How We Know They\’ve Got it Wrong

Northern Rock is bankrupt. I think we all know that?

So, how do we know that whatever scheme is being cooked up to solve the problem is in fact a bad one?

Northern Rock package announced . N Rock shares surge on bonds package

The shares in a bankrupt organisation rise upon the announcement of the plan? Quite, too much is going to the shareholders.

5 thoughts on “How We Know They\’ve Got it Wrong”

  1. The amount going to shareholders should be an cardinal integer less than one.

    The first concern should be to net depositors. NR should be wound-up, to stop further risk. The accounts should be transferred to a solvent bank, etc. i.e. see the way NetBank was handled by the Fed.

  2. “The first concern should be to net depositors. NR should be wound-up, to stop further risk. The accounts should be transferred to a solvent bank, etc. i.e. see the way NetBank was handled by the Fed.”

    A good system, but our Government has been asleep on the tiller and simply not reformed the banking laws to allow them to do this.

  3. “The first concern should be to net depositors.”

    Surely the first concern should be to the taxpayers whose money has been taken by force to prop up an ailing business. Then we can look to the depositors who at least had a choice as to where their cash would go.

  4. The logic doesn’t really work. It was going to be nationalised, now it’s probably not. You would argue that a company in government hands is worth less than one owned by the private sector.

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