A cuckoo in the stock market?
All the talk in markets is of a possible slowdown in the rate of decline.
The reason why share prices around the world have been rising in the past few days is not that there is evidence of economic recovery - but rather that the pace of deterioration may have been decelerating.
Think of it as what happens when you touch down in a plane and the pilot turns on the thrust reversers at full pelt - the plane stops before it overshoots the runway (barring mechanical failure).
The pilots of the global economy have been gradually increasing the force (and noise) of thrust-reversal in recent months: monetary and fiscal authorities have cut the cost of credit, pumped money into the system, rebuilt banks' balance sheets and stimulated the economy.
That amounts to many trillions of dollars of economic force. There may be more to do - but it's bound to have an effect.
Now, since it was a collapse in the availability of credit that pushed the world into the worst economic conditions since the 1930s, an improvement in the supply of credit would be (for most people) an encouraging sign.
In that context, the Bank of England's last credit conditions survey - which was published on Thursday but was drowned out by G20 mania - may turn out to be significant.
The survey claimed that in the first quarter of this year there had been a slight increase in the availability of loans to companies and a less-than-expected reduction in the supply of unsecured credit to households and small businesses - although the supply of mortgages shrank again.
Perhaps more relevantly, credit conditions were expected to improve in the coming three months: credit will remain tight, but not quite as tight as it has been.
It could be the first cuckoo (sorry for mixing my metaphors).
And there may be other cuckoo-ish noises; there's been contradictory data on what's happening in the housing market in the UK - whose underlying message may be that prices aren't dropping as quickly as they were - and a less-than-expected fall in US motorcar sales (though today's news on car sales in Britain is dismal).
I am being parochial, and economic stats from around the world remain pretty dire.
But here's the paradox. It's impossible to prove that we've heard the first cuckoo in spring. However that may not be the disaster it seems. What matters - to an extent - is what investors think they've heard.
Confused?
The point - which I've been making for some time - is that there is an inextricable link between asset prices and the supply of credit (and between the supply of credit and economic prospects in general). Or to put it another way, a pre-condition of economic recovery is that asset prices have to stabilise and then rise in a sustained way.
For asset prices to rise, investors' appetite for risk has to increase - which would happen as and when they see portents of better times ahead. And if - for example - property prices then bounced even a little, banks would have a bit more confidence when lending, because collateral would not be seen as inexorably shrinking.
A similar virtuous process stems from a generalised rise in share prices. And that's a trend we have been seeing from Tokyo to Wall Street to London.
If share prices rise, including the share prices of banks (as has been happening), then it becomes much more of a realistic prospect for companies - including banks - to raise the equity capital they need.
That in turn both reduces the demand for emergency lines of credit and increases the willingness of banks to lend.
Against that background, the strong demand for HSBC's £12.5bn of new shares has to be seen as a very good thing.
None of which is to say that even if we've heard the cuckoo that it couldn't yet be wiped out by yet another malevolent storm.
And I've bored you rigid with my fears about the huge challenges we'll face, even after the recession has ended in a technical sense.
That said, it would be mean-spirited not to take pleasure from the thought that we might have heard a cuckoo.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~53~RS~)
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After all the talk against derivatives, I just love your "the pace of deterioration may have been decelerating". The world looks increasingly crazy to me. Unless it's me who is losing my sanity.
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Robert
Surely a few more post like this with a positive edge will only help things start to improve.
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I'm confused, Robert, very confused. And I'm sorry, but it all sounds like cloud cuckoo land to me.
http://moneyistheway.blogspot.com/2008/09/cloud-cuckoo-land.html
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Well you never know Robert, one can hope.
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Sorry to be a pesimist when the sun is shining for some, but in this part of the UK we are about to see the unemployment levels shoot through the roof, this will undoubtedly result in bad debt and reposessions. So whilst the City may be about to enjoy a burdgoning spring ours is looking dire. Even if there is the money to borrow most will not want to or be able to and IMHO neither should they, because the rest of the economy still has a very long way to go and I do not believe is even close to bottoming out.
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I think the use of the word `cuckoo' is very apt. You can hear a cuckoo but you hardly ever see it. Also it is a parasitical bird which just about sums up what has been happening in our economy over the last nine months..
We seem to be reaching some sort of floor, or, as I have said previously, is it a step or a mezzanine? Too early to say yet. I have seen a lot of domestic building activity in my locality so the speculators are still out there expecting an asset recovery. The fact that they are there is significant.
However, this might apply to the economy at a macro-level but at the micro-level it is dire and still getting worse.
The consumer is paying down debt, there is a lot of inflation about that dare not speak its name and the prospect of significant increases in taxation are very real. This does not bode well.
I think everything impinges around how the government tackles the considerable debt it has run up for not passing by on the other side. Tax hikes and welfare cuts will cause manifest political trouble and exacerbate economic woes. Cuts in public spending sufficient to meet the rise in debt are not in the canon of Labour thinking and against the interests of their client groups.
So we can expect fudge for the budget and an Augustinian desire to be worthy but not yet. This will not be good enough, there will be a further run on sterling and inflation will take off.
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Robert
You continue to argue Brown & Darling's assertion that it is a lack of credit behind the economic downturn. This is simply not the case - collectively the indebted population of the UK has recognised that continuing to consume on credit at the level it was is no longer viable and it is the reduced demand which has triggered the onset of the recession.
This then becomes self perpetuating with the associated job cuts and lack of investment leading to further reductions in demand as individuals attempt to reduce personal indebtedness or save for their own rainy day.
Brown sees the only way to break the cycle as encouraging further consumption through once again borrowing but memories are not that short! The electorate knows he milked the availability of easy credit to generate his illusory good decade and will not be suckered again.
Consequently demand for borrowing will remain low and the recession will be deep. Good quality applicants (personal and business) will continue to be able to borrow as they have throughout the last couple of years.
Brown (and you) need to be able to distinguish between cause and effect.
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If we are re-inflating the asset bubble to deal with the dodgy derivitives market, then I think we're all in cloud Cuckoo land.
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Have the Labour spin masters ordered you to put this out there Bob? Next thing you will be telling us it`s a good thing for Britain to go to the IMF.
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Robert,
Even if the stock markets had meteoric rises, it will take a significantly long time for that to translate into more jobs and people having more money in their hands to feed their families with, or to retire on, or whatever, and even longer before it stops people putting money away in anticipation of problems ahead.
And - even if that all happened overnight - it will be even longer before people regain any trust in the financial industries such as banks, investment advisors, insurers, etc. Humans, rightly or wrongly, often take the attitude of "once bitten, twice shy". It's called learning by experience.
