Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
With thanks to Colman for nudging me into making this a diary.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Jan 15th, 2008 at 07:11:20 AM EST
What are the odds that the people making decisions in the UK actually knew about the Spanish case?
by Colman (colman at eurotrib.com) on Tue Jan 15th, 2008 at 07:12:44 AM EST
[ Parent ]
Close to zero, I think, but it doesn't matter. They don't make their decisions on the basis of economic history. They look at the FT editorial pages for guidance.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Jan 15th, 2008 at 07:17:55 AM EST
[ Parent ]
And in other news...

I wonder if the two stories could be (indirectly) related.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Jan 15th, 2008 at 07:31:25 AM EST
[ Parent ]
BBC NEWS: Pound falls to fresh low on euro
A weaker pound against the euro will make travel to the continent more expensive for British holidaymakers.
That is the least of our concerns right now, mate! Did you see the retail sales figures for December?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Jan 15th, 2008 at 07:36:40 AM EST
[ Parent ]
But for a British ex-pat living in the eurozone it's great.


Money is a sign of Poverty - Culture Saying

by RogueTrooper on Tue Jan 15th, 2008 at 12:45:26 PM EST
[ Parent ]
That's the way it should be done, for sure. Norway didn't make a bad fist of the Christiania Bank a few years ago either.

But it doesn't take away the need for funding by the "lender of last resort".

I sent in this LTE to the Guardian, so no chance of it seeing the light of day other than here!

Dear Sir

As Northern Rock teeters on the brink, we (Nordic Enterprise Trust - a Scottish Charity) hope that we may be able to communicate through your columns an alternative proposal for Northern Rock to the conventional "either" State = Nationalisation "or" Private= Plc: to wit, a "Northern Rock Partnership".

Using the simple and infinitely flexible UK LLP as a framework, Northern Rock's assets may be placed into the stewardship of a "Custodian" (noting - as exposed in the "Guardian" - that those in the "Granite" SIV were already placed into the unwitting stewardship of a northern Down's Syndrome charity).  The Northern Rock Foundation is a good candidate, since it owns 15% of Northern Rock Plc already.

A "Capital Partnership" may then be formed by adding an "Operator"  member ie a staff consortium, on the one hand, and an "Investor" member ie a shareholders/creditor consortium on the other.  

The "alchemy" derives, as Tim Congdon explained recently in the Financial Times, from the arcane role of the Bank of England as "lender of last resort". The interest and penalties currently being received by the Bank of England and Treasury respectively constitute "seignorage" (ie profit accruing to the taxpayer arising from the privilege of money creation) and we suggest that this continuing windfall may be placed into the stewardship of the Custodian in order to further fund a "Default Pool", thereby augmenting the existing shareholders' capital with a new class of additional "equity"

It is then simply a matter of dividing the net revenues of Northern Rock - after provisions into the Pool - into proportional units eg billionths and for the stakeholders to agree who gets what.

The Government (and the existing shareholders) may then sell this "Equity" in the Northern Rock Partnership over time to new investors, with the first port of call being to the Gulf, since the structure we have just described is, to all intents and purposes, a "Sukuk" or Islamic REIT.

Clearly there will be issues to overcome, but we see none of these  as intractable, as a simple continuous asset class of units in Northern Rock revenues replaces the irreconcilably conflicted claims of conventional secured Debt and conventional Plc "Equity".  

Yours sincerely

Moving the coal nearer the sardine again, Lieutenant! ;-)

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Jan 15th, 2008 at 07:40:19 AM EST
[ Parent ]
When you consider the 'halfwit' Mervyn King, Governor of the Bank of England did nothing for 6 weeks when he was notified Northern Rock was insolvent; then it isnt surprising they would try to block nationalization.

Biggest mistake by Labour but the price they paid to be finally elected in 1997 was giving the Bank of England its 'independence'. 'Independence' being a euphemism for a handful of companies and movers and shakers controlling the bank with no recourse by the electorate or their elected politicians except for the few nominees Brown or whoever is PM is allowed to nominate.

Brown, Blair and the whole new Labour crowd guaranteed the powers that be they would act and be 'corporate Labourites to go along with the 'corporate Tories'.

Unfortunately in England; its not just the ultra rich who control the BofE but the ultrarich and the 'inbred toffs' who figuratively and for all I know literally, Mervyn King comes from.

Which makes it potentially much worse in England when compared to just having to threaten the 'ultrarich' in the US before the Fed becomes aggressive. It is very possible in England, the recession(depression) will be far worse than in the US; not because the systemic problems are greater but because the capacity for pain is far greater for the 'ultrarich and inbred' toffs in England.

by An American in London on Wed Jan 16th, 2008 at 09:28:15 AM EST
[ Parent ]
I was just thinking that the inflationary pressures and the slide of the pound against the dollar and euro would require raising interest rates, but that would just make the credit crunch worse. So the UK will be hit hard, very hard.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Jan 16th, 2008 at 09:31:20 AM EST
[ Parent ]


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