Northern Rock plc given £7.75 Bn. of tax payers dosh by thrifty, prudent Scots, Brown + Darling - technically a loan but actually thrown away
The guys who claim experience, expertise and technical skill in examining financial entrails, have determined that a close study of the Bank of England's weekly figures say that £7.75 Bn. classified under the heading 'other assets' is equivalent to (ish) the BoE's support to Northern Rock - massively up from last week's figure of £ 2.9 Bn.
Making more money from Fiction than J.K.Rowling and the Bloomsbury group
Well Simon Ward, a bright, fresh faced, economist at New Star Asset Management, says so and everyone is grasping at this mind boggling quantity of tax payer's hard earned disapperaing forever down the ever widening and deepening black hole that is Northern Rock's work of fiction , their Balance Sheet . The press report that, " Northern Rock could not be reached for comment."
Northern Rock's increasingly grubby shares closed down today at 180p today.
On the 15 September 2007 the Financial Services Authority issued a statement headed - "The FSA reiterates that it judges Northern Rock to be solvent and that savers can continue to deposit and withdraw funds."
Now one can reasonably assume that the Directors of NR having borrowed nearly £8BN. (and probably more by now) haven't just sat round and looked at it. Presumably they needed it to pay some pressing creditors like folks who previously lent them money ... and don't want to reapet the exciting experience.
Northern Rock plc is insolvent
Call me old fashioned but one of the tests of insolvency is when, "the company cannot pay it's debts as they fall due" .... so how can the NSA insist , "that it judges Northern Rock to be solvent ". remembering of course that declaring companies insolvent is not their job , nor do they have the staff or authorisation to decide such things and make such ex cathedra statements.
The sole judges of insolvency of a company whilst trading are the Directors, but by any measure they are clearly incapable of paying their debts as they fall due without recourse to the tax payer.... and it is evident that there are noready buyers in the market.
Snake oil merchants make grab for assets
Furthermore according to a report in today's Financial Times today, "creditors holding Northern Rock's tier two debt are forming a committee to protect their interests in any restructuring or insolvency, amid fresh concerns over the bank's viability." That's the holders of Granite securitised notes, covered bonds etc., etc., with their multi country, multi company , curiously Byzantine layers of companies, trustees, detailed in their weighty and impenetrable prospectuses (ii ?). (Even more dosh for M'learned friends in the pin stripe trousers)
Rather late in the day it has filtered through, from the silent boardroom of Northern Wreck , emptier than the trophy room of Newcastle United, that last week the company distributed almost £40 mln stg in dividends to holders of preference shares just before cancelling the dividend to ordinary shareholders.
Pic is of the beautiful, delightfully athletic, and artistic gymnast Alina Kabaeva who can do remarkable things with balls and ribbons accompanied by music and the Russian President, Mr Putin, with whom I would be delighted to discuss the complex world of global finance especially in relation to the beautiful country of Uzbekistan.