Apparently Northern Rock didn’t go bust then

Richard Murphy says:
August 22 2020 at 8:41 am
When did NS&I last repay all deposits, simultaneously?

If the answer is never, indeeed, if you cannot even find periods when they fell massively except by policy, then they may technically be a liability but repayment is not an issue

So, yet more nonsense

Holding deposits is not a matter to be concerned about

If it was, declare all banks at major risk now

But you know they’re not

But that, of course, is because their liabilities are guaranteed by banks: the one organisation that can never fail to meet its liabilities, which is why no one need claim on it and why NS&I will nit be making net repayments.

Also, a very good point:

Kim says:
August 21 2020 at 6:44 pm
If you don’t consider BoE as part of the UK state, the so-called state “debt” is £2,000bn.

If you do consider BoE as part of the UK state, the so-called state “debt” is £2,000bn, including £745bn of reserve balances issued by BoE.

You can’t consolidate BoE’s assets with HM Treasury and at the same time not consolidate its liabilities.

Doesn’t Spud keep telling us that government debt is just the money we use? Therefore the money we use is government debt?

7 thoughts on “Apparently Northern Rock didn’t go bust then”

  1. “Holding deposits is not a matter to be concerned about”

    Isn’t the point that a bank doesn’t ‘hold deposits’? It takes them, then lends them to other people. Or in the case of NS&I gives them to the government to piss up against the nearest wall. Either way the deposit isn’t there anymore. But the liability to repay it still is…………

  2. That whole thread is a masterpiece of Capt Potato’s ability to hold wildly dissonant views at the same time. It is not so much stump thinking as a bewildering kaleidoscope of idiocy

  3. Thanks, Diogenes, it takes a compelling recommendation to prompt a visit to the shrine of Elynomics and that is a great thread. I was particularly taken with

    …given the government can set the interest rate on the deposits as it wishes, including zero if it also so wishes, can you explain how this is debt?

    I predicted a few days ago that he would soon discover that negative interest rates would allow the government to receive interest on its borrowings so it will only take one little nudge to get him over the line.

  4. given the government can set the interest rate on the deposits as it wishes, including zero if it also so wishes, can you explain how this is debt?

    Astonishing! Bank current accounts (their liability to us) have often not paid any interest? Let me get this straight: An interest free loan is no longer in fact a “debt” (wrt the capital owed). Or is this out of context?

  5. Pf, Spud’s answer will change approximately every 10 seconds when people point out upsides and downsides of this especially moronic assertion. How much would you pay for his “expert”, permitted by the ICAEW and FCA, advice?

  6. which also suggests you can’t handle about thinking about more than two variables at a time, which is pretty scary if you think you are qualified to comment

    The latest zinger from Spud. Considering his stump mentality it’s a classic.

  7. As Northern Rock wasn’t actually bust and Darling had to hire an accountant from some obscure partnership to produce a visibly false analysis to “justify” his confiscation of shareholders’ possessions because no major partnership would do so, that is certainly true but irrelevant.
    [For those inexpert in accounting I shall mention three obvious points: the whole analysis started with the assumption that the Bank of England would default on its statutory duty to act as lender of last resort to UK banks; the analysis assumed some massive losses due to write-downs but ignored the tax refunds due thereon; the accountant charged as a debt to Northern Rock the fee paid by HMT to an investment bank for a report on Northern Rock!! Experts in accounting would also tear out their hair at the assumption that there should be a second write-down of the assets already written down and the inclusion of liabilities for pensions earned in respect of future service by employees]

Leave a Reply

Your email address will not be published. Required fields are marked *