Viewing 40 posts - 1 through 40 (of 45 total)
  • What was the total cost to the taxpayer?…
  • ohnohesback
    Free Member

    …of the Northern Rock debacle? It ssems that beardy Branson got it at a knock-down price…

    http://www.bbc.co.uk/news/business-15769886

    br
    Free Member

    Could be +£21bn…, according to the story

    ernie_lynch
    Free Member

    Nationalise the losses, privatise the profits.

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    joao3v16
    Free Member

    Beardy Branston’s purchase doesn’t however include NR’s mortgage arm – this became ‘Northern Rock Asset Management’, & remains nationalised.

    I’ve a NRAM mortgage. For obvious reasons they’re not offering new mortgage deals, so if I want a better deal the only way is to remortgage rather than get the benefit of a better deal with the bank I’m already with. Bit of a pain considering remortgaging costs would probably negate any saving on my monthly repayments, unless it’s a large reduction on what I’m paying now.

    allmountainventure
    Free Member

    [video]http://www.youtube.com/watch?v=I5QwKEwo4Bc&feature=relmfu[/video]

    D0NK
    Full Member

    My NRAM mortgage was up last year renegotiating was a faff as NR and NRAM can’t talk to each other but not too much trouble. NR was still offering the best deal for me.

    Nationalise the losses, privatise the profits.

    quelle suprise

    maccruiskeen
    Full Member

    What was the total cost to the taxpayer?…

    Depends on what you mean by ‘Taxpayer’. The total cost, whatever it might be, needs to be divided by all the government’s revenue streams. ‘Tax Payers’ as in Income Tax Payers only account for (i think….) about 16% of that

    D0NK
    Full Member

    maccruikeen I think most people would be happy with:
    what the government paid for NR – what RB paid for his bit of it (have they recouped losses anywhere else?)

    kevin1911
    Full Member

    The Government put in £1.4billion to rescue the bank, sold it for about £750M, so we’ve lost half the money.

    The mortgage arm that was stripped out and kept nationalised was only kept separate because the loans it holds are at too high a risk of going bad, so were making the rest of Northern Rock unsaleable.

    It makes my blood boil. People losing their jobs, businesses going under, benefits getting cut, but we can still find money to spunk literally donate to private companies.

    maccruiskeen
    Full Member

    The Government put in £1.4billion

    is that a US billion (9 zeros) or the other kind of billion (12 zeros) ?

    kevin1911
    Full Member

    is that a US billion (9 zeros) or the other kind of billion (12 zeros) ?

    You’ve lost me there I’m afraid. A billion is a billion, doesn’t matter what country you’re in. Nine zero’s. Twelve zero’s is trillions

    br
    Free Member

    You’ve lost me there I’m afraid. A billion is a billion, doesn’t matter what country you’re in. Nine zero’s. Twelve zero’s is trillions

    Nope, it depends how old you are and from which country.

    http://en.wikipedia.org/wiki/Billion

    mudshark
    Free Member

    No-one uses long scale these days – well of relevance to us anyway.

    The sale must have been at market value so that’s as good as it gets.

    maccruiskeen
    Full Member

    so one kind of billion is a thousand times bigger than another kind of billion. So for clarity you’d need to find your £1.4 billion expressed as millions. Because millions are always millions

    br
    Free Member

    The sale must have been at market value so that’s as good as it gets.

    Only if you have to sell, ie a fire-sale

    mudshark
    Free Member

    So for clarity you’d need to find your £1.4 billion expressed as millions. Because millions are always millions

    Rubbish! Default here is short scale. I’ve been involved in finance for 25 years and never had this problem.

    coffeeking
    Free Member

    Sky news this morning suggested that the price paid for it was actually pretty high, and it was only the not-very-profitable section that had been sold, the side that was actually making a profit was still nationalised?

    mefty
    Free Member

    It makes my blood boil. People losing their jobs, businesses going under, benefits getting cut, but we can still find money to spunk literally donate to private companies.

