Northern Rock Share Discussion Threads

[diydan] 19/1/2009 16:28

oh how things have changed in 6 months. I seem to recall Mr Darling saying that the reason the offers from Management buyout, Virgin etc were turned down was because HMG would not wait for its money back and wanted it returned faster. Now they want NR to slow down the rate of payback. It is now obvious NR are the best financed bank in the UK. They only owe about £8B and would have had that payed back by the end of this year. Yet HMG say NR is valueless.

Do not forget NR have done nothing different from what the then management and shareholders wanted to do. If HMG/BOE had left NR independent the shareholders would have put in more cash and the company had continued to trade it would have payed back all of the loans. Many on here said all NR needed was time.

[onsider] 19/1/2009 12:06

New Northern Rock lending policy



"We have decided it is not appropriate for Northern Rock to continue to shrink its activities, they have made substantial repayments to the government and is ahead of its repayment schedule," said Chancellor Alistair Darling.

Funded, in part, by the 1.8 billion they owe the shareholders.

[onsider] 19/1/2009 10:01

Northern Rock has said that it is to be given longer to repay its loans from the government.

There was concern that the timetable for repaying the loans was forcing Northern Rock to reduce the amount it was lending in mortgages too quickly, which was not in line with the expansion of lending the government wanted.

[diydan] 19/1/2009 09:51

Turkeys and christmas jump to mind if anyone thinks people at NR leaked the BOE funding to "Mr Peston". Why would NR leak it from what I remember they were very annoyed by it. Also if it was them it does not explain how "Mr Peston" has continued to get information about the whole financial system for the last 18 months. That can only be coming from HMG/BOE or the treasury department of one Alistair Darling? My Money is on Mr D.

[mercier et camier] 19/1/2009 00:22

Treasury man appears to pin blame for Northern Rock leak on advisers

[kpwuk] 18/1/2009 18:00

Ladies and gentlemen of the jury you must now make your decision , based purely on the evidence and find the defendant guilty.
The next exciting episode from the only country without a right to silence, before advice from legal counsel.

All a bit Eastern bloc isn't it?

[grbaker] 17/1/2009 16:37

Also, don't forget that there were offers on the table for NRK and that the day before the offers had to be in (correct me if I'm wrong on the timeframe), the UK Gov. moved the goal posts (in relation to the period in which they wanted the loans repaid) and this effectively scuppered all the offers at the last minute...

[grbaker] 17/1/2009 16:34

What might well happen is that the UK courts will uphold the Governments valuation criteria... then, the case will go to the European Courts (as I belive SRM Global has already mentioned they might do) and the EU may then overturn the UK court's descision (see .

This will enable the UK Government to save face, blaim the EU and delay the whole sorry business untill after the next election (if they are lucky)...

The comment from Legal and General is very telling:

"L&G enjoy the protection of typical bilateral investment agreements that the UK executes with other countries. Article 5 of those "model" agreements protects assets against confiscation by foreign Governments without payment of fair compensation. But it would seem that they no longer have such protection in the UK if the Government's argument stands. L&G sees this as a surprising development. The current valuation process put in place for Northern Rock is a waste of time because of the Act and Order put in place, which results in a foregone conclusion."

Point 1: Bilateral agreements - if the UK overturn this, then other foreign govs. can do the same...

Point 2: Fair compensation - other forign govs. can therefore take assets of UK companies trading/registered abroad and pay NO compensation to UK shareholders

(It is also difficult to see how zero value for a still-trading company is in any way "fair", especially seeing as there is a mortgage book of considerable value involved)

Point 3: If all protection in the value of companies is gone, at the whim of UK Gov., then L&G and every other pension fund may well be forced to sell out of all other UK banks currently receiving UK Gov. funding: that's a disaster for the UK stock exchange and FTSE100 index (at a time when it's very volatile as it is). Also, forgeign run pension funds may be forced to do the same.

Following the logical line of what this descision could eventually lead to, IMHO, is not pretty... any comments?

[theuniversal] 17/1/2009 15:10

the point is that lloyds tsb, did offer a price for the mortgage book of 113 billion, if the boe behaved like it did now with the banks helping them out, with out the poilitical twaddle from fsa and the gov. then i imop nrk would of sold half the mortgage book, and paid pff the libor and bank of england loan....over so many years or sooner, look what the gov wanted nrk to do the other week to attractin costomers to kick start the houseing..when last year all other banks thaought nrk would have an unfair advantage ect....
if the shareholders dont get any composation it will be a disgrace, considering they didnt even lend to the sub-prime and helped those in the north to have adfordable houses and mortages,

tu

[bobobob5] 17/1/2009 14:59

The whole thing needs an independent drains-up investigation, including where Peston gets his information from. But you won't get that until the Conservatives are elected. Remember the Dodgy Dossier...and remember the late Dr David Kelly...

