Crunch: A new phase
So it's RIP to the First Septic Bank: the US Treasury will not, after all, be buying toxic assets from battered US banks and insurers.
Apparently there was simply too much residual poisonous poo in the system for the US Treasury Secretary, Hank Paulson, to mop up.
The proposal to buy all those collateralized debt obligations and other distressed securities would "take time to implement and would not be sufficient given the severity of the problem."
Little wonder Wall Street had the blues again last night - and, after the recent bounce, US shares are once again very close to hitting five-year lows. The downward trend extended to Asia in the ensuing gloomy hours.
So what's going to happen to the $700bn that Congress very reluctantly gave Paulson a few weeks ago? Well - as you'll recall - $290bn has already been allocated to strengthening balance sheets of leading banks and AIG, by injecting capital into them, as part of the global bailout of the banking system.
As for the rest, well more capital will be made available to financial firms, there will be attempts to stem the rising tide of foreclosures or repossessions of homes, and - which is the latest horrible phase of the credit crunch - Paulson will try to stem a threatened collapse in the provision of funds for car loans, credit cards and student loans.
The foreclosure numbers are horrible. In October alone, 280,000 US properties received a default notice, were warned of a pending auction, or were repossessed, according to RealtyTrac, which gathers such data. That's a rise of 25% year-on-year, and 5% worse than in September.
But as troubling for the US government is the drying up of consumer credit. In what we now have to refer to as the AL Era (that's the world after "After Lehman", or after Paulson allowed the Wall Street firm to collapse, thus shattering the confidence of lenders everywhere), the valve has been turned down on the provision of finance for credit cards, loans to buy a car and student loans.
What's happened is that the market for securitised credit-card receivables, car loans and students loans - those forms of debt packaged up into bonds or securities - seized up in October. Which is depriving the institutions that provide these loans of around 40% of their funding.
Which in turn means that US consumers are suddenly finding it pretty hard to get a loan of almost any sort.
So Paulson and the brainboxes at the US Treasury are working on a scheme that would involve taxpayers' money somehow supporting the provision of finance for consumer loans.
What appears to be under consideration is that the taxpayer would in effect guarantee to take the first five per cent of losses on securitised car loans, or student loans or credit-card loans - in the hope this would give investors the confidence to lend to financially-stretched US consumers.
We'll see.
In the meantime, the merciless onward march of the global economic downturn continues.
Germany is now officially in recession.
Chinese industrial output in October rose at its slowest rate for seven years - and the China has cut taxes on more than a quarter of exports, to stimulate trade.
Intel, the world's biggest chipmaker, says sales in the last three months of the year will be up to 15% lower than it expected (that's more than $1bn of lost revenue).
BT is slashing 10,000 jobs, principally among sub-contractors and agency workers (there may be slightly less to this than meets the eye, since apparently 4,000 have already gone).
GM is still teetering on the brink of collapse (see yesterday's note "Forced Convergence of China and US").
And so it goes on.
As I've remarked before, what's come to pass is what governments, central banks and regulators most feared: economies are shrinking while banks and financial institutions fear that their stinking Augean stables may never be clean.
UPDATE, 12:57 PM: I am indebted to "Queens-Subject", comment number seven, for pointing out a typographical howler that's now been amended. The amount already injected by Paulson into banks is of course $290bn, not $290m. Only wrong by a factor of a thousand.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~04~RS~)
Comments
Sign in or register to comment.
Nice! How much longer before we turn the lights out?
Complain about this comment
My understanding was that the reason US & Asian stocks slumped yesterday/overnight is because Paulson isn't going to buy up the debt but is planning on buying stakes in the banks instead.
The markets clearly thought this was a bad idea and that it wouldn't solve the problem.
Isn't this the "solution" our great and esteemed PM is claiming worldwide credit for?
Complain about this comment
Brown said that every one was copying his approach.
If the Americans have changed their approach, then is Brown now on his own or was he telling porkies in the first place?
ps. Any update on Mandlesons confession of discussion of EU tariffs with Oleg? I am looking forward a week of hounding followed by his resignation - when is it scheculed to kick off?
Complain about this comment
At last someone sees sense and lets a bank fail,if the same had been done with Rbs, the Bank of Ireland,Northern Rock,Wachovia,Anglo Irish and Hbos the problem would now be over,Savers with these institutions would have been fully protected and the extent of the failure of these institutions would have been forgotten now and the economy would have showen signs of recovery yes the poor employees would have lost their jobs but then they would have had the large pension pots and bonuses earned to see them through.It makes no sense to prop up really toxic companies with vast sums of taxpayers monies when very good business are folding by the hour
Complain about this comment
How we all long for 'le crunch' which if I recall correctly was an advertising slogan for a type of French apple. (Or was it a French car accident?)
The American auto industry may not be allowed to fail at home, but when the parent is in trouble the overseas subsidiaries are cut first - so even if part of the 700 billion dollar fund is used to prop up the almost defunct American car giants we should not be surprised if the European subsidiaries are still sacrificed. (Goodbye Vauxhall, Opel, Sarb, Volvo, Ford Europe etc. etc. - or anybody want to buy one of them?) What of the European car industry bail out cash - for if the USA props up its car industry to maintain a level playing field Europe must do the same - protectionism here we come!
Another worry is the shape of the curve published by the Bank of England yesterday, if we assume it is their central projection then where are the error bounds? Even then with the turnaround coming in the third quarter 2009 the upturn seems far too steep to be a naturally occurring economic phenomenon. Anyway they will not have taken into account any further 'bad news' since their projection was made. It is a indictment that confidence bounds are not published as well as it makes the Bank look unnecessarily stupid when the prediction is not met.
Also, the upturn being so steep, the Bank must already be forecasting putting interest rates up really quite high to prevent overshoot. Indeed, as their often stated mechanism related to interest rates is a time lag of twelve to eighteen months they should have already put the rates up - clearly their prediction is a logical nonsense - which is very very worrying indeed.
What all this shows is that the Bank is scared of telling us the truth as they see it for it might scare us - but the untruth that they published is even more worrying.
Complain about this comment
The implications are obvious - the motivation suspicious. Is this the poison pill left by the outgoing Administration for Obama? Perhaps he should just take control immediately.
As far as cleaning the stables is concerned, the only way out now, given that there's no river big enough to swill the lot out, will be to seal off the block and begin again. That way, given a year to rot down, the old block will contain much valuable fertiliser for the new growth.
Complain about this comment
Hi Robert,
Another typo? Para five, should it not read 290bn not 290m? Detail my man!
Can you do a piece on how the global shipping trade is seizing up re tanked shipping rates etc? A scary leading indicator of demand evaporation!
Tighten your seat belts!
Complain about this comment
Wasn't Paulson talking about buying stock in banks yesterday?
[His read speech must have been constructed to obfuscate- therefore we need BBC analysts to explicate]
Complain about this comment
We should never forget that the main source of this whole problem was the "decapitalisation" of the banks over the last several years by the excessive levels of banker remuneration.
40 - 50% of bank revenues going out in remuneration and bonuses to people who were not - as is now obvious - particularly productive, was never a sustainable business model.
But they will go on linging their pockets for as long as they remain unsupervised.
SCRAP ALL BONUSES TO ALL BANKERS NOW.
DO NOT USE MY TAX MONEY TO REFILL THE TROUGH FOR THESE GREEDY PIGS.
Complain about this comment
Robert..........
Thank you for this update.
Seems we are now at the point of minus doom and gloom!
Surely the US now sets out the roadmap we face in the UK, but as with all recessions the economic climate will turn around.
Some positive articles are now required to cheer us all up for Christmas and the New Year.
I know what I want from Santa Claus..........
Complain about this comment
What about the UK buy to let market? I have an acquaintance who has 40, yes 40 Bradford and Bingley Mortgages. He has built his empire since 2000.
Property will drop to 3.5 times average earnings simply because there is no wholesale foreign money money in the system and deposit requirements will be a minimum of 85% LTV - once we hit the bottom.
These empires will not stand - they will collapse. Did no one foresee the immorality and lunacy in the Buy to Let model?
Complain about this comment
wouldn't it be nice if we could just start all over again; learn from these mistakes and try not to let greed get in the way?
it makes me sad to think that this is what the human race seems to have evolved into
perhaps we are better off extinct?
besides, think it's bad now? just wait until the oil runs out and the huge barons and cr4porations have no way to make billions of £££ at everyone else's expense ... will they force the hand of America to 'push the button' and call time on the human race?
Complain about this comment
I've got a very worrying feeling that we've only seen the tip of the iceberg so far...
If GM goes bust and the crisis spereads through the Motor Industry in the same way that it spread through the Banking industry, and its not bailed out because there's no more cash in the worlds piggy-bank now that we've spent it on the Banks...
Doesn't bear thinking about really...
Complain about this comment
I see that despite the rest of the world in an economic downturn, local governments in this country are still recruiting as if there is a bottomless of taxpayer money....
Complain about this comment
Look we're expecting 12 to 18 months more bad news. It'll all come out in the wash! In this case it needs Jet Wash!
We've all been carrying on with unsustainable financing and many companies don't deserve to be in business with the models they are trying to make-work.
This is all bad news but also great news for those who have put aside funds for this kind of scenario.
A good number of car makers need to go belly up.
Bigger fortunes will be made in this recession than in the boom that is for sure.
The Governments know they can only put on a brave face and tinker, ultimately the market will dictate what happens.
Now is the time to dig deep and negotiate hard. NOT for the faint hearted tho!
Complain about this comment
Dear Robert
The Financial world has Ditched capitalism, globalisation, and Thatcherism, for Socialism, and Nationalisations. What New Deal CAN we expect now.
Complain about this comment
It's a good news for Banks in USA and UK as this will speed up the process of strengthening the balance sheet of leading USA banks so that the Libor will come down to the lowest level, this in turn will further facilitate the money market flowing of funds for interbanking lending and for customers alike. This decision is especially good for UK banks to move forward rather waiting in the wind to expect something eventually come out from US treasury bailout. For UK banks such as RBS whoes share is currently trading at 54p, which is ironically below the 58p dividends payout, will focus on its own internal resources such as nearly 5 billion sterling shares RBS held in Bank of China which will be available to dispose next month, if some of the RBS overseas assets disposed successfully then there will have a good chance for the incoming CEO Mr Hester to turn the Bank around and start to resume dividends payment to shareholders within one year's time. After all the insurance arms of RBS such as Directline and Churchill are very profitable business so as the international money transaction business.
Complain about this comment
Either Paulson is very good at reading the market and changing his strategy on the fly, adapting to ever changing market conditions, or he simply has no idea what he is doing and simply changes his mind depending on who has the loudest voice and has his direct phone number.
Personally, I have my money on the latter, as I doubt he really has a clue what to do and is simply marking time by helping out his buddies in the banking and finance world ensure that they get their huge bonuses.
While it is good to have liquidity in the economy, pushing more credit towards a population that is already drowning in debt is simply not a very sensible solution, and can only be sustained for a very short term until the problem comes back in even more drastic form for you to deal with.
Oh well, I guess we will just have to wait and see what the future will bring, but I doubt it is going to be good news... Anyone know where I can buy a survival guide for living in the urban jungle?
Complain about this comment
Bring back British Leyland.
The patterns for the Marina and Allegro must be somewhere in the archives.
Complain about this comment
We seem stuck in this strange half-way-house where the state throws taxpayers money at the banks and then says 'please lend it to businesses and consumers'
We take stakes in private firms and then try to let the free market that has brought us so much woe continue as if nothing is wrong, only this time with huge amounts of taxpayers money
Surely if the banks remain truculent on the matter of loans Governments should set up state lenders of last resort and bypass the financial institutions by lending direct.
Complain about this comment
Given the volitility of the market at the moment it is very difficult to be sure of cause and effect but surely Poulson's decision gets us back to Groundhog day. The point of the bailout was to create some sort of a market for toxic debt with the US Treasury in the position of buyer of last resort. If their not buying institutions will again not be able to price the debt causing further write downs and a further tightening of credit.
Meanwhile why is it such a small story that the Pound has now lost 25% of its value against the dollar in 5 months? This is a far greater devaluation than Black Wednesday and will seriously impact on our Government's ever more desparate attempts to borrow yet more money internationally. Unless this stops further reductions in interest rates are for the birds.
Complain about this comment
To number 4
...yes the poor employees would have lost their jobs but then they would have had the large pension pots and bonuses earned to see them through.
I happen to know quite a few people who work for a bank who at their level will not get large pensions or have earned excessive bonuses.
Many need reminding that not all people working for banks fit into the top percentile greedy pig brigade and are decent hard working folk.
Complain about this comment
#14
a massive proportion of these are to work in job centres and benefits offices though. maybe they arent being quite as shortsighted as the national government....
Complain about this comment
The US government should pay off peoples mortgage loans with the remaining $400 billion dollars it has to a level at which people can keep up with the repayments.
The whole mess started by lending out large sums of money under the assumption so long as everyone paid massive profits would be made.
Freeing people from this unsustainable mortgage debt means they would have more money for the real economy. It would also slow down the house price falls.
While it is a bailout of some sorts taxpayers are going to have to pay more in the long term to cover the borrowing in order to buy out the mortgages wholesale.
Complain about this comment
#1 - You need to be patient for a while longer. You will probably get one or more "practice runs" in 2 or 3 years time, and in a further 2 or 3 years they will introduce you to the real thing.
No doubt the politicians of the day will claim that they had no idea and never saw it coming and anyway it´s a global problem, and if it´s good enough for California then surely it´s good enough for the UK, and it´s not all bad news just think of the carbon saving allowing the UK to claim pole position in the world green stakes.
August economic commentators and forecasters will spew forth a dictionary full of excuses to explain why their central forecasts for economic recovery and growth have been impacted in a not necessarily positive way by the systemic failure of the British power industry. No doubt this will be another once in a lifetime event, something for which it would be wholly inappropriate to hold any individual to account. Indeed any attempt to hold anyone to account for anything would be little more than spiteful vindictivenees. Unless of course an opportunity arises to blame Johnny Foreigner - this of course should be siezed upon immediately.
The only saving grace is that most of us will be literally sitting in the dark and hence will not have the opportunity to listen to the boundless puerility briefly outlined above.
Complain about this comment
#11 "Did no one foresee the immorality and lunacy in the Buy to Let model?"
Unfortunately not. My godson couldn't afford to buy a home, because B&B et al financed buy-to-letters had forced up prices to ridiculous levels. And of course the money to pump up this bubble came from overseas. Now of course people have to have less interest on their savings - partly to subsidise the people who have become a new landlord class on borrowed money. There should be fair rates for owner occupiers, but punitive rates for these parasites. (I have no personal interest in this as I am mortgage-free)
Mortgage to buy to let has certainly contributed to the current bubble and bust: just as borrow to speculate on the stock market contributed to the 1929 crash.
Complain about this comment
Robert Peston.....a short seller in disguise?
