these sharks. No bail out for them, not in this lifetime. Keep the rich rich and make the poor poorer.

Let them explain to one another tomorrow why when too low interest rates for too long got us into this position that interest rates should now be lowered.

Do they take us all for idiots?

An economy that does not reward savers for saving gets what it deserves - financial chaos.

If they will pay nothing for money it is not worth anything!

(End of rant!)

British banks may or may not face a liquidity problem. They may or may not go under. But the fact of the matter is that this crisis will only be over when the average house in this country is affordable on an average income with a 20% down payment, a 25 year standard (ie principal-repaying) mortgage and a

The underlying causes of the problems at the moment is asset values.
In Melbourne last financial year some sectors of the housing market saw 90% gains .. Across the city as a whole they were 19%.
In the U.K there was a 20% gain the previous year, and in the U.S some areas saw a 30% gain.
Now as we all know a thing is only ever worth as much as someone will pay to own it in your place.
Hence the boom, people wanted properties at that time, and with limited stock they paid more to acquire them.
The same has happened within the business World not just for properties (office, retail etc), but also stocks. The private equity rush (Qantas was nearly brought by a leveraged buyout corporation that is technically bankrupt this month) was the cause of this. Leveraging debt to secure assets is the exact replication of the housing bubble.
NYSE is leveraged 20-1 on assets. Bear Stearn was leveraged 31-1 on assets. It only takes a small re-alignment of your asset base to place you technically insolvent.
Expect to see house prices drop. Wages as a proportion of debt to increase. Corporate earnings to increase (you've already seen the banks desperately raising their loan margins with alot of help from central banks), which all means ... INFLATION.
Just imagine how big a housing crash there would be if banks lent 20 times what you earned. The 91/92 housing crash was on the back of 4-5 times earnings. In OZ, the average house is over 300K, yet the average wage is 60K. That is 5 times post tax earnings. Unsustainable, and I would imagine a crash is due here as well.

Yes, a government spokesman said "Leave your money where it is. This bank is as safe as Northern Rock"

Whoops! I look forward to adding another bank to my portfolio along with all the other taxpayers of the country.

"funding crisis of the sort that did for Northern Rock"

You really are the bloody limit. You were extremely quick to stick the boot into NR on Sept 13th directly causing the retail run, moving NR's requirement from a facility of @ 拢5bn to funding of 拢20bn plus, you then spent the next 3 months extolling your own virtues, recounting ad nauseum how you had broken the story.

Now (being the coward that you undoubtedly are) you're distancing yourself from the NR debacle - presumably as you don't have the balls to claim the credit for 2,000 job losses - for which I am convinced you are responsible.

Grow a set of conkers Peston and take the credit for bringing down the Rock and sacrificing 2,000 jobs....You know you want to !!

Now just hang on a minute here. There needs to be belief, there is belief. There is enormous value in many strong holdings. The UK economy is generally strong, certainly in better shape than the US.

We need to hang in there, have our assets diversified well and then take a long term view.

You have to hold your cash somewhere, what are you going to do, move from frying pan today to fire tomorrow. Or have it under the bed until you see which banks are still standing?

People who are worried will protect what they have, those who see opportunity will make long term gains if they can wait a while. For Gods sake let sense prevail and stop panicing. Clear down unnecessary debt with cash reserves, buy some quality well spread funds and financials, some Nat. Savings, gilts and gold, have another cup of tea and try not to believe everything you hear and read!

The Banks should not just be meeting with Mervyn King to get an injection of cash, it should be to outlaw BSBR (Borrow, Sell, Buy, Replace) share dealing, which renders the system wide open to criminal activity. Shares should only be sold by the owners of shares, with shares valued on the basis of intrinsic value and proven earnings of the companies. It would appear that anyone with access to system can put jobs, pensions, pension funds, companies and perhaps even national economies at risk. If they want to gamble, let them put their money on the 2.30 at Kempton Park. What saddens me is that some people are making 拢millions out this whole charade, while the ordinary investor can loose his/her life savings. Should not the Fraud Squad as well as the FSA get involved? The speculation is not just crazy, it is criminal. What is crazy is the whole
system of share valuation/dealing, and we are all nuts to allow ourselves to get involved in it!!