    The shareholders lost everything, they didn’t get a penny. The people who were saved where the people who had deposits with NR i.e. individuals and businesses.

    kimbers
    Full Member

    coffeeking – Member

    Sky news this morning suggested that the price paid for it was actually pretty high, and it was only the not-very-profitable section that had been sold, the side that was actually making a profit was still nationalised?

    skynews is the mouthpiece of the government
    aemon holmes earlier today…..

    ernie_lynch
    Free Member

    The people who were saved where the people who had deposits with NR i.e. individuals and businesses.

    Ron Sandler chief executive of Northern Rock didn’t do too badly either…..he got to keep his job on £350,000 (fourteen times the average UK salary) and he doesn’t pay any UK tax.

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5872633/Lib-Dems-oppose-non-dom-Ron-Sandler-as-chairman-of-Lloyds.html

    druidh
    Free Member

    Northern Rock (the bit that Virgin Money just bought) is running at a loss.

    Northwind
    Full Member

    Spoke to one of my tame industry chaps, and he’s quite convinced they’ve been intentionally devalued and sold at the bottom of the market, so that George Osborne can say “Look how much money Labour wasted”. But he’s a declared cynic.

    Doesn’t really seem the idea time to sell though, bang in the middle of a new financial crisis.

    ernie_lynch
    Free Member

    Northern Rock (the bit that Virgin Money just bought) is running at a loss.

    That Richard Branson sounds like a right mug.

    ohnohesback
    Free Member

    Or maybe Osborne decided to sell now knowing that the markets are due for a massive slump…

    martinhutch
    Full Member

    Glancing at it now, it doesn’t seem like a catastrophic piece of business. £750m+ (Branson says they’ll probably end up paying more than this under the t&cs of the deal) for a chunk of NR not the whole thing bought up for 1.5bn by the gvt. The mortgage book, which is certainly not all high risk debt (I know this because they have my mortgage) is still in public ownership, and I imagine will be worth a fair bit of the difference.

    The bit Virgin bought is still loss making, and even if you’re generous and say the annual loss will be counted in a couple of tens of millions a year (top of my head it was £68m loss last year?), then this is another reason why disposal is a reasonable move for the gvt, especially as we need the cash.

    tonyd
    Full Member

    Have to say my initial reaction was WTF, but if NR were operating at a loss then it probably is a good thing to do – cut your losses and get out. To make the business profitable I expect there’ll have to be some ‘efficiency drives’, ie job losses. Politically that would be a very hard sell for the govt, they may have just dodged a bullet.

    As for NRAM, it may still be profitable but the exposure to default must be huge. If (and it’s only an if, don’t want to start a debate) the housing market drops substantially, along with a continued recession and job losses, there must be a big default risk on many of those loans. Weren’t NR one of the biggest providers of buy to let and 125% mortgages? These could be seen as the equivalent of the US sub prime.

    If any of that comes about then we, the taxpayer, could be on the hook for even more losses.

    druidh
    Free Member

    Scenario A: There are lots of job losses in order to turn it around. This happens under Branson and not Osborne and the government is off the hook.

    Scenario B: It need lots of investment to turn it around. Who, on here – on in the public at large, would have supported the government further investing in NR?

    BoardinBob
    Full Member

    The Government put in £1.4billion to rescue the bank, sold it for about £750M, so we’ve lost half the money.

    Yes, but the £1.4 billion was for the entire bank. This is just part of it that’s been sold off, so the taxpayer still effectively owns NRAM

    tonyd
    Full Member

    the taxpayer still effectively owns NRAM

    The question is why? Probably because no one wants to buy it! The taxpayer are now underwriting these mortgages, it may turn out OK and we get our money back, or better turn a profit, or it may not and we end up losing more money.

    IMO governments (taxpayers) shouldn’t be backstopping loss making companies, banks or otherwise. I’ve never seen the numbers but I’d imagine it would have been cheaper to let the FSCS guarantee kick in and cover lost savings, sell the mortgage book at market value, and let the bank fail.

