Northern Rock

Um, and that sort of behind the scenes during the spring and the summers, you know, quietly, uh, kind of blew up, uh, and, you know, funding markets, uh, had the, the seizure, uh, very famously in the summer of that year.

And then we had a sort of Northern Rock kind of thing, and people thought that, you know, um, maybe that had been contained, I mean, not, not for Northern Rock, but for the market in general.

Uh, and the US markets and other markets peaked in October 2007.

So there was a relatively significant lag between the peak of the US land cycle and the peak of the broader market.

Um, I, I di- I, I did want...

I mean, the, one of the back cover endorsements, uh, from a gentleman called Neha Mehta, at the time when he read the first edition, he was working at the FSA, so he was actually involved in, um, i- issues concerned with the bank crash, you know, the failure of Northern Rock and, and, and the takeover of Northern Rock by-

Yeah

... uh, uh, well, sorry, the, the, the Virgin Money acquisition, et cetera.

The other side of this is if it all goes terribly wrong, the most that anyone can lose under EIS is 38 pence in the pound.

Now, as someone that owned Northern Rock shares that went completely kaput, that actually is not as much of a risk as you think.

So it's a very well thought out scheme and it's the envy of the world because it is the most progressive and the most proven scheme that we have.

And I think we've had over, I think it's £64 billion has been invested in UK businesses through SEIS and EIS.

Some, even if they were responsible on how they lent, still struggled during panics where everyone would come to collect at once and they realized that they weren't able to get it back in time.

And that happened to the British Bank, Northern Rock in 2007, with depositors literally lining the streets for their assets.

And this was as recently as 2007, so 19 years ago now.

19 years ago.

And the reason they do this is because there are laws about it, not about how much you have to save, but what banks can do with their money.

If you remember Northern Rock and the people queuing around the block to pull their money out of because they were worried it was going bust, banks are required to keep a certain amount of money on their books for every pound they lend out.

So a building society has to have, I think, one pound saved for every two pounds they lend out, and banks can actually be a lot more generous.

I think it's almost like 15 pounds lent out to one pound saved.

I can look up the exact figures.

And the Bank of England, it runs something called the Pru- Prudential Regulation Authority, and what it's meant to do as well as interest rates and things like that, is make sure that the banking sector is stable so we don't have another situation where we had Northern Rock going bust and Halifax being walked down an aisle with a shotgun to its head to marry Lloyds, and all the other things that went on in that period.

All of this happened because the banks had lent way too much money, not very carefully.

It led to a large amount of chaos and general unpleasantness for the population as well as for the bankers.

Yeah, I love that.

Is there any more? Any more? What else? Northern Rock.

No, they went bust.

Lloyds? No, I don't know.

And I think the thing to compare it to is not Theresa May, but Gordon Brown.

Because there's a consensus now that if Gordon Brown had gone in 2007 early, before the financial crisis, before Northern Rock and Lehman Brothers wreaked havoc with the public finances, then he would have got his five-year mandate.

He was in that brief window of popularity, and he squandered it.

And I think Burnham, we've got a huge financial cataclysm coming down the road from the bond markets and the Strait of Hormuz.