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Hard Rock

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1. At 01:09 PM on 14 Sep 2007, Stewart M wrote:

   Is withdrawing savings just a knee jerk reaction? Or is that what happned during the depression in the 30's? Afterall our "Money" is really just a number on a bank file. If we all tried to withdraw then there would not be enough to go round.

2. At 01:26 PM on 14 Sep 2007, wrote:

   Well I was up till late last night trying to log in to their website - as my Mother who is 79 was extremely concerned about her 拢36,000 in the 'on-line tracker account.

   I've given up for the time -being but have assured her not to worry too much.

   I think for peace of mind though - I'll take it out and transfer it somewhere else.

3. At 01:58 PM on 14 Sep 2007, wrote:

   ROCK AND HARD PLACE

   Surely the problem with 鈥済lobal money鈥� is that its value is shored up by 鈥渂elief that it has value鈥�? It is all based on 鈥渃onfidence鈥� which can evaporate like Scotch Mist. When finance houses say: 鈥渕arkets can go up and down鈥� they should really be saying: 鈥渕oney can evaporate without warning 鈥� leaving nothing".
   Just as Chaos Theory gave us the 鈥渂utterfly鈥檚 wing鈥� 鈥� one flap of which causes a tornado half way round the globe, so one financial flutter can plunge the world into a 鈥渃risis of confidence鈥� leading to a monetary Ice Age. All part of Gordon鈥檚 Age of Change perhaps; but can he fix it?
   

4. At 02:02 PM on 14 Sep 2007, witchiwoman wrote:

   StewartM -
   Thats my thinking! I do have some (small) savings with Northern Rock but will stay put for the time being. I know this doesn't happen all the time but I have a feeling that if the layperson knew just how banking worked we'd all be keeping our cash under the mattress/ in the tea caddy (other hiding places are available etc...)

5. At 02:24 PM on 14 Sep 2007, wrote:

   my independant financial advisor says grab it and run!

6. At 03:36 PM on 14 Sep 2007, Nigel N wrote:

   Whilst it is probably true to say that your money is safe, that does not appear to be the view of the financial markets who appear to be cutting and running on both the shares and the pound.
   What remains to be seen is how much of the B of E loan is going to be withdrawn by worried savers by Saturday evening. If any branch runs out of money this weekend, it could get very exciting/scary.
   Those who want to see a run on the bank can always watch Mary Poppins on DVD.

7. At 03:41 PM on 14 Sep 2007, wrote:

   Stewart M and all others,

   Yes, it is exactly what happened in 1929/30, and irt was called a

   Interesting times, indeed.

   xx ed
   

8. At 03:49 PM on 14 Sep 2007, wrote:

   So what caused a 31-percent contraction in the money supply? Pretty clearly, the public run on banks. The first banking panic occurred in late 1930; the second in the spring of 1931, and the third in March 1933. When it was over, 10,000 banks had gone out of business, with well over $2 billion in deposits lost.
   Banking panics occur when the public fears that monetary institutions are on the verge of collapse. The securities market falls so fast that investors scramble to convert their holdings into cash, thus creating a public run on banks. But banks, whose loans are based on fractional reserves, cannot afford to give everyone their money all at once, and therefore go bankrupt. A chain reaction follows as deposit-owners who have lost their money can no longer afford to pay off other debts and costs of business, driving others to scramble for cash as well.
   Today we know how to prevent banking panics from developing into a chain reaction -- thanks to lessons learned from the Great Depression. For example, the stock market crash of 1987 was even larger than the Crash of '29, but timely government action prevented a run on banks. One of the solutions is to make sure that banks have enough reserves to cover their deposits - that is, expand the money supply. This is why the Fed's relative inaction between 1930 and 1931 has come under such intense criticism. But, to be fair, monetary theory was undeveloped at the time, and nobody was aware of the solutions.

   Yeah, that'll be right! Just trust Nanny/Gordo, and everything'll be OK!

   lalalalalalalala
   ed

9. At 04:07 PM on 14 Sep 2007, wrote:

   witchi......you bin a peepin under my mattress again?

10. At 04:17 PM on 14 Sep 2007, wrote:

    Thanks for the info DIYman -- still trying to log in to Northern Rock - but with no luck!