Sadly, the lax regulatory regime has left a legacy whereby many ordinary people feel they are unable to do anything whatsoever about risk taking, over-stretching, maverick financiers or just plain arrogant and bullying ones. It's just not a level playing ground, so why bother to play at all?
Let's face it, track record shows that they can't trust HMG or its regulators to rein them in. (The Financial Ombudsman Service is ludicrously slow and is highly under-resourced, judging by my personal experiences with it and, as for the FSA, well let's not even go there!)
Long drawn out legal battles about bank charges don't make people feel any better about banks' true willingness to give a monkey's whatever about them as customers. (Really, why couldn't the banks have just 'rolled over' on that one, even part way? Wouldn't it have been worth the PR? Why this insistence on dragging everything out like they have. Yes, I know, the Anglo-American way of doing business).
So, the industry is still left with the issue of how to rebuild trust and the simple fact is that building trust takes time. The more the trust has been abused, the greater the time. Unless, of course, we're going straight back to running everything on the basis of fast fat profit again.
Are you sure that was an actual cuckoo you heard? It wasn't a cuckoo clock, perhaps? It's amazing, with modern electronics, how realistic those things sound nowadays, isn't it?
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So people hear something and dont know what it is but imagine it is what they want to hear. So we are no further forward are we because this is exactly how these genii got us here in the first place. Surely it is time to send them to the corner to write out one hundred times - I must not imagine I am hearing what I want to hear. I must ignore the voices in my head. I have a disorder and I am a danger to myself and others.
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i am not sure that share prices have anything to do with real life.... the stock market is nothing more than a casino... look no further than a stock like Tesco ....in the last year it has been as high as 437p and low as 285p....yet during that year was tesco's business any better or any worse? No it was just people gambling that moved the price not the fundamentals of the business... This latest rise could be a sign of better times but could just as easily be a bear market rally and in two months will be once again testing the lows...basing economical judgements on the state of the stock market is very dangerous..
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People are getting desperate for all this horror to be over and everything to get back to normal. The gamblers at the Stock Exchange want the punters to come back. But it's all a mirage.
The recession is just getting started. Nothing has changed in the directors rooms. The same millionaires are still scratching each others backs and hoping their comfortable protected lifestyle can resume as soon as possible.
If no dramatic action is taken, like root and branch clearout of the robber barons, then the current sticking plaster fixes will ensure that we muddle on, gradually getting worse unemployment, then hitting bottom and bouncing along for years of depression.
Maybe it will get bad enough to force real action to be taken, but if not, we are in for a long age of suffering like Japan.
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Any chance of a post without the terms "to put it another way" or "i have been banging on about this for the last year" as if we are all so stupid it needs explaining 3-4 times in different ways and we certainly dont need the "i told you so!!" bit. If you were some sort of clairvouyant surely the goverment would have employed you buy now!?
Other than that i like the tone of the blog. Basically everyone is just waiting for the starting gun before getting on the property ladder.
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The armchair-experts are waiting for the gun to fire. Having stratosphered the dot-coms with day trading, over-inflated the housing market with their homes-under-the-hammer, and now that their lovely-loot no longer earns interest merely by existing - because every man and his dog that could pay them interest did so, and then some - they need another easy win... What's it to be? Hand guns and mines? A BBC daytime TV programme on export of torture instruments to make a "healthy profit"? Buy plots of 3rd world land then sell it back to them weeks later at an inflated price? It's the British dream: have enough money to live comfortably off the backs of others. The big question is, is this the bottoming out or just a few over-eager gun-jumpers? Only time will tell, but one thing is for sure, your average working-class-joe won't be seeing a "nice little earner", they'll be hoping to stay afloat as others speculate their life away.
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It`s all a nice picture you`re painting but it still doesn't get away from the fact that the economy is no where near growth yet.
Based on your arguement, if my football team is playing Manchester United and I`m expecting them to get hammered 10 - nil but they only lose 6 - 1 I should be happy. The lose was less than I was expecting so maybe my team is better than I thought. None of this changes the fact that the team still lost the game no matter what kind of gloss I want to paint over it.
The problems our govt have been building up with all of this debt will go far beyond the recession. Darling has come out now and said he got it wrong in the pre budget report - nah do you think?
Every man and their dog said at the time that Brown`s and Darling`s forecasts were crazy. Now 2 weeks before the budget he tells us the deficit is 2.7% worse and we are short another £39 billion. And at the same time Mandelson and a few other ministers are laying the ground work by telling us it`s ok to turn to the IMF for help.
Here`s some more information for you: PM's just saved apocalypse for later http://creditcrunchedoutinuk.blogspot.com/2009/04/pms-just-saved-apocalypse-for-later.html
Max Keiser refers to all of this mess as Financial Terrorism and I can't say I disagree.
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It would seem that for our economy to be flourishing we require a state of affairs where credit is constantly increasing. When credit dries up people stop buying things like houses and cars, and the economy nosedives.
Because interest has to be paid on loans the amount of credit has to rise exponentially. This is obviously not sustainable in the long term - at a certain point the interest payments just become too great to bear, even with further borrowing.
All the G20 has done is to create a stimulus whereby credit can be extended for a bit longer. We have effectively borrowed from the future in order to fund current spending.
This will result in a rally in the markets and in business confidence but it will be short-lived for the simple reason that credit cannot just keep on rising exponentially.
The better option would have been to bite the bullet and to raise interest rates/reduce govt spending. When we finally get rid of this terrible government that is what the Tories will have to do, as they have had to do after every failed Labour government.
The IMF will get through a trillion very quickly indeed. Gordon will be too arrogant to approach them for money until it is much too late anyway. I have no doubt that he will opt for printing money instead, and won't stop until he has completely ruined us all.
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Perception can and often does have much more impact than reality, certainly in terms of the economy and never more so than in the stock market.
Organisations, governments, individuals, and the media need to realise that this "economic airplane" didn't crash. Yes, it came down onto the runway hard. There are some casualties that need our immediate help.
But the passengers and pilots of this global economy need to stay calm whilst the plane is checked. Normal flights will resume soon.
Roger, Wilco, over and out...
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A last you seem to have got the point that markets rely on sentiment just as much as hard facts perhaps now with this hindsight you can see how some of you early rumour reporting about the condition of some banks (in particular one that has just had a highly successful rights issue)did more damage than good.