Complain about this comment
Robert there’s something I don’t understand :
Who is going to lend the UK the money to ‘borrow our way’ out of the recession. ?
Given the decline in the value of the pound to a new low against the euro and the sub $1.50 dollar just how are Brown and Darling going to ‘borrow’ us out of recession ( to fund tax cuts and public works projects ) – Surely our mighty currency will not buy in many dollars or euros, and whom are we borrowing from?
Maybe using sovereign wealth funds like Barclays have done, and they appear to be paying top dollar (sic) for their money. Doesn’t sound too good.
The IMF then, like Denis Healy did in the seventies, the last time the wheels came off a Labour government.
Maybe we could borrow it from Prudence, but I haven’t seen her round here for a while.
So who is going to lend us the money, in what currency, and on what terms?
Also this economic stimulus must be coordinated with other countries who will be doing a similar thing – so who are they going to borrow the money off?
Do I here the printing presses warming up?
Gordon always said we are uniquely placed to withstand the economic downturn. Given the state of the pound in the money markets, the rest of the world obviously agrees with him.
I get the feeling we are up a creek without a paddle. Hand me my brown trousers.
Complain about this comment
Robert
We are not looking at recession anymore. Commentators are talking of depression.
What will be a Depression in its current context? Nobody can really suggest that we will have a mirror image of that period, can they? Suicides(which were wholly hyped at the time) soup kitchens and mass depravation?
Will the world depression of 2009 - 2015, if it occurs have a financial industry on its knees and the 45% nof the population being supported and by who as corporation after corp' and small business collapse?
Will there be no alternative other than to invest heavily in social housing as the mortgage industry becomes non existent?
Will it accentuate the class divide futher as the middle classes become dependent on welfare?
Will communities come together with co-operative societies to even out hardship.
Will the effect of gorging on false prosperity enrage the people enough to support the overthrowing of existing regimes?
Will the BBC used to unite the nation as a Public Service Broadcaster?
Who knows, but its all to get pretty exciting isn't it?
Complain about this comment
giantirishrover.... thats some strategy!
Surely if all these banks go bust then all debts owed will be called in? Mortgage, commercial loans etc etc... everyone would go to the wall not just the Banks.
As for the Bank employees, maybe the top tier of the board can survive on bonuses and pension pots however think the normal employee being tarred with the same brush is a bit harsh.
Complain about this comment
If most banks are bankrupt, and can't or won't exercise their basic function in society, we might as well abolish them and look for a new model of finance.
Lending money, except very short term for cash flow purposes, should be abolished. Instead of banks we need investment houses which rather than lend, take a stake in anything they finance. They would then have an incentive to keep a business going rather than foreclose. The same with mortgages: People pay rent on the portion of a property they don't own, while paying off the capital plus a reasonable service charge on what they don't.
The purpose of a central bank should merely be to match the money in circulation with the amount of goods and services available. Plus we need state guaranteed deposit takers whose sole purpose is to keep money safe and enable it's transfer between people and organisations.
The function of banks has changed greatly over the centuries, as has the nature of money. Time for a complete rethink, and on an international scale.
Complain about this comment
And still the Guardian adverts abound for all manor of more needless jobsworths.
When will the world wake up to the fact that BROWN has busted Britain.
The list of his failed policies is endless yet still he spouts he is "Doing the Job"
If we had any decent Labour MP's who could stand up to the bully boy and (girl) enforcers they would stand up and be counted and get rid of the most incompetent Prime Minister Britain has ever been subjected to.
Unfortunately we dont have a decent replacement and not one in the Conservative party either. Cameron lost the battle when he tried to "Get in on the action" with his speech at the party conference. A serious misjudgement and one which history will show, lost him the chance to ever become Prime Minister.
Britain is BUST
Complain about this comment
The phrase that has defined the last 6 months or so was 'Worse than Expected' as bankers and economists fractically tried to catch up with what was happening and realised that none of them had any of the imaginary money that they thought they did - and the ones who did have any had lent it to a deadbeat named Cletus in a trailer park in Arkansas.
Well, my friends, the next 6 months or so are going to be defined by the words 'Longer, Slower, Deeper and Harder', which sounds absurdly like a porno movie, but refers to the strength and depth of the tidal wave of recession that is gathering in the deep and heading our way. 'Crash' Gordon is standing on the shore with his back to the sea and his trousers rolled up to the knee blithely blaming everyone else for problems that he could have prevented.
There are an awful lot of people who are going to get hurt in the next year or two by market forces that they don't understand - and they are going to want to know why.
The words 'no more boom and bust' sound a bit hollow now, eh Gordon?
Complain about this comment
The argument about the automotive industry being a key part of the economy just doesn't hold water. Any productive industry must weather the visicitudes of the economy, product life cycles, demand and supply and all, and the same argument was current in the UK economy in the 1970s about British Leyland. Its loss did not bring the UK to its knees, even though it was particularly unpleasant - to be gentle - for those concerned.
Another viewpoint is that the shake-out will refresh the corporate sector as a whole, and possibly do more to save the planet than anything a government can plan (particularly in the US, where they'd rather lose both legs than the car, even though they can't afford to replace it this year).
Complain about this comment
Well - at last we all know what the Third Way much trumpeted by Blair and Brown actually means.
An economy with the spivvish characteristics of capitalism combined with the sclerotic inefficiency of Socialism.
Complain about this comment
No wonder lending has frozen up. If the average existing car loan or whatever is only worth 80 cents on the dollar then any institution offering such deals will make an immediate accounting loss of 20% on any new loans offered if they are marking to market.
Complain about this comment
Gosh how depressing :(
Is there any good news out there?
Robert, please find a golden nugget of hope in the mire and write about that tomorrow just so I can face the weekend!
Thank you.
Complain about this comment
What we are witnessing now is the spill-over from the financial economy into the 'real' economy of goods, services and jobs. Despite the impression, fostered here and elsewhere, that the economy is really about financial flows and banking, these 'real' components of the economy are much bigger, so will be correspondingly more difficult (or impossible?) to rescue.
The loss of even one of America's Big Three auto companies would cost two and a half million jobs, maybe more, with a high proportion of those jobs being lost in Obama's back yard. He cannot conceivably say that saving banks is OK but saving auto jobs is not.
Therefore, GM, or Chrysler, or Ford - perhaps all three - will be rescued if necessary. This might be justifiable in terms of knock-on effects, but it perpetuates what are, frankly, failed businesses. Each rescue of a failed business draws funds away from the productive parts of the economy.
The word "tailspin" comes to mind here....
Complain about this comment
To number 22.
Oh do you now indeed: well tell me how many poor people in just say in south wales do you know you have lost their jobs in the last month with only the basic redunancy packaage, no pensions and no hope.
Any one working in a bank gets at least twice the redunancy package of the average person and also have a very generous pension package paid for by the taxpayer the very people who are being made redudant in South Wales.
Just to remind you Fred Goodwin from the Rbs walked away witha pension pot of 8.5m never mind his tax free package,now leave him with 1m of a pension pot and divide the 7.5m pension pot amongst 300 of the poor people of south wales in the last month and they would jump at it.
No have no worries about your friends in the bank
Complain about this comment
so letting Lehman's fail started all this?!
I don't think so! All it did was whistleblow on the entire finance market behaving badly!
Uncertainty is fanning the flames-total disclosure and honesty is needed, together with an instant stop of knee-jerking.
I don't think anyone knows how bad all this going to get. We need to stop throwing money into the air in the hope it will stop all the chaos.
If governments do this, the money they want to put into the system will go where it will work properly.
Fix the problem, then to relentlessly after the architects of this mess.
Incidentally, as banks are still not lending to each other, then perhaps LIBOR is redundant and should be scrapped? After all, it just encourages the bank to continue to borrow from Peter to pay Paul. Let's wean them off credit too!
Complain about this comment
#31
What you describe is what I understand is "sharia financing" as strict Islam forbids any type of interest being charged. There have been a couple of mortgages that use the principles you outline.
Complain about this comment
Now let's look at this a different way. We have a labour government who by it's very nature prefer state control over private enterprise, but 10 years ago any attempt to change the world would have been seriously resisted. So you play the long game, keep feeding to rope and encouraging behaviour which in the end is destined to fail. In the meantime, you rape the companies and pension funds of as much tax as possible to fund this economic miracle.
Roll the clock forward 10 years, and the system finally cracks under the wieght and the government step in with state control at the highest level. They allow the banks to withhold credit despite what they say in public and this feeds through to manufacturing, car makers, retail. Finally the doors are opened to China to "invest" in the economy at such a low rate and the project is complete.
Add into this a fast ticking clock to the next election which the government will resist until it absolutely has to and we are in for a very rocky 18 months, during which time the goverment will continue to blame capitalism for all the problems.
The population desperate for an explanation would much rather blame the capitalists than admit that they were conned in 1997... and don't say your weren't warned! Socialisim will be embedded in our society and we will never recover.
Complain about this comment
Zipitee Doo Daa, Zipitee Eh, we’ll that’s me cheered up no end! Time to spend ALL my cash while I can get some gratification for it as soon it WILL BE worthless!
Complain about this comment
Too many people have borrowed too much for too long. (with apologies to Winston Churchill). We have for the past eight years being funding a bubbling economy with, not next year's earnings, but the year after's earnings. The bubble has burst and now it is pay-back time. We will not fully recover until pay-back has substantially been achieved. However, this will not be a time to get on the same tracks again. A lot of people will have learnt frugality and caution. This will mean that the financial markets will have to rethink their business stratergies to cater for a world where a greater percentage of the population are savers rather than borrowers. Perhaps this will enable banks to lend more time, effort, and expertise to ensuring that borrowers, both personal and business, are responsible and have adequate ability to repay and have an assets that cover the borrowings.
Complain about this comment
I love it when you call a debt a security and them lend out on the back of it.
It will only be secure as long as the debtor pays back the loan. Now the debtors cannot pay and so we have insecurity.
Wonderful thing; logic.
I always knew I could never be an accountant as I had a proletarian attitude to money as I could never see it as a commodity. Now I know why I was never a banker.
This is not so much a loss of confidence but the return of reality.
Not nice is it? But welcome to the real world.
Complain about this comment
The problem with the UK economy in this global recession, is that it has a bloated, unproductive, ever recruiting public sector. We arrived at this recession with a large, structural, public sector deficit thanks to one Gordon Brown. When will Brown accept his part of the blame for the mess we are in? (Rhetorical question, since Brown is incapable of seeing any fault in himself).
Complain about this comment
"there will be attempts to stem the rising tide of foreclosures or repossessions of homes, and - which is the latest horrible phase of the credit crunch - Paulson will try to stem a threatened collapse in the provision of funds for car loans, credit cards and student loans"
"The foreclosure numbers are horrible. In October alone, 280,000 US properties received a default notice, were warned of a pending auction, or were repossessed"
Good job it's only America RP! But it's not is it?
You're British, right?
How about the story HERE? I'm beginning to think you belong in the same bucket as all those clever-clogs in the UK who think people who fall thru the debt-net deserve everything they get.
Look - it doesn't even make commercial and economic sense to 'punish' people and firms. We are going to need them all in position to have any hope of a fightback.
A MORATORIUM ON COURT ORDERS FOR DEBT REPOSSESSIONS LIQUIDATIONS AND BANKRUPCIES NOW
Why isn't David Cameron fighting for this?
I mean - Why ISN'T David Cameron - or someone in Parliament - fighting for this??
Am I the ONLY person in Britain saying this?
Cummon you guys..
GC
Complain about this comment
So where can there be any confidence in solutions which are put forward before the full stench of the problem has been experienced?
Paulson is now standing on shakier and shakier ground trying to present a controlled image. It looks like the guy has jus started to read the second page of a 100 page contract and is suddenly realising more of what he's got himself anfd the US taxpayer into.
Will Darling need to backtrack? If he does, where will it be?
The credit crunch is a series of mistakes and they are still being made. A crunch could now evolve into full scale decimation.
Complain about this comment
#31 and #41
Yes - this is very similar to Shariah financing in theory - but the economic reality of a Shariah mortgage is far closer to a traditional mortgage than you might think because it recognises that the decisions and responsibility must lie primarily with the borrower.
Complain about this comment
Oh dear - so $700billion isn't enough to clear enough toxic debt to make any difference. I hear old blue eyes echoing - "and now the end is near...."
If the toxic debts were cleared out then buying stakes in the banks to recapitalise them (i.e. provide new money for lending) would seem sensible. Buying stakes in banks still exposed to potentially huge losses is just throwing good money after bad - the root cause of the problem still remains. No wonder the markets didn't like it. Mr P is not going to refill their piggy banks but dilute their investments instead - of course they reacted badly.
It seems that one way out is just to simply void all CDSs period. This way the exposure to debt returns to the lender of the loan and stops the silly multiplying of the same debt which has resulted. At least the banks should know what they lent and to whom rather than trying to get the 'masters of the universe' to trawl their IM accounts to find out whether they did a deal or not. So a large number zeros dollars dissappear - well, so what, they never existed in the first place. The truly weak lenders will be exposed fully to light of the markets and should be made to pay the price. In the UK B&B and Northern Rock have paid this for dumb business models.
The true subprime lenders obviously will have nothing left but then frankly we don't want them lending to anyone anyway.
All that the uncertainty at present is doing is causing a recession which in turn will make more normal loans (to businesses) turn bad as their profitability falls, so they make people redundant/stop investment plans/cut back expenditure (all understandable 'good' business practice), ex-suppliers to these repeat the process, profits fall further and the cycle continues until we find the underlying economic position which is sustainable.
A point to note it at the last recession the companies which came out strongest were those which had invested (wisely) during it and continued to advertise strongly to maintain consumption.
Mr P can use the remains of the $700billion to buy the defaulted mortgages (not encouraging more bad debt)- he can then keep the people in the houses and charge them rent thus defraying the cost (oooh social housing I can picture the bile on republican's lips) - when the situation improves he can offer right to buy to clear: if the renter can actually afford it this time of course. He would of course need to get through congress a bill stopping that peculiar American practice which allows home owners to just walk away without penalty. That rapidly implemented should slow down the rate of default by 'owners' treating it like an investment.
Complain about this comment
Blogger 12 has made a valid point, I have long since feared that the elites have usurped mankind for their own greed filled selfish lives. To think that the bomb could also be used to cleanse the world is a very frightening prospect.
Its all a long way from the happy 1980’s where the Americans were the good guys, their country has been turned into a fascist state and the so called enlightened or educated indigenous population are none the wiser.
I honestly don’t know who to fear the most, the Americans, the Russians, the Chinese or Brussels!
Complain about this comment
Why is there such a huge disconnect between the soothing sounds (deceit) emanating from our glorious political leaders and this sort of analysis from Peston?
Indeed, even the BBC mainstream news seems barely interested in the earth-shaking events taking place in various dark quarters of the global economy.
There seems to be a polarity of views on what's happening at the moment. The man on the street - whovever he is - would seem to be largely oblivious to the earthquake now being signalled by the tremors being reported by Peston and other like-minded commentators.