The world economic cake is only so large. When it finally could grow no more, the only way for the banks to continue increasing their profits at rates far above inflation was to take more and more from other sectors, Even that could not continue forever (one is reminded of the Communist limits-to-growth methodology of using countertrade to asset-strip Eastern Europe to keep Russia afloat in the 1970s-80s), and now instead of taking vertical slices, they want to take horizontal slices by stoking inflation, which will affect them more than anyone else, turning this into some form of cannibalism or even autophagism. This may equally signal the demise of capitalism.
The one alternative is to abandon the profit motivation, or at least to defend it at the inflation rate against those who seek to grab ever more for themselves. One might alternatively, within this framework, see the money being pumped into the banking system as a way of bringing inflation up to the return-on-assets definition of inflation of 20-25%. The problem is, how to live with that.

short selling is legal !
how does that make sense ?
why do investment funds "lend" shares to hedge funds to sell short
to make profit @ their & every one elses expense its obscene.
get the law changed so that you cannot sell what you do not own.

Some time ago and in response to one of Robert Preston's articles about the credit crunch I wrote to say that had read about small but powerful and unscrupulous groups of people who occassionally get together to bring about violent changes (corrections) in the financial markets.

Their primary intention of course is to make vast sums of money for themselves and the way they go about this is to spread rumours and fear into peoples minds about what is happening in the money and property markets in order to panic people into making irrational decisions.

The first time I heard about such people was way back i 1960's when pound Sterling came under pressure and Harold Wilson referred to them as the Gnomes of Zurich. Since then there have been a number of such incidents in the money/property markets and on each occassion the banks soon bounced back and certain individuals were known to have made vast fortunes for themsleves.

I strongly suspect that the present hysteria in the financial markets is re-run of what happened in the past except that this time the mischeif makers are aided and abetted by the fact corrupt information is now more easily communicated to a much wider audience.

Unfortunately city editor's and such like are the willing disciples of the these unscrupulous people when it comes to giving credence to whatever misinformation they wish to communicate in order to destabalise the markets before achieving their objectives.

You all seem very knowledgeable so what would you do in my situation. I have a 3 year fixed rate bond with Bank of Scotland offshore (a good 6 figure sum.) I live off the interest. Do i move it and be penalised or stay put? I keep reading all this stuff about Bank of Scotland and HBOS and im getting very anxious. Any advice? Thanks

It is interesting to note that the governor of the Bank of England is meeting the chief executives of the major banks of UK on Thursday, 20.03.2008 to discuss their desire for BOE to lend them more money against the security of a wider range of collateral, especially motrgages.

To my understanding BOE is a privately owned bank just like the other banks.

I have several questions I would like 大象传媒 to ask BOE and put their answers in 大象传媒's website.

How will BOE creat the extra money to lend the banks?

Can someone from BOE explain their source of money?

Or is it just credit created out of thin air?

This is not chicken feed.

Against what existing reserve, say in gold, BOE is going to creat this hundreds of billions of 拢?

And who owns the gold if the money is going to be created against that?

If BOE is going to lend the money against mortages as collateral from the poor, struggling banks (who by the way were rich beyond imagination only a short time ago) and if these banks or some of them go belly up, then BOE will own the mortgages. So instead of several smaller private banks holding the mortgages, those will be held by one single, gigantic, private bank which welds much more power than the other smaller banks.

Will BOE guarantee that it would not foreclose if due to economic downturns some mortgage holders have to default?

Or, instead of several smaller banks trying to foreclose in their somewhat disjoint ways, one giant single bank will efficiently run all the foreclosures in a coordinated fashion to transfer the distributed wealth of many to the hands of extremely few powerful ones?

Also what right the banks have to get loans by providing mortgages as collateral?

They did not loan people any real money. They gave credit created out of thin air. If they had something real to back their created credits in the first place, they should not be facing this trouble now. To me it looks this whole charade is extremely carefully engineered. We want straight answers in plain, simple terms, no more mumbo-jumbo. Banking is not rocket science, though bankers would like us to believe so.