As for those still harping on about the nasty derivatives market please be a little more specific if you can, a large part of the derivatives market (interest rate and foreign exchange) has done much to protect many businesses from the violent market movements we have seen and in fact the few pension funds that switched to a liability based fund using derivatives (inflation swaps and interest rate swaps) have performed much better than the tradition asset (equity) based funds. Many of your pension funds and investments have actually been protected by derivatives and saved YOU money. But I guess its too much to expect these days for anyone to look at both sides of any story much easier to jump on the bandwagon, generalise and not attempt to try to gain the full facts or dear I say base your comments on actual facts
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Financial markets always pre-empt the economy. That's how they work. The problem is that they don't go in one direction only and it is rarely clear as to why they behave the way they do at any given moment. It is possible that equity markets are now starting to get to good value levels. The other possibility is that they are starting to discount a large surge in inflation caused by some governments printing money. This explanation becomes more likely if yields on government bonds (Gilts here) begin to rise. That would indicate a loss of confidence in the government's ability to restrain the inflation they are trying to create as a temporary antidote to deflation risk.
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A lot of the population in the UK are naive to just how bad of a situation the UK is actually in. They think the recession will come to an end and that`s it - we can all go back to the way everything was.
It may not happen this year or even next but the UK is going to be in for a real jolt of reality somewhere along the line.
Brown cannot even answer the question of how much in the hold UK plc is.
How will Gordon Brown pay back the national debt?
http://tinyurl.com/c7dl8k
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This seems an overly optimistic view of things.
The secondary effects of the recession aren't even being fully felt yet - mass unemployment, reserves of cash being exhausted etc. Companies can "make do" for a while when business is quiet, but sooner or late they use up their reserves and would have to borrow (difficult in current market) or start firing people.
This will create a new wave of secondary effects, which will feed back into the market.
The fractional reserve system always has been a house of cards, akin to a pyramid scheme, that persisted purely because enough people thought it was sound. Now our leaders would have us believe that real wealth can be created with a printing press and a big bottle of green ink. They appear to not even understand the basics of why the system has broken.
Gold price is currently down - looks like an excellent time to buy.
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So stock markets have been rising for a month. Very nice for people who bought a month ago and plan to sell now. Meanwhile, back in the real economy...
Robert, the fundamentals haven't changed. We had ten years of unsustainable growth based on ever rising consumer and government debt. In order to pay back that debt (or if you will, inflate it away) we need several years of reduced living standards, which in turn means lower company profits. People can no longer buy new cars by increasing the size of their mortgage. There may be the illusion of recovery in the next year, especially with a pre-election giveaway, but after the next election there will be sharply increased taxes and lower government capital expenditure, to pay for the bailout of the banksters.
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If only it was so simple! Too big to fail or simple special pleading? I think what Robert really means is that pumping air into a deflating air bubble might work. Time will tell.
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The cause of the recession is simple, take me for example.
Bank stops paying me interest on my cash, AND increases interest on my credit cards (zero balance by the way).
Result?
Closed my savings account (extracting the cash and paying down my mortgage) AND closed ALL lines of credit.
Who else is doing this? Lot’s is my guess so the recession will become very deep and only the strongest will survive. This is the reason the recession will not only continue but deepen, as for the cheap money that vanished back offshore? I’m willing tobet the Chinese wish they had not done that now….. (and as the currency USD and GBP are being diluted, they may as well have left it here).
Also,
Why is the oil going up? Sterling is gaining strength against the dollar and the Euro – Me confused!
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There is no doubt that the stock market is on the rise and house prices will be moving out of a negative direction by late summer . However I still believe the government will have no alternative but to dramatically cut public expenditure in the next 12 months , it is simply unsustainable , tax rises will not cover the deficit , on our prsent course the deficit will be massive. We need to adjust the % tax on GDP , so its again worth while to generate wealth / jobs .
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Bob - will you please stop doing the job of Labour's PR people for them.
Whilst there may be signs of a slowdown in the slowdown this is countered by a lack of any evidence at all that the Govt is going to carry out it's "promise" to rebalance the economy.
Anyone under the age of 35 should emigrate now!
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Market volatility is the easiest way of making money on financial markets. The markets will be volatile this year; which is a good thing if you want to buy and sell shares and currencies for profit.
If you get your timing right, you'll be quids in......
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Let's hope that the disastrous frenzy of greed of the last 10 years has come to an end and been replaced with something far more valuable......common sense.
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Re: point 7 - it is horrifying that politicians and leading economic figures have yet to fully grasp the idea that the "real" economy is crashing to a terrifying halt ref: continuing collapse in car sales and recent reports about nose-diving summer holiday demand.
The lack of credit to ordinary consumers on very average salaries is partly the issue - but only because for the last 10-15 years a significant majority of people have not had the real income to spend as they have and made up the shortfall with endless personal loans, credit cards and equity release (on the back of an always unsustainable boom in property prices). So yes, the cutting of credit lines is the initial issue. But the woes the "real" economy is experiencing are the embryonic stages of a fundamental reassessment in British society. Ordinary people simply do not earn enough to sustain the level of economic activity that Gordon Brown et al seem to desire. Now that the unemployment spiral has kicked in this will only get worse.
The stock market and its performance is becoming an increasingly vulgar side-show as recession now truly begins to take hold at ground level. Point 12 is right - Tesco is simply a supermarket (admittedly a very diverse one) but its fortunes have not recently fluctuated to such an extent as to explain the variation in their share price as nothing more than speculators speculating. The stock market is nothing more than an expensive bookmakers outfit - it can't be denied that unfortunately it seems to influence our society significantly but it is a million miles away from the experiences and realities of everyday Britain.
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FOR THE BIRDS
it's the start of a lovely week here in old London town and having attended the G20 I'm rekitting the Numpty down here in Wapping (the traditional home of pirates and sea captains is Narrow Street if you didn't know); based on your predictions, I shall be setting sail with new-found optimism that there will be more merchants ships and easy pickings for us pirates
HOWEVER....
I suspect that your use of a CUCKOO as the example has some deeper meaning; any ornithologists on here or partakers of the big back garden survey? cuckoos are seldom seen and traditionally seen as devious things
Now if you had said that you had seen the first ROBIN of Spring, I would be more confident
Here's my predicitions, which I'm calling the
EARLY BIRD INDEX OF WORM FUTURES
April 2009 = first CUCKOO of Spring (a sucker's rally)
remainder of 2009 - rising unemployment, declining world trade, deflation
April 2010 = first ROBIN of Spring (some genuine green shoots)
remainder of 2010 - very mixed, anaemic and flat 'recovery' and possible stagflation
April 2011 = first BLUEBIRD of Happiness (growth in consecutive quarters)
April 2012 = first ALBATROSS of Peak Oil (rocketing resource prices knock us back to CUCKOO STATUS AGAIN
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An alternative explanation for the bouncyness in stock prices is that traders have come to the view that all this furious interest rate slashing and money creation is going to lead to a nasty dose of inflation. Remember, stock indexes are nominal.
Similarly - upticks in credit availability and house prices, in the absence of any real growth, could just be indicators of inflation.
With all the novel policy action going on, it must be almost impossible that the authorities will hit a stable growth with low inflation outcome first time.