On the other hand, people like me (are you one of them?) continue to hold the view that the situation is far, far worse than one might believe from simply listening to the lightweight, mainstream news reporting we're seeing/hearing/reading, and the patronising garbage being churned out on a daily basis by the likes of Brown, Darling, King et al, whilst the Tories look on dumbstruck.
Keep telling it as it is Robert.
Complain about this comment
I love it-Crash Gordon and Darling Canute!
Brilliant!
After racing vertically downwards and charging along the plateau, we suddenly encounter another vertical drop! How come every blogger on sites about this subject knew that:
The bailout plans around the world wouldn't work
There was more dirty laundry to air
How come those in control didn't?
A total waste of time and money-apart from delaying the inevitable to ensure it became another party's problem!
Ordinary people always suffer. All we now have left is our sense of humour!
A good thing though-my daughter is at Uni and has now learned a great deal very quickly about the world at large-she has a part time job, doesn't use her overdraft, won't ever get a credit card and is saving hard. She is now seriously thinking of withdrawing her cash and hoarding it as she isn't getting a decent interest rate. She has no trust for even National Savings as she thinks GB can't be trusted.
The speed, intensity and brutality of recent events is due, in part, to our lightning-fast technological world, but at least many more people are learning a massive amount very quickly about the world of finance. They are more cautious and cynical, and that, in the current climate can only be a good thing. No longer will people go meekly to the slaughter.
Complain about this comment
#18 I think you're exactly right re Paulson, Swervin Merve et al. Ever read War and Peace? This reminds me of the description of the battles between the Russian and French armies: a total maelstrom with every soldier reacting in blind panic while the Generals stood on a hill issuing retrospective orders to give an illusion of command.
These people have proven that they can't see past their nose in this crisis, but they still seem to have an important role to play in steadying the troops.
The fact that reality seems to unfold contrary to every prediction they trot out is denting any faith in their ability to lead us out of the crisis. Honesty in this situation really would be the best policy, as the erosion of any remaining trust and respect in these leaders will only serve to deepen the crisis.
At the moment they look like toddlers trying to command ant hills.
Complain about this comment
Great plan by Paulson to let Lehmans go bust! He must be worth every penny he gets.
One thing I don't understand is what is happenning to the money that would normally have been lent to the banks. Were is it now, and what effect is that having?
Complain about this comment
#11 "Did no one foresee the immorality and lunacy in the Buy to Let model?"
There is nothing immoral or insane about the Buy to Let model *provided* you have the money (hard cash) to buy them !! My godmother has 5 properties that she bought over her working life, scrimping and saving to buy each of them !! Now they are her pension fund and are , dare I say it, safe as houses when compared to the pension funds looted by our esteemed PM !! They will also be her gift to her daughter and grandchildren in the years to come.
The immorality and lunacy is in the fact that your friend did not *buy* to let !! He *borrowed* to let, expecting the rental income to cover the cost of borrowing and also help towards paying off the capital sum(s) borrowed !! To use a very ugly and hateful American word, he *leveraged* his small amount of wealth into what he saw was his empire only to see it dissolve in front of his eyes now.
Blaming the Buy to Let model for his own failure to curb his greed is a cowardly avoidance of responsibility !!
Complain about this comment
'waitingforthepain' sees the devaluation of Sterling as posing a problem for the Government to borrow to pay ourselves out of the mess. Is it no true perversley that you borrow less foreign currency to gain the same amount of Sterling. But this is a dangerous game, because if Sterling falls further (and borrowing pushes this) then you have to pay that much more back in interest. This is all a big gamble. And then of course as Sterling has fallen by 25% against the Dollar and the Euro etc prices of imported coomodities, goods, and services must go up by 25%. The BoE must have got its figures wrong if it is really expecting deflation. I do not see Energy companies reducing their prices, and what about prices in shops. I agree, any further run on Sterling should be curtains on interest rate cuts. If not then the Government and BoE are out of control. Help!
Complain about this comment
Mr. Peston, has the BBC re-discovered a real Tardis ?? Post #13 appeared before post #12 !! Or is it the someone cannot count ??
Complain about this comment
The system is not in decline, recession, or slump. The system is bust. With care we might come out of it very slowly over the next ten or fifteen years. Trying to restore it
quickly to its former running speed, with imaginary government money in the style of Germany in the twenties, Yugoslavia in 1990, and Zimbabwe in this decade, will lead to hyperinflation on a global scale. That will be something new.
Don't fear for your investments - fear for your life.
Complain about this comment
way things are going maybe obama can get fidel to come out of retirement and work as a consultant...... as a bonus the yanks will get decent health care and maybe there boxing team might scoop a few medals at the next olympics too!
Complain about this comment
#51
If I were you I'd fear Our dynamic duo the most!
Complain about this comment
hey everyone-time for Politicians Anonymous-
"My name's Crash Gordon and I'm addicted to power and credit"
How does one start a political party? We bloggers should be in No 10 and No 11!
Complain about this comment
Does anyone have any remotely concrete figures detailing the exact amount of money that has been paid out to banking executives in bonuses over the past 10 years?
I'd be very interested to know how many billions of £/$ have been handed out to these failing human beings, money that would have contributed towards saving the global economy had it been put aside for the rainy days we are now facing.
Also, had such ridiculous bonuses not been on offer in the first place, would we have been in such a dark place right now?
Complain about this comment
The other part of the equation that I'm having trouble comprehending is the whole repossession question. The whole point of repossessing a property is surely to recoup the loss that you are making on it by selling it again.
In the current situation, there are simply no buyers, so repossessing a property does the banks absolutely no good whatsoever, as it is not like they can sell the properties for anything like the amount of money they lent out on them.
Surely there needs to be some kind of recognition that there is currently no point whatsoever in repossessing a property and that the lenders need to come to some arrangement to prevent houses people being thrown out of their houses on a point of principle rather that goes against financial good sense.
Complain about this comment
If the USA is in such dire straits, why has the pound taken a hammering against the dollar and other major currencies. Weren't we told that the UK economy was well placed to ride out this recession, by Mr Darling.
Complain about this comment
The banking market (despite heavy protestations from the banks themselves) is a monopoly, or at least exhibits fine monopolistic tendencies. There is in reality very little competition, and very high barriers to entry through onerous box-ticking regulation.
We need to be able to wipe the slate clean when these things fail, rather than dragging them out forever. Who was it who talked about the sterilising effect of daylight?
There are clearly pension issues, but if the markets working properly, we've all suffered as a result of the write-offs we've incurred to date, and that is merely a matter of timing. Speaking as a person some way off retirement, and not looking forward to the gilt-lined super-annuated defined benefit schemes that have historically been in place, I hate the prospect that my lifetime savings will be wiped away at the last minute.
We fix this now however, 30 years before I retire, by making people accountable for their actions, realising that they run the risk of failure.
Government should levy a higher rate of corporation tax on these risky businesses, and protect the savers / pensioners from the potential defaults with the proceeds.
Complain about this comment
I can't imagine the Financial Whizzers at Breton Woods mark II, adopting the Brown approach in any way.
'Do what I have done to the UK economy'
- Destroy the currency against other currencies
- Introduce inflation as a time ticking result
- Ravage the Pensions
- Take from the hard working and give it to the Incompetents
- Have Unemployment and Recession
- and simply Ignore the People
To which the Bretton Woods mk II chairman will say
'Yes ok Mr Brown, you can do that but for what purpose ?
Now sit down.
In the next item on the Bretton Woods mark II agenda, we will see if anyone has anything sensible to say'
Complain about this comment
#41 Allahu i Akhbar!! (God is Great!)
Up to a point, but it's a bit more than that - it's a potted version of the Social Credit model of Clifford Hugh Douglas. I first came across the ideas years ago in a Robert Heinlein novel "Beyond This Horizon", and more recently in his posthumous novel "For Us the Living".
Heinlein loved above all to get people thinking. My point in proposing this is that if the present financial model isn't working, and can't be fixed without us expecting another breakdown somewhere soon along the line, we need to consider the alternatives.
Complain about this comment
#13 "If GM goes bust and the crisis spereads through the Motor Industry in the same way that it spread through the Banking industry, and its not bailed out because there's no more cash in the worlds piggy-bank now that we've spent it on the Banks..."
GM has long been the doo-doo before now. So has Ford and Chrysler !! GM going bust will only affect Ford and Chrysler. Ford will go down the tubes while Daimler-Chrysler had been desperately trying to sell off the Chrysler part for more than a year now !!
All that will really happen is the this will strengthen the hands of the other major car makers who may take up some but not all of the slack. Other minority car makers may also go to the wall. The only exceptions will be the truly specialist car makers. My friend in the armoured Mercedes business told me his business is booming especially in the Middle East and Latin America. He mentioned something about kidnap attempts helping to drive his business on !!
China has a tiny middle class of a mere 250 million; just a trifle under the entire population of the USA and they all want cars. However, they are not terrible enamoured with massive gas-guzzlers. I hear they have now become the Japanese car makers' best customers. Nanjing Auto is probably making more Rovers than the Rover Group did !!
So, to answer your worries, there will *not* be a knock on effect a la banks !!
Complain about this comment
Hmmn we landlords are loved even less than ever now.
Personally, I bought my 'buy-to-let' properties with bigger deposits than most residential purchasers in areas with traditional high rental demand. I rennovated and made improvements to them and rent them out for a small profit (for now at least!).
Good luck to all those who paid cash for their rental investments... and to all those out there without any mortgages. I'd have had to have worked as a fat cat city slicker (remember them) or been born with a richer father to have been able to afford it without some finance. Cheaper commerical mortgages were made more readily available, i did my research and i 'took advantage'.
Looks like my research wasn't very good, but no worse than most of the world's leading economists.
I've said it before, most people in life, as always, have just been trying to make a living and invest in their futures. But if it makes those of you who have to have people to blame feel better. Yes i, and those i know who have done the same, are all parasites. And we're reaping what we sowed.
Complain about this comment
#17 No dividends until the 12% coupon preference shares and other government loans are paid off !! Our Lord and Master has said so !!
Complain about this comment
and bankers anonymous-
"I'm a banker and I'm addicted to gambling with people's lives"
Complain about this comment
#18 Try Foyles !! They seem to have all manner of weird and wonderful books !!
Disclaimer: I do not belong to the Foyles family, do not hold shares in the family company and am not a member of staff of said company !!
Complain about this comment
#29 soup kitchens and mass depravation?
-We probably already have the mass depravation. Mass deprivation is on the way.
#31 Sasha
"Instead of banks we need investment houses which rather than lend, take a stake in anything they finance."
Erm - I thought we had that and it was the cause of the problem ( investment in CDOs etc). Most of the investment banks have switched to commercial banks, have they not?
#50 Spot on.
We need to know how DEEP these banks are in the clag.
Then the fear and uncertainty is gone.
Complain about this comment
Fortune favours the brave! Come on Gordon, we don't have to wait for the pre-Budget report, act now!
Lower the rate of VAT to15%.... NOW!
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
Buy-to-letters have "just been trying to make a living and invest in their futures"?
No, they've been skimming off other people's livings and making it that much harder for them to invest in their own future.
I have to shell out a third of my pay every month to someone who now controls almost my whole street and is allowing it to "elegantly degenerate."
Come the non-existent revolution buy-to-letters will be the third against the wall after the politicians and bankers.
Complain about this comment
Just a thought but why don't we let the nations with the wonga buy all (any left?)of our nations assets. Then just renationalise them for peanut compensation as they did with our assets in their countries when we were "rich".
Complain about this comment
Is it me or is everyone getting bored of comments blaming the current global economic crisis on Blair/Brown? If anyone thinks that these two would have averted (or caused) this disaster is living in cloud cuckoo land.
The seeds of this were planted thirty years ago and no individual or group were going or able to stop it.
Capitalism is rubbish, but is the least worst option. If you don't like it then you should have supported the Communists (or its relations) when you had the chance.
Complain about this comment
#32 Cameron is to the Left of Blair, or should that be Blair is to the Right of Cameron ?? The LSD, oops sorry, Liberal Democrats, are so far in the clouds that they are out of contention.
Either way, Cameron is no Maggie Thatcher !! And she, or her clone, is what we need now !!
Complain about this comment
46 (crowdedisland) is absolutely right.
The claim that the UK is "best placed" to weather the downturn is demonstrably nonsense, as is being demonstrated almost daily by job losses, the slide in the value of Sterling, reports from the OECD and others.
The reason for this greater vulnerability lies primarily in the bloated public sector and the resulting structural public debt-dependency. Private enterprise in general - and banks in particular - have made mistakes, but these pale into insignificance when one considers, for example, plundering more than GBP 200 bn from pension funds to pay for bureaucracy and benefits.
Not much can be labelled "made in Britain" these days, but we can paste this label onto many of our current problems.
Complain about this comment
If Paulson does do the U turn and as one of Bushs nurses, stops the transfusion, I think it will be an antithetical master stoke that only Bush could engineer.
Cuttin taxpayers funding to the Financials to try and slit the throat of the US's economy before Bush goes, leaving the President Elect with a headache, will in fact leave the door open to use the reserves to support the lame-duck Detroit 3.
Therefore, leaving the economy needing a transfusion anyway as it crashes without it seatbelt on!
The blue collar bankers cannot be saved, neither can the auto-workers, isn't it time the life support was switched off and the transfusions halted?
Complain about this comment
RP "toxic assets"
An oxymoron?
Complain about this comment
So there's a drying up of funds for credit cards, car loans and student loans.
It might be a bit 1960s, but why don't we start saving up to buy cars, and only sending the best people to university, so we can afford to fund it for them??
Is this financial "crisis" in fact a return to common sense????
Complain about this comment
@64.
If houses don't get re-possessed what incentive for paying back a mortgage (or rather penalty for not) is there?
As soon as word got out that repossession had stopped or were much less likely, everyone on the borderline of being able to pay will just stop paying and the banks/building societies will have even less day to day liquidity.
Complain about this comment
# "Why is there such a huge disconnect between the soothing sounds (deceit) emanating from our glorious political leaders and this sort of analysis from Peston?"
Could it (huge disconnect) be that they emanate from the opposite ends of the alimentary canal ??
Complain about this comment
Moderator
Can you get someone from IT to sort out the presentation, please?
There are problems with apostrophies and the pound sign.
See #12
"to make billions of ??? at everyone else's expense ..."
Thanks.
Complain about this comment
I really can't understand why the banks were bailed out. If they had gone to the wall yes it would have been difficult and we would probably still have the same problems as we have now. But in the longer term new banks would start up and surviving banks would have been recapiltalised after receiving deposits from customers from collapsed the banks. There would also be a few billion £ in the Treasury to help people through the difficult times ahead rather than ridiculous level of national debt.
Complain about this comment
#37
Good news...... the world will in future need less people employed as estate agents.
Good news......Paulson has peered over the edge and seen that pi$$ing away half of $700billion on toxic loans, instruments and the CDS market measured in $trillions is a bad idea.