How amazing that hedge fund rumurs and short selling is to blame. How convenient. More frightening is the willingness of the BOE to support these banks blindly. We want and need transparency and when you have a 拢450b Mortgage book (HBOS) don't tell me there will not be some fallout. Unfortunatly BOE made there bed with Northern Rock and we will all suffer for years to come.

AS for auguments about the relative strengths of the US and UK economies - please tell me where the strenth is, where is it coming from in the future. The BOE policy makers, hiding behind their 'inflation' focused mandate are paralised with fear, petrified of 3% inflation. 3% ??? Food infaltion is 10%+. fuel inflation 20%+, HOuse inflation has averaged 25%+ in the last 3 years. Can they please throw away their text books and face the reality. They cannot control commodity price inflation with short-term rates. They need to cut, and cut aggressivley. That is the only way people will keep their houses, pay their debts and get thru this year. I only hope that when they drag us into the longest and deapest recession in living memory they will all rsign and never show their faces again.

The rumours only benefit short sellers. Short sellers are only able to do this because they can borrow shares to sell short. Who are the share lenders? Mainly the pension funds, insurance companies and unit and investment trusts? Who loses through short selling? The same people who do the lending. Is it not time for the lenders, especially the trustess of the major pension funds, to realise that the minimal income they receive from stock lending is not worth the disruption to the long term value of their investment funds? Of course the investment banks will not like it because they are the ones standing in the middle and generating fees from both sides.

Unfounded rumours.

Sounds exactly like Brown and Darling saying Northern Rock is solvent and there is no problem, whilst secretly organising a nationalisation.

Time for a prosecution I think

"I have checked"

Ha Ha Ha Ha Ha Ha Ha

I'm surprised at the amount of people who say that Northern Rock is "the only place where you're money will be safe". Everyone seems to be forgetting about the NS&I.

Surely the meeting today between the banks and the Bank of England should be about better regulation.
How can they ask for reassurance on support (more money!)when their own credibility is at its lowest point ever.
The only way to restore inter bank confidence - the most serious aspect of the whole sad debacle - is to ensure that self regulation is ended and more stringent controls are put in place for the benefit of the banks and their customers.
But sadly we never learn!

I have read that traders who start rumours in this climate ought to be flogged.

Shall we do the same to traders who start rumours when prices are on their way up as well? It seems only fair.

Why are banks expected to be bailed out by the government (read: taxpayer) when they obviously haven't done their job properly?

Maybe they're are too many banks and too little money in the market to keep them all in business at the moment.

When one bank goes bankrupt their business will be taken over by the survivors. It's not the end of the world.

So the banks want the BOE to help them maintain liquidity, and they also want the BOE to at least double the emergency loan offer, while simultaneously asserting that the very idea that any of them might want to apply for emergency loans is ridiculous?
How stupid do they think we are?

I have just had a call from HBOS, to reassure me that they are 'sound'. That is the first call they have initiated in 10 years of banking with them.

I was not concerned until then; however they must be losing deposits if they are doing this. I am reminded of the old banking adage, don鈥檛 panic in a crises, but if you do make sure your first. I am off to the Crock!

In making the Crock the safest bank in the world, has Brown undermined the whole banking system?

So the banks want the BOE to help them maintain liquidity, and they also want the BOE to at least double the emergency loan offer, while simultaneously asserting that the very idea that any of them might want to apply for emergency loans is ridiculous?
How stupid do they think we are?

This is interesting....someone makes a rumour up about a bank and then it causes panic. The FSA step in to sort it out and try to lynch the source...

mmmm....let me think.....Northern Rock - Peston starts a rumour and nothing happens apart from a run on the bank.

How very strange!!!