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The take up of HSBC and other rights issues is not a case of seeing the light at the end of the tunnel as you suggest. It is more a case of vultures prepard to pay deeply discounted prices which they could never have had a year ago.
If large FTSE and international companies can't use the stock market as it was intended what's the point of it.
What is needed more than ever is the ability to stop discriminating in favour or grossly over indebted large firms and realise that UK wealth generation comes from smaller ones who employ far more across the industrial and keep this country going.
When that happens the real first shots of recovery will definitely be there to comment on. Until then you need to put things into perspective Robert
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"The point - which I've been making for some time - is that there is an inextricable link between asset prices and the supply of credit (and between the supply of credit and economic prospects in general)."
Doesn't it strike you that none of this makes sense? Property and asset prices experienced a bubble. The bubble burst - the world went wrong.
Now we need another asset bubble to get things right again, i.e., get fools to overindulge in the hope of making unrealistic and unsustainable profits?
Surely more of the same isn't the answer. Doesn't anyone see that a junkie needs to go cold turkey to be cured?
Anyway, the latest rise is likely to be a dead cat bounce - some more will be suckered in before the next drop. This tends to be what happens. made worse by the media.
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DUNBORROWIN'
as #26 javaman and many others say, a lot of people are spooked and therefore not following the US and UK govt's entreaties to carry on borrowing and spending money they don't have
so we are in the early part of a long adjustment back to an earlier age; it will take a long time to flush the trillions of debt out of personal finances, if ever, given the rushing increase in unemployment, as Larry Elliott discusses in today's Grauniad
even the Americans have tried to stop spending money; they have mega problems with unemployment linked to lack of health care and plummeting house prices; and the Alt-A, ARM (Adjustable Rate Mortgages), commercial property problem and massive credit card debt that can't be paid are all coming along as successive waves of the TSUNAMI
remember how that TSUNAMI worked? you don't get just one wave, but a series
sorry for the pessimistic take on this, but I think it's important to remind everyone that it is feasible or even right to believe that we can return quickly to economic growth as it was, as it ISN'T SUSTAINABLE
D'OH
in honour of my views I'm playing Steely Dan's Pretzel Logic at the moment; marvellous music circa 1974, when the economy was quite screwed up but not as much as today's..........
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Lags are an important factor to consider. A lot of the figures being reported now are for the period of the last quarter up to January and those were bad, of course. But I reported previously that reality had markedly changed since then. 7 weeks of solid increased trading figures have now become 8 for us, with a week that's not only the best of the year, but the best of any year we've ever had. Not just more customers, but also spending more on bigger ticket items. Interest rate reductions meant more money to pay off personal debt, now it means they have more disposable income. The weaker companies who barely had a viable business in the boom years have gone to the wall so the better companies are picking up the stronger demand. In my sector, recovery is so undeniably well under way it would take an idiot to deny it. Unemployment will remain high because, as people say, they won't make the same mistaken spending decisions as before. But lower consumer debt is a good thing. It was one of the mistakes of the past. That's a good thing, though, as banks won't get the easy ride of loading us with debt and they'll turn over and profit less as a result. We've made structural decisions about where we put our money and how we pay bills for the future, and they don't involve banks at all.
Flaky companies in flaky sectors won't be coming back to mop up the unemployed. There'll have to be whole new sectors to do that. People have to be more creative in future. Recessions are the mother of innovation, so I expect that to happen too.
Have ou not noticed all those For Sale signs turning into Sold signs recently? I have. Maybe it's just where I live and work but I doubt if I'm alone.
Also, fianncial markets don't pre-empt the economy. They pre-empt the /reporting/ on the past economy by getting more current information on progress through a reporting period. What I did at the start of this post is give you a heads up on what that progress is. Believe me or don't believe me, I don't care. It'll begin to be reported to you as news in about two months or so, while markets have just got wind of it now. Just because there's still lag in some sectors doesn't mean it's not happening. It is, and it'll spread to them when the massive stockholdings are run down to acceptable levels. Those sectors delivered and profitted on today's demand months and months ago, so I hold no sympathy for them.
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As soon as we do see real recovery we will also see interest rates starting to rise rapidly. Lord Turner in his FSA report back 4 or 5 weeks ago already told us to be prepared for 9 or 10% mortgage rates.
At that point even raising taxes will probably not bring in enough revenue for the Govt to service the debt. If it were a business, UK Plc. would be heading for insolvency. A few months back I wouldn't have thought that to be the case.
We may be screwed but we saved the Banksters anyway. Have a look at:
The Best Way to Rob a Bank: Own One!
http://creditcrunchedoutinuk.blogspot.com
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#28 wee-scamp
Anyone under the age of 35 should emigrate now!
You`re not wrong!
Anyone for Canada or Australia???
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I think the availability of credit should remain more restrictive than before this crisis began. Why are we trying to get back to 125% mortgages and loans that are 7 times average incomes? As in Japan maybe it is not so much a problem of availability as it is one of willingness to take on unaffordable debt? If this is indeed the case then cutting rates and running fiscal deficits will turn out to be a problem, not a solution.
PS If monetary policy and Govt stimulus measures turn out to be economic errors will MPs be asked to cut their pensions too?
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We heard about the green shoots of recovery, then we heard the cuckoo, what we need is a photograph of them.
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Why don't we face up to the fact, that having spent the last decade or so spending beyond our means as a nation, it's not going to resume normal service anytime soon. This is not doom mongering, it's just being realistic. Forget about the stockmarket, it's not the real world, and reacts to the most ridiculous snippets of news.
I think it would also be helpfull to swap the word "CREDIT" for what it is "DEBT". And no matter how it's dressed up "CREDIT CRUNCH", this is a full blown DEBT CRISIS and until that debt is paid down there will be no true recovery, only smoke and mirrors.
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We are in a false dawn. How long have we been waiting for some good news? House prices stabalise? Well not if you believe HBOS the following day with prices down 1.9%. Nationwide said prices rose in October 2008 too!
There remains a lot of money on the sidelines waiting for capitulation. How can this happen when we are waiting for it with money on the side?
Some businesses are seeing very strong rallies. Barclays are up from 50p to 180p. Will we regulate this business so profits are much less than before? Let's hope. Do they still hold a huge amount of toxic debt on and OFF balance sheet? Of course. Has the media been more positive? Yes.
I honestly hope we will see the FTSE stay strong but I do not see any improvement in the economy to justify it. Even the G20 was a con offering £1t of money that may never be called and may never be printed.
Good luck investors.
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One thing that hasn't been considered is that a lot of big companies don't want a recovery yet.
All this recession talk is enabling them to cut pay-rises this year, make people redundant with those remaining in the company having to work harder and longer to make up the staff shortfall and yet somehow be happy and thankful because they still have a job.
