An investigation into Northern Rock shows £53 bln of mortgages owned by off shore company:

Fresh doubts emerged last night about Northern Rock's ability to repay the £23bn of taxpayers' money it has been lent by the Bank of England.

A Guardian examination of Northern Rock's books has found that £53bn of mortgages - over 70% of its mortgage portfolio - is not owned by the beleaguered bank, but by a separate offshore company.

... The first tranche of the Bank's emergency lending to Northern Rock in September has been secured against specific assets. But the second tranche is secured only by a more general floating charge, which would mean the Bank would be vying with other creditors for repayment if Northern Rock failed. It is not clear how much money was loaned in each tranche, but the emergency loans are thought to have been for about £11bn each.

Well the Bank of England can most likely kiss £11 bln goodbye. In addition, given everything stated above, the assets securing the other £11 bln seem more than questionable.

This is exactly what can be expected when government attempts to bail out private enterprise. In the grand scheme of things, however, £11 bln is peanuts. To put things in perspective please see How Much Will The Credit Crunch Cost?

As long as we are looking abroad we may as well mention that Kazakhstan sets up $4 bln fund to help its economy weather the credit squeeze stemming from the US subprime mortgage crisis.

In Japan banks suffer 230 bln yen in subprime losses:

Japanese financial institutions have had to write down about 230 billion yen ($2.13 billion) on holdings linked to the U.S. subprime mortgage market, according to reports. All combined, Japanese financial institutions are holding 1.3 trillion yen in assets linked to the riskiest portion of the U.S. residential mortgage market, the report said.

The report said major banks had 1.2 trillion yen in subprime-related holdings while regional banks has 110 billion yen and credit associations and credit cooperatives reported 20 billion yen in exposure. The financial regulator added Japan's six major banks are expected to report combined losses of 300 billion yen in subprime-related losses in the financial year ending March 31, 2008.

Japan could be vastly understating the losses. It is not just the riskiest tranches that are the problem: Anything but the top few tranches are going to have massive writeoffs.