I’m feeling counter-intuitive today. So here goes.
1. Northern Rock will end up making the Government money and be sold off at a significant profit (or have made a net contribution to public sector finances) before the next election.
2. After the impact of heavy advertising dies down, the fact that Natasha Kaplinsky is presenting Five news will make almost no difference to their ratings. This will not prevent the the price of news presenters continuing to rise. The fact that they’ve got Neighbours inbetween the shows might make a difference, but the news will still underperform in it’s slot.
3. Gordon Brown will win this weeks PMQs.
11 Comments
February 18, 2008 at 2:46 pm
Come now Mr Sen – if I recall correctly your last Northern Rock prediction several months ago mocked the idea that nationalisation was an option and suggested Virgin were hours away from a deal…?
Small wager says you’re wrong on PMQ’s as well – we’ll need an independent arbiter so how about Simon Hoggart the following day in the Guardian (see, I’m even giving you a Labour friendly paper!) – if he calls for Brown my sub-prime debt to you rockets to 20p, if it’s Cameron he gives the nod to it’s you that needs to visit the bank manager…?
February 18, 2008 at 3:51 pm
http://hopisen.wordpress.com/2007/11/26/northern-rock-media-summary/
Is this the post you mean?
Looking at that again, I pretty happy with it. I say that the moaning and wailing in the media is overplayed (still think so), you say “oh but shareholders will block”. I say shareholders won’t block when it becomes the alternatives (Lib Dems nationalisation proposals) are worse for them.
Turned out shareholder didn’t block at all, but the gov’t rejected the proposals because not enough upside. So, reson gov’t went for nationalisation- because private bids undervalued NR!
I’m confident NR will turn out to be profitable bet, and also that the effect of the longer bidding process will be that the NR shareholders will have a much worse case than the railtrack ones when they, inevitably, try and palm their losses off onto the gov’t. No more sofa gov’t, etc, etc.
Ass for PMQs- Not Simon Hoggart- couple of weeks ago failed to even notice that GB was quoting Ken Clarke as “the former Chancellor” and based his piece on how awful it was the GB was quoting himself. How about Nick Robinson?
Vitally tho, do you agree wth me on kerplunsky?
February 18, 2008 at 4:26 pm
Good for you Hopi, I’m already bored with reading on Tory blogs how Northern Rock nationalisation is a worse political catrastrophe than Black Wednesday, the death of Dr Kelly and 9/11 rolled into one.
February 19, 2008 at 10:35 am
Well that why Brown did it , to take the flack now . The timing of all his descisions has been political …..sigh
Hopi ….if someone stole your money and then came back a few days later and told you they put it on a horse and won. would you be happy with this turn of events ? Well you might be , but you would not be inviting that friend to stay for tea , I suspect
The problems with N Rock are not where you are looking for them .They are in the failure of the tripartite regulatory regime ..well the FSA really , to understand what they were looking at . Nothing could be more closely associated with Gordon Brown and in fact more symptomatic of the heavy and stupid heavy handed Brownite M O . The fsa as ever add costs and delay but know nothing about what they are looking at and believe me I know . In fact Brown went out of his way , as usual , to make sure everyone knew it was the Brown show .
Problems will come as the rescue will justifiably be seen as Labour showering its chums with Southern taxes whilst it closes hospitals Post Offices , neglects infrastructure floods with immigrants and wants to carpet bomb with slums across the SE. Further more every single business that goes under will wonder why they are not being bailed out by the tax payer having paid for Labour`s friends to be Equitable life Pension holders for example.
But overall, you have a point this is normal Left incompetence with money ,,,..what do you expect , it will not hurt the way Black Wednesday did on its own ( course Labour were all for the ERM……but thems the breaks ) .
The state of public finances is far far more serious and in the down turn there will be a pincer between hugely inflated expectations set up by Labour a dwindling number of tax payers and an inability to borrow . The effect of recession on the chunk the State needs from GDP is something Labour have ignored but if you look at the graph on Tax Payers Alliance all will be clear . We are in a parlous state .If , as we can expect , this collapse is followed by real cuts in income . ( not hard for those who are not in the Labour tent …and have got nothing out of the last ten years ) , it will be seen as the moment Brown began to look the lumbering Frankenstein he is to enough people to be out of the game . Northern Rock`s significance will in retrospect look mountainous .
I think it is possible he will not make it to the next election under such circumstances as the Labour Party will be dead anyway and after what they have done to the South , working families and to England , there will be no mercy. Their public wish to exterminate the Constituency of England’s largest Party will not look like such a clever idea out of power .
February 19, 2008 at 3:46 pm
Blimey Newman, leave room on the Word Press server for the rest of us. Agree 100% with all three predictions. Only thing is Five are going to be on an upward swing anyway because of factors other than the lovely NK so it may be a little difficult to analyse the out turn.