Beyond that we're scratching around.
Complain about this comment
The buoyant economies of the last decade or so depended on demand created by easy private credit, particularly in the US and UK. The removal of that demand must either be reversed or it must be replaced, if a very serious recession is to be avoided.
Even if the banks can be persuaded to start lending reasonably freely again, it is most unlikely that in the short term they will get back to their former level. So governments must fill the gap with public investment.
Unpalatable as it may be to governments addicted to supply side economics, they must now invest massively in public projects. The recession is likely to be at least as bad as that in the 1930's, which was only finally cured by vast public expenditure brought on by the onset of WW2.
Complain about this comment
#65 "Weren't we told that the UK economy was well placed to ride out this recession, by Mr Darling."
And you believed him ??? Hahahaha...choke, choke...
Complain about this comment
@74 we needed to know how deep these organisations are in the clag two months ago. However, in their infinite wisdom HMG decided to allow them to continue digging (and there's yet another thread to be reawakened, the failure of the FSA to regulate, and the failure to call them to account, but rather to allow them too to keep burying the evidence).
The only possible way to do this is to use the NAO to lead assessment teams from every bank, bar its own, into each others accounts at 0001 hours on 1st January. That way there's a cat's chance in hell the year-end accounts will be objective, conservative, and precise.
Complain about this comment
I doubt the buy-to-letters, or to give them their more traditional name, the landlord class, will unduly worried by this crisis. Historically, they can often do well in times like this, whilst ordinary people feel the squeeze.
The problem is that they often use their increased power during these times to extract more and more concessions from the state, further enriching themselves and impoverishing everyone else. The false dawn of the French aristocracy before the Revolution comes to mind, when they cornered all the lucrative civil service jobs and exempted themselves from all taxes.
A wise government would adopt progressive taxation and try to stop them in their tracks. I suspect we're going to get a fudge instead.
Complain about this comment
Now is the time for GM, Ford et al to shift into Bicycle and Rickshaw production as that's all we'll be able to afford.
Personally I'm aiming to get the horse dung clearance concession for the West Midlands!!
Complain about this comment
The bail out was never a cure-all. The purpose was to try to prevent collapse. It will take months for all the problems to be exposed.
The end of the financial year, barring fraudulent accounts, sounds a reasonable point.
The banks from their behaviour are clearly expecting more problems in the financial system and in the economy. All that has been seen so far is a false dawn, a reflex to intervention, there are still dominos to fall.
The UK government is finding the obvious, that they cannot instruct the banks commercially, because it is the banks who have the risk not the UK government, and the worry is the loss of loaned capital.
Brown has trumpeted too early and too long that he is the saviour and it will bite back. Credibility will suffer which will do nobody any good.
In the meantime consumer trust, which is critical to recovery, has been all but destroyed. Consumer trust will only be rebuilt slowly, and then - and only then, will the UK housing market recover, which like it or not, is central to the UK economy.
The UK economy looks to have major problems. If you take 5 years bubble growth from a largely modest and steady, ie flat, economic growth history in that period you have to be concerned that things were actually in hidden decline entering this mess. Perhaps that is why the bubble was so welcome for some.
There is likely to be some bitterness about in the New Year which will also have adverse effects. The problem is not just fiscal, it is psychological. It is likely that things are seen as worse than they really are which will not help.
It remains about all fear, and having stoked up the fear in order to justify intervention the consequences have to be played out. If this view is correct then when a rebound does occur it is reasonable to expect it to be strong as things will have been driven too low. The problem is when it will actually occur and what happens in the meantime, which looks to be grim.
Complain about this comment
#65
I have read that the USD will become Bog Roll about February.
I do not know what this prediction is based on but the US seems deeper in it than we are.
These are historic times. I am gripped by it all.
Good News!
In all this gloom Siemens profits up 46%.
Complain about this comment
the quality of comments seems to have deteriorated on this blog.
paulson's u-turn means he has come around to brown's approach (buy equity in banks instead of buying their toxic assets). buying equity is a more effective subsidy, because it takes the first loss across all assets held by the banks. markets sold off because paulson has access to a lot more information than anyone else on the health of the us banking sector, so the fact he has opted for brown's more drastic medicine is an unintended signal to the market that the banks are in an even worse state than previously thought.
robert, as well as credit cards/student loans/auto loans (which i have been flagging since september), you also need to start asking probing questions about corporate debt. everyone assumes that corporate america cleaned up its act after the enron / worldcom scandals, with a significant fall in average debt/income ratios being reported in corporate financials. i suspect the reality is that a lot of debt has simply been swept under the rug via sale-leaseback and future flow securitisations and other such balance-sheet-flattering transactions. i believe us gaap is particularly porous when it comes to off-balance-sheet treatment. i suggest you start asking some of your banking contacts in credit structuring what their view on the reliability of corporate financial statements is with regard to their overall leverage.
another observation: the uk and american economies are basically in the same stew right now (burst credit bubbles, collapsing demand and risk of serious deflation). sterling has responded by plummeting in value, which is definitely the right response from the point of view the necessary economic adjustment. contrast that with the dollar, which has gone through the roof since lehman went belly-up, largely for a lot of technical reasons that have nothing to do with the health of the us economy (unwind of the carry trade, evaporation of short-term dollar refinancing, the floor on dollar rate cuts, flight to quality, prefunding dollar derivative cash calls, etc etc). imo this means that until we see a total capitulation of the dollar (let's say usd 2.00 / eur), the usa is going to suffer a much more profound recession than the uk (although the uk's recession is likely to be sharper at least in the next 6 months).
Complain about this comment
I was wondering if anyone can offer me some advise. I work for a large financial organisation whose share price recently (within the last week) went ex-divi. Within two business days of this event one of the company's senior managers sold a very large holding which was concluded the following day which just happened to be the day before trading in the stock was halted and the bank then concluded a multi billion institutional rights issue within hours.
So here is where I would like the advise. Am I a cynical person who needs to take a chill pill, or am I right to be concerned that there is a serious breach of at least ethics by this senior manager and more than likely (what my cynical mind believes) is a case of insider trading. This manager (board room level) must have known on the Friday that the company was about to embark on a rights issue. Considering the speed of the institutional placing, I have to believe that these investors had prior knowledge of the action pre trading halt.
I would appreciate anyone believing a regulatory breach has occurred, how I can ensure a thorough investigation is conducted into Mr Farhour of the National Australia Bank who by doing this saved himself over half a million Australian dollars.
If this breaches house rules, I am quite prepared for the last section, naming the executive and the organisation to be removed. Equally, I would be pleased to see some financial enquiry/investigation into this as I can not believe that the ASX (the financial regulator) seems unworried by his actions.
Complain about this comment
#68 Heinlein also said, "Dictatorship is defined as one person can decide better than a million people. Huh ? Democracy is defined as one million people can decide better than one person. Duh ?"
Complain about this comment
#70 "Hmmn we landlords are loved even less than ever now."
Sorry, nothing personal! If you lived locally I'd buy you a drink :-)
My point, really, is that this kind of borrowing to acquire assets is bad for society and bad for the economy long term, and should be discouraged by regulation and taxation.
The only people I really hate beyond forgiveness are those who buy fine wine as an investment but don't drink it. I've no objection to competing with other wine lovers for the better vintages, but when these *****s come in to deprive us of the pleasure unless we pay them a rake-off, then I see red! (or rather I don't - I switch back to beer.)
Complain about this comment
#12: Badger_Fruit
Cr4porations : brilliant
Complain about this comment
People probably won't accept this, but what you say about credit card funding being securitised is of course why rates on cards have not come down.
Over the last 10 years, much of the funding that underpins UK credit card lending has been securitised by our banks and is not linked to deposits (and certainly not Base Rate). Since the credit markets have dried up (and because credit cards are inherently more risky), the cost to banks of funding these balances has probably not come down, and may even have gone up.
Nevertheless, I'm sure the politicians will either not understand this, or choose to ignore it to score a few more brownie points at the expense of the beleagured banking sector, rather than using this fact as another means to educate people as to the way finance works, which would be of benefit to us all in the longer run.
Oh, and by the way, whilet I might have worked in a bank in the past, I don't now and I'm not trying to be an apologist for what they've done. Rather, I'm in favour of making sure people understand the real issues facing us, so we can address them properly, not distorted views that help out politicians...
Complain about this comment
#79
No it's not just you getting bored with these type of comments in this forums -
they belong with all other other ignorant bile on Have Your Say notice boards. Along with the savants who think hacking half the public sector jobs will fix the recession and all will be rosy again so they can buy a buy to let again!
Neither Blair nor Brown did anything to directly cause or avert this disaster. The specific conditions which the UK faces now are a composite of decades of awful political choices by both Labour and Conservative governments egged on by a UK electorate which it is patently clear is basically economically illiterate and intensely selfish (it's just human nature after all).
Complain about this comment
In reply to 4 & 39
Although I appreciate that there are unfortunate people all over the country, not just in Wales, that have lost, or will lose, their jobs please do not blame ordinary bank staff for this.
In support of No.22 . I also know several Bank workers and they are not expecting, or ever expect, huge bonuses that would support them, if made redundant. In general the bank staff that you would meet are not well paid, it is the Directors and Chief Executives that walk away with ridiculous bonuses and not the normal branch staff. Please do not put them all in the same pot when making sweeping statements.
Don't know what the normal redundancy packes are but I believe that one of the HIgh Street Banks standard package is 3.5 weeks wages for every year worked, so when most Bank employees earn less than £20k that isn't a lot for someone that has only worked for a few years.
Complain about this comment
#70 45 years ago, when my godmother bought her first house, mortgages were the province of the rich. She scrimped and saved for her house which, I believe, cost her 3,000 quid (in *real* money) !! God knows what it's valued at now but it's all paid for !!
Now she lives in comfort in a retirement home and being persistently bombarded by unsolicited mail from parasites who scour the land registry for folks like her, offering to "release the value of her properties" !! She carefully collects them into sacks so that the local recycler can fuel his furnace with them.
"Waste not, want not" - had always been her motto.
Complain about this comment
Is it just me, or is Robert Peston enjoying reporting bad news from the credit crunch just a little too much? And in doing so, isn't he fueling the loss of confidence, potentially making things much, much worse?
I admit reading the posts in response to Robert's blogs is quite entertaining. Here are a few opinions few from me:
i) Hank Paulson is not an idiot - you do not become Chairman and CEO of Goldman Sachs by accident, whatever people blogging here might think
ii) People who work in banks are just like the rest of the human population and are not to blame for the economic downturn
iii) We are all responsible for the current situation. As borrowers we want to pay as little as possible for the maximum debt we take on. As savers we want the maximum interest possible for the money we save. We have demanded these services from banks and it's just reality that we will be unhappy (and may struggle) when we can't get what we have become used to
iv) On the last 2 weekends I've been in 2 different city centres outside London - both were packed with people doing lots of shopping, eating and drinking; demand has not evaporated, and therefore neither should confidence
Complain about this comment
#79 - "Is it me or is everyone getting bored of comments blaming the current global economic crisis on Blair/Brown?"
But it is necessary to look at the UK picture as well as the global one. The main charge against Brown is that he has left this country ill prepared for this recession, since he was deficit spending during the years of growth. It is scandalous that we have a structural public sector borrowing requirement at the end of 16 years of continuous growth. If we had been running a Budget surplus like Australia, we would be in a much better position now to weather the downturn.
Complain about this comment
97. At 12:45pm on 13 Nov 2008, benagyerek wrote:
the quality of comments seems to have deteriorated on this blog.
paulson's u-turn means he has come around to brown's approach.........
Complain about this comment
Robert, I seem to sensing a financial services career progression here.
If at first you don't succeed, try again as an economic forecaster.
If you fail again, try out for the Government economic strategy team.
If that's a no-no, maybe a seat on a Central Bank monetary policy committee would suit.
If all fails, there's always Chancellor of the Exchequer, if you're Scottish, or Treasury Secretary if you're American.
What, you may ask, was the "at first" option? ....... why, apprentice to Mystic Meg, of course ! !
Complain about this comment
#100 But you will get your vengeance when they open that bottle they bought at such a high price only to find that they have purchased the world's most expensive bottle of vinegar !!
Complain about this comment
at least your comments are still quality
"come around to Browns approach"?
The US is following the UKs lead on this are they?
Well that's sobering news.
Complain about this comment
#63 andreweaster "Does anyone have any remotely concrete figures detailing the exact amount of money that has been paid out to banking executives in bonuses over the past 10 years?"
Good point. Backbenchers of all parties, unite and reclaim your backbones! We need emergency legislation to freeze the assets of these people subject to them being reclaimed to compensate those ripped off (ie all of us!). Some might say this is unfair - what laws were they breaking? But what law was broken by those those who have lost their jobs and are now facing repossession?
Then, for the future, we need a new crime of criminal financial negligence on the statute books, together with a "Proceeds of Financial Crime Act". ..."to encourage the others"
This posting was originally removed because it broke the following house rule: "it contains words or phrases in a non-English language" That is, I used Voltaire's original French phrase. The phrase is commonly used in educated English idiom - it certainly occurs in my Thesaurus. I've used it before on these blogs anyway. RP regularly uses non-English words like "wonga".
Please RP was I being unreasonable, or is this political correctness and dumbing down gone stark staring bonkers?
Complain about this comment
#85
"If houses don't get re-possessed what incentive for paying back a mortgage (or rather penalty for not) is there?
As soon as word got out that repossession had stopped or were much less likely, everyone on the borderline of being able to pay will just stop paying and the banks/building societies will have even less day to day liquidity"
I don't know if you read my own post - but I am calling for a moratorium on repossessions an dother court proceedings for debt because they are compounding the problems socially and economically. You can't take money from people who don't have it so the whole system is (de facto) just fanciful and it is certainly punitive.
A moratorium can easily be justified and it is a breathing space that can easily be monitored - folk don't need hammering in the courts (and remember bankrucpy nearly always follows or preceeds repossession) they need TIME.
What incentive then to pay your own mortgage if you can? You have answered your own point really - it keeps the liquidity. Unless you would feel a pressing need not to contribute to the greater good. Those that can, should. And of course, don't forget, if you don't pay for the house in time you never own the deeds, so it's in your interest to pay for it all because otherwise you can't hand it down to your family.
In truth we all need time now, I cannot see any normality being restored this time round, not like the 90s. There is such a maelstrom of chaos coming that in few months we will look back even on early 2008 as the last good time of our lives.
GC
Complain about this comment
61,
Yeah, should have added them to the list!
Complain about this comment
#52 Moraymint.
I also think that "they" have downplayed the situation but I think it has been a deliberate attempt to talk things up to the general public in the hope that things might turn out as they have predicted.
I suspect that "they" are absolutely horrified at how bad it is going to be, I read a book recently called "Time To Emigrate" by an ex conservative MP. He admitted that the govt and all politiciant lie to us on a daily basis, this on happened to be about multiculturlaism but I'm sure it applies to the economy.