[greycioud] 17/1/2009 14:43

Compo should be fair. 5p would be fair IMO.

[mryesyes] 17/1/2009 13:54

Compensation deal being rushed through during current bank meltdown.
If they did it in years to come, all the Tyneside grannies would be on TV saying the govt stole their shares. At the moment the govt looks generous to make a payment of 1p
The NR loan book was solid as they come, possibly the best in the market.
The govt will get its money back but it should form a company to rent properties and exchange properties between those who want to own and those who want to rent.

[mercier et camier] 16/1/2009 23:06

You have to laugh. The bank the government deemed so bad it had to be nationalised is now the bank they will use to kick start the economic recovery.



Government will use Northern Rock to boost lending

The Government is planning to use nationalised lender Northern Rock as a "good bank" to ratchet up lending to consumers and businesses as part of its most dramatic offensive so far to stop the economic downturn.

By Katherine Griffiths
Last Updated: 10:45PM GMT 16 Jan 2009

Nationalised bank Northern Rock could have a cap on its lending lifted by the Treasury. Barclays did not take money from the Government as part of its £37bn bail-out of the banks in October Lloyds, which has bought HBOS, will participate in the bad bank scheme as will RBS

Prime Minister Gordon Brown yesterday attacked the past "irresponsible" lending of British banks now being supported by the taxpayer.
The plan would come alongside the creation of a state-owned "bad bank which will house the major lenders' toxic assets. The Government will also unveil plans to implement Sir James Crosby's proposal to guarantee new loans to homebuyers and businesses.

When the Government nationalised Northern Rock in February last year it imposed strict limitations on the new lending of the Newcastle-based lender so it did not fall foul of the European Union's rules on state aid. Capping Northern Rock's lending also meant it could make large repayments on the £27bn the Government loaned it.

However, it is understood that the Treasury has been working on a reversal of this policy. Ministers now believe the bank presents an opportunity to increase lending as many other lenders have cut the amount of business they are doing.

The plans come as the banking sector suffered another dramatic day on the stock market. Barclays lost a quarter of its value, leaving it down more than 40pc on the week. Shares in rivals were also hit, with Royal Bank of Scotland sliding 13pc to 34.7p, Lloyds TSB down 5pc to 98.4p and HSBC off 2pc to 535p.

The final hour marked a dramatic reversal of the day's earlier trading which had seen Barclays' shares up 5pc and RBS rise 9.5pc on hopes governments on both sides of the Atlantic will again bail-out the battered sector.

Barclays attempted to shore up confidence with a statement after the market closed in London, saying that the board expected its full year profits for 2008 to be "well ahead" of analysts' consensus of £5.3bn. These profits would be achieved after all write-downs on bad debts, the bank said.

Barclays also said its capital ratio would be 9.5pc and its equity tier-one ratio would be 6.5pc.

Barclays said of the dramatic fall in its shares: "We know of no justification for the fall in our share price. We are fully aware of our reporting obligations. We have not said anything."

Barclays did not take money from the Government as part of its £37bn bail-out of the banks in October. However, analysts believe that the bank will be given no choice by the Treasury and Financial Services Authority over the bad bank and will be forced to participate. This may mean Barclays has to take more write-offs on the value of its assets, which could reduce its capital ratios.

Other banks which will participate in the bad bank include Lloyds, which has bought HBOS, and RBS. The Government is a major stakeholder in both Lloyds and RBS and they are not thought to have put up significant opposition to the plan. HSBC, which has not taken any Government money, would also be expected to take part.

The Prime Minister yesterday indicated he was readying fresh action to thaw out the financial system and attacked the past "irresponsible" lending of British banks now being supported by the taxpayer.

Forming a plan for a bad bank will be highly complex, sources said, and the Government is only expected to have a blueprint ready by tomorrow or Monday. It will then have to thrash out the detail with the different lenders.

[onsider] 16/1/2009 11:47

So, that's that then.

