Inflation – Symptoms & Diagnosis

Many of those who have experienced personal or corporate bankruptcy describe a sense of control being lost very slowly over an extended period before a sudden catharsis brings the whole house of cards tumbling down. This narrative describes the fate of Northern Rock precisely. For much of 2007 the stock market had ‘sensed’ Northern Rock’s over-reliance on wholesale funding could become problematic, but it wasn’t until images of depositors queuing to remove their cash appeared on television before the liquidity crisis became existential.