#79 dceilar
I'm sick of the left / right finger pointing. As you say the situation has been building up for years, the Brown era has been a bitter blow for the likes of me (who actually thought that we were going to get a different form of government in 1997) the policy of triangulation and sucking up to the ritch and powerful is scandalous.
General Rant.
I think that most of the general public actually believe this guff about business cycles being natural and recesssions being caused by unforseen external events. Instability in any system is caused when the control mechanisms are not robust or complex enough to contain the system under control.
What we have done in recent years is made the system more complex, more coupled and faster responding at the same time as removing many of the already too slow control mechanisms (interest rates).
The communist answer is to increase the control but there is a simpler alternative which is to simplify the system down.
There is another driver, natural resources will run out in the forseaable future - hopefully not in my lifetime but certainly in my Grandchildren's. We cannot go on consuming and expanding at the same pace whilst waiting for some technological revolution to solve our problems for us.
We are already above the population which the world can sustain and there have been recent indications of the instabilities to come.
In this country we do not "need" all the rubbish we spend our money on, real human happiness comes from interaction between us - watch "the secret millionaire", the millionaires are as affected by the gifts they give as the recipients.
Surveys have shown that human happiness is decreasing as general living standards have increased. I have transformed my life by simplifying my desires (and saved shed loads of cash as well). My only regret is that when the rest of the world goes under there will be no way of insulating myself from the fall out - those who are unprepared will just come along and take what I have once the veneer of civilisation is removed.
Just off for a skinny double cappucino (well we all need some luxury).
Cheers
Complain about this comment
If America, The Eurozone and the UK economies are all in trouble why has the pound fallen against both the euro and the dollar? If we were all equally affected, the currencies should hold up against one another evenly.
The fact that the pound has fallen 25% against the dollar and 17% against the euro suggests that in spite of Brown and Darling's claims, the UK is obviously considered to be a worse prospect than the other two.
Of note is the fact that it has also fallen more sharply against a number of other currencies - e.g. 40% against the Yen and 30% against the Hong Kong Dollar.
Though one might think this might be good for exporters, the fact that the UK s a net importer spells bad news for the country as a whole. Deflation? Inflation more like!
Complain about this comment
I hope it's just you, #79
GC
Complain about this comment
Oh and 97, when congress get their way and the Treasury has to disclose the institutions that have had $2 (TWO) trillion of under the counter handouts and they find that many are the same companies that are/have been receiving some of the $700 billion "legal" bail out, you may discover that this decision has absolutely nothing to do with following Browns lead.
Its more likely that the disclosure will cause a run so unimagable that they are taking precauctionary measures to take full or part control of what is left.
In any event, we will know who is right in about 2 weeks
Complain about this comment
pk @ 111
they're going to nationalise the banks. you just aren't allowed to say that out loud in the usa.
Complain about this comment
@GC, A moratorium on repossessions might also have the added benefit of counteracting some of the downward pressure on house prices, as an expectation of repo properties flooding the markets in coming months is reportedly putting off some potential buyers.
Although whether there should be any steps taken to counteract the downward pressure on house prices is open to debate.
Complain about this comment
On Paulson's u-turn I thought he decided to recapitalise the banks a few weeks ago using a little loop-hole in the legislation from Congress, and moreover, did he ever rule out recapitalisation?
Post 97: agreed and seconded!
Complain about this comment
BLOGGER 80,
So you think 18 years of Maggie would sort us out? Dear god I am speechless!
Complain about this comment
well at least as a UK taxpayer, I can sleep comfortably knowing that over 1.9bn of our money is being used fruitfully to pay for RBS bonuses over the next few months...
Complain about this comment
All Empires fall, all civilisations tumble and are replaced by others.
All we're seeing is the normal order of things; the US will crumble (not right now, but under the weight of their accumulated deficit, the demands of their population for a decent life denied to them and the rise of more sophisticated competition). Russia, China and India will rise. The World will carry on, like it always did.
It might be bloody, of course, most such episodes are but in 100 years it will just be a subject for the history books.
I think we might go with them, maybe we'll linger a bit longer but I don't know.
Complain about this comment
Poo? Seriously was there no other word to use? I expect parliament to be demanding an enquiry into this terminology
Complain about this comment
Discussing the $700b bailout
"Once we cross the divide from financial institutions to individual corporations, truly, where would you draw the line?" said Jeff Sessions, Republican Senator for Alabama.
Every debt is equal, but some debts are more equal than others it seems
Complain about this comment
With reference to the US car makers bail out, a loan of US Dollars 25 Billion is to be made available early next week (debate Tue 18/11).
Complain about this comment
Oh and this decision is nothing to do with Obama?
Complain about this comment
pk @ 118
i think we are in more agreement than your comment suggests. brown and paulson are just following different paths to the same eventual outcome. the main difference is that "nationalisation" is not such a taboo word in the uk..
Complain about this comment
#98
I wouldn't worry about it, Your Director has done nothing unethical. If you think about it, would he have done something like this totally openly if it was illegal or unethical? Directors are allowed to deal, though there are usually pretty strict controls around it. In the UK, the market I know best, Directors cannot deal in the weeks leading up to announcement of results, or where they are in possession of price sensitive information (eg if they're negotiating takeovers). Also, they have to get permission from named persons within the company before they can deal (usually the Company Secretary or one or more non-exec Directors).
In the case you highlight, I'd be pretty sure the share price fell after the rights announcement anyway, in which case it cannot be insider dealing by definition. Insider trading requires the dealing in question to result in a profit.
Complain about this comment
"Debt and Delusion "[Central Bank Follies that Threaten Financial Disaster ],by Peter Warburton "printed 2000 after the colapse of the hedge fund "Long Term Capital Management 1998 clearly , fortold of the continual fools gold rush into inflated assets using cheep credit encouraged by central banks ,that would and is, now colapsing Thiis seminal work by PW LEAVES POLITICIANS AND BANKERS WITH NO EXCUSE and exposes the delusion of "prudense and stability"of the talk the talk brigade that is now having to walk the walk to the gallows of their own making .
Labour should change its anthem to the grreen grreen grass of home
Complain about this comment
112. sashaclarkson :
Very good point, and one I support on all levels.
However. It will never happen, for this simple reason.
The banks and the City ARE the establishment. They are the government's master and its partner in crime.
This becomes very obvious and impossible to deny when during this time of great calamity, the government weren't on hand to protect the people, the people they are supposed to serve. But instead ran to help the privately run banks.
The rest of us were abandoned, left to go under.
Most of the big boys of banking get Knighthoods, so they'll never see the inside of a prison cell.
You'd be asking the establishment to go after the establishment. For that you'd need some politicians with big onions. In the real world, these do not exist.
Our MPs are too busy treading water, thinking of all those jobs waiting when they leave. Tony Blair got a part time job at JP Morgan for 2.5 million. Who knows what they've got waiting for Gordon, but he did them a huge favour with that bailout, so my guess is they'll see him good.
(I remember the fuss about the Olympics costing 12 billion or so. Now we're supposed to swallow these telephone number style bailouts without comment.)
The only chance that there'll be any justice at all in this would be if the public finally got off its backside and took to the streets and demanded it. But if x million and y number of worldwide demonstrations couldn't prevent the illegal invasion of a sovereign nation, what chance is there to see prosecutions for the bankers who smashed the world economy and got rich in the process? Not much.
Most ordinary people are happy enough to blame themselves, or let others do it for them. Thinking it was their credit card debt that toppled the West. Not the unashamed incompetence and obscene greed of the very few at the top of the pyramid.
And remember, you’ll be derided for pointing the finger, as I have on several occasions. It’s the blame culture innit?
Would it be considered the blame culture, I wonder, for the parents of a murder victim to demand justice when the killer was not only known, but was still walking around free.
Only in the funhouse mirror world of banking I guess.
Complain about this comment
119 see 118 above, we do agree
Complain about this comment
#116
I think the run on sterling has a lot to do with two things
1. Last week, the head of the IMF said that the UK's economy wasn't at all good! (I forget the exact words)
2. Our esteemed head of the Bank of England has cut interest rates, will do so again, and states very clearly that it's all downhill from here for the UK for sometime!
So two head bankers in swift succession have knocked us - hardly surprising noone wants sterling now!
Complain about this comment
and
Russia is using dollars to prop up the Rouble apparently!
The Euro is more stable purely because it's the currency of many countries, not just one, so the effect of a bad economy is balanced more easily by the good ones
But then who am I? Just an average person who doesn't know anything! I'm no financier nor politician, I'm part of the group of mushrooms kept by Gordon Brown!
Complain about this comment
Post 106 I agree re the shopping. I have been to the Trafford Centre in Manchester and the Fort in North Birmingham and on both occassions it was a nightmare trying to park.
I tend to believe that it is either people deciding to have one last good Christmas before the years of doom or gloom or it could be that because virtually every shop has a sale on people are looking for huge bargains rather than actually spending much money.
One last point as the price of oil has halved since the summer why hasn't anyone reduced the price of electricity or gas to the UK consumer?
Complain about this comment
thanks, #120 at least two of us agree on the value of a moratorium.
If only it was 2million!
You know moratoriums are used all the timein public spending, it's nothing new except in that its us here will be new. I expect Obama will do this.
The other FANTASTIC advantage is that it will le hard pressed businessmen get on with the job - or at least trying to find profitable jobs - and take his mind of the worrying (cue: terrifying) issues. It means also that he won't have to start staff cutbacks to raise/save money too so everyone wins.
You see, that cost is never counted, the breakdowns. One is expected to cope with 'whatever the Government throws at us'
MORATORIUM ON REPOSSESSIONS AND COURT ORDERS, INSOLVENCIES, FORECLOSURES NOW!
GC
Complain about this comment
*31
Are you suggesting Sharia type banking?
Do any Sharia banks have toxic sub-prime debt?
Complain about this comment
RP - to anticipate the discussion of credit card lenders not passing on base rate cuts:
First of all, your points about LIBOR obviously apply. LIBOR is more relevant than the base rate to the lenders' actual costs.
Second, as noted above in a blog comment it is the credit card secondary securitisation market that specifically drives the costs to lenders.
Third, and most specific to credit cards, the charge-off rates on cards - written off losses - have risen rapidly by about 150-160 basis points in the last 12 months, to around 5.5% - 6.% of outstanding credit. For example, in the US overall, charge-offs are up from 3.85% to 5.47%. This is a rising trend - it will get worse before it gets better. Do not expect card lenders to pass on rate cuts (even in LIBOR) until they have clawed back at least this 1.5% loss, probably plus an extra cushion against future, increased losses.
As you said in your original posts, it's a bit contradictory to criticise lenders for acting conservatively. The first thing they are going to do with any room to maneuver the governments give them - whether that's from loans, capitalisation, or reduced base rates - is cover their own losses and risk. If you don't let them do that, you might as well just institute wage, price and currency controls across the board, and suspend the stock market, because you will no longer have anything like capitalism.
Complain about this comment
The1beard wrote
This is all bad news but also great news for those who have put aside funds for this kind of scenario.
I agree with this comment. However I would guess that the majority of the money that has been put aside has been put aside by bankers from their bonuses in previous years.
To say that it all stinks just does not go far enough. we need to invent some new words because the likes of apalling, disgusting, pathetic, obscene etc just cannot possibly get the point over enough.
Complain about this comment
Some of us have been pointing out the irresponsibility of deficit spending during the years of growth for ages now. I remember back in 2002 having a big spat with other bloggers on another site, because I called Brown's then Budget irresponsible. Well now the chickens have come home to roost. I cannot emphasize enough in how much better a position the UK would now be, if we had been running a Budget surplus for the last few years. Forget about Brown's tax policies if you can and concentrate on the deficit - Brown could now be in the enviable position of pump priming the economy without massive increases to the public sector deficit - we really could have those Keynesian policies economists say are necessary. Instead, because of Brown's feckless irresponsibility with the public finances, we are in the position where massive extra borrowing is simply unsustainable!
Complain about this comment
Crumbs you lot have been busy since yesterday.
Especially Sashaclarkson.
In my opinion the insolvent institutions either need Chapter 11 or Administration,that way the books can be dealt with under public scrutiny.
Then when the mess has been dealt with{if ever} they can be disolved.
In the meantime new Banks etc can be set up to function as basic banks with no lending etc just facilitating a payment and deposit function.
That way depositors can sleep at night.
Complain about this comment
Mr Brown seems to have forgotten all about the U.K'S commercial property loan problem. At the end of last year the loans outstanding ammount to approx £24BN. The experts are now telling us that commercial property will fall between 30 & 50% by the middle of next year off its 2007 values. As most loans granted amounted to 90%+ some banks are going to have to write off an awful lot. So will HBOS be the first to fall?
Complain about this comment
# 115 iwanttoscream
We should grab a beer sometime: you sound like a man/woman after my own heart. The end-of-cheap-energy issue is the next disaster waiting to happen, exacerbated by politicians being unable/unwilling to address the implications. This will become the defining issue of the next decade.
Oh, and I've read "Time to Emigrate" btw: it was written by ex-MP George Walden, as I recall. After reading it, I decided my kids should focus on building their lives in Canada.
Complain about this comment
Do you know what this similar to?
It's like the party build up to Christmas when you have loads of nights out, parties, work dos...
And you are spending more on one night than you make in a week.
And then along comes January and you say to yourself "I am going to take it easy this month... I'm going to do the right thing..."
And you do.
You stay in, you cook food, you rent out DVDs...
And then you realise that in February you still don't have enough money to do the things you want to and it takes until March for you to really get back on your feet.
The last 6 years have been the build up to Christmas for banks, businesses and consumers.
The next 10 years are going to be our January and February.
For those blaming certain public profile individuals, think again.
Complain about this comment
#84. sal196
Haleluja! on that.
When there is plenty of money, many people can't help themselves but to squander it - such people shouldn't be left in charge of it!
Just becaue there was plenty, that was no reason to squander it... There is no virture in wasting money...
i.e. If the olympics can be done for 4bn rather than 9bn then it should have been 4bn all along, the other 5bn was just waste.
Foolish, wasteful Labour.
Complain about this comment
The Americans are still advocates of the capitalist system even though the credit crisis proved that capitalism is not working and are attempting to preserve what they can out of this calamity. My feeling is that capitalism in the true sense of the world like its opposite communism will disintegrate and a new economic era will develop.
The prime minister G.B on the other hand is now well placed in the current crisis to impose state control over many aspects of the economy in order as he believes salvage what remains of the economy and thereafter develop the economy in his own ideological way. For someone who is governing not through mandate but only inheritance such a plan will go down in history as the biggest individual ambition of any previous Prime Minister to rectify what was effectively his own wrongful handling of the economy for the last ten years. The chickens are now coming home to roost.
Complain about this comment
If as Mr Brown claimed the UK was so well prepared to weather the crunch, then why is the pound falling so quickly against the dollar and euro.