Friends in so called 'recession-proof industries' are seeing staff numbers cut with departments being moved off-shore where labour is cheaper which were long term company targets that have been brought forward with the economy as an excuse to difuse the bad publicity.
Large companies also know that they are in a better position to weather the storm than small companies so the longer the downturn goes on the more of the competition will go to the wall meaning they can claim the market share and larger profits come the recovery.
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Sorry yopu have spent too much time with G.Brown, in the real world of small businesses there are NO signs of anything picking up, infact all we see is big companies and goverment departments taking longer and longer to pay and suppliers demanding cash up front.
As for the goverments small business rescue / garantee plan promised in the pre budget statement. Will as far as i can tell its still does not exist.
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I'm not sure if the choice of cuckoo as the sign of an improvement in conditions is the best. A cuckoo in the nest normally implies that someone has supplanted the rightful occupant of a position. The offspring of the cuckoo replace the offspring of the bird in whose nest the parent cuckoo has laid its egg and receive all the benefit of the host birds attention.
Normally a swallow implies the arrival of better days, the first swallow of summer. But then again, the arrival of one swallow doesn't guarantee a good summer.
In either case we are talking about migratory species who make fleeting visits.
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A cuckoo in the stock market? Sorry but I don't think you've even got the right class of animal. Try the attached link, it's a tad old but still relevant:
http://www.ameinfo.com/16529.html
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#39. jd6969preston wrote:
"As soon as we do see real recovery we will also see interest rates starting to rise rapidly. Lord Turner in his FSA report back 4 or 5 weeks ago already told us to be prepared for 9 or 10% mortgage rates."
I have read Lord Turner's review and do not recall any such warning.
Would you please post the relevant extract? Or, if you prefer, just the page number?
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Another reason for being a bit upbeat is the non failure of the G20 summit. There are indications that since this group covers most countries that really matter economically, it is able to at least affect confidence. Politicians like the idea of networking with their peers under the admiring gaze of TV cameras. The G20 is likely to meet fairly often and has it within its power to do things which might work. Crucially, the associated PR effort coordinated by governments may increase confidence in markets. I.e. the vital and hard to capture ingredient which could trigger an upturn.
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A recession which is over before it's begun? Now that really is cloud cuckoo land. I doubt that the impact of pumping trillions into failing banks stops at the closure of Woolworths and a brief decline in house prices.
It may be over for those who don't pay UK taxes, but for us mere mortals it hasn't even started. What I want right now is to stop hearing Gordon Brown going around telling people what a hero he's been through all this. Only time will tell whether he's been a hero or not (in the same way that time told us what ten years under his stewardship as Chancellor achieved).
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For those of you looking for a picture of the cuckoo, you will see him on the news every day - He wears his pants over his trousers and it was his actions that saved the world / universe.
His best mate often referred (on here) to as, comical ali – is also cuckoo!
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The credit conditions survey extrapolates tentative conclusions from broad questionnaires circulated to various lenders. I thought it said that availability ( or lack of it) of wholesale funding was still an inhibitor to loan supply. The Lending Panel Forum are giving ( or should be) the Government hard facts about both supply and demand for credit. Poor supply conditions will excacerbate recession. The FSA were doing their sums on the lending capacity shortfall, but as yet I cant find any figures. What we need is the facts. Michael Coogan, director general of the Council Mortgage Lenders, says: "January and February are usually the quietest months in the mortgage market. The current withdrawal of many specialist, small and foreign lenders from new lending has created a huge gap in the capacity to fund mortgages to match consumer demand and this is continuing in 2009.
"People want to know why lenders are not lending. They are, but government schemes to restore the flow of funds are primarily focused on a few large banks and recent lending commitments by a few lenders cannot fill the gap overnight although we hope to see more funds flowing into mortgage activity later in the year."
I'm all for cuckoos and green shoots if they exist, Robert. Meanwhile I note the hedge funds are betting on inflation biting in.
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Yes there is a cuckoo in the stock market. There is a cuckoo in the housing market. There is a cuckpp
in the supermarket. The UK has become a mere suburb of the cloud cuckoo land where politjcians and global
leaders live. We are the landless and disinherited.
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The cuckoo! What a metaphor. Undoubtedly the most evil and terrifiying species in existence the cuckoo commits up to 6 homicides (birdicides?) within 9 hours of it's birth. While still blind, featherless and looking like a small chicken wing the cuckoo kills any and all of other babies in the nest by pushing them over the edge whereby they plummet to their deaths. (all under the nose of the rather clueless mother)
I will leave the sheer number of parallels that can be drawn here to more imaginative people than me!
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What will be interesting to both know and watch is the number of Bank Directors themselves actually buying (rather than being given or exercising options) very large amounts of their own banks shares with their own money. By very large I would hazard this would be an investment of at least half a million pounds? Possibly higher.
The new motor vehicle sales market does not seem to have clocked any cuckoo's. But it has heard a sick parrot's feeble little squawk, does this count?
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Fantastic news Robert!
We are getting more of the same then?
From Wiki:
......
Was that Fred I saw heading off to an office block this morning? Everbody, quick transform yourselves into an ostrich!
Seriously, this is not good news. Increasing value of assets? Back to the never-ending growth that is not sustainable. No real change. Not very intelligent or forward thinking is it?
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This comment was removed because the moderators found it broke the House Rules.
So what comes first - The first cuckoo of spring - or green shoots?
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Rising asset prices. Well this is almost guaranteed to happen with banks allowed to defy previous accounting rules. I think my 5 year old car is worth 100K so it is not unreasonable for my bank to lend me 50K against it. The fact that I only paid 8K for it 3 years ago is besides the point. It is down to the banks what notional value they place on the stuff other than cash that they have on their books. Well now isn't that going to fix the World eh ??
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So, in effect, we could be on the way up, but we could not be as well? Thank you for that nugget of incisive journalism.
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#49 rbs_temp
The Times (as did some of the other papers) did a story on March 22nd titled Coming to a bank near you: the 9% mortgage
In the story the following was quoted:
"If, like me, you’re holding out for cheaper fixed mortgage deals, last week’s review of the global banking crisis by Lord Turner, chairman of the Financial Services Authority, showed just how long a waiting game it could be.
Buried in the report was a startling figure: mortgage rates can stay high for six to nine years after the onset of a banking crisis.
Turner wants banks to hold much more capital to prevent the failures of Northern Rock, Bradford & Bingley and Halifax Bank of Scotland from being repeated....Indeed, the margins on tracker mortgages are now so fat that the 9% mortgage may not be far off. Nationwide building society has the biggest margin on a tracker mortgage, according to brokers."
