Rock of the North!

Northern Rock is a bank that was once a building society. As a bank they can borrow large sums of money to bolster their liquidity. But just now, there is a problem in world banking. Some American banks have been flashing their cash in front of the noses of the less fortunate. All of a sudden the so-called Sub-prime Market has imploded in parts. Now banks don't want to lend to other banks.

Thankfully, the Bank of England has seen fit to assist Northern Rock. As the Chancellor of the Exchequor, Alastair Darling says, Northern Rock is a sound business that got caught up in the problems of the global banking industry. Pity, though, that this only applies to banks with a problem and not the rest of us!

A little curiosity in all this. Apparently these banks, having been used to taking in each others laundry, so to speak, have suddenly got a pile of dirty washing that they can't identify! I find it amazing that they can lend all this money in a cobweb of transactions, a few bad apples are thrown up, and they have to go back trying to find the lending routes.

Now if I told my bank, that I lent money to someone, that they lent it to someone else but that I didn't know who or where, would they give me a second chance to pay THEM back?

Posted in: Alastair Darling,Northern Rock,sub-prime loans