Given that we have a balance of payments deficit this will result in even more borrowing to be paid for sometime.
Has Mr Brown been telling porkies.
Complain about this comment
Sir John of Family Values didn't waste any time:
"Former Prime Minister Sir John Major has accused Gordon Brown of squandering the favourable economic legacy he inherited from the Conservatives"
What was it Lord Kenneth Clarke of Brown Shoes used to chuckle about? 'We were sitting in No 10 listening to the pound crashing in value..' or similar. Ho ho ho.
How much did Major's Govt gamble and lose? With the BOE under his direct control? How many folk were dispossessed because of the Black Wednesday blunder under that cheating half-wit's 'leadership'?
GC
Complain about this comment
62 TigerjayJ
good question. How do you start a political party. How can we set up the first meeting.
Without doubt 90% of the bloggers on here know more about the real world than any politician or Banker ever will.
I was had my hair cut this morning and my barber made this statement.
How come most of his customers knew that borrowing could not go on for ever, yet this never occurred to our leaders.
They all behaved as one, as if we could continue as a country to borrow more and more every year without ever thinking about paying it back.
I'm more angry than anything else.
Complain about this comment
Can I just get this straight
Mr Brown is lending the banks £50 billion
He wants 12% on this : £6 Billion
The banks are going to have to earn this by taking the money in loans and interest FROM THE BRITISH PEOPLE AND COMPANIES.
So at the end of the day:
The Governent has an extra £6 billion revenue from the UK Taxpayer.
The taxpayer - who lent the money gets nothing and is out of pocket by £6 billion.
So just another stealth tax.
Complain about this comment
#145
"Do you know what this similar to?"
Nothing that I practice.
Just because that may be the way you behave, doesn't mean we all do it.
Complain about this comment
All the US corporate Bonds bought up in October were not bought by the US treasury with that some of that $2trillion, was it?
Not to give the illusion that investors were prepared to buy up debt again and therefore un-crunch the credit markets?
Complain about this comment
#149
The answer is..... a tiny fraction of what is being destroyed right now.
In fact I think Brown blew nearly as much when he threw away our gold reserves as was lost on Black Wednesday.
Still, he's prudent isn't he?
Complain about this comment
To the many amongst you who seem to think that these sort of extreme events only happened in this and the last century can I recommend a read of an old book, 'Extraordinary Popular Delusions and the Madness of Crowds' written by one Charles Mackay in 1841 and reprinted in 1995 - it details many previous manifestations of the group madness (did'nt we all think that easy credit was a good thing and would go on forever) and of course the South Sea Bubble and other examples are fully written about. We would love to live in La La land but it ain't real.
Complain about this comment
2# & 3#
The first tranche of the $700bn bailout has already been used to buy equity in the banks.His change of tack was to move from buying up toxic mortgage debt to consumer credit which may or not be toxic,does anyone know?
Complain about this comment
No 56. At 11:21am on 13 Nov 2008, ishkandar wrote:
"your friend did not *buy* to let !! He *borrowed* to let"
You are bang on the nail ishkandar!
He's not my friend, and the sooner he and other like him are called in the happier I will be.
Complain about this comment
#149 the treasury say 3.4 Billion GBP although estimates range from this figure to 27 billion with the most common estimate for losses + missed opportunity ranging from 9 to 12 billion. Even at it's worst estimate at 27 billion it does not even come close to the amounts Brown and Darling are talking about. the pound is plummeting for a reason and we ignore this indicator at our peril.
Complain about this comment
#100 n
Do you know where I can find these gullible fools - I have located a bottle of Blue Nun in the wine store (well garage) and it seems to fullfil the requirments of investment quality wine.... the bottle's dusty and the contents undrinkable.
More seriously this fad for wine as an investment typifies the idiocy of some of these investment markets. The whole reason fine wines are expensive is they are in short supply and of superior quality. Once they lose one of these aspects, i.e. become vinegar, they are intrinsically worthless.
Complain about this comment
#144 Moraymint
You say "The end-of-cheap-energy issue is the next disaster waiting to happen".
It's not waiting to happen. It's happening now before our very eyes.. Although the oil price has fallen because of the drop in demand the millisecond demand shows any sign of recovery the oil price will bounce right back up to 100 dollars/bbl and beyond...
Worse - because those that run oil companies aren't actually any brighter than bankers they are already delaying investment in new production. So you can probably expect an overrun in the oil price to well above previous record levels.
And the UK Govt's answer to this problem is what I hear you ask?
As far as we can determine it's tax everyone more so they use less fuel, let City types make buckets from commissions on carbon trading contracts and hope others come up the new technology we need rather than invest in it ourselves!
Complain about this comment
149, 154:
It seems to me that we're on our third consecutive inept leader.
Johnny Major was arguably the worst of the lot, dragging things out for five long years after it was clear that he could not win a raffle, let alone re-election.
Tony the Phoney was all spin and no substance. Ten years of drift presided over by a grinning self-server.
Brown seems messianic, intent on imposing his public-sector, levelling ideology on us irrespective of the practical cost, whilst denying all responsibility for past mistakes.
Where is our Al Gore or our Barack Obama? Surely we're due a decent and competent PM one of these days? And why cannot politicians of real calibre - and there are some, such as Frank Field and Vince Cable - get to the top under our system?
Complain about this comment
#150 forfuturesake
Like you say, if we collected all the salient points on the blogs over the last couple of weeks, organised us bloggers, we would have both a political party and manifesto!
How many votes would we get I wonder?
We could just make a film - 'Revenge of the Bloggers' - has a great ring to it!
If, as the BBC think, Westminster reads our blogs, then they must not understand what's said, or cherry pick what they like and regurgitate it as their latest idea to turn things around!
However, I think it's highly unlikely they have time to read these blogs - they are all too busy digging very deep holes, or strutting their stuff on the stage as the saviours of the world!
What's the word for that? It escapes me at the moment?
Complain about this comment
@10
I am sure many in this country will still be getting what they want for christmas this year.
And i dont think there will be 2 million unemployed by the end of the year. And why?
Well as i have said before this is all about debt per head of population, we the uk being twice as bad as germany and usa if you include our housing stock. there is still alot of credit out there, which equals more debt.
Mr camrons idea that we will be the first in and last out of this mess not altogether true.. And GB will be very pleased that right to the last is country wont fail him in is policy of spend, spend ,spend. Even though when it does really hit and this will be around feb 2009 it will hit very quick and hit us hard. Where getting a very good idea on how many jobs will go a month just bye looking at the figures in the usa, if usa job losses reach 500,000 a month , we have roughly one 5th of the work force, so 100,000 a month but because where twice as bad it will 200,000 a month.Even though i think job losses in the usa may well reach 1 million a month. and would of already done so if it was nt for the usa goverment.
This in time will then strat to effect our good banks like HSBC. Making things much worse not better. if HSBC are not asking for help i will be very surprised by sept of next year.
A new vision is needed and quickly, the ones who act first will be the ones first out of this mess. even though if they where to act today it would be atleast 5 years before we start to see things getting back to normal.
We need to plant new trees and put our money into goodwood, and old trees which are dying bad wood.
Have i been eating nutty fruitcake?
I THINK NOT JUST LOOK TO THE FREEZING UP OF THE SHIPPING LANES
Complain about this comment
What this article clearly shows is that the problems with debt in America are accelerating and at some pace.
I thought Poulson yesterday looked panic stricken. I wonder what else he had in that bottle of water he kept on swigging throughout his speech.
If Gordon Brown is looking to America to sort out everyone's problems he needs to think again.
There is no longer any point in trying to stem this crisis. It has taken on a life of its own..
What should now be a priority with this government is what do you do with the millions of people who are and will continue to be jobless over the next few years. Many of them encouraged here from abroad with no means to go home.
The social problems arising from what is now looking like a deep depression today will take over as a far more serious crisis for the country tomorrow.
Unfortunately this government are totally unprepared and will have a lot to answer for.
They are running on a wing and a prayer at the moment but no one is listening I'm afraid.
Complain about this comment
The latest events are proof positive that you either accept the consequences of a free market or you think you can intervene with neverending and re-curring problems. Politicians, remote central bankers should never intervene as they have, they are trying to maintain the "status quo" which is clearly flawed and should be replaced by whatever the market comes up with.
Would the global banking industry have imploded if all those banks in trouble had not been rescued? In fact why would an industry clearly in such poor condition merit saving, surely the survival of the fittest is not only a law of capitalism but in this case a kindness to a fatally wounded beast.
Complain about this comment
There seems to be a lot of angst about the fall in the value of the pound. However this is a reaction to the abrupt change in interest rate policy of the Bank of England from keeping rates high to suddenly making deep cuts and now threatening even more. Sterling has fallen because the yield on holding sterling is lower. This has nothing much to do with the economic prospects of the UK. In fact our national debt is much lower than many other countries and we are indeed in a relatively good position to weather the storm. We have nothing like the horrendous losses of AIG or the looming bankruptcy of General Motors. So far.
Complain about this comment
Why does no one talk about PFI. Brown used up our children's credit card to mortgage their future,and now wants to use up our grand children's credit card for people to spend willy nilly. Is it not irresponsible for Brown to encourage people to spend money on things that are not essential. Which generation are going to pay back all this toxic PFI. debt, and borrowing that the country can not afford.
Complain about this comment
#165, this is survival of the fittest, if fitness is not defined as economic viability but rather the ability to manipulate politicians and tax payers and the cunning to nurture the delusion that infinite economic growth is the only game in town. Survival of the fittest it is, and in nature this always rules. But what is 'natural' is not always 'good': the naturalistic fallacy.
I think I'm taking this too seriously, time for the pub.
Complain about this comment
Robert,
Nice touch, thanking the blogger who pointed out the mistake... You don't really read this every day though, do you? It'd fill your whole day!
Course you only work for about 5 minutes at a time and some days you're not on the news at all... lol! Maybe a moderator mentioned it to you, but on a serious note, it would be nice to see some more interaction on this blog, with you replying to a couple of the questions raised each day.
The number of people who contribute would go through the roof if they thought you were actually "listening"!
Complain about this comment
Robert,
It appears that liquidity supply is not a problem .... and as an entity with a program to spend currency in order to generate Interesting Capital ..... it would be surely in order that newly printed cash be provided so that the Spend can Generate ITs Magic .... Innovative Direction, ideally. .... which it would be in this particular, peculiar case.
Do you have to know a funny handshake or something to qualify for such Windfalls as have Banks supposedly restocked for Business ... but not Buying into any Stock and Business.
What is wrong with them? Have the Lost the Knack of Making Money....having swapped it for Losing it and Lending it to Losers?
Complain about this comment
Where is Great Gordon going to park his economic cycle now that the wheels have come off...and whos bottom line is going to be affected other than the taxipayerrs
Complain about this comment
So why doesn't the government do the following:
1) Take on the mortgage debt of those in a distressed state, both individuals and morgage providers.
2) View this as an investment that saves them money on providing housing benefits etc
3) Recover the individual debt with a low-interest rate over a longer period as part of PAYE for example (like a student loan)
4) Require the mortgage providers to repay the Govt loans at a commercial rate over an agreed period. The Govt becomes the first person paid, thus reducing the 'pot' for stupidly large bonuses to come out of.
Seems to me that if the banks can't work their way through 4) and go bust then they've got what's coming; the mortgages they own would then become Govt owned as some way of recouping the loans to the banks.
Complain about this comment
As the banks appear to have vastly reduced their offerings in the lending markets (won't lend to customers or each other), precisely how are they going to stay in business? They made lots of money when people were paying back those big mortgages, so, bearing in mind they still have all those staff, they must be starting to think about a further bail-out from Prudence Brown!
Complain about this comment
In reply to 104
Yes 3.5 weeks for every week worked for the so called ordinary bank employee so how is this not much better than 1 week for every year employed or rising to 1.5 weeks for those over 50 one doesnt really need to work in a bank to see which one is the best package also the avearge wage in the united kingdom is 325 per week so if the avearge for bank employees is 20000 per year well one again can see the folly of the banks pay system but i suppose as they are in fact civil servants now they should be paid the same as that other branch of usless waste of money paid for by the ordinary man/woman on the street and dont forget about their 50 days holidays a year including their sick pay
Complain about this comment
#161
Only the three inept leaders - I think the line stretches back a good bit further than that. Whilst Thatcher may have had some (I can't believe I'm going to type this) good points the execution was lousy - destroying bad industries was not fixing the problem it just made other problems which neither her nor her successors governments have managed to resolve sustainably.
You pick two good candidates (the only?) from our current politicians - but Frank's a one trick pony and Vince likewise trouble is that both have things to say that the bulk of the electorate don;t want to hear. Jimmy Carter tried it in the US - we can;t go on like this, our way of life is unsustainable, unbridled greed is bad - the result? Ronald Reagan walked all over him.
Voters always vote for the party offering the most benefit/money to them in the shortest time not what they actually need.
Complain about this comment
I recently read an article in Le Monde Diplomatique by Martine Bulard. In it, she predicted that China would pressure the US government to (1) nationalise Fannie Mae and Freddie Mac, and (2) adopt a particular approach to saving the banks - recapitalisation. With Paulson's statement yesterday, both predictions have now come true! Bulard also believes that the Chinese will lobby the IMF and World bank to make sure their lending practices become more socially responsible.
Complain about this comment
My life philosopy has always been.' Whats the point of worrying. No one is saved ! But now it seems to be 'no one has saved...poor fools.....
Complain about this comment
At the end of August 2008, public sector debt stood at £637 billion. (43% of National GDP)
Outstanding UK consumer debt stood at £1,345 billion (100% Total of GDP)
Most consumer debt is secured and if it was not for that fact it can be repaid over several years we the UK would be technically bankrupt
As the public sector debt is increased and the "secured'' part of the consumer debt shrinks in value, the technical part of Bankruptcy vanishes and the UK becomes insovent
Reduce the Interest rates and the currency is devalued causing the debt to increase further.
1.The Government have promised to
borrow more
2. The asset values continue to fall
3. Interest rates continue to fall
4. Sterling continues to sink
These are the current policies of your Government - are you lot crackers or what?
Complain about this comment
On the upside, there are a whole load of nice offers in the supermarkets these days - http://discoverunearthed.wordpress.com - and good food is always a comfort!
Thought I should try and lighten the mood!
Complain about this comment
Robert--thanks for the daily dose of black humor!
Paulson pulled history's biggest bait-and-switch on Congress and the US taxpayer.
I called my newly re-elected House member's office to register my displeasure, as I was one of thousands who had begged this idiot to vote against The Bailout. But vote for it he did. He's a 'Blue Dog' Democrat, who talks conservative at home, and votes as Pelosi and Frank order him in Washington.
I told the staff member what Paulson had announced, and honestly, I think it was news to him. I was greeted with stunned silence at first, and then the attempt to recover, and the promise to pass my thoughts on to the Congressman, etc.
I'm not holding my breath for any admission that he and we were scammed....
Holy Cow!
