On the contrary, it's extremely clear that they did something wrong, and if they'd done nothing wrong they wouldn't have needed to go cap in hand to the Bank of England (which is when it got in the papers, before any savers had started queuing up).
allowing the entire UK financial services industry to become a smoking ruin is not a reasonable cost for punishing the failure of NR
It's exactly what will happen if the credibility of the British regulatory system is destroyed by this sort of behaviour. Allowing Northern Rock to fail would no more have destroyed the financial services industry than allowing Kwik Save to fail has destroyed the grocery industry. Now there's no incentive not to take risks with your money. The necessary corollary of that is that there's also no incentive for a bank to act responsibly in the marketplace, because they'll always be undercut by irresponsible banks.
I believe that people are buying Northern Rock shares now, once it lost something like 25% of its value.
People were buying them all the way down - if there'd been no buying, there'd have been no selling, and nobody would have known what the price was. For what it's worth, they've lost 75% of their value since Spring, and just over 50% since the start of September. Another 20% or so and someone will make an offer for the lot, which is what would have happened sooner if this stupidity hadn't taken place.
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Date: 2007-09-19 01:00 pm (UTC)allowing the entire UK financial services industry to become a smoking ruin is not a reasonable cost for punishing the failure of NR
It's exactly what will happen if the credibility of the British regulatory system is destroyed by this sort of behaviour. Allowing Northern Rock to fail would no more have destroyed the financial services industry than allowing Kwik Save to fail has destroyed the grocery industry. Now there's no incentive not to take risks with your money. The necessary corollary of that is that there's also no incentive for a bank to act responsibly in the marketplace, because they'll always be undercut by irresponsible banks.
I believe that people are buying Northern Rock shares now, once it lost something like 25% of its value.
People were buying them all the way down - if there'd been no buying, there'd have been no selling, and nobody would have known what the price was. For what it's worth, they've lost 75% of their value since Spring, and just over 50% since the start of September. Another 20% or so and someone will make an offer for the lot, which is what would have happened sooner if this stupidity hadn't taken place.