    Just hangs on the customer id Number box :-(

11. At 04:35 PM on 14 Sep 2007, imac wrote:

    (1)

    Yeah, you're right.
    Its like when the manager has syphoned off all the gold from a bank in a Wild West town. The town carries on normally for years - until he absconds. (Try Galbraith's 'Money' for those sorts of (true) stories)
    Or Enron or Robert Maxwell. Everythings ok provided no one points out there isn't any money left in the kitty.

    Then its musical chairs and the last one to the cash point is skint.

    So (7) is right too.

    Actually the BoE is apparently guaranteeing up to 32 grand per customer per bank. But I would get a 'I promise to pay the bearer on demand..' cast iron, good as gold, as safe as the banks of England guarantee on that, personally.

12. At 05:02 PM on 14 Sep 2007, Deepthought (John W) wrote:

    Another run on the bank film is "It's a Wonderful World".
    Although in that case there was just enough money...

    (Sorry if this is a multiple posting, either it's posting or the Blog has ground to a halt)

13. At 05:05 PM on 14 Sep 2007, Deepthought (John W) wrote:

    Another run on the bank film is "It's a Wonderful World". Though in that case, there was just enough money....

14. At 05:07 PM on 14 Sep 2007, Stewart M wrote:

    The problem is do you grab the hard currency. Preferably on gold OR transfer the electronic currency to an other bank/building society. Obviously folk are not trusting the banks and are taking the hard currency option. I can see the reasons but where do you safely put 拢150000 in notes? I know a bank safety deposit box.

    Is there a pyton sketch in this somewhere where a bloke trys to get his money to be told his box (yes only yours) has been stolen?

15. At 05:08 PM on 14 Sep 2007, Deepthought (John W) wrote:

    Another run on the bank film is "It's a Wonderful World". Though in that case, there was just enough money....

16. At 05:15 PM on 14 Sep 2007, David McNickle wrote:

    Stewart M,
    Your money might just be a nunber on a bank file, but mine isn't.

17. At 06:07 PM on 14 Sep 2007, Electric Dragon wrote:

    Deepthought - I think you're referring to "It's a Wonderful Life".

    "You're thinking of this place all wrong, as if I had the money back in a safe. The money's not here. Your money's with Mr Hedge Fund, and Ms Collateralised Debt Obligation, and Mr Delinquent Sub-Prime Borrower of Podunkton, PA"

18. At 06:16 PM on 14 Sep 2007, wrote:

    Stewart M,

    Speaking of , it's looking to reach a record price against paper money.....and so is oil.

    Sterling is falling against even the very weak dollar, and not before time. It's been way overvalued for far too long, making it far to affordable for Brits to continue acting like colonial masters of the world.

    Welcome to the New Economics!

    Ciao
    ed

19. At 07:33 PM on 14 Sep 2007, imac wrote:

    (11)

    Sorry, my typing gets worse and worse. The protection should have read '2 or 3' grand, not '32'.

    Hope that hasn't lost you your place in the queues outside Northern Rock.

20. At 07:47 PM on 14 Sep 2007, wrote:

    Sound familiar? A look into the ???

    1928

    * The construction boom is over.

    * Farmers' share of the national income has dropped from 15 to 9 percent since 1920.

    * Between May 1928 and September 1929, the average prices of stocks will rise 40 percent. Trading will mushroom from 2-3 million shares per day to over 5 million. The boom is largely artificial.

    1929

    * Herbert Hoover becomes President. Hoover is a staunch individualist but not as committed to laissez-faire ideology as Coolidge.

    * More than half of all Americans are living below a minimum subsistence level.

    * Annual per-capita income is $750; for farm people, it is only $273.

    * Backlog of business inventories grows three times larger than the year before. Public consumption markedly down.

    * Freight carloads and manufacturing fall.

    * Automobile sales decline by a third in the nine months before the crash.

    * Construction down $2 billion since 1926.

    * Recession begins in August, two months before the stock market crash. During this two month period, production will decline at an annual rate of 20 percent, wholesale prices at 7.5 percent, and personal income at 5 percent.

    * Stock market crash begins October 24. Investors call October 29 "Black Tuesday." Losses for the month will total $16 billion, an astronomical sum in those days.