Complain about this comment
"But now it seems to be 'no one has saved...poor fools....."
Can you blame them? I've just received a message from my bank, HSBC, that they've passed on the full 1.5% rate cut on to their savers. Some incentive, that ...
The Bank Of Mattress is seeming more of a viable proposition than ever.
Complain about this comment
I am amongst many that think the press have added to the current financial problems and that Robert Preston is particularly negative in his presentations on the BBC. He creates drama in everything he says. If you could focus on some positives in the economic climate then it would help to work our way out of the present conditions.
Complain about this comment
What's the reason for these foreclosures? I'm sure one of RP's recent documentaries had the story of an American family having their home repossessed and being evicted even though they could pay the mortgage. Can lenders do this - are they?
I find it hard to believe they really want to lend to people already financially stretched. Are they trying to lose money?
How about including news of jobs created as well as job losses. The news have jumped on this band wagon again - 2000 jobs here and there. Also, how about including other positive business news? I'm not suggesting that 'bad news' should be hidden but there should be balance.
Complain about this comment
Reading through all these comments one thought springs to mind.
A revival of the spitting image series.
Complain about this comment
172 highbury
The issue re housing is how many are traumatically affected. If it is a minority then the government is most likely to walk away and forget easily. This is what happened in the early nineties. The biggest problem is the victims have no collective voice and can easily be character assassinated as individuals, the courts will do that. The banks have already shown they will play as per usual, ie no margin whatever the PR line is. The government has never shown any enthusiasm for dealing with the individual case, just the general case, and very moderate tweaking of the situation. In terms of the consumer - big ticket items, ie priced in thousands rather than hundreds, are in trouble. Underlying this, things - whether it is an illusion or not, appear to be affected, but not that much, at present, say 10 percent on the High Street, figures welcome. Whilst this remains the situation probably not enough people are affected in the underlying economy to precipitate really radical action by the government. That does not mean Brown is safe, far from it. The housing market is in very deep trouble and no effective steps have been taken by the UK government to stablise it. Brown has no stated strategy proposal so until proven otherwise it has to be assumed he does not have one. Cameron in reality has to concentrate on the situation he is likely to inherit following the GE in 2010 so only limited proposals can come from that location. He cannot afford too tight a tie-in with Brown and Browns policies or he will be sucked down like a small boat near a large sinking ship at the GE. Cameron has to establish his own alternative identity. The Lib Dems keep talking sense but with little impact. The problem in all of this is events can move more rapidly than the realisation of the consequences of the events occurring. The only solution to the housing market (in the absence of recovery) and repo is negative equity trading, ie a move from secured borrowing backed by householder failure cost recovery against an insurance policy as the ultimate position, and against the assest - the property, to partial unsecured borrowing underwritten by a government fund and there has been no sign of any discussion of this. If the housing market gets worse, much worse, it may change. It is not hard to see 2 million households at risk of negative equity, ie frozen in and at risk. The storm is still going on. The pound at this point has been abandoned in preference to the UK voter and their problems and its value will lie with what goes on elsewhere. The policy at present appears to wait until Easter 09 and see what is going on then, bar dramatic events forcing action in the meantime.
Complain about this comment
'98. At 12:45pm on 13 Nov 2008, SoapboxJoe wrote:
I was wondering if anyone can offer me some advise. I work for a large financial organisation whose share price recently (within the last week) went ex-divi. Within two business days of this event one of the company's senior managers sold a very large holding...'
1. Hire your own, very competent and assertive attorney.
2. Gather as much evidence as you legally can, with his guidance. Don't break the law yourself, as tempted as you may be.
3. Go with him, and the evidence, to the federal prosecutor who handles fraud cases.
It is not likely that anything will be done, but in case things blow up, you and your family are more protected, as the person who showed up at the prosecutor's office first.
If you have knowledge of a major felony, and remain silent, you could be considered complicit.
Above all, protect yourself and your family.
It sounds like you work for crooks, and they will throw you under the wheels of the bus with not a moment's hesitation.
Complain about this comment
No 112, javaman. No. neither GB, cameroon or anyone else currently politically employed are likely to help the UK economy.
We are in a sinking boat and instead of bailing, the captain and first officer are standing posturing.
So how about benign dictatorship.
Boris Johnson as dictator, Ian Hislop foreign affaires, Paul Merton as chancellor and just so the misery-guts dont feel left out, replace Mandelson with Jack Dee.
At least we would have a smile as we sink below the waves.
Complain about this comment
with reduction in interest rates is there a justification for factors/invoice discounters et al to INCREASE their rates to recover earlier difficulties
Complain about this comment
The credit crunch was a bomb just waiting to explode. Did the Labour government think that they could continue to achieve growth based on debt? Only an idiot would think that a country could continue to lend without limit. Well the party is well and truly over and all those who borrowed more money than they had sense are going to have a terrible hangover.
It really is a disgusting affair that the boom period was based on unsustainable debt. Is this Capitalism? How will future booms be any different to this one? What will future booms be based on? Will they be just as hollow? Is the Capitalist economic model a failing system just like communism before it? Serious questions needs to be asked so these mistakes are not repeated. I'm also not surprised to see that there is no action being taken against those responsible for this mess! The capitalists are truly in bed with the politicians!
Complain about this comment
AND they want the banks to increase public borrowing by offering loans at 2007 rates
This is YOUR Government and the policies it is chasing on YOUR behalf.
Are you crackers or what?
Complain about this comment
But we'll be all right because when there is no money left to buy the shopping it will be because
Gordon's going to Iceland!!
Complain about this comment
Hi everybody, I've just finished work. Have I missed anything?
Complain about this comment
AUGEAN?
WELL THEN GET ON THE PHONE TO HERCULES.
THEN ASK HIM TO RE ROUTE THE THAMES THROUGH THE CITY & VIA DOWNING STREET WHILE HES AT IT.
Then get the Man From Mars to find a new Planet we can all screw up.
Moscow is chilly on the Profumo front here till saturday. . .
Complain about this comment
Problem solved - let some banks fail - credit crunch over - business as usual. Did anyone detect the sarcasm!
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
I think I heard you stumped by a question on 5Live's Midday News of when we last experienced prolonged deflation. Your guess was pretty accurate. I'm sure you've checked, but in case you haven't there's a useful graph in Niall Ferguson's The War of The Worlds (Figure 9.2 on page 330 in the paperback edition) of UK unemployment and inflation between 1928 and 1939. The last period of prolonged deflation seems to have run from Dec 1930 to Jan 1934. Apparently we eventually got out of that mess by building Spitfires, and battleships? Would that work now?
Complain about this comment
105#
"Province of the rich" nonsense,my mother had a mortgage in 1935 for a house costing 250 pounds which required a 50 pound deposit! Even in those days 50 pounds was not rich.
Complain about this comment
re: Post 182 and the dozens of others who seem to hold Robert Peston personally responsible for the credit crunch
Think about things rationally, how much day to day influence in the money markets does any thing Mr Peston say really have? He isn't liquidating billions of pounds worth of assets in order to pay off losses on securitized mortgage packages. He isn't responsible for setting Libor, he doesn't control the parameters for who is deemed creditworthy enough to obtain loans.
All he does is report what is actually going on in the financial world, as that world is apparently dysfunctional at the moment then he can't pretend that everything is sweetness and light, well unless he wants a job with the South China Morning Post!
Complain about this comment
# 186
Please refer to my response to the original post at # 130.
I doubt very much the Director has done anything wrong, and if he was insider trading, he'd have to be dumb beyond belief to do so in such a transparent manner.
I think your comment about the poster working for crooks etc is probably libellous.
Complain about this comment
@'192
No not really.....................
G Bush as just told the world we could be ending for globle meltdown, if something is,nt done soon,
We have been saying that on roberts blog for week so nothing new there.
AT least he had the nerve to tell us
Complain about this comment
191
lol
I must use that in the Board room tomorrow. Funniest thing I have heard in weeks
Complain about this comment
2
Incorrect,
They survive on exports. Does not need further explanation.
Complain about this comment
13. At 09:35am on 13 Nov 2008, TGRWorzel-SirPercy wrote:
''I've got a very worrying feeling that we've only seen the tip of the iceberg so far...''
No we have not. We are seeing the whole of the iceberg above the water, but the problem is the mass below the waterline we have not seen yet
Complain about this comment
2 years ago I bought a house and I knew that I was having to pay 20% more than I should have for it and I knew that the reason for this was that I was competing in the market place against buyers who were perfectly happy to write a bunch of porkies about their incomes on mortgage application forms and finance houses who were perfectly happy to turn a blind eye to this and to throw away the rule book on income multiples anyway. Am I sorry for people being repossessed and finance houses in trouble? Not really. The thrifty and the honest are the really undeserving victims of this boondoggle inspired disaster,
Yours Aye,
Graucho
Complain about this comment
If debt is all the US and UK can do, then there is absolutely no reason to hope for a better tomorrow. Thanks for destroying the pound, by the way. Maybe it's really time to leave this sinking ship...
Complain about this comment
Looks like Oil is being manipulated up again and Wall St are pumping liquid cash into the producers.
I don't believe in conspiracy theories.
Complain about this comment
Revenue and customs have a moratorium on import duty from the European Union on all goods under 150 pound, whoops euros, hmm never mind they are near parity now.
1. They need the British to spend
2. They know the British don't make anything any more
3. Lets hope Xmas spending on the internet buying French or German goods tax free will encourage the consumer.
But hold on, even with the devaluation of sterling offset against tax everything is still 20% -30% dearer than a year ago.
Still, we can always go to to farmers markets and buy British pickles and bread for presents
Complain about this comment
i dont care about any banks
i hope some and alot go bust
and disappear for good
the governments should refund the money of savers sack the boards and take control of there bad habits of gambling with peoples lives
he whole situatio nstinks its corruption at its worse
markets are minipulated and investors are hoovered up
goodridduns banks in my opinion
ask your self when did a bank do you any favours ???
Gbriown shoud resign i nshame in hisrunning of this country
my boss for 10 years reaped in massive profits and stashed up millions of pounds
how there is a 3 month glip he lays of 50% of the staff put others on 3 day weeks pays them lower wages to boot
no loyalty any where banks bosses all the same out to rip and con you out of as much as much as possible
oh and he never pays hissuppliers making his stash bigger
Complain about this comment
Quote
that's the world after "After Lehman", or after Paulson allowed the Wall Street firm to collapse, thus shattering the confidence of lenders everywhere''
Strongly infers that a deliberate choice was made. My memory is of desperate attempts to
embrace a suitor and Barclays deciding to leave Lehmans at the alter from within the church. Perhaps it was realised early '' there was simply too much residual poisonous poo in the system for the US Treasury Secretary, Hank Paulson, to mop up. '' We have yet to see how the alternative policy of funding on a whatever it costs policy succeeds with A.I.G.
Complain about this comment
peterskitchen
"Every debt is equal, but some debts are more equal than others it seems"
class pure class!!!
Complain about this comment
Number 208
I agree with you completely Alistair, those nasty, nasty bosses.
You could try walking next door and asking Gordon to rethink his decisions
By the way, if you continue in the way you started, you may have a chance to challenge his top job.
Complain about this comment
''In a speech at the Manhattan Institute in New York before weekend talks among leaders from the Group of 20 nations, Bush said policy makers should resist the urge to meddle too much in markets as they seek to reverse the financial and economic turmoil now engulfing the world. ''
At last there is something I can agree with this man. He might make a good President someday
Complain about this comment
I am very heartened. Many of the people posting blame all on Blair / Brown. USA knackered, Germany recession, China creaking, and on and on.
Heartened because we must have so much influence. I think not!!
Complain about this comment
#211 PetersKitchen
Hilarious!
#212 PetersKitchen
"Bush said policy makers should resist the urge to meddle too much in markets"
So he hasn't meddled much with $700bn then?
How much is 'too much' BTW?
It seems the big 3 car makers are going to become partially nationalised in USA. Is it better to say 'state owned'?
- Never thought I would see it.
Quote:
"Democrats say those loans were designed to help automakers develop less-polluting cars, not to stave off the financial disaster the companies now say is imminent. "
-Really?
Complain about this comment
Until governments come up with some new ideas of helping individuals directly rather feeding the banks and large instutions, we will see many many phases on the credit crunch.
Complain about this comment
#106 and #136 - I agree - Peston is enjoying the limelight too much.
lets-not-panic.blogspot.com discusses how the media (and technology generally) is ramping up the pace of this recession compared to the past - in essence, quicker reporting to the public, and quicker reporting within companies, so everything happens much faster than it used to.
#136 - I think the answer on gas and electricity prices is that those companies buy their fuel "forward" by some margin, so they bought for this winter during the summer - I think one company (can't find who) has said they expect prices to fall in the Spring.
In terms of the BBC news coverage, I notice that Sainsbury's rise in profits didn't get much attention (what, a retailer not in deep doom and gloom!). And that large profits from BP and Shell were not so much good news for pension funds as justification for a windfall tax - though we probably have to blame lefty Labour backbenchers for that rather than the BBC.
Complain about this comment
giantirishrover (no.4 and 174)
What planet are you on? Everybody is entitled to their opinion, but you need to think whether what you are saying makes sense.
What would happen if we let the banks that you mention fail - just sweep them under the carpet and move on? I don't think so, it would be like armageddon, and we would be worrying over more than recession and potential deflation. Take time to think it through.
Also, you cannot blame all bank staff for what has happened - RBS alone employs something like 170,000 people - are you saying that they are all to blame? I don't think so! It has already been stated that executives will not be getting bonuses (and rightly so), but general staff are likely to see their bonuses severely cut (if paid at all), through no fault of their own.
One other point. If you look at the National Office of Statistics latest figures, the average UK wage last year was £457 per week. This is considerably higher than the £325 that you have 'calculated', and also works out at £23,764 per year, which kind of blows your argument out of the water.
As I say, everybody is entitled to their own opinion, but you need to think a little harder about what you are saying.
Complain about this comment
There's a peculiar pleasure watching Brown etc squirm around as it becomes evident they actually don't have a clue what to do.
It's not much, but consolation that this fraud will be exposed as the least competent Chancellor in memory.
Complain about this comment
@185
Nic Clegg from the lib dems said on the BBC just a few days ago that a house every 11 seconds was being repossed. And things are going to get alot worse by about 3 times as much I would say.
so that would mean a house every 4 seconds. and as the natiowide as already said it expects house prices to fall into 2010 then there is going to be a hugh number being made homeless. so lets see how many.........
An house every 4 seconds is 15 a min
so you have 15 x 60min = 900 an hour
900 x 8 hour day in the court = 7200
5 days x 7200 = 36,000 a week
36,000 x 52 weeks= 1,872,000
that will effect about 5,4 million people
then you have the ones who will keep there houses but will be in negitive equity.
Our banks have already taken one big hit, i dont think they will be able to take another
Complain about this comment
"196. At 7:24pm on 13 Nov 2008, well_spoken wrote:
The last period of prolonged deflation seems to have run from Dec 1930 to Jan 1934. Apparently we eventually got out of that mess by building Spitfires, and battleships? Would that work now?"
