Yes, but today the government annoucned that it personally guarantee the whole amount of everybodys savings in Northern Rock. Well thats nice, using my money that way.

I knew there were too many words in there for anybody to read them all...

(see 2nd para and 3rd para from the end Debster :))

Well I read most of them :-)
I didn't know about the compensation service (or the limits). I shall look at the figures in savings again. But I'm with you on everything, particularly the bit about making it so difficult people can't be bothered. As I think I've said before, I don't class myself as stupid but trying to follow some things leaves you feeling like it.
And I've never once incurred bank charges. I'm fortunate enough to never have been in such dire straits, granted, but I've got to feel that for every one person who ends up in debt through no fault of their own, there are probably three who simply can't be bothered to manage their money. 1+1=2 isn't that hard. If you earn 2, don't spend 3.

If the government was caught by surprise then they should have rememebred the panic buying when people thought there might be a petrol shortage. So there was.

Curiuosly, I wonder how open ended this facility is?

I don't have a problem with our government underwriting a viable buisness. Even if all the investors got their money out, they still have a good mortgage book which can be sold on, hopefully at a profit, allowing the interest rate to be profitable too. If that's what it takes to shore up our banking system, then fine. The spectre of a chain reaction run on banking is too horrible to contemplate.

The malaise is much deeper than these symptoms.

I also have no faith in our government making anything other than a total cods up of the business. Ah well.

GoodTwin - exactly. And I'll bet that, like us, you have never been in 'dire straits' as you've been aware and careful and 'cut your coat according to your cloth', as my Grandma used to say.

Very interesting and informative article on the subject of the ongoing credit cris and the comparative merits of building societies and banks as mortgage lenders that I've just read here.

"The spectre of a chain reaction run on banking is too horrible to contemplate.

The malaise is much deeper than these symptoms.

I also have no faith in our government making anything other than a total cods up of the business.

Ham - Yes, I agree. I can understand *why* the 'Government' (sic) have done this, but I do think it's not a good message to be sending people.

I think an important point is that the govt is not underwriting the business, it is protecting the money. This means that financial businesses do not have a protection against high risk behaviour, the business will go under, but the investors/savers will get their money.
When it comes down to it, I think it was the right thing to do. They had 2 options, leave it alone and see if the problem fizzled out or went into meltdown, or go in and try to rebuild confidence in the whole system with a guarantee which is unlikely to ever be needed (if NR drops much further then it will be bought by a competitor and the financial position stabelised).
it is another example of globalisation and a good reason why you should not put your money into shares as a companies actual performance is no indication of its share performance these days.

Why have theydone this? My best guess? There are 1 or 2 more in the woodwork, yet to come out, so Northern Rock could not be left to dangle. That's easier to believe than NR are the only one.

I loved your "Banking Blogg" Phewwwww, bw I am glad you are not my bank manager I dont think I would see day light again? You nearly had me cutting up the plastic. Have you calmed down yet?

Off to Gods Country for some R&R and a drop of Paddys, talk next month. kkma.

Interesting too that Martin the Money-Saving Expert is promoting the bank charges reclamation game; not really 'money-saving', as, as you so rightly point out, it's actually founded on the idea that you've not saved in the first place...

KW - I've thought for some time that I would *love* to have that conversation with Martin :) I think he's coming at it from a 'the charges were punitive not what it cost them' angle, but I always say, banks have always (as long as I can remember) made very clear what the charges will be if you break their rules.

Ham - yes, BBC Breakfast hinted this morning that there were another 2 on the brink. I haven't been following news today, so maybe it's clear by now who they are?

I can see why the government needed to stop the panic. I am also vastly resentful that they have used a promise of my money to do so. If they do it with one building society, they have to do it with every one and with every bank. Will they announce when this absolute guarantee comes to an end? And will that be treated as another crisis by the papers, I wonder.

As far as reclaimed charges are concerned, some of those have been unfairly high in the first place, but at bottom I agree with you. I would rather go without (and I have) than spend money I don't have.

z - yes, me too, but we come from a different generation to the students and 20-somethings of today, don't we? They've been brought up on a 'Government' (sic) message that "debt is necessary and OK" - student debt is encouraged after all.

If I was 21 again and had a debt of £13K (which I think is a conservative estimate of the average student debt now?) then I'd probably not worry about adding a bit more to it... and once it's all out of control, hey, there's voluntary insolvency - declare yourself bankrupt and it's all forgotten about in just 2 years now. It's almost trendy to do that now.

Although - I don't think I'd end up in debt as a student even these days - I managed to make enough money by working in term time and holidays when I was a student to supplement the minimum grant (all I got because my parents earned too much) plus the £50 a term my parents 'kindly' gave me, and never ended up overdrawn. But then I didn't go to the bar every night (in fact hardly at all), and didn't buy ready meals... we still had a lot of fun mind. I found my old bank statements from that time a couple of months ago. All annotated. Very interesting reading. I was amazed by how little I managed to live on - and in London.

I read all the words. But then I'd already read Martin's take on it this morning.

Funny how in Newcastle where Northern Rock is based there are no queues, no hysteria, just complete confusion as to what the rest of the country is smoking.