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the black market is beginning to prosper in the south west mr starling where oh where are you going to get your much needed tax revenues from.cash is king and will remain so for a long time yet.
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#39 jd6969preston
Thank you again.
Just watched the interview with ex-regulator William Black in your link. 10 minutes very well spent. I urge everyone genuinely interested in learning the truth and learning from it to watch this. I've grabbed and saved the video in case it "disappears" from the web.
Many things he said made eminent sense, for example: "Lying to create confidence does not work."
Black's almost final words: "Get rid of the people who have caused the problems!" In the US banks, they are nearly all still in place. Too many of ours are too.
Back to my OU studies now.
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Stocks are propably not rising because of a slowdown in the slowdown.
It'll be the pinstriped runts unwinding their short positions, which exacerbated the fall in stocks in the first place. At some point they have to go back into the market to buy the stocks that they borrowed from the pension funds so that they can return them.
The stock market is a very poor indicator of reality in the short to medium term. Anyone who has had the misfortune to show "Analysts" round their quoted business will know that the last thing these chumps actually do is meaningful analysis.
If share prices are a mirror of the underlying value of companies then the mirror is at best fogged over but more likely cracked or even broken.
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I think the phrase robert peston used before was kinda like things are getting worse slower which isn't the same as things are improving.
From what I'm reading elsewhere the real story now is that some top people are going to get sued and bail out money given to liars from liars might have to be clawed back.
The companies/banks that have been committing fraud may have to go into receivership.
The whole bail out process might have to start again.
Maybe Robert with all his inside knowledge should phone up the the Serious Fraud Squad If there is anything he wants to get off his chest now would probably be a good time.
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Cuckoo = rich blocks wearing red socks (the bankers and other assorted Masters of the Univers)
Dunnocks = The Government
Meadow Pipits = The regulators and legal authorities/sytem since they don't have much authority after all
Eurasian Reed Warblers = the public
Yes, we've been silently invaded
Just heard Fred has invested in new silken socks - they are yellow but his face and riches are a dead give-away
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"worst economic conditions since the 1930s"
On what basis do you make that statement? Yes, we're in a recession. Yes, economic conditions are not good. Yes, a lot of people are losing their jobs.
But we've had plenty of other recessions in recent decades. What makes this one worse than the others? If you believe we really are in the worst economic conditions since the 1930s, how about some stats to back it up?
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# 18 Amused 2death
Thanks for the chuckle.
# 40 jd6969preston
If only 20 years younger... New Zealand would be my destination.
The cookoo's are late arriving this year, maybe they have sniffed the economic cold winds here and gone that way too.
Unelected Crash is a cookoo sitting in a unstable nest, if green shoots don't appear... eviction is inevitable.
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Great - we don't need a "car scrappage scheme" after all. Mervyn's against spending, it'll help foreign cars firms and "new car" toffs, and dry up the supply of decent cars for common, working people. And now we can hear the cuckoos - just in time, eh?
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Thanks for the positive article Robert - hopefully you are the prophet of recovery just as you were the prophet (or cause?) of the collapse!
Confidence is indeed dependent on either a virtuous or a vicious cycle - the concept of "self-feeding economics" is a demonstrable one:
http://www.knowingandmaking.com/2009/04/self-feeding-economics.html
It isn't about "lying to create confidence" - it's about the fact that current asset values are incredibly sensitive to expectations of future economic performance. A tiny adjustment in future expectations results in a big shift in asset prices. We saw this on the way down and we'll see it again on the way up.
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what on earth has got into the moderators? they are working at the speed of light; surely lunch break beckons, otherwise this is a gold-letter day
just heard a chap from the National Housebuilders on Radio 4 who sensibly pointed out that the govt could embark on some REAL STIMULUS by building some houses; only 70,000 will be built this year and apparently the number of households will increase by 200,000 (due to more people living singly etc); the govt target (which of course it was left to 'market forces' to deliver) used to be 150,000and had a year or so ago was put up to abot 240,000 I think, but acual building has halved instead of doubled!
building houses could:
provide much-needed social and rental housing
povide employment in a declining construction sector
deliver good value on costs in a time of lower building costs
the govt could also be buying up unsold houses; they say they are doing all this or are about to, but of course it's far too little
if just a few billion were put into house-building it would provide an important ROI (return on investment) in all sorts of ways
and could we do something about insulation grants, home energy audits, incentives to scrap old cars, renovation grants etc etc
come on gov't DO SOMETHING
as for the G20 $1tn stimulus it is FAKE; and whatever fraction of that $1tn is spent, it will be through the auspices of the IMF, who as we all know, runs an extremely anti-stimulus economic policy, forcing countries receiving help to retrench by closing public services etc
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All this market noise is from people desperate to make some money back. The truth is the Government is cooking the economy via its new found banks to tyr and save itself.
It won't work, it will be seen through. This is a huge suckers' rally.
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Rob, you're out of touch - you need to get up to speed - here's what's coming next...
http://www.pbs.org/moyers/journal/04032009/watch.html
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#68 disgustedofmitcham
'worst economic conditions since the 1930s'
journalism has a tradition of exaggeration and inaccuracy to uphold
a V2 rocket hit my house here in North London just last night, you know; it's all being hushed up as part of a new LYING TO CREATE CONFIDENCE GOVT INITIATIVE
apparently THE ENEMY (whoever they are) are trying to bomb our docks and industries but can't find any
I'm looking forward to a SLOWDOWN IN THE SLOWDOWN to be honest
hope things are ok down there in Mitcham; WHAT'S THE LOW DOWN ON THE LOW DOWN? I'd keep your tin hat handy
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#62. jd6969preston wrote:
"The Times (as did some of the other papers) did a story on March 22nd titled Coming to a bank near you: the 9% mortgage
In the story the following was quoted..."
Which may well be true, but it's a very long way indeed from your original assertion that "Lord Turner told us to be prepared for 9 or 10% mortgage rates".
The Times is simply applying today's highest tracker mortgage margins onto worst-case projections for base rates in the years to come and coming up with a hypothetical 9% mortgage rate.
Their hysterical projection has absolutely no basis in reality, and for you to then exaggerate that figure even further upwards and attribute the warning to Lord Turner is quite blatant and disgraceful mischief-making.
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Its good that there are at least signs of a slow down in the rate of decline.
As somebody who subscribed to the doom laden view that the economy was in dire trouble for the next few years - and perhaps jobs won't come back as fast as they went - its reassuring.
But .... if I understood Robert correctly he is talking assets in general.
But on the issue of specific assets - if it is true that we still don't know the value and location of all of the toxic assets then surely the banks and finance will remain inherently unstable for a long time unless that problem is resolved and that then impacts on credit and thence business and thence jobs and thence confidence?
