Tuesday, 24 February 2009
Northern Wreck rides again
Covered in depth elsewhere I know, but the sums mentioned just do not add up and I have not seen too much coverage of that. Wreck received a loan of £27 billion upon nationalisation, then it has received a further payment of £3 billion as I understand, plus another of £2 billion which has been hidden as an equity loan.
In return the Wreck has repaid £18 billion of the loan; benefit to the taxpayer but not the mortgage market the Government has now realised (screw the market I say, it needs to fall, but that is for another post)
It has also made a loss of £1.4 billion this year.
So, Wreck still has just under £9 billion of our money, £3 billion of which I understand is really accounted for as good will impairment and so gone forever. Wreck may have lost £1.4 billion, but the taxpayer has really lost £3 billion.
Now we are going to pump another £5 billion in for mortgages of up to 90% - given even the average consensus is for house prices to decline 12% this year, then any money lent at 90% will have to be accounted as a loss in the short-term. More capital will then have to be put in to balance the books.
Hence Northern Wreck is still on course to cost us up to another £15 billion in losses, having already accounted for £3 billion. Plus more money put into it in the future is guaranteed by this 'business plan.'
It is a disaster, the nationalisation of it was a disaster as I said at the time, the new policy of subsidising a falling house market is utterly without merit.
Why are the people doing this not being held to account? Why are the mainstream media not seeing the insanity and wanton wasting of billion in these ill-thought out measures?