    I understand there may have been implications of the whole system going pop, but aren’t we just delaying that (at huge expense) anyway?

    ernie_lynch
    Free Member

    To make the business profitable I expect there’ll have to be some ‘efficiency drives’, ie job losses. Politically that would be a very hard sell for the govt, they may have just dodged a bullet.

    Scenario A: There are lots of job losses in order to turn it around. This happens under Branson and not Osborne and the government is off the hook.

    😕 I think some people might be talking about a different company. There has been massive job losses since the government rescued Northern Rock – about 3,000.

    The last lot of job losses earlier this year was specifically to prepare Northern Rock for privatisation.

    “The results also highlighted that cost management would remain a key area of focus in 2011, as the Company continues on its path to profitability and prepares for a return to the private sector. In line with this objective, the proposed restructure is intended to improve operational efficiency and to align the total number of employees with the medium term growth expectations of the Company.

    It is anticipated that the proposed restructure will result in a reduction of up to 680 jobs, affecting employees at all grades across the Company. “

    http://companyinfo.northernrock.co.uk/corporateCommunications/news/article.asp?newsID=396

    Before that announcement there had already been a couple of thousand job losses.

    Where do some people get the idea that job looses would be “very hard sell for the govt” ? 😕 Why would the government be bothered ? Sackings/job losses don’t cost governments votes – it’s always sold as simply market-forces/value for money/modernisation/blah, blah, blah, and actually a rather good thing.

    uplink
    Free Member

    Virgin have pledged that there will be no compulsory job losses for at least 3 years

    grantway
    Free Member

    Just don’t see how selling a Bank at such a loss is good for the tax payer
    When the Government says Branson will make money out of it.

    Government = shite will never get the tax payers monies back
    They won’t even report what they have clawed back from the Banks
    so far.

    tonyd
    Full Member

    Virgin have pledged that there will be no compulsory job losses for at least 3 years

    Ah, so as per Ernie’s post it’s already been done for them.

    Where do some people get the idea that job looses would be “very hard sell for the govt” ? Why would the government be bothered ? Sackings/job losses don’t cost governments votes – it’s always sold as simply market-forces/value for money/modernisation/blah, blah, blah, and actually a rather good thing.

    Is that sarcasm? I’m assuming it is and I’m just being slow, but on the off chance it isn’t does the same apply to the miners? Or perhaps the nurses, firemen, and lollipop ladies that are shouted about every time someone suggests the public sector cutting back? And why do people hate Thatcher so much?

    CaptJon
    Free Member

    maccruiskeen – Member

    Depends on what you mean by ‘Taxpayer’. The total cost, whatever it might be, needs to be divided by all the government’s revenue streams. ‘Tax Payers’ as in Income Tax Payers only account for (i think….) about 16% of that

    What about NI (non-employer bit), council tax, vehicle excise duty, VAT, tobacco/alcohol duties, etc..?

    http://en.wikipedia.org/wiki/File:UK_taxes.svg

    chewkw
    Free Member

    Bloody bankers should all be hang drawn and quartered …

    ernie_lynch
    Free Member

    Is that sarcasm? ………why do people hate Thatcher so much?

    No it’s not sarcasm, it’s based on the lack of support workers who are fighting to save their jobs get. The media does a very good job in selling job losses as an unfortunate but necessary requirement in a free-market economy.

    If you want evidence of how unbothered both the public and politicians are about people losing their jobs, then just look at Northern Rock – was any fuss created concerning the 3,000 job loses ? No….governments, present and past, were able to shed 3,000 jobs from Northern Rock without a murmur of discontent – some people apparently weren’t even aware that there had been any job losses. So I really can’t think why the government would need to worry about job losses in Northern Rock causing them ‘bad publicity’.

    And btw, job losses did not affect support for Thatcher or cost her votes. In less than three years she managed to double unemployment from one and a half million, to over three million, a quite staggering achievement which would be hard to replicate even if you tried. And yet when it came to the following general election support for her and her party barely fell …. an insignificant 1.5%.