Sorry it was too early in the morning ... btu I did know about the old limits for compensation, I remember from when BCCI went bust a few years back it was all over the papers.

And you should have guessed from my ungrammatical and misspelt comment that I wasnt quite with it ... plus my monitor died last night and I had to install another one at short notice and the old one was very heavy (break out the violins).

And in the papers today it said it was Alliance and Leicester (Or allester and Liance, as mum always calls them) and Bradford and Bingley who are teetering on the edge.

I had a phone call from Bradford and Bingley this morning. They only call wehn they want something.

Northern Rock, on the other hand, aren't answering my e-mails, and I have contacts. However, as Martin the Money Saving Expert points out, they're very unlikely to collapse. The Bank of England would be aware of the full situation before they agreed to grant credit.

My big concern with the Nanny State step by Brown and Darling is that it basically absolves any financial institution of any responsibility for managing their affairs. In this case, they may be confident that the likely costs are minimal, but it sets a dangerous precedent.

On the other hand, it's the business of government to change the goalposts and change the rules of engagement on an ongoing basis in an effort to respond to changing circumstances. I can understand why they did it, and it seems to have helped them in the opinion polls, but I do worry about the long term consequences.

I fail to see how bank charges being reclaimed is paid for by you. Banks are making billions of pounds in profits based on compounding and repeating overdraft charges (35 quid for going 35p into the red) and most of that is on the shoulders of those who can least afford it. Further, if it was anything other than a money making scheme for the banks, then their charges wouldn't have gone up in recent years.

But don't worry. They're taking your money too. All that time between a payment coming out of your account and appearing somewhere else, your money's bankrolling a fat cat. Banks could easily and cheaply transfer money instantaneously but it's just not in their interest to do so.

And the consequences for you, me and everyone else would be much worse if Northern Rock were to collapse due to a bank run. That's why you, me, and everyone else are guaranteeing the bank. But beacuse they've issued this guarantee, then that vastly decreases the likelihood of it ever being needed, and so costs you, me, and everyone, nothing whatsoever.

I fail to see how bank charges being reclaimed is paid for by you.

*Please* can someone explain the basics of business to ian? It is too great a task for me...

I don't see what's wrong with Martin promoting the bank charge reclamation scheme; after all, he isn't just interested in making people save, he also wants to help reduce your costs, whether it's for insurance, mobile phones or bank charges.

It's just another way of beating the banks at their own game, much like the 0% balance transfer credit card scheme that you've profited so much from, BW.

0% games are a legitimate way of using systems that banks set up to make profit, that can only be played successfully by the financially astute. Reclaiming charges that people *knew* were being levied, but ignored, and racked up anyway, is, IMHO, not on.

Sure, they didn't cost banks that to administer, but, neither does a £2.99 pen you buy in WH Smith cost more than 4 or 5p to import from China. That's the name of business, surely?

The charges would only have been unfair had people not been told (a) that they would be levied, and (b) how much they would be.

I got a little book some years ago about the seven laws of money.

The first rule was to pay yourself first. Ten percent of everything you make is yours to keep.

I had never considered that before. Now it's my first thing to do.

I can't do much about what other people and big companies do but I can do something about what I do.

Thanks for the good thoughts on this issue.

Three years ago, my youngest left university with £1000 overdraft and no student loan. He hadn't touched his savings. He paid the overdraft before any interest was charged and has saved about £1000 a month ever since. Apart from my daughter, who has a mortgage but no other debts, none of my family owes a penny. Al bought his shop outright and Dilly has paid off her mortgage, rents out her house and therefore doesn't has to go back to work and leave her babies. All done by careful management, none of them earns a lot. People think, of course, that we're lucky.

z - absolutely, and well done to you for bringing them up with the Values and skills to enable them to live like that. Anyone can do it, with discipline, and really thinking about what they want from life, and what's important to them.

Like you, I am *so* sick of people assuming that we have pots of money just because of the way we live. I was talking to someone the other day about how I'm having to cut down on the things I am able to do to make money because of my current physical state. She said, "Won't you have to move then?" I looked puzzled and asked why. "Well," she said, "you're not going to be able to afford the sort of mortgage you must have, are you?" I shrugged and said that the mortgage is now down to its last £25K (which we are choosing not to take money from tax-free ISAs to pay off). "Ah!" she said, "you must have had a big inheritance then!" "Erm, no, not a penny from anyone, ever," I replied. "And before you ask, no we don't have any other debt, except a car on a 0% finance deal that is more than covered by Mr BW's monthly company car allowance." "How do you do it?" she asked. I looked at the deisgner clothes she was wearing. I looked at the 4x4 with a 57 plate that she was driving (which had just replaced the 06 plate she had the week before - ie 18 months old), and at the jewellery dripping from her hands, which displayed immaculately manicured-weekly false nails. She'd already told me she was off to lunch with some friends in a local restaurant. I bit my tongue and shrugged. "Come back and see me when you've got some time, and really want to know the answer!" I smiled.

Read this this morning. http://www.fool.co.uk/news/your-money/2007/09/19/why-rescue-some-savers-but-not-others.aspx?source=ioowftxt0010011 Very enlightening.