On NR old Peston – not short of self-regard – reminded us on R5 of this being “his” story, said he agreed with or at least accepted the arguments to mid Jan but thought the temporary public ownership should have started then.
So what has changed in the last few weeks for the worse? The share price? Er no. The depositors’ lot? Er no. The borrowers’ lot? Er no again. The workers’ lot? Er no, another few weeks of secure employment before any storms on the horizon.
The Lib Dems? Who cares? The Tories? Well, yes actually their lot has worsened. They dithered and failed to commit for longer. Their whining has been more nauseating and off-putting. GOO has got more manic and silly and toff-like.
Clearly the sky has not fallen on anyone’s head. Clearly households are not really three thousand apiece worse off as they have NR’s assets and not just liabilities.
The Tories have been crying wolf about this and everything else. The world can see that.
February 19, 2008 at 10:49 pm
“reson gov’t went for nationalisation- because private bids undervalued NR!”
That’s an interesting take on it. ‘Value’ is always a tricky concept, but I’m surprised at your confidence. You haven’t seen NR’s books, just like the rest of us (one reason, of course, why Darling’s jeers at the tories are so fatuous), no one apart from the Gov and the bidders have. All we can do is speculate. But let’s look at what we know:
i) No one who’s seen the books has been willing to offer what the Gov, and you, seem to think it’s “worth”. Hmmm…
ii) The Gov, and seemingly you, are claiming that the underlying assets of NR are good ones. Well, for roughly the past two years NR’s policy on borrowing money has been so risky and shortsighted that it ended up insolvent. So please explain why you think it’s policy on lending will have been so much better?
iii) This one depends on how cynical you are. But I can’t help noticing that now, as opposed to a few weeks ago, the most that Gov figures will say is “the FSA assures us” that the loan book is good. They’re no longer willing to put their own name to it.
iv) At the announcement of nationalisation Darling said the reason winding up the business wasn’t an option was that if we did it now we wouldn’t get all our money back. I may be wrong, but I don’t think he had admitted before that we were ALREADY sitting on paper losses from NR. And if that’s the case at this stage in the slow down, what makes you think it’s going to get better?
February 20, 2008 at 12:19 pm
I’ll give you number 3.
February 20, 2008 at 12:57 pm
Number Three – spot on Hopi. Hope you had money on it…
Gordon was on top form…
Cameron’s hysteria over the Rock looked feeble and weak – he’d clearly been practising his sound-bite in front of the mirror butit failed…
Suggesting Gordon is like Castro when it comes to Freedom of Information is a real shot in the foot – has Dave forgotten it was the Labour that brought in FOI…
Bizarre that Tories don’t understand the need for confidential commercially sensitive information to remain confidential…
As Gordon says, if Dave believes in total openness, when will he publish full disclosures by the Midland Industrial Council which allows rich donors to hide the fact that they bankroll the Tories?
when indeed..?
February 20, 2008 at 1:44 pm
Clearly households are not really three thousand apiece worse off as they have NR’s assets and not just liabilities.
NR assets …it has no value . If it did then it would have been sold as Brown tried to do. His regulatory regime failed and he is now trying to hide the evidence of the disaster. The shares have been suspended and it is likely their value is nothing at all minus the Government support (our money)This is why the share holders are in a rage. There are few retail depositors and they will attract no more *( that was the problem ..not sub prime ) Employees wil have to go and there will be repossessions as the banks trading is corrected. There are ample safeguards for commercially sensitive information and as we own this bank we have a right to know whats going on.
Perhaps the culpability Brown has been overly blamed but then he took credit for a world wide boom that had far far less to do with his anti business high tax socialism . That credit is now gone
February 20, 2008 at 8:04 pm
It’s your perogative not to respond to questions pn your posts.
But as you don’t seem too eager to sustantiate your prediction over NR, it looks like you were using “counter-intuitive” as a synonym for “insanely stupid”.
February 20, 2008 at 8:44 pm
Sorry Alabaster, it’s kind of a complex question and as I said, I had to do a lot on the day job today.
You pose four questions.
i) The answer to the first is that NR suffered a loss of finance availiability because of the Sub-prime sector. The business cun’t operate without new mortgages. In order to get them the gov’t would have to offer any purchaser the same funding support it offered NR. If it’s to offer that subsidy to anyone else, then as the LDs pointed out they’re getting the upside of the growth potential and that should come with a major price tag.
ii) NR took a risky business model in order to expand quickly. it was extremely successful while they could access credit, but when they couldn’t things became problematic. The UK property market is stable, and NR doesn’t have a significantly worse default record than other profitable banks, AFAIK.
iii) This is a rhetorical point. Saying the FSA says the book is sound is more convincing than say the government.
iv) The reason you can’t sell off the book now is that the market is screwed up bcause of what’s happening in the US. If we sold now, in 2 years time it’d look like we’d sold right at the bottom of the market.