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Slungiehill

Listed below are comments made by Slungiehill between Friday, 10th October 2008 and Friday, 27th November 2009.

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Dubai: Just a sideshow? 2:17pm on 27 Nov 2009 The popular perception is that Dubai and all its development had been paid for in cash from oil revenues. Were that the position it would have created an element of security as there would not be a problem with servicing debt. Given the facts that Dubai's main economic markets comprise of westerners wanting to go on shopping holidays in airconditioned malls and property speculators looking to make an easy turn and those two markets have collapsed in a spectacular fashion what is the surprise? The fact that they have so much debt? or the fact that even in the separate reality of the world of the super rich that life and indeed economic activity is a feeding circle and not a linear path.
Microsoft: 'No bounce' 12:59pm on 05 Oct 2009 We must not forget the 'good times' were largely predicated on the availability of easy credit, which enabled everyone to 'feel rich' and spend on houses, cars, etc, etc. The growth in the stockmarket is presumably related to the free money been driven in by the Bank of England and other central banks. We (especially in the UK) are not producing more and therefore creating a surplus of wealth which can be reinvested. Infact all the talk is of cutbacks in public expenditure once the emergency plumbers arrive after the next general election to fix the financial leaks in the UK. I suspect we are in for a few tough years with a few false dawns whilst reality (you have to create wealth to spend continuously) is assimilated and adjusted to. So my vote is with the management bears; the investor bulls are merely opportunists trying to scratch a living in changed circumstances and the clever ones will make a very good living from it too.
IMF vs Treasury and FSA 8:10pm on 21 Apr 2009 I had wondered if the government had been playing down the true extent of the debt mountain. Clearly they have, the next questions are:
1. What other matters are still buried or not recognised as yet?
and
2. Assuming we are at the end of the financial melt down; what are the UK politicians going to do to turn Britain into a cash positive economy?
Making banking boring 10:30pm on 02 Apr 2009 The sad thing about the current situation is it developed on the back of a fantasy that credit could be extended forever. We (the world or the G20 as they represent us) are now stopping the infinite credit line. Meanwhile back in Gotham City The Joker is preventing the real market from correcting itself by preventing the banks from going bust. As a consequence we are about to enter a very long period of very sluggish conditions. The limitless easy credit is no longer available and the overpriced toxic assets are being held in limbo away from the corrected market whilst the bankers await the market value to recover sufficiently to recoup some of the losses. Outcome for the UK will be stalemate. It's going to be a tough 5 - 10 years.
Will Lloyds' chiefs resign? 6:56pm on 09 Mar 2009 I do find myself wondering if the reason Lloyds were bounced into buying HBOS was the governments clear knowledge it would in effect sink them. Thus allowing the government to nationalise them in all but name giving the government almost a full set of High Street bank cards. After all Crash Gordon is a true Labour left winger.
The New Capitalism 10:58pm on 08 Dec 2008 Reading that reminds me of when I was at Napier University in Edinburgh in 1993. We had a talk from a banker (Bank of Scotland) explaining how we (the public) would become holden to the bankers. I never could reconcile how it would be sustained and for a while of course we were captured by our love of debt. However, it appears that a decade or so the table has turned.
Shock Carphone resignation 08:54am on 08 Dec 2008 When you consider their share price has dropped over the past twelve months from £3.58 to 92p today (at time of writing). That he pledged 134.6m of his shares between 2006-2008 which in fact appears to be 177m shares! It must have been a lively board discussion when this was revealed. In addition to the shocked board, there must be a few worried financiers. With rhe collateral now being worth around 25% of what it was 12 months ago. They will be hoping he was not too heavily into Lehman Brothers, the American subprime market, etc, etc, etc...
A British subprime mess 9:51pm on 04 Dec 2008 The sub-prime thing was driven by a number of influences not least of which was deregulation of the market. The main problem however was the people in charge of lending (be that HBOS, RBS or Bish Bosh loans) do not, did not and probably never will understand that the capacity for a market to rise is finite. The 125% mortgage was viewed as safe as the forecast was for prices to rise sufficiently (and remain stable) that within a couple of years the extravagence would be covered. The lenders stretched the utility curb by creating 40 year mortgages and interest only mortgages, maxed out for loan multiples (forgotting people still want holidays, cars, food, nights out, etc, etc). Ultimately something can only be stretched so far before it bursts! The government of course are now looking at creating a 'relative' feel good factor for us hard pressed folk so they can capture enough of the vote come the election. I think the expression in Iceland is Kreppaonomics for the situation we have here. http://www.economist.com/finance/displaystory.cfm?story_id=12382011&fsrc=rss. The only reason the UK has not gone bust is our government have a Black Amex card where as Iceland clearly only had a Gold one.
End of Thatcher's tax incentives 8:42pm on 24 Nov 2008 The VAT reduction is merely a smoke screen to create a discussion about something that helps no one. Why not reduce the fuel levy? abolish stamp duty on houses below £250,000, reintroduce MIRAS to help the housing market? If people are able to move home they will spend. The banks are now pretty well secured, lets encourage broad market activity rather than tinkering.
Day of reckoning 1:04pm on 10 Oct 2008 Anyone complaining about RP's use of dramatic language clearly fails to appreciate the fact we are in a real mess here and if anything its rather understated. After all the whole growth thing has been built on credit and there has not been a period where the world stopped, took a breath and allowed itself to catch up. Look at house prices to earning ratios as a very simple example. I would discuss this growth in house prices and people would say even longer mortgages would be allowed or interest only would be more widely used. The simple fact is that both models work providing the structure is there to bridge the long term gap on capital being repaid. It was not, the loans were seen as assets and the deals to buy the assets were seen as bonus's and bang! The situation we are in will now allow the world to catch up, infact it will force the world to catch up! RP keep it up, the blogs are accessible, entertaining and to the point.

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