In short there is the fear that we are being asked to turn around and face the glorious sunrise instead of the ice berg that holed us.
I always was a party pooper I suppose.
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"And I've bored you rigid"
We weren't going to tell you, Robert.....
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Finally! The Peston Machine hit's Positive town.... albeit ever so briefly!
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There are a lot of green shoot/first cuckoo of spring articles around this week. For the die hard pessimists - who call themselves realists but are not - the comments about the decline of the world economy keep coming with a few even suggesting that emigrating is the answer. How emigrating will get anyone away from a world recession I find slightly puzzling.
The recession has been a different experience for all of us. I work in property and so we were one of the first casualties. Now that the bottom of the market has been effectively called and the buyers are back (at the right price of course) my sector will begin to emerge. Other sectors such as those that involve production where time lags are significant will have gone into the recession later.
A very well made comment - number 45 - a lot of companies are using the recession as an excuse to get rid of dead word, streamline labour costs and negotiate costs of purchases.
One final thought - for each one of us who have suffered in the recession there will be five or ten others who have not been affected at all. Their industries or jobs are immune and they now have more spending power for cars, housing, shopping etc - all sectors where the businesses are competing for their money. As an example I am selling people some houses at the moment at cracking prices.
It would have been a very ill wind that had blown nobody any good.
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But of course Robert, the real cuckoo in the nest is the extremely high and unsustainable level of public borrowing. Spending cuts and tax rises are now inevitable, because of Brown's fiscal incontinence - the only question is for how long they can be averted and whether the fix for the public finances puts the UK firmly back into recession.
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Go to the High Street if you want the truth.
Check out the growing number of empty shops.
Look at the glum faces of the shopkeepers.
Count the "Buy One, Get One Free" offers.
Think about the dramatic drop in new car sales, reported only today.
Check the unemployment statistics, and the forecasts.
Check the growing number of bankruptcies and of companies going bust.
We're barely at the start of this slump.
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Hmmm. I'm not sure that we can look for an early recovery in the housing market. Increased unemployment has yet to translate into desperate house vendors, which will depress the rental market still further. I think we're also going to see a hike in interest rates that will depress sales (and increase repossessions) further in the next year or so.
I think it will be a while yet until we see increases, or even stabilisation in the uk housing market.
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OK let's take stock.
Houses are only now becoming affordable to first time buyers except of course that lenders are advancing smaller LTV amounts, so there is still a big funding gap. But houses will only sell whene there are buyers throughout the chain.
I am sure that an increase in house prices will improve "confidence" in the lending sector, but if this makes houses unaffordable again who wins?
Surely a period of stability without getting back on the see-saw is required? If confidence can return with prices becoming stable this must be better in the long term. Of course negative equity is also a dreadful factor here, and house owners in this position need prices to rise to balance the loan/value equation. But with historically low interest rates many mortgage payers should be in a position to replace interest payments with capital contributions and hence start reducing the value of the mortgage. Lenders need to show flexibility here.
Otherwise we face the lenders being the cuckoo evicting hard pressed owners from their "nest".
I think it is true to say that talk of recession breeds recession, but the converse is that talk of recovery can also breed recovery. So please continue to monitor signs of spring. Perhaps you can use another metaphor next time?
But I fear we will want to see too big a bounce for the long term good, as there is an inbred tendency only to look at the short term. Planning for recovery is crucial, not least to generate replacement and new jobs in the market, as only through confidence in the employment market will the downturn have truly run its course for many many people.
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Share price rises? you have the graph the wrong way up, if not today then tomorrow!
This is surely just a 'dead cat bounce' as refered to by #36.
Nothing is fixed except the potential availability of credit.
Why does no one in the financial world do real root cause analysis?
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Is this good news i hear? Propertry prices rose slightly, and that was nationwides take, but the day after the halifax reported a decrease. Isnt it not too soon to tell if there a green shoots? Markets here were also down from Thursdays rally after the g20 summit on Friday, is that investors realising that the summit did not produce what they initially thought?
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Yes, most markets and resultant credit flows are a confidence game, its the inherent instability behind economic cycles (boom and bust - which GB claimed was at an end).
Improving perceptions and therefore expectations could well turn things around superficially; however, if its just for another bubble based on specualtion, especially around house prices, is it actually an end to the problem or just a licence to yet more debt.
It seems currently its either personal debt, government debt or a combination of both.
Basically the like that we're better off than we are.
The solid long term answer would seem to lie in productivity and efficiency. Producing more while using less,, a net gain and real wealth.
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I have to agree with BerkshireTerrier that memories are not that short! Easy credit was used to generate illusory results in the last ten years, boosted the City and financial sectors and consumers will not expose themselves like that again.
If borrowing remain at a lower level permanently, the recession will be long. Credit might confine itself, as it ought to, for well-thought out applications and borrowing will be vetted more carefully.
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What a load of tosh, this 'cuckoo' will do nothing to redress the massive global trade imbalance. It will do nothing to stop a big drop in living standards in the west to be more aligned with the producing east, unless the producing east fancy lending us more money to spend on their goods...utter madness.
It will do nothing to stop the next round of loses through the defaults of the recently unemployed.
the 'cuckoo' will allow those in the know with a Common Purpose to suck a bit more money out of the system then short sell before it heads on down again when the above underlying factors 'kick in ' again, when G20 is forgotton etc. has any body looked into RP's support of the Common Purpose group yet?
This 'dead cat bounce' just represents a slight impass, a gap between the financial crisis and the crisis in the 'real' economy. The negative feedback loop of the real economy slowdown (unemployment , short time working etc) has not fully kicked back into the finacial sector yet. By the end of the summer it will.
Thats my take on it anyway and I am not a city analyst, I have just read the economist for the last 3 years and live in the real world. If i am right will somebody out there give me a £1 million a year salary plus bonus and pension please....
Poor joe public is being taken for a ride again by the financial and media elite cuckooos indeed.
Jericoa
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Recovery has to be a steady curve, we can't get back to a little normality without some time passing. These "cuckoos" aren't very helpful. Any quick growing "green shoots of recovery" may well turn out to be just a bunch of weeds.
We don't want to jolt the housing market. No jolts please. I'm fully aware that there are groups of people who want to rock the boat to earn lots of money, e.g. house price crash doom-mongers who want prices to fall by 50%. Some of these people want this to expand their rental/investments portfolio and get even richer - keeping more good homes out of the reach of the first-time buyer.
And how do you stop people just being generally selfish?
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Robert
I think the indications are that we're also going into a dangerous volatile shaky period where some regions/sectors of the economy will grind to a halt and others will race ahead. Deflation/inflation/stagflation/ and energy-fuel shortages are just around the corner. The result - a kaleidescope complex economy with hot spots and extreme cold spots that the Bank of England cannot handle (even if M King is left to get on with without interference) without a new remit and powers.
