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mart666

Listed below are comments made by mart666 between Sunday, 21st September 2008 and Thursday, 12th March 2009.

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Will QE work? 10:21am on 12 Mar 2009 QE is design in this format NOT to reflate the economy but to ensure that the Government's vast debt is funded at as low a cost as possible. Indeed if the seller of gilts were to place their newly created cash on deposit they would earn almost nothing a be at a possible risk of a bank failing , so why not reinvest at a 2- 4% with the Government. This is will look like a great rate of return especially as deflation increases it's hold on the UK this summer. Even the CPI ( currently 3%) will fall below zero by September / October.
So as with many things the real aim is not the one that is made public.
Banks still not lending 08:15am on 16 Oct 2008 Robert

I am a have said before that the bank rescue package will not work because we are faced with a world drowning in debt and thus we are now seeing debt deflation taking hold.

I now expect that we will have to face early next year deflation across the world economy and in a year or two another massive banking crisis as deflation takes down both countries and banks.

We do not face a recession but a DEPRESSION and the equity markets which act as a forward indicator are screaming this. That is why the banks are not lending and why Brown has NOT solved the banking crisis. The most dangerous part is still to come in about 1 or 2 years time.

This will have to end in a banking moratorium as I have said several times before!
All change at RBS 8:20pm on 11 Oct 2008 #28 dktreesea

I have to disagree you and hope that I do not work for a company that you run as it would eventually collapse.

Ask any accountant and they will tell you that most business failures occur because of cash flow not lack of profits.

Indeed look at Northern Rock which at the time was making good profits but died as a commercial company because of the collapse of its cash flow.

Young businesses do need help with cash flow but beyond a certain point that business as to fund itself or at some point it will fail.

Returning to the banks 2001 virtually all UK banks were self funding and indeed HSBC , Standard Chartered , Co-op , Nationwide and many others ARE self funding not relying on the interbank market as their source of funding.

We need to break up RBS, the Halifax has a huge depositor base and can be easily salvaged even with a falling housing market, shrink the RBS side.

UK has 1 person every 5 minutes going bankrupt or insolvent and the average household has a non mortgage debt of £9,500.00 .

So who is left to borrow?
All change at RBS 6:38pm on 11 Oct 2008 Robert

I have liked your articles and comments but I am about to say what may sound different to compare to the normal comments regarding the crisis.

Firstly the root problem is not the freeze in the interbank market , this is only a symptom of the disease NOT the disease it self!

The real underlining problem for the world as a whole is that there is too much debt and too much leverage.

Only a few years ago banks in the UK had no funding gap and used the interbank market as a top up source of funds not the main river of funding. Browns plan will not work as he is pushing on a string.

For example there are 4 major UK banks relying on the interbank market and the real plan must be to shrink and break up these failing giants up so that the smaller units can become self funding as any other viable business has to be.
Day of reckoning 08:13am on 10 Oct 2008 Robert

The underlining illness is excessive debt which is unsupportable and will collapse.

As for Gordon's great plan this will not work for a number of reasons;

1 Any bank using the Treasury scheme will be treated as a leper as it will be sending a message that it is not able to cotinue as a going concern. In these panicky times not even Governments will be believed.

2 The ordinary shareholders will be virtually wiped out by this plan so why use it if the bank is doomed anyway?

3 the directors will loose their golden parachutes if they use the Treasury scheme so why use it?

I have said in the past on this blog ,that the end result will be a banking moratorium, which will cover the USA , Canada and most of Europe and many parts of Asia.
A real fire break is needed but it will be impossible to avoid the oncoming depression just is we can stop the arrival of winter.
People across the world have repeated the same mistakes as happened some 80 years ago just as those people failed to learn the mistakes made 60 years before that.
Those who fail to heed the lessons of history are doomed to repeat them.
Smack smack - we're dead 12:25pm on 02 Oct 2008 Robert

Very good article once again.
You mention the Rep of Ireland pledging to guarantee all deposits and loans of the 6 largest Irish Banks. What a desperate gamble that government has taken with a 400 Euros backed by an economy of half that size !
At least one major credit rating agency is looking to downgrade that credit level of the Republic following that huge national gamble.
People should be now careful not only about which bank they should their money with but also which government!
I am afraid that there are a number of small countries with overly large banks which could bankrupt their governments. It is not a question of too big to fail but too big too save !!
Paulson's monster 7:10pm on 21 Sep 2008 Friendlycard

I think that credit will be a good measure for the future but it will not help this current situation.
The big problem is the debt criss is appearing in more and more areas not just real estate . I also think that the US is closer to reaching the bottom but it still has a away to go yet. We must remember that the huge numbers of people who are going to loose their jobs have not yet hit the property market.
I am watching for a very serious decline in the equity markets this autumn as a signal for further banking problems ahead.
The UK banking industry now being concentrated in a few big players is an accident waiting to happen. As I said earlier they will be too big too save not too big to fail.
Paulson's monster 6:15pm on 21 Sep 2008 Very good article however I think that the eventual outcome will be the same as happened in the USA in the 1930s. That outcome was a full scale banking moratoriums that began in individual states , the first being Nevada ( Nevada also has the worst real estate problems today in the US!) and spread across the country.
The big problem with the debt situation facing the world is that the total amount of bad debt is not static but dynamic so what was 700billion yesterday could be 5trillion in 2 years for example. Shutting all the banks across large parts of the world will I fear be the final outcome as it has been on other occasions in history.
This going to take many months and with the creation of Lloyds- Hbos we in the UK have a monster that is now to large to save not to large to fail.

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