Northern Rock to cost you £40 billion

And now we know, as more details emerge of borrowing from troubled Northern Rock, that the guarantee of deposits in the bank is going to cost 3% of UK GDP.  Northern Rock experienced the first run on a UK bank in more than a century. With loans and debts which are coming up for repayment soon, new borrowing will take public exposure of this private institution up to £40 billion, all of which has been underwritten by Gordon Brown on behalf of you.

Northern Rock operated on slim margins at the best of times, borrowing wholesale money from the markets and lending it at a slightly increased rate to mortgage customers. This model could have carried on indefinitely but for the sub prime crisis in the US, where several lenders went belly up and property prices are collapsing. This debt crisis is on its way to Europe, where, as things normally work with the US, it will take a couple of years for the full effect to kick in.

Banks have gambled with money for years, safe in the knowledge that governments will bail them out if a roll of the dice backfires. Northern Rock has only highlighted the conspiracy in the banking sector, that all banks are unsafe because they play with far more money than investors have deposited, meaning a run on a bank can occur at any time.

This article published by www.conspiracyreview.com ©2008.