[morgancivils] 16/1/2009 10:15

This is the latest update

Court Case & Public Demonstrations

The Judicial Review hearing, on which our claim for fair compensation depends, commenced in the High Court in London on the 13th January 2009 and finished three days later. To coincide, UKSA organised a number of events including a demonstration outside the High Court.

This page contains a summary of events in the Court but it does not aim to be a comprehensive or verbatim record of what was said. It simply provides a summary of some of the key arguments and points made by the parties to the case. All the evidence and key legal arguments in a Judicial Review are given to the Court in advance so there are generally no great surprises in the court itself. The key issues being raised by the claimants, and our evidence, were given many months ago in this note: Legal Case

There are two judges in a judicial review and no witnesses. They were Lord Justice Stanley Burnton, the senior of the two, and a Court of Appeal judge, Mr Justice Silver. There were three sets of claimants: the small shareholders; SRM Global Fund; RAB Special Situations Fund and an 'interested party', Legal & General.



The legal teams and counsel representing the various plaintiffs and the Government were as follows:

SRM Global: White & Case, represented by Lord Pannick, QC.

RAB Capital: Nabarro Nathanson, represented by Michael Beloff, QC.

The private shareholders: Edwin Coe, represented by Tom de la Mare.

Legal & General, represented by Ben Jaffey.

The Government: Slaughter & May, represented by Lord Grabiner, QC.



1st Day. Lord David Pannick opened for the claimants. He presented the key arguments and said that what had been put in place by the Goverment amounted to a "No Compensation Scheme" rather than a "Compensation Scheme". He emphasised that unless the terms of reference for the independent valuation (as laid down in the Nationalisation Act and Compensation Order), were overturned, then the claimants could expect nil compensation.



He gave a naval analogy of the situation of Northern Rock shareholders. The Government effectively were like a Royal Navy ship that came across a vessel in distress - in this case Northern Rock. They proceeded to salvage it by temporary assistance. Would they then claim the full value of the vessel and its cargo? Obviously not under salvage law, but that is what the Government is doing. In addition, if there had been any pre-agreed terms for salvage then that would be applied, and not retrospectively varied at the whim of the rescuers. In the case of Northern Rock, penal interest terms on the LOLR loans and other fees had been paid by the company as agreed when the loans were made, whereas the Government now wants to claim the full value of the equity as well.



He also suggested that if the Government believed its view of the valuation of Northern Rock was sound they should be prepared to argue their case to the valuer, not put in place artificial terms of reference that inhibits the valuer from using his own judgement.



Another key point he made is that if the Government argument is upheld, then if the Government loans money to a company in future, it will become potentially worthless to the shareholders, with obvious consequences for the valuation of companies, and their willingness to accept such finance.



Michael Beloff then spoke and primarily covered the relevant legal precedents in his own amusing manner. He said the title of the Government's Compensation Order was "somewhere between a euphemism and a blatant falsehood". He suggested the Government had not challenged the claim by an expert valuer that no compensation would be payable. The compensation scheme is therefore "an elaborate and sophisticated charade".



Justice Burnton interrupted at one point to suggest that the Nationalisation Act is the key issue as the revision of the Compensation Order by itself would not be sufficient by itself to meet the claimants demand (and almost follows on automatically from the conditions for the valuation specified in the Act). This is a significant issue as judges are more reluctant to overturn "primary" legislation which they see as the "will of Parliament" than they are secondary legislation put in place by executive order.



2nd Day. Mr Beloff said there are no legal precedents for a Government to confiscate property with no compensation except in very special circumstances - for example overriding social or economic policy purposes or inability to pay. He suggested it was also necessary for a fair process to be in place to determine any compensation and with reasonable assumptions being applied. Also he believed the previous conduct of the Government was relevant to any compensation scheme for which there were precedents, and the regulatory authorities, the FSA, have admitted failings in the regulation of Northern Rock.



He said the valuation should be based on what the position was before nationalisation took place, i.e. what a willing buyer would pay a willing seller (the normal principle used in company valuations), at that time. But the Northern Rock valuation assumptions are divorced from reality.



Following on from Lord Pannick's analogy of naval salvage, Mr Beloff used a terrestrial analogy of the locked cabinet. Say one has a valuable cabinet containing treasure, but have lost the key. Can the locksmith who opens it claim the full value of the contents, or simply a reasonable fee for his work? The answer is obvious. In this case LOLR facilities granted by the Bank of England were the key that unlocked the value in Northern Rock. Therefore the Government is not entitled to no compensation but neither is it eligible to claim all the value. But the Government was already being paid by a penal rate of interest and other fees on the funding and guarantees provided.



