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Hello Crazy Crew,
I don't think you should be bored with the Northern Rock (NRK) story, even if you do not hold and never plan to hold any shares in the bank.
It affects us all, really. The big slump in the Rock's share prices yesterday may possibly have set the whole UK shebang falling - except that the Dow fell a lot as well, which was probably the real reason for the drop in the Footsie.
But the Rock story matters to us all because it asks the question: can we really be happy to invest in a UK bank again? Well, the answer is probably yes, as the Government has come to the aid of the Rock and its depositors.
I have criticised the government's handling of this story in the media, mainly because I think they should have guaranteed depositor's money a lot faster than they did, thus avoiding that awful run on the bank.
But Mr Darling's latest speech in the Commons restored my faith in him. I think he did exactly the right thing in giving the Rock time to recover by saying the government loan would not be withdrawn at least for the time being. Of course, he's probably right when he says taxpayer's money is not at risk.
The loan is supported by huge assets the bank still has - namely its huge fund of quality mortgages. Yes, it may take some years to get the money back for the taxpayer, but it will be earning interest as it does.
My own feeling is - and apparently a commentator on BBC Radio said I could 'dream on' - is that the Northern Rock share price will ever so slowly pick up, as the crisis slips back into history.
I could be wrong - this is still a confused situation and anything can happen in Crazyland - but I hope I'm right. However, this is not advice, so please don't take it as such. You have been warned. As we all rock on!
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