Comments on: Northern Rock: the core of the issue http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/ Richard Murphy on tax and corporate accountability Fri, 09 Jan 2009 01:00:46 +0000 http://wordpress.org/?v=2.6 By: Misaccounting was at the core of the governance failure that lead to the credit crunch | called2account http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/#comment-494184 Misaccounting was at the core of the governance failure that lead to the credit crunch | called2account Thu, 25 Sep 2008 04:45:19 +0000 http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/#comment-494184 [...] pleased. As I wrote about Northern Rock last year (at a time when most people really didn’t want to face these [...] [...] pleased. As I wrote about Northern Rock last year (at a time when most people really didn’t want to face these [...]

]]> By: Tax Research UK / Misaccounting was at the core of the governance failure that lead to the credit crunch http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/#comment-493939 Tax Research UK / Misaccounting was at the core of the governance failure that lead to the credit crunch Wed, 24 Sep 2008 12:54:17 +0000 http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/#comment-493939 [...] pleased. As I wrote about Northern Rock last year (at a time when most people really didn’t want to face these [...] [...] pleased. As I wrote about Northern Rock last year (at a time when most people really didn’t want to face these [...]

]]> By: Tax Research UK / Securitisation http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/#comment-305045 Tax Research UK / Securitisation Thu, 06 Dec 2007 14:25:54 +0000 http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/#comment-305045 [...] there is more to it than that. I’ve already written about the corrosive nature of the obvious duplicity built into the governance of these arrangements. But we now know for [...] [...] there is more to it than that. I’ve already written about the corrosive nature of the obvious duplicity built into the governance of these arrangements. But we now know for [...]

]]> By: Tax Research UK / 2007 / November / 19 http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/#comment-277714 Tax Research UK / 2007 / November / 19 Mon, 19 Nov 2007 10:58:38 +0000 http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/#comment-277714 [...] It’s a nice idea, but let’s contextualise this (without getting back into the debate on the difference between SPVs and SIVs which adds little here). Northern Rock has currently borrowed about £20 billion form the Bank of England - near enough $40 billion, therefore. How can $75 billion prop up the rest of the market in that case if any serious run were to occur? [...] [...] It’s a nice idea, but let’s contextualise this (without getting back into the debate on the difference between SPVs and SIVs which adds little here). Northern Rock has currently borrowed about £20 billion form the Bank of England - near enough $40 billion, therefore. How can $75 billion prop up the rest of the market in that case if any serious run were to occur? [...]

]]> By: Tim Knight http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/#comment-267470 Tim Knight Tue, 13 Nov 2007 16:02:23 +0000 http://www.taxresearch.org.uk/Blog/2007/11/12/northern-rock-the-core-of-the-issue/#comment-267470 Just for the record, I agree with everything you have said here about SPVs, SIVs and all other form of Enronomics and spurious financial engineering designed purely to avoid tax and/or to support obfuscation (including Northern Rock's Granite machinations). I have long been an admirer of your main cause, and your energy in pursuing it. However, none of the points you have made in this post relate to the points you appeared to be making in your earlier post about the 23 billion or so lent by the BoE transparently to resolve Northern Rock's liquidity problem. In my first comment on your earlier post, I claimed that the 23 billion was not created out of thin air, it was borrowed from whoever the fleeing lenders diverted their lending to (I used Barclays in my example). I also claimed that the loan to Northern Rock did not divert resources from other propositions. All such loans are built up through zero-sum closed circles of zero-sum book-keeping postings. Other (solvent) propositions could be supported in the same way. I stand by by those claims. In my second comment on your earlier post, I claimed that you had failed to distinguish clearly enough between solvency and liquidity, that Northern Rock was solvent but illiquid, and that illiquidity was not a sin. The BoE was right to support, and should have done so as lender of FIRST recourse at COMMERCIAL rates (rather than as lender of LAST recourse at PENAL rates). Again, I stand by by those claims. However, I offered all of those comments not to undermine your main cause (countering obfuscation, deceit and tax avoidance), but to suggest that your (questionable) points about the 23 billion were themselves undermining your main cause. Please stick to your main cause (for which you have my unfailing support), and avoid inviting unnecessary controversy on other causes (which can only provide amunition for those who WOULD wish to undermine you). Just for the record, I agree with everything you have said here about SPVs, SIVs and all other form of Enronomics and spurious financial engineering designed purely to avoid tax and/or to support obfuscation (including Northern Rock’s Granite machinations). I have long been an admirer of your main cause, and your energy in pursuing it.

However, none of the points you have made in this post relate to the points you appeared to be making in your earlier post about the 23 billion or so lent by the BoE transparently to resolve Northern Rock’s liquidity problem.

In my first comment on your earlier post, I claimed that the 23 billion was not created out of thin air, it was borrowed from whoever the fleeing lenders diverted their lending to (I used Barclays in my example). I also claimed that the loan to Northern Rock did not divert resources from other propositions. All such loans are built up through zero-sum closed circles of zero-sum book-keeping postings. Other (solvent) propositions could be supported in the same way. I stand by by those claims.

In my second comment on your earlier post, I claimed that you had failed to distinguish clearly enough between solvency and liquidity, that Northern Rock was solvent but illiquid, and that illiquidity was not a sin. The BoE was right to support, and should have done so as lender of FIRST recourse at COMMERCIAL rates (rather than as lender of LAST recourse at PENAL rates). Again, I stand by by those claims.

However, I offered all of those comments not to undermine your main cause (countering obfuscation, deceit and tax avoidance), but to suggest that your (questionable) points about the 23 billion were themselves undermining your main cause. Please stick to your main cause (for which you have my unfailing support), and avoid inviting unnecessary controversy on other causes (which can only provide amunition for those who WOULD wish to undermine you).

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