There was also a breach of procedural rights in A1P1 (Article 1, Protocol 1, of the European Convention on Human Rights) in failing to provide the ability for the claimants to make representations to the value regarding the "assumptions" used for the valuation (a point raised by counsel for the small shareholders, Tom de la Mare in his written submission).



Tom de la Mare then spoke and said that denial of the fact finding process so the valuer could not look at the reality is a breach of the law - see European court precedents re Article 6. He then covered the background of Mr Dennis Grainger, who did not sell his shares because he was reassured by the Government's statements on LOLR and other matters. Others bought shares based on similar reasoning. He considered the problem of the terms of reference was a central issue because irrefutable assumptions are not compatible with Article 6.



Ben Jaffey then spoke (for Legal & General). L&G enjoy the protection of typical bilateral investment agreements that the UK executes with other countries. Article 5 of those "model" agreements protects assets against confiscation by foreign Governments without payment of fair compensation. But it would seem that they no longer have such protection in the UK if the Government's argument stands. L&G sees this as a surprising development. The current valuation process put in place for Northern Rock is a waste of time because of the Act and Order put in place, which results in a foregone conclusion.



Lord Grabiner then opened the case for the Government. He questioned whether the valuation assumptions were contrary to A1P1, and said he did not agree that the valuation will necessarily result in a figure of zero.



He stated that "Northern Rock was bust" (a very questionable statement which the Justices later indicated they did not necessarily take as a statement of fact), and suggested that Northern Rock had no right to LOLR funding, and no reasonable expectations of same. He suggested that those trading the shares running up to nationalisation such as the two main plaintiffs, were "taking a punt".



His view was that the shareholders were not entitled to any value that arises from the Government funding and hence the key assumptions in the Act (e.g. all funding withdrawn which is the first one), is reasonable.



He then discussed the Lithgow precedent at some length. This was a case of the nationalisation of large sections of the shipbuilding and aircraft industries in the UK, which ended up in the European court when the owners of the companies complained they were not fully compensated. In essence the court said there was a wide "margin of appreciation" available to Governments when determining such compensation, ie. a wide discretion on the possible valuation. Even Lord Grabiner pointed out that this did not mean zero compensation and no value as all the shareholders received some compensation (in reality they received a value based on a share price over a retrospective period of time and complained as much about that as on other issues).



Lord Grabiner did however point out that the valuations in Lithgow were reduced based on funds (e.g. grants) provided to these companies before nationalisation and attempted to widen that principle to cover the Northern Rock case. But he also made clear that the Lithgow nationalisation did not exclude an arbitration procedure and there was a way for the affected parties to make representations on the valuation and the associated assumptions. In essence there seemed as much to support the claimants case as the Governments in the Lithgow precedent and this was touched on later in the closing arguments.



Note that Lord Grabiner did not seem as formidable an advocate on this, and later issues as his prior reputation had indicated to the writer that he might be.



3rd Day. Lord Grabiner covered the issue of whether there was a prospective "subsidy" from the private sector solutions or whether the Government was likely to make a profit. But this hardly seemed to be a key issue as the nationalisation as such was not being challenged.



He then attempted to say that the claimants had alleged the Government deliberately took steps so that they could nationalise the company at less than fair value, but Lord Pannick jumped in and denied any such claim. Justice Burnton said the claim was simply that regulatory failure contributed to the difficulties of Northern Rock which resulted in due course in nationalisation.



Grabiner said that even if the Government intended to make a profit, that was irrelevant, and it is also untrue. Also if Northern Rock was treated less favourably than other banks, that is not a breach of A1P1.



He referred to Tom de la Mare's argument but he does not agree that A1P1 dictates onerous procedural obligations (not to the extent of Article 6). In any case, the lack of ability to challenge the valuation assumptions can be done in this judicial review. So it all hinges on whether the assumptions are lawful and within the "margin of appreciation".



Justice Burnton said if matters relevant to the valuation assumptions are shut out by the legislation then the question is whether this was a breach of A1P1. Justice Silver said "a judicial review can only challenge matters of law, not matters of fact". The issue here is that the court recognised it was not empowered or qualified to undertake the valuation itself and therefore was not in a position to make judgements on the facts.



