Northern Rock on the rocks

Northern Rocks fall continues, 60% wiped off share value, £2 billion pounds withdrawn in 2 days the former building society now valued at £1.1 billion pounds. Fear and panic still in the high street as assurances from the Bank of England and chancellor of exchequer ignored by customers of the bank. Added to this the pound tumbles on fears of the economic impact, they could be forced to cut interest rates with the run up to christmas. The credit crunch fallout now hitting the UK financial services sector and not just Northern Rock. The BoE are loking for a suitor for the bank rather than have the bank go under, however any buyer would want assurances that they get access to funds promised to Northern Rock. Lloyds TSB, Royal bank of Scotland and Citibank are said to to be in talks with authorities.

This week marks the US Banks reporting third quarter earnings to the markets and admitting just how much billions of dollars the credit crunch is costing them. Lehman Brothers, Bear Stearns, Goldman Sachs and Morgan Stanley all report this week. Experts predict that the top ten investment banks could see around 40% or $25 billion wiped of profits. The subprime mortgage crisis has also reached motor loans with lenders seeing a rise in late payments and repo levels. Wall Street is worried that the same mortgage borrowers who are falling behind with their home loan repayments will also miss repayments on their car loans. Many of the banks that lent in the mortgage market are also providing loans for cars and facing added exposure to losses. However note it is far easier to repossses a car than a house so looks for a spike in car repossessions. Added to the economy woes is the real threat of an attack on Iran by the United States as reported byFrance's foreign mininster Bernard Kouchner we should prepare for war if a peaceful resolution cannot be found.