Coo

[drplokta]

Apparently, the UK has now overtaken the US and has the highest nominal GDP per head of any major economy. We're now exceeded only by a few fairly small countries in north-west Europe (largest: the Netherlands; richest: Luxembourg) and by Qatar.

Of course, a fair amount of this is that the pound is rather over-valued, and you can still buy more for the average per capita GDP in the US than in the UK.

Comments

[drplokta]

Northern Rock's problem wasn't bad mortgages -- its mortgage book is actually pretty strong. Its problem was a bad business model, which relied on going back out to the markets every three months to borrow more wholesale funds to pay back the previous batch of short-term funding. When market liquidity dried up, this was no longer viable, but it's a liquidity problem and not a solvency problem. As far as we know.

[erikvolson.livejournal.com]

I suspect there's deeper problems (and so does the market.) Liquidity crunches don't involve borrowing nearly 30% of your total value from a central bank to stay solvent. According to the Wikipedia (via the Daily Telegraph), the asset book as of Novemeber was 80b prime and 27b subprime -- over a quarter of the book is in the subprime market. Before the madness hit, a bank would carry maybe 5% in such.

The reason I think they're in worse shape is the difficulty in getting the buyout to happen. If the book was solid, even in the current credit crunch, they'd still be a steal. The fact that people are being very leery means they don't have confidence in those assets -- and I don't think it's because they don't trust NR's assets, I'm thinking that it's because they don't trust *any* real estate backed assets right now, and that's all that NR has.