Lord Pannick then spoke in rebuttal for the claimants. He said there were two core propositions advanced by Lord Grabiner: 1) that Northern Rock was bust; 2) that Northern Rock had no entitlement or expectation of financial support. But if these facts were self evident then the valuer would accept them as true, so why would the Treasury need to put the additional restrictions in place in the Act and the Compensation Order.



In reality, the valuer cannot decide two vital factual questions: 1) what is the extent to which the value of the company was due to the underlying assets of the company (as opposed to that proportion contributed by the Government); 2) the extent, if at all, the financial support was worth more than the price Northern Rock paid for this (the "subsidy" issue). The statutory assumptions prevent any fair balance between the interests of the Government and the shareholders.



Lord Grabiner said he didn't know how Goldman Sachs had calculated the subsidy. Lord Pannick said how are we expected to question this if no evidence is produced on it. Likewise the valuer cannot examine this. Note in relation to this issue that "disclosures" were expected to be a contested issue in this case but in reality the claimants lawyers did not seem to push this issue and seemed reasonably satisfied with the information received.



Pannick said their case was that the valuer had been prevented from examining all the facts relevant to the value of company at the valuation date. He then revisited the "locked cabinet" analogy introduced by Mr Beloff, but in this case with a valuable truffle inside it, which would deteriorate over time if not removed and consumed. If a locksmith had opened the chest and consumed the truffle, with no payment in compensation, would we accept his claim that "your property would have been worthless without my assistance"?



He mentioned that Lord Mandelson had just yesterday announced loan support to companies in the present financial crisis. If Lord Grabiner is right, any business which considers such a proposition should consider it had a major "health warning" attached because of the Government's implied right to confiscate the whole company for nil compensation some time later.



Lord Pannick said one of the central questions is whether the asset had no value or not. Justice Burnton said: if it had no value then it would be unexceptional to allow confiscation without compensation.



Michael Beloff then spoke. He said according to Grabiner's argument, the Treasury could simply say "there would be no compensation" and according to him this would be OK because it was consistent with reality. But clearly it would be a breach of A1P1.



He then recapped some aspects of the Lithgow precedent. The first point it raised was that one does not just consider the legislative language, but also the effect of the legislation. Secondly regarding the margin of appreciation, nationalisation of whole industrial sectors was very different to that of a single company such as Northern Rock. Thirdly, banks are different to industrial companies. The Bank of England acts as a banker to banks, and none of the Lithgow applicants had no compensation.



He suggested the Treasury's sole argument is that Northern Rock is valueless without LOLR support. Is it true that the shareholders owned no value, or legitimate expectations? It is not a question of whether the Treasury should receive no benefit from its contribution to Northern Rock, but whether they should receive all of it.



Tom de la Mare then spoke again. He said that as regards Lord Grabiner's argument, a judicial review can tackle issues of law, but not of fact. Several precedents were referenced in support. But Grabiner said it was not for the court to tackle the issues of fact or act as valuation experts. What is the Government's justification for tying the valuer's hands? Lord Grabiner has not given any.



That concluded the arguments for the claimants and the defence.



Justice Burnton said "it is the position of the small shareholder as much as the major shareholders that concern us". Judgement was reserved and will be published in the future (probably a few weeks time).



R.W.Lawson 15/1/2009



NOTE: PLEASE DO NOT ASK WHAT THE VERDICT MIGHT BE IN DUE COURSE. ALL WE CAN ADVISE IS THAT THE LAWYERS AND COUNSEL FOR THE CLAIMANTS APPEARED TO DO AN EXCELLENT JOB.

[magician2001] 15/1/2009 18:05

Good article for those interested....

Northern Rock was secretly given a "substantial" valuation by the Government while shareholders received nothing in compensation when it was nationalised, the High Court was told yesterday.

Documents obtained under disclosure rules, which cannot be published, show that the Government knew that it was obtaining a "valuable asset", Lord Pannick, QC, for SRM Global, the bank's biggest investor, said.

The figures also showed how much the Government expected to make from the sale of the bank on the market once economic conditions improved, he said.

Northern Rock, he added, was "a solvent company with valuable assets facing short-term liquidity problems".

Full link.....

[cpl593h] 15/1/2009 13:14

I won't be asking L&G for an objective opinion anytime soon.

'knowing that their shares will not be appropriated for anything less than their fair market value'

i.e. 0p.

I only wish NRK was a partnership so that we could go after the owners and shareholders for every penny they own or stole.

[diydan] 15/1/2009 11:00

just a reminder to all you who do not argree that compo should be paid, read this from L&G.

