Thread: Five Steps to Crisis

NORTHERN Rock branches were besieged by thousands of desperate customers anxious to empty their accounts... as the crisis threatened to hit ALL home owners.

Panic-stricken savers started forming queues long before opening time — and by the close of business at 2pm a total of £2BILLION had been withdrawn.

Police were called to keep order at several branches as customers, ignoring pleas to keep their money with the stricken bank, waited for hours for the chance to get their hands on their cash.

And there were warnings that millions of home owners will face a sharp RISE in mortgage interest rates as the Northern Rock crisis hits the High Street. City experts predicted that those with variable rate mortgages, and new borrowers, will face an average sting of £50 a month this week. This is will be to cover the increased interest rates bank are themselves having to pay, as the credit crisis has made it more expensive for them to raise funds from the money markets.

Ross Walker, RBS Financial Markets economist, told the News of the World: "I do think we will see mortgage rates rise further. As a rough rule of thumb it will be at least by a quarter point, maybe a half.
"But it will come in other forms as well, there will be new restrictions. Banks will decide not to grant loans, where once they could have."

And the Conservatives warned that Prime Minister Gordon Brown was now sitting on a massive financial crisis after "building an economy founded on debt."

Shadow Chancellor George Osborne blasted: "Gordon Brown encouraged an economy where people borrow a huge amount. They have pushed up the cost of housing, raised stamp duty and now people have no choice but to get bigger mortgages. "The British economy is now more exposed than the rest of Europe and this proves we have an economy built on debt which is now no longer sustainable."

Meanwhile there was no sign of the bank's chief executive Adam Applegarth at his palatial £2.5million home near the picturesque village of Maften, Northumberland. Earlier on Saturday Mr Applegarth—who earned £1.36 million last year—said that the bank had yet to draw on the Bank of England emergency loan, which started the crisis.

So, let me try & understand all of this.

The US gets the Bank of England to fund low-class US defaulters?

Sounds like a UK subsidy scheme to me.

It doesn't matter if British banks dole out billions in mortgages to American trailer-trash who can't afford to repay them as they've always got the UK bank-account holders to milk to get back the money they've lost.