The 50 BN business bail out and the drug which is lending.
Within the last hour the Prime Minister and the Chancellor have well and truly removed the gloves.
I will give you the Trumpo overview and what it means.
First and foremost, this is not for a new flow of money, it appears to me that some very big businesses in the UK have had their credit lines pulled and the Govt has stepped in as a last resort to provide these facilities to save many tens of thousands of jobs.
Gordon and Alastair continually confirmed that the finanical support was for the corporate sector, and was not aimed at increasing the money supply.
This bail out was to re-affirm the Govt’s commitment to peoples jobs, savings, mortgages and to all types of lending.
The increase in the money supply is soon to be provided by a new scheme to come from The Bank of England and full details are to be announced within weeks, however the scheme is designed to provide liquidity to non banks and secondary lenders. In addition there was a subtle hint that Northern Rock is also going to contribute to the flow of new money into the mortgage market. This makes perfect sense, as the Northern Rock have a proven and scaleable business platform to deal with rapid lending growth, and they certainly have the skill base in Newcastle and will be massively more cost effective than using the current Govt controlled LLoyds/HBOS business.
A bold Trumpo predicition:
- Trumpo estimates that within 12 months, Northern Rock will be the largest mortgage lender in the UK, again!
- Trumpo estimates thet RBS will become the largest commercial lender, again!
As per the above the UK lending market will become predominantly nationalised, and I dont think in these times thats such a bad thing.
8 out of 10 for the current decision making by Gordon and his team and RIP Royal Bank of Scotland.
More constructive Trumpo comments coming soon, hopefully being assisted by Ken Clarke who can add some credible challenge, its been sadly lacking by the Tories and should stimulate construcive debate.
Your Trumpo.
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January 19th, 2009 at 12:16 pm
at last some positive action! it strikes me that its all perfectly safe and asset backed (by houses)so why do people and the press grumble at the tax payer getting involved? Am i missing something or is this a relatively safe bet assuming properties will always be in demand? At least it looks as if i wont need to find a new mortgage and i can stick with Northern Rock rather than being kicked out to find a more expensive mortgage!
January 19th, 2009 at 3:30 pm
If the Northern Rock are to regain there position as the largest residential mortgage lender in the UK, we need to see the return of higher LTV’s products. Many of the best rates and products have been capped to 60% LTV along with only a handful of options offered at 75%. Over this LTV many Banks seem reluctant to lend.
I’m not suggesting the return to the 125% products the Northern Rock was offering but the mortgage industry & the general public needs 85 – 90% LTV at an affordable pay rate.
If funding becomes available at this level we will see the return of first time buyer. Hopefully this will then end the trend of falling property prices which is denting consumer confidence.
Once this confidence returns back into the housing market we should see it filter through to retail and manufacturing sectors.
This additional money must go towards funding these much needed higher LTV products.
March 3rd, 2009 at 6:54 pm
What do I think to the Royal bank of scotland? RBS boss Fred goodwin should be stripped of his pension. If they pay him a profit related percentage he will get minus figures. Taking away his pension is the best option.
March 26th, 2009 at 1:06 am
Either you have a big adjustment like a 20 percent or 30 percent decline, or you have a big recession or you have a slow decline in property prices or several years of no growth.\par