"They both [HBOS and Lloyds TSB ]have ample liquid resources. "

QuITe. But with no Viable Vital Markets to Invest in, they list in Shark-infested Waters, pretty much says IT All.

when the fiscal going gets tough all rhetoric about free markets and enterprise quietens

Now it is OK for billion pound plus profit making banks to receive a massive public subsidy but village post offices have to perish

What is needed are extensive and effective controls and regulation not another fix of financial methadone

HBOS UK mortgage exposure has an average loan to value ratio of 40% or thereabouts. The risks are low. Most of their b-t-l lending is at less than 85% and 100% residential lending is limited to a fraction of a percent and is cautious on income multiples.

Liquidity wise they are "average" but it would be wise not to create a situation where there is an unjustified run on any bank in the UK.

Alt-A exposure is limited because they have a 30% insurance against losses. As and when the credit crunch ends these 'investments' may actually turn out to be real winners.

I'd caution against moving savings out of one bank and putting them in to another. How do you know where the next run will happen? Out of the frying pan and in to the fire! And it's actually the supposedly safe building societies who have less flexibility and are running out of cash faster.

As for the investors compensation scheme - if the likes of HBOS or Nationwide go under do you really think the 拢35k liability limit of the scheme would be met? There's no money in the fund to start with. Where will your 拢35k come from? Another bank teetering on the brink?

The 9% HBOS bond was for 18 months by the way - not 12 months!

Hold your nerve. Do nothing silly. It will pass in time.

More whispers from the Hall of Rumours! Word on the street is it started in the City or on Wall Street or Frankfurt, Tokyo, Shanghai or somewhere else. But can we be sure it wasn't a toxic move by an intelligence service, disgruntled player or e-terrorist in the New Great Game?

Northern Rock had total assets of 100 Million and 85% was lent to customers. Lloyds TSB has only lent 59% of total assets to customers, leaving it with fargreater liquid assets. Other OK banks are closer to Lloyds than Northern Rock in this regard. B&B And A&L are smaller and more similar to the Rock but have secured funding until well into 2009.

Other banks have more mature lending books, meaning they have better collateral as more of their borrowers have significant equity in their properties. This makes them even more stable and gives them better collateral against which to raise funds. Stop worrying and enjoy four days off!

This is not entirely related to this article but I think it should be said. Surely the FSA and possibly the police should start talking to those individuals who have made millions in bonuses whilst manipulating markets in the US and UK and of the misery of the poor? As well as the recent market manipulation of the value of HBoS and Lloyds TSB? They said that what they have done isn't entirely illegal but is wrong and will be dealt with by the FSA. I'm sorry but money launderers and the like get years in prison for their activities. How is it that those who have a respected position and wear a designer suit normally get away with a slap on the wrist and a million pound compromise agreement to keep quiet.

People have been sold dreams that they could never ever afford so WHY was this allowed to happen???? Why - no one was checking.

This bonus system that runs into the millions for the privaleged few must be scrapped because the reality is - it's our money that they are handing out like sweets. I agree that the bonus systems do keep good performing staff and are necessary but to pay them millions - no!! Because now each of the companies are losing billions as a result of those they think so highly of. The identified individuals should not be allowed, by law, to practice in finance again.

Why doesn't the UK and American people wake up and do something about this !?!?! - When the French aren't happy, they go out in force but when it happens in the UK, we accept it. It should be the people who decide because the reality is - it's our money the finance houses and the government are using the play roulet with. All we see every day is taxes going up everyday items and charges being implemented - for what? Are services being improved - no.

As for Gordon Brown - I am Scottish and I am surprised that Gordon got as far as he did. The effects of poor economy management and cover ups are now beginning to show.

Think about it - these people that are appointed in key Government roles - are they actually competent to do this - no, they move department and are voted in by the people because they promise great things - but do they actually deliver? Short term maybe, but how they managed it does surface after a few years and who has to pay to clear up the mess - the people.

MSP's and MP's should only be given the same as what the private sector pay their staff when they live in major cities - London waiting allowances. Make them travel long distances like everyone else or put them in rented accommodation - they are buying properties everywhere, furnishing them - on our bloody hard earned cash !