    The only way increased unemployment affected Thatcher was that people who had previously hated her, hated her even more. Something which I’m sure she was completely unbothered by, specially as most of the increased unemployment had occurred in the Labour heartlands.

    tonyd
    Full Member

    So you’re saying politicians aren’t bothered about bad press or anything adverse that might cost them votes?

    You conveniently ignored the nurses, teachers, firemen, etc, that get waved around at the merest hint of public sector cutbacks. Given the amount of support drummed up for them I think you’re being quite disingenuous claiming lack of public support for those losing their jobs at the hands of the govt.

    Perhaps if the Northern Rock staff were teachers they’d have got more support? Never mind the fact that those that got sacked were probably counter staff trying to pay the mortgage/bills, they worked for a bank therefore they must be scum. The issue here is with the main stream media reporting, not peoples support or lack of.

    Job losses did not affect support for Thatcher? It just made those that hated her hate even more? So how did she get to power in the first place if so many people hated her? You yourself say support fell by 1.5%, that’s about 0.1% per 100,000 extra unemployed by your own statement. I’d say that indicates an affect.

    I think it’s also fair to say that a lot of people still hate the conservatives as a whole because of Thatcher’s policies, the most endearing of which is the confrontation with the miners and the massive unemployment around that time, so I think it’s also fair to say that governments sacking people can have a massive affect and that they are very mindful of this.

    I know a lot of people that hate Thatcher with a passion. The funniest this is that most of them are under 40 and weren’t around during her time in office, and they actually have no clue why they hate her.

    There, I bit. I was trying so hard not to but I did anyway.

    ernie_lynch
    Free Member

    You conveniently ignored the nurses, teachers, firemen, etc, that get waved around at the merest hint of public sector cutbacks. Given the amount of support drummed up for them I think you’re being quite disingenuous claiming lack of public support for those losing their jobs at the hands of the govt.

    What do you mean I “conveniently ignored the nurses, teachers, firemen” ? I didn’t mention any professions at all. Besides, when did the government last announce that they were sacking nurses, teachers, and firemen ? The government can oversee the loss of thousands of jobs, directly or indirectly, without needing to be concerned about any serious public backlash, people quickly forget about any such concerns by the time elections come round.

    People generally don’t blame job losses/unemployment on government policy. They’ll often simply dismiss it by blaming market forces, trade unions, the global situation, etc. As I said, the media does an excellent job in that respect.

    In the case of Thatcher/the 1980s mega-unemployment levels, pollsters were intrigued how little effect it had on support for the Tories, specially as when they asked the question “what is the most important issue facing Britain today ?” the number one reply people gave was “unemployment”. So they changed the question to “what is the most important issue facing you and your family today ?” in answer to that question “unemployment” came way down the list.

    People vote according to issues which concern them, they’re not really interested in issues which concern other people. One of the principle reasons for Thatcher’s success was that she very effectively identified people’s personal greed and selfishness and exploited it to her maximum advantage.

    If an economy is experiencing say, 10% unemployment, this represents a staggering high level of unemployment, but it also means that 90% aren’t unemployed. The majority of that 90% will believe that they are not affected by unemployment, so for them it’s not an issue of any great importance.

    However they are almost certainly wrong – unemployment tends to affect most people, whether they have jobs or not. The majority of the 90% will be affected in wage cuts/no pay rises, job insecurity, reduced services, social issues, increased crime, etc. People however tend not look at the bigger picture.

    A few people will actually get a positive advantage from high levels of unemployment, ie, the people the Tories represent – big business. Although paradoxically only in the short term. As here lies the greatest contradiction of all of capitalism – “what is individually rational for one firm is destructive in the aggregate”. So unemployment-driven low wages is good for a company as it can substantially increase their profits, but it will also reduce their market, and therefore also their profits, due to the lack of public purchasing power.

    The instability of inequality goes to the very heart of the present global crises. Although it takes a while for it to become apparent – boom and bust.

    tonyd
    Full Member

    OK Ernie, I give in, you’re right.

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