U.S. Mortgage Crisis Rivals S&L Meltdown

Today's Wall Street Journal has a lengthy article about the subprime mortgage crisis.

Northern Rock: the first mass run on an English bank since 1866

Northern Rock is a British bank. It experienced this summer what Chris Giles, Economics Editor of the Financial Times, calls "the first mass run on an English bank since 1866." (FT.com: Oct 25, 2007)


Northern Rock had a peculiar business model: In Mr. Giles' words, the Bank of England characterized Northern Rock "with its dependence on securitisation, the concentration of its asset base in mortgages and the narrowness of its margins - [as] an outlier in British banking."

Where was the lender of last resort? "The Bank [of England] now acknowledges that officials did partly fumble the lender of last resort operation for Northern Rock.

What's a Minsky Moment?

The Wall Street Journal's Justin Lahart reports that the "Minsky moment has become a fashionable catch phrase on Wall Street. It refers to the time when over-indebted investors are forced to sell even their solid investments to make good on their loans, sparking sharp declines in financial markets and demand for cash that can force central bankers to lend a hand."