This is not entirely related to this article but I think it should be said. Surely the FSA and possibly the police should start talking to those individuals who have made millions in bonuses whilst manipulating markets in the US and UK and of the misery of the poor? As well as the recent market manipulation of the value of HBoS and Lloyds TSB? They said that what they have done isn't entirely illegal but is wrong and will be dealt with by the FSA. I'm sorry but money launderers and the like get years in prison for their activities. How is it that those who have a respected position and wear a designer suit normally get away with a slap on the wrist and a million pound compromise agreement to keep quiet.

People have been sold dreams that they could never ever afford so WHY was this allowed to happen???? Why - no one was checking.

This bonus system that runs into the millions for the privaleged few must be scrapped because the reality is - it's our money that they are handing out like sweets. I agree that the bonus systems do keep good performing staff and are necessary but to pay them millions - no!! Because now each of the companies are losing billions as a result of those they think so highly of. The identified individuals should not be allowed, by law, to practice in finance again.

Why doesn't the UK and American people wake up and do something about this !?!?! - When the French aren't happy, they go out in force but when it happens in the UK, we accept it. It should be the people who decide because the reality is - it's our money the finance houses and the government are using the play roulet with. All we see every day is taxes going up everyday items and charges being implemented - for what? Are services being improved - no.

As for Gordon Brown - I am Scottish and I am surprised that Gordon got as far as he did. The effects of poor economy management and cover ups are now beginning to show.

Think about it - these people that are appointed in key Government roles - are they actually competent to do this - no, they move department and are voted in by the people because they promise great things - but do they actually deliver? Short term maybe, but how they managed it does surface after a few years and who has to pay to clear up the mess - the people.

MSP's and MP's should only be given the same as what the private sector pay their staff when they live in major cities - London waiting allowances. Make them travel long distances like everyone else or put them in rented accommodation - they are buying properties everywhere, furnishing them - on our bloody hard earned cash !

Why does the bank of England need to bail out foreign banks like the HSBC when these companies are making such huge profits ? I think its about time a cap was put on profits.

Dont panic ? but the banks are panicking , even to the extent of now selling their freehold bank premises through auctioneers Cushman and wakefield- for example Hsbc Shaftebury Avenue , plus many other hsbc, barclays are there two

- all sales with leaseback

"existing business not affected" the auction boards proclaim !

fixed assets sold to fund trading activities - not an ideal situation

Although not inclined to panic (having sold the market in November), I wonder whether panic might be the right reaction. Certainly it is what my bank seems to be doing. After 40 years with the same high street bank, I have been told to repay an overdraft of 拢2K -- even though I have 拢30K in receivables, a mortgage-free house, and plenty of savings in personal pensions, etc. If a major bank is so desperate as to be willing to cheese off a long-term and reasonably desirable customer, I suspect there is even more pressure than many of us believe. If they are yanking my overdraft facility, how much tougher must they be acting with start-up business loans, etc.? And are not these small, fast-growing companies exactly what we need if we are to avoid the US-spawned recession?

If I had enough money, I would do as the Bankers do and buy a few extra homes in Cornwall and farmland between there and the City-if there is any left unbought by them- and park my big black 4*4, ponies and mistresses on it.
All bankers have done in the last 3 decades is lie to personal customers and struggling businesses and suck their very hard earned from them.
If another, say 3, collapse, where does the cash come from to 'guarantee' customers holdings?
I am moving my savings out this week from one of the most mentioned in the media over the past months.
W. Wilson (pension in Eq. Life :()

Did you ever notice?

Twenty years ago, all the major UK banks, had logos of animals running off with your money.

Lloyds, with the out of control horse.

Pre HSBC the Midland had the Griffin with its claws outstretched.

Barclays had their dead crow and as for Nat West...they were different.

A radioactive logo just going round in circles.

Which brings me to the point.

What regulation has allowed the Banks to run amok like kids in a sweet shop offering irresponsible lending just to keep up market share.

Now having stuffed themselves they are feeling a bit sick and running to the Old Lady....the Bank Of England.

If a French bank lends anyone in France more than 30% of their salary, the bank are in big big problems.

In the UK...go on...lend 9 times salary..if there are problems, eventually down the line, the tax payer will pick up the tab.