    * Congress passes Agricultural Marketing Act to support farmers until they can get back on their feet.

    1930

    * By February, the Federal Reserve has cut the prime interest rate from 6 to 4 percent. Expands the money supply with a major purchase of U.S. securities. However, for the next year and a half, the Fed will add very little money to the shrinking economy. (At no time will it actually pull money out of the system.) Treasury Secretary Andrew Mellon announces that the Fed will stand by as the market works itself out: "Liquidate labor, liquidate stocks, liquidate real estate鈥� values will be adjusted, and enterprising people will pick up the wreck from less-competent people." (More)

    * The Smoot-Hawley Tariff passes on June 17. With imports forming only 6 percent of the GNP, the 40 percent tariffs work out to an effective tax of only 2.4 percent per citizen. Even this is compensated for by the fact that American businesses are no longer investing in Europe, but keeping their money stateside. The consensus of modern economists is that the tariff made only a minor contribution to the Great Depression in the U.S., but a major one in Europe. (More)

    * The first bank panic occurs later this year; a public run on banks results in a wave of bankruptcies. Bank failures and deposit losses are responsible for the contracting money supply.

    * Supreme Court rules that the monopoly U.S. Steel does not violate anti-trust laws as long as competition exists, no matter how negligible.

    * Democrats gain in Congressional elections, but still do not have a majority.

    * The GNP falls 9.4 percent from the year before. The unemployment rate climbs from 3.2 to 8.7 percent.

    1931

    * No major legislation is passed addressing the Depression.

    * A second banking panic occurs in the spring.

    * The GNP falls another 8.5 percent; unemployment rises to 15.9 percent.

    1932

    * This and the next year are the worst years of the Great Depression. For 1932, GNP falls a record 13.4 percent; unemployment rises to 23.6 percent.

    * Industrial stocks have lost 80 percent of their value since 1930.

    * 10,000 banks have failed since 1929, or 40 percent of the 1929 total.

    * About $2 billion in deposits have been lost since 1929.

    * Money supply has contracted 31 percent since 1929.

    * GNP has also fallen 31 percent since 1929.

    * Over 13 million Americans have lost their jobs since 1929.

    * Capital growth investments have dropped from $16.2 billion to 1/3 of one billion since 1929.

    * Farm prices have fallen 53 percent since 1929.

    * International trade has fallen by two-thirds since 1929.

    * The Fed makes its first major expansion of the money supply since February 1930.

    * Congress creates the Reconstruction Finance Corporation. (More)

    * Congress passes the Federal Home Loan Bank Act and the Glass-Steagall Act of 1932. (More)

    * Top tax rate is raised from 25 to 63 percent.

    * Popular opinion considers Hoover's measures too little too late. Franklin Roosevelt easily defeats Hoover in the fall election. Democrats win control of Congress.

    * At his Democratic presidential nomination, Roosevelt says: "I pledge you, I pledge myself, to a new deal for the American people."

    
    (www.huppi.com/kangaroo/Timeline.htm#BackFed)

    Deja vu all over again?

    xx
    ed

21. At 08:10 PM on 14 Sep 2007, Deepthought (John W) wrote:

    Electric Dragon (17) - you're right. But you knew what I meant.

    Been one of those weeks....memory like a sieve (which meant I made an embarassing boo-boo with a customer earlier today)...

    Sorry for multiple postings .... but really, it just said there for minutes without the message coming up (and one of those was completely re-written).

22. At 06:05 AM on 15 Sep 2007, Gwynn Jones wrote:

    Your coverage of this is a disgrace. Northern Rock is not failing, nor has it been "bailed out" by the Bank as you flippantly put it. Your failure to cover this story rationally, in a manner consistent with the facts, has already caused wholly unnecessary anxiety and suffering to thousands of people.

    Worse, you have become part of the story yourselves, almost egging people on to withdraw their life savings from a perfectly sound British Bank.

    I suggest you reschedule your programme to the 6.30 p.m. slot, where Radio 4 traditionally puts out rubbish comedy shows. This would free up the 5 p.m. slot for a serious, well-informed news programme - hopefully run by a serious, well-informed broadcaster.

23. At 08:28 PM on 15 Sep 2007, imac wrote:

    (19)

    As you were, 32 is right after all.