This does not effect you dairyhick as I am sure your padded cell with always be safe and secure. I hope so anyway as I would not like to think anyone like you was free to roam the streets.

The shareholders were supported in court yesterday by Legal & General, the biggest investor in the UK stock market. L&G, which held more than 4 per cent of Northern Rock, said the Government's action meant it could nationalise the whole banking system without compensating shareholders, setting a dangerous precedent.

"Without effective property rights, a free-market economy cannot operate effectively," L&G said. "It is essential for future economic growth and pension security that investors can place their money in the UK stock market, knowing that their shares will not be appropriated for anything less than their fair market value."

[dairyhick] 15/1/2009 09:22

here's sum feedback. wot about the loud whining of crock shareholders who were too stupid to sell despite the hedge fund muppets propping up the share price for them? and now want to be treated as savers rather than risk taking (LOL) investors. thasser terrible noise man, juss terribule too beholed.

[bryan2] 15/1/2009 09:20

The court case latest.
Courtesy of Jamtastic Interactive Investor site.

Shareholders in Northern Rock have criticised the Government for encouraging them to keep or buy shares in the stricken bank before nationalising it on terms that will leave them with little or nothing.


Thomas de la Mare, representing small investors the High Court in London yesterday, argued that the Government's harsh terms for nationalisation would have "a devastating effect" on people whose Northern Rock shares were part of their retirement savings.

Dennis Grainger, the lead small shareholder claimant, held on to more than 7,000 shares he had built up in the bank's staff-share scheme, despite the announcement of emergency Bank of England support in September 2007. He was "persuaded" to do so by statements from the authorities that Northern Rock was solvent, well capitalised with a good-quality loan book and that Northern Rock was being supported through short-term funding problems, Mr de la Mare said.

The statements were successful in ending runs on the bank's deposits and shares, and the 150,000 small investors should not face disadvantage for holding on to shares or buying more, Mr de la Mare added. In his evidence, Mr Grainger said: "Many shareholders... still believe they have shares in the bank and have not fully understood what has happened. These are not gamblers."

The shareholders are asking the court to overturn the Government's nationalisation terms, which require a valuer to assume the bank had received no state support and was in administration. The bank's shares were valued at 90p before nationalisation in February; shareholders argue they are really worth at least £3.

The shareholders were supported in court yesterday by Legal & General, the biggest investor in the UK stock market. L&G, which held more than 4 per cent of Northern Rock, said the Government's action meant it could nationalise the whole banking system without compensating shareholders, setting a dangerous precedent.

"Without effective property rights, a free-market economy cannot operate effectively," L&G said. "It is essential for future economic growth and pension security that investors can place their money in the UK stock market, knowing that their shares will not be appropriated for anything less than their fair market value."

The shareholders highlighted the different treatment given to other banks since Northern Rock's nationalisation, with investors in Royal Bank of Scotland and Lloyds Banking Group diluted by Government stakes but not wiped out.

[bryan2] 15/1/2009 09:03

Investment and Positive Feedback.
Physicists and Engineers are well acquainted with the phenomenon of Positive Feedback.
It is an unwelcome attribute and generally causes instability by reinforcing some destructive resonance effect.
Some examples are;
1. The howl produced when a microphone gets to close to an amplifier.
2. The Tacoma Bridge and the recent London Foot Bridge.
3. The "death roll" of a sailing yacht oscillating in a following wind.

Physicists and Engineers try to eliminate this effect wherever possible.
However in economics (its professionals claim to be a science) the phenomenon is not understood and certainly not dealt with.
In a rising market an example of Positive Feedback is the practice of Momentum Trading.
Simply investing in the shares that show the biggest daily or monthly gain instead of a bottom up investigation of the value of shares.
A rising market example is illustrated by the "Dot Com Bubble".
In a falling market the practice of "Shorting" is an example of Positive Feedback.
The tendency of a share downturn is amplified into a self destructive route.
Of the two practices "shorting" is by far the most destructive.
Even the shorters themselves often get wiped out by the instability they created.
We can see all around us the results of the unregulated trade in shares.
The Regulators and Central Bankers need educating in how to deal with feedback in oscillating systems because it is obvious the do not have a clue.

[cpl593h] 14/1/2009 20:50

Is bryan2 really Adam Applegarth trying to salvage the exec options?

We deserve to be told!!

Anyone bleating (ie acting in the manner of the lowest of the low) for compensation should be arrested for the attempted robbery of my children's heritage.