Actually. What got us out was printing money to pay for spitfires and battleships... And yes that would work now.
Money is *really* simple. They make it sound complex but it isn't.
Money only ever does one of three things... inflates, stands still or deflates.
99% of the time it is inflating. This is called growth. Basically the government and banks are printing money because you think inflation is the price of everything rising, when in fact it's the value of the money falling.
Simple supply and demand.
If the government print a £100 note and then spend it, they got that £100 worth of stuff basically for free. We all have to pay for it because our money becomes worth less.
The other 0.9% of the time it's deflating, called recession or depression. Well deflation is simply the opposite of inflation. The supply of money falls and the value therefore increases. The thing is, if money was just paper, deflation basically wouldn't happen. Deflation happens because almost all of our money is based on debt.
Credit/debt based money is like an elastic band. When people are borrowing and each loan creates new credit and new debt it all grows (growth is just credit expansion) inflates, prices rise and rise for years, interest rates fall and fall to keep the pyramid scheme running, but there is still that debt out there to be paid. Eventually it begins consuming all the credit, and the supply of money falls. It's the equivalent to taking billions of pounds and throwing them into a furnace.
Well doh... Of course there's less money around if it's being destroyed...
One question to ask is, what kind of idiot thought that creating 97% of our money from debt was a good idea, and why on earth are our governments trying to fight deflation with more debt? How could that ever possibly work?
It's going to take little bits of *paper* which are not destroyed in a transaction passing billions of times between individuals to combat this deflation.
And you know what? They will print them. Watch the Bank of England M1 money supply figures. As soon a that takes off, the recession/depression will be over. Not before.
Complain about this comment
201#
Do you think the other cleaners will get the joke?
Complain about this comment
#195 alexandercurzon "Hey there, what did you say to get NUKED?"
No - I didn't make a remark about "he whose name may not be spoken" (and whose activities may not be mentioned.)
I committed the crime of quoting Voltaire on admiral Byng IN FRENCH. See my response #112. I could be mean and complain to an attack Rottweiler like the Daily Wail, but for all her faults, I do rather like Auntie Beeb and don't want to contribute to he destruction.
Interestingly enough, nobody thought fit to remove the Arabic in another post.
On another point completely - how will the fall in the pound affect your businesses? This is a business blog after all, but RP is more focussed on the big boys at the mo.
Complain about this comment
moderators, please let this post go through.
After reading this lot, I'm p****d right Off !!!
Another happy Brit NOT (Insert Angry face / Muggins here !)
Complain about this comment
http://news.bbc.co.uk/1/hi/business/7728048.stm
When bush speaks of free trade what does he actually mean?
That the traders at the top are free to rip the rest of us off?
I believe that this is it in a nutshell, no wonder he dont like socialism, too bad George - you got tooooo greedy and will have to pay the price.
Complain about this comment
evening all!
Back on the dodgy phone again, so apologies if the predictive text makes odd words!
Peterkitchen-err, don't want to be big headed but I predicted a run on sterling with a drop in interest rates last week the night before MLR came down-I also predicted many other things and said the interest rates should have gone up.
If it was obvious to me and others, why didn't Ole Merv and friends? Or did they realise and just do a GB clanger cos he said so?
What an unholy mess!
They'll tax humour next!
Complain about this comment
SASHA
Currency movements are a constant nightmare on the clothing & footwear side,as we sell/wholesale worldwide the ups and downs re sterling tend to balance out.
The biggest problem at the moment is that debt insurance is very difficult due to such a high failure rate.
Weve had 6 significant customers fold this year and another 11 are in intensive care,14 smaller customers have also gone to the corporate graveyard.
Theres no problem unloading product to the discounters other than long term doing that damages brands.
But from our point of view we get instant payment and keep our margins intact.
I took the view 18 months ago of cutting our production capacity by 18% for 2009,also we lost two factories in China in the earthquake,these are not being replaced.
However unlike the banks we have always turned BAD DEALS DOWN.
Ive done some short selling this year on HBOS,at a few hedge funds expense,plus some oil trades from 2007 to 2008.
Those deals have significantly enabled us to weather the cyclone which is still to come and last the next four years or so.
Complain about this comment
If we have an expanding population, no-one can buy a house, and builders can't even build rental properties because of VAT recovery blocks, one day existing landlords will wake up and say "they have to rent from us, and they are only in for 6 months, so let's double the rent."
Suddenly renting is seen as good. Rubbish. It is bad for the property (both landlord and tenant are unmotivated to improve it), and it is bad for the economy. Wider house ownership destroyed the strike orientated old labour system because people now had something to lose.
But what will really be interesting is when someone repossessed by a bank has the guts to sue the bank for the loss caused by it.
Complain about this comment
#204 - I am appalled by your 'unChristian' attitude.
There is a cold wind blowing and it will blow nobody any good.
As Christmas approaches just stop for a moment - as you tell the world via this blog that you don'tcare - have a think about the words of Dickens' ghost of 'Christmas present' when reminding Scrooge that the poor should die and decrease the surplus population - 'forego your wicked cant..'
Pride comes before a fall, don't get too cocky about your elevated position up there with all the other clever people who think they won't be touched by any of this. You'll be touched in some way, sooner or later, and then you'll be hoping someone speaks for you.
I have not been repossessed and hope not to be but I happen to think it matters to speak for others.
GC
Complain about this comment
are people really surprised we're running out of money, and people are losing jobs because companies want to save a nice big wage for themselves, nothing to do with the future, its funny for me, money doesn't grow on trees, yet people spend it like its never going to run out - EVERYTHING runs out, people complain about the fuel prices going up, why do you think that is, because oil companies are greedy and dont care about you.... also because its going to run out and people need to face the fact that nothing lasts forever and that we're going to have to look for a different resource to get about.... money's great when theres lots of it, isn't it people!!?!
Complain about this comment
@ 217. 4 & 174 are correct. The UK average wage is as you say, however they were quoting the UK average WORKING wage which is considerably lower and is the £16.9k they say.
As an example I am a team leader in a skilled IT job for a major european corporation and in charge of 7 people. I earn £15.8K gross. My 'underlings' are on £14K flat. They're semi-skilled and take 6 months to train.
Wages are a lot lower than a lot of people realise.
Luckily the boot is getting on the other foot and our employer now recruits it's mangement from Poland and the Baltic states. They are replacing 35-40K graduate-level experienced managers with 25K ones.
This replacemenet of middle management by cheaper eastern european graduates will increase and suddenly the middle class are going to start experiencing what we the workers have been experiencing for the lasy 10 years - the effects of imported labour.
And as for students in Uni at the moment studying IT? You're looking at having to work your way up to 25K once you've got a few years experience under your belt and provided you'll work for less than an eastern european.
Complain about this comment
#230
Car sales down in Eire 54%, Chrysler down 46%. Ouch
Poland, car sales up 12.4%
The Europeans will be gone. I use the term advisedly as we Brits were never, and in our hearts, are not Europeans.
We have dragged the Germans off the back of the French several times but as they say in Wales ' They are not from around here are they?'
We can tell.
You mention 35-40K Graduate jobs. You can get that salary by paying 3K for an MCSE course in South Africa.
Non Techies (MCSE= Must Consult Someone Else)
ie: Can't do it.
Complain about this comment
#223
I can see your safety valve has lifted but you do not make it clear what has caused it.
Is it discovering the truth or is it that you totally disagree with the general sentiment?
Complain about this comment
231 - I mention those 35-40K graduate jobs to show they are vanishing rapidly. You could have got a job for that at degree-educated IT middle management with our corporation 2-3 years ago. Now they recruit through an agency in the Baltic states and Poland only, not in the UK, and are bringing them in for 25K.
The depression of wage levels is now creeping into the professions and middle-classes.
Complain about this comment
#144 Moraymint
Thanks for the George Walden prompt. Energy, don't get me started about the way we threw away our world leading clean coal technology 20 years ago.
I wish I had the guts to take my whole family somewhere else, I suppose I'm just not scared enough to uproot just yet.
Dave
Complain about this comment
#228
I hoped being Satan's advocate would provoke a reaction. When reckless drivers cause motorway pile ups, the last thing they tend to get is sympathy. Well hundreds of thousands of people on both sides of the Atlantic borrowed reckless amounts of money, usually committing fraud in the process, and precipitated this financial pile up. As a consequence of this hundreds of thousands of innocent hard working families will be receiving P45's for Christmas and many will tragically lose their homes in 2009 as a consequence. I have every sympathy for them, not that sympathy ever buttered any parsnips and none for the stupidity that caused their calamity. Repossessions I fear will have to continue, simply because these financiers, much as they may protest devotion to free enterprise, actually engineered a false market in house prices and the painful adjustment back to reality has to be made. One modest reform I would suggest, however, is this. A regulation to the effect that if a family are repossessed within 3 years of taking out a mortgage and then become a charge on the local authority via housing benefit, bed and breakfast etc., then all these costs will be recoverable from the institution that instigated the loan. They should pay for clearing up their own messes, not us,
Yours Aye,
Graucho
Complain about this comment
#235 graucho: "A regulation to the effect that if a family are repossessed within 3 years of taking out a mortgage and then become a charge on the local authority via housing benefit, bed and breakfast etc., then all these costs will be recoverable from the institution that instigated the loan. They should pay for clearing up their own messes, not us,"
BRILLIANT!!!!!!!!!!! A* :-)
Complain about this comment
The last 168 BILLION DOLLAR round of stimulus checks did NADA for our economy. We must not as a nation forget the role the high cost of our dependence on foreign fuel played in the demise of businesses from the largest to the smallest. The exorbitant cost of gas the past year has done serious damage to our economy and society. Jobs and homes have been lost at a record rate. The increased cost of production and shipping of every consumer good imaginable have been passed on to the consumer.What OPEC has in store for our future is not pretty. We need to take lessons from our mistakes.WE also need to get out from under the grip our dependence on fore gin oil has on us. Why not take some of these billions and invest in America becoming energy independent. Driving an electric car would cost the equivalent of 60 cents a gallon. The electricity could be generated by solar or wind power. Green technology would create millions of badly needed new jobs. What America needs is a green revolution. It is time for us to move forward with alternative energy. I just read Jeff Wilson's new book The Manhattan Project of 2009. I highly recommend this book to anyone who is concerned about the downward spiral of our economy and it's effect on our society and would like to see our country become energy independent! www.themanhattanprojectof2009.com
Complain about this comment
Gordon Balls smiles with an insincere rubberlike look and tries to convince people that he and Mrs Balls together with their Darling poodle are proud to have brought England to its knees.
I remember when GB gave away of most of Great Britain's gold reserves at the lowest price, thus turning us into Little Britain, whilst promising to get Little Britain to toss away its sterling to accept the euro ( which action would let the Germans take away ALL the foreign currency reserves left).
I also remember GB promising that we, the unfortunate taxpaying scum, would be able to vote in a referendum on adopting European legislation. What a LIE and CON.
Now Gordon B thinks he is the world's Greatest Chancellor, I think he will go down in history as the current world's WORST chancellor. The accolade for the world's worst ever chancellor should, in my opinion, be given to Herr Hitler.
Personally I blame the TORY party for behaving so incompetently when in power which resulted in so many of the stupid voters handing Labour the power. I believe that the damage done to Little Britain by Labour may never be reversed and our on;y hope is to VOTE them out.
I suggest, as a start, some ideas which could help turn things around-
1. All Employeers should be made to pay a surcharge of 10% of all payments in cash and kind made to employees who do not have a "British Passport". This will help offset the payments made to British citizens unable to get employment because of the influx of "foreigners" who have displaced the British citizens from employment, whilst at the same time does allow employers to take on foreign skilled workers.
2. All Non-Doms should be taxed at 40% plus Full NI taxation on all their gross income including share options. Huge sums are taken from Britain by people not paying tax.
3. No companies or individuals should be allowed to offsett costs from outside Great Britain so as to avoid taxation payments to Britain.
4. Cease ALL monetary payments or provision of any other support by the State or local authorities to all non British people residing in Britain except for the costs of taking them back to their country of birth. The only exceptions being to people who GENUINELY are eligible for asylum because they would be killed by the governments of their own country. It is ridiculous that Britain supports the VAST number of people from other countries at the cost of British taxpayers.
I have no doubt that other people would suggest additional measures and that all people reading this who are non British citizens would object strongly to these suggestions.
Complain about this comment
Would a non-capitalist system allow for the repossession of the the ''repossessor'' (IMF) ??
Complain about this comment
Robert,
Would you ask your mate Big Gordo, how exactly Osborne might start a run on the pound when there's one been going on for some time? Does he not keep an eye on the exchange rates? No? No advisers keep him up to date? Special, or otherwise?
Brown is either mad, a liar, or more likely, both. He's intent on destroying the UK.
Complain about this comment
Like many people when it came apparent that US/UK had serious financial problems and the US came up with the $700 billion bail out plan and the UK bailed out Northern Rock along with many other banks I had faith in the governments and chief economists, but now with the global economy is in free fall and that Mr Paulson and co are changing direction in the fundamentals of the bail out plan it is clear that we are being led by a group of people that have gone into panic mode and are running out of ideas, now we move onto the British prime minister Gordon Brown who wants to spend his way out of the recession this is the man who raided pension funds ran up national dept and now wants to bankrupt the UK, I fear that we are on a crisis that could be worse than the great depression which could result in serious civil unrest and without exaggeration the real potential of global unrest.
Complain about this comment
240.
Osbourne is a known mate of hedge-fund spivs, many of whom give generously to him, Eton Dave etc.
Hedge fund spivs are those who gain most from getting advance info about imminent events, including rumours, which may move markets.
The day before Osbore made his ill-advised comments, the pound lost about 3% v the USD and Euro, making some hedge-fund spivs millions.
Not enough there to make you think that George the oik should learn the art of discretion, even if he did not tip his hedgie mates off in advance?
Complain about this comment
Gordon Brown was confident the Saudi's would pump more money into the IMF. Looks like they are not. China and India have said the same. They have to look after their own economies.
At the G20 meeting, leaders had all agreed that they have to take urgent action to fight the recession, BUT not what course of action to take? They cannot agree on this. GB wants the Saudi's, China and India to contribute more, but it looks like they are not going too.
This historic meeting lacked any substance on any course of action our leaders would be taking.
Complain about this comment
The present politician's and BOE/economist's future models, if they follow their pledges, are going to go haywire(c.April 2009), because the consumer spending is ''disappearing'' into ''downsized''/''second-hand'' expenditure.
Spend spend spend, to maintain ''aggregate demand'' is not necessarily required, and neither is ST deflation, necessarily, a disaster.
Perceived real wage/income growth is,as always, what's most important.
As regards the economy,and what to do,think of it like catching the ''falling knife'' in a downward share price.
Complain about this comment
View these comments in RSS