Northern Rock....What do they mean by "The Cheap Money ran out"...?

Answer 1

Up to a few months ago it was normal practice for banks to lend money to other banks at a discounted rate. this allowed northern rock to borrow money at relative low rates so they were able to service the mortgage loans they issued.
THEN came a blip in the market in the USA which indicated that money had been lent to easily and 1000s of people defaulted on the mortgages in the USA leading to foreclosures and large financial losses to the banks.
The UK banks fearing the same problem in the UK started to be be cautious with the money they had and stopped lending to each other at cheap rates, because they wanted to keep the money in reserve just in case the same happened in England. This caused NORTHERN ROCK difficulties when they could not borrow money as they normally did to service the mortgages already granted. so they had to go to the Bank of England and borrow money at higher rates.
SO the cheaper loans were no longer available so therefore the cheap money ran out

Answer 2

as Wilfred said, but it never got as far as northern rock borrowing the money from the "lender of last resort" they just asked for the facility. Like people thinking you couldn't pay your bills because you asked for an overdraft, even though you never used it.
So people got scared as the rules about how safe your money was, was unclear and not as simple as now and this caused a rush on the bank

Answer 3

Cheap money refers to the ease of borrowing. As the scale of the defaults in mortgages in the market became evident, lenders of money in the markets began to panic and saw their investments to be more risky than originally thought.

Therefor people were less willing to lend money to anyone with exposure to mortgages. Therefore they began charging a higher price to offset the higher perceived risk they were now taking. Effectively making borrowing of money more expensive.