Hot on the heals of my mention of the 1975 'Secondary Banking Crisis', and observation that 'history is repeating', a UK Bank is in deep trouble.

The ironically named 'Northern Rock' Bank has sought emergency funding from the Bank of England to prop up its failing business.
The Bank of England, quite disgracefully, has agreed to provide such support with its usual willingness to let Bank Directors off the hook for incompetence and stupidity.

To make matters worse, the Chancellor of the Exchequer has reassured depositors the Government will guarantee their deposits.

Northern Rock deliberately sought to become the biggest mortgage lender in the World, and although it never reached that lofty position, it has come rather close with untold billions in mortgages on its books.

The logic behind this sort of 'World Domination' is always fundamentally flawed, whether it be mortgages, computers, paper clips or any other sort of market, and I will explain why...

Normally mortgage lending is a very secure form of investment for a bank, especially if you are only a small or 'mid ranking' participant in the overall mortgage market.
However, when you have tens of billions in residential mortgages, far from providing the level of security you would expect, it in fact makes you extremely vulnerable to changes in market conditions for the simple reason "you are the market".

Northern Rock is terminal (despite their "jolly hockeysticks" Press Releases and Government Guarantees) and will inevitably collapse, possibly in a week or two, and then you have the problem of what to do with billions of pounds of mortgages on their books.
The Receivers will be holding a baby which is mindboggling in its extensive nature.
Imagine every mortgage ever granted in New Zealand since its creation in 1840, all being on the books of one lender....and then double that figure! this is an indication of the scope of the mess which has to be cleaned up.

For those who are scratching their heads at how such a problem could materialise, the Chairman of the Bank is a Zookeeper! author of esoteric prose with titles such as "Genome, Autobiography of a Species in 23 Chapters" and a biography of Francis Crick.
With a Zookeeping science background why should we have ever doubted his ability to run a bank?