Northern Rock - setting a trend

Northern rock, the first of many....

The fall of Britain's Northern Rock bank may be the first dropped shoe in a chorus line of big banks tap-dancing into oblivion. The British government's move yesterday to nationalize the insolvent mortgage lender's remaining operations leaves shareholders holding an empty bag. Their only resort now will be to call their lawyers. What we may be witnessing, in a movement that will surely spread to the US, is a changing of the guard at the top of the financial food-chain between bankers and lawyers.

London is the money laundering center of the world

The delivery of this video clip is definitely wierd. However, the commentary is compelling.

In this particular video, Strange Gordon slams London as being the international center for money laundering. Of course, the London housing market is in on the scam. The message is clear; if you have the cash, London loves ya.

Gordon finishes the video with a bombshell factiod. Although London has some very tough anti-money laundering legislation, there has not been a single prosecution of a UK banker for handling dodgy money. Given that one in five house purchases over $1 million is bought by a Russian, this beggers belief.

So there you have it. London isn't just the most bubblicious city in the world. It is the money laundering center of choice for the world's criminals.

Here comes the Congress, ready to clean up the mess

The bubble has to be over when Congress starts to get involved.

Connecticut Democrat Christopher Dodd – Chairman of the Senate Banking Committee - would like to ask a few questions to the Fed and other agencies. He was certainly onto something when he said there was “a pattern of neglect by federal bank regulators (that) precipitated the subprime mortgage crisis that could cause 2.2 million homeowners to lose their homes''. However, this “pattern of neglect” has been obvious for several years. It is pity that he did not identify this “pattern” sooner. He might have done something about it, like insist on effective banking regulation,

Meanwhile, Massachusetts Democratic Rep. Barney Frank is targeting late 2007 for passage of a bill to curtail predatory lending like that seen behind the widening mortgage market crunch.
Both initiatives are welcome, but sadly, they are way too late to prevent the unfolding subprime crisis.

Now comes the clean-up. It won't be long before the subprime crisis will fade into the background. A new, politically more explosive, default problem is about to hit the mainstream mortgage market. Soon, the banking system as a whole will be under stress. There is only one organisation with a check book big enough to sort the mess out - Uncle Sam.

Get ready for the biggest taxpayer financed banking bail-out in history.