This also I think shows the huge benefit to the economy of the pension funds as their stock buyers have their pick of the market and now switching investments and starting to buy stock in the high demand areas eg good banks, energy, fuel, utilities, green companies, commodities and most important stocks are probably the best inflation hedge with property being weak and low interest rates. So these are market reaction adjustments as the sectors become more volatile and investors expect that there will be some growth i.e. the first real terms growth/signs of green shoots in the high quality stocks.
The politicians will jump on this at some stage like yelling 'Recovery' but overall the situation will likely be very patchy and uneven and overall the economy is likely to be flat for a few years to come. Many people will loose out heavily on their investments particularly on pensions if their units are invested in the slow lane.
We have to look at the stocks and sectors which are lifting the FTSE index the most to see what is really going on but it is obviously some good news to see some gain and that the stock market and its pricing mechanism is robust.
More importantly let us hope that the next budget does something with pensions and the housing market buy allowing pension investors to buy a residential property with their pension pot with suitable CGT and IHT concessions. Brown proposed extending SIPP's to allow this a couple of years ago and then backed out when he realised he would lose some tax revenue and would have been a good thing for pensioners as they could downsize more easily and that decision now looks like another serious error as the pension side would have been likely to have kept some activity in the housing market over the last year. This doesn't need a global solution - it needs a change of UK government and a competent Chancellor and government.
We need a bold budget to lift the ordinary tax payer's pension options with the availability of property purchase whether they are paying into a private or company pension or both - on this we need ideas, initiative, vision, competence and DELIVERY.
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Robert
please, the most important piece of news anyone needs to remember is that RECORD amounts of debt are now being repayed.As many members are noting ,there is no appetite for borrowing and people are using their
cheaper mortgages (where they have them) to repay their credit cards, loans and or pay more off of their mortgage.Everyone knows interest rates and or taxes will rise and jobs may go, so the penny has finally dropped with people, to do what Gordon stated but never did "be prudent".
So your cuckoo may well sing a bit but in a land of clouds
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Much as I hope that things are getting better I fear I agree with many of the posters in their thoughts that we are a long way from recovery.
I am with Churchill after Alemein. I think this is the end of the beginning rather than the beginning of the end.
On a positive light lower interest rates are starting to help free up cash. The downside is that most people, myself included, are using this extra to pay down debts on mortgages or credit cards. We can all see both higher mortgage rates and higher taxes coming soon.
On a negative side food inflation is 18% according to the Grocer. I for one am noticing a huge increase in the cost of my weekly shop over the last 12 months. Also there was another 2p per litre duty on petrol and diesel last week with diesel back over GBP 1 a litre in most places.
April is the start of annual direct debits for local support bils. My water bill has gone up 5.5% and will start to hit me from this month. Council tax has gone up again and just to hit the middle earners, like me, who are mortgage holders the National insurance Upper Limit has gone up by 10 times the tax allowance increase.
I'm determined to go on holiday this year and if I'm one of the 20% less than last year still going to the Eurozone this summer my pound is likely to go 25% less than last year. If I go to the States it is even worse.
Don't expect any extra spending from me or many others this year. I'm also not going to be replacing my car this year. It will last at least another year. If yesterdays figures are anything to go by I'm not alone in this either.
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Mr Peston - I am surprised you are not more overweight.
Having read your article I would suggest you have not had to leave your computer to write the article. Hardly prize winning investigative journalism??
The facts that suggest you have heard a cuckoo?
'The survey claimed that in the first quarter of this year there had been a slight increase in the availability of loans to companies and a less-than-expected reduction in the supply of unsecured credit to households and small businesses - although the supply of mortgages shrank again.'
So a slight increase in availability (not actual loans).
A less than expected reduction.
A shrinking of the supply of mortgages again.
'And there may be other cuckoo-ish noises; there's been contradictory data on what's happening in the housing market in the UK - whose underlying message may be that prices aren't dropping as quickly as they were - and a less-than-expected fall in US motorcar sales (though today's news on car sales in Britain is dismal).
I am being parochial, and economic stats from around the world remain pretty dire.'
So Contradictory data on what's happening in housing market (??????)
May be that prices aren't dropping a quickly as they were (or may be that they are as the only other possibility!)
Less than expected fall in US car sales (so a fall but not as big as expected)
Dismal UK car sales figures
Pretty dire stats from around the world.
The facts your whole article are based round are all negative APART from the fact that share prices have gone up.
Perhaps these 'cuckoos' in the City who have stolen all the food from our tables are the cuckoos you can hear??
I can only hope the dead cat lands on them.
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I think Warren Buffett originated the phrase financial WMD.
I don't want to take anything away from Max Keiser.
I recently saw him on Aljazeera suggesting an end to 'usery'in the banking system as in sharia law. It took the other guests a while to recover from the shock before agreeing with him. I think I remember him saying "lets stop calling it credit it's debt" on his bbc world news show The Oracle.
Wow remember when credit used to be a good word.
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I'm told by a reliable source close to N10 that El Gordo is a cuckoo fancier and is breeding them. Also the same souce tells me that Sir Bob is also starting in this arena. Apparrently its the new black and is very fashionable amoungst the power that be. This cuckoo's only prey is that from the Hawk known as Ecomomic Reality. These used to be on the endangered list, as they were poisoned by many a commentator in the press, but they are being breed in large number by Mr Joe Public
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85. At 1:09pm on 06 Apr 2009, _gemba wrote:
......
Nothing is fixed except the potential availability of credit.
Why does no one in the financial world do real root cause analysis?
--------------------------------------
Looks like someone is attempting to...
74. At 12:50pm on 06 Apr 2009, grave_sniffer wrote:
Rob, you're out of touch - you need to get up to speed - here's what's coming next...
http://www.pbs.org/moyers/journal/04032009/watch.html
-----------------------------------------------------
and the root cause is called de-regulation leaving the way open for systemic fraud on a massive scale.
Is the above link just a 'sour grapes' opinion Robert or is there any substance in it worth some journalistic investigation?
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#91 - not sure I can support the residential property in SIPP's idea.
The mistake govt made was stating they would be allowed as a SIPP investment then the last minute U turn; but in my opinion should not be in. Would just lead, for example, to more Lake District properties being owned by rich individuals down south and not lived in whilst the locals live in caravans and small terraced houses.
IMO everything should be being done to deflate property prices as quickly as possible to readjust our whole economy - a very hard sharp shock that leaves us all on our knees for about a year but with a firm floor from which to build, invest, develop and have sustained growth which everyone will believe in knowing we have reached a floor. To make this happen Interest Rates need put up to a realistic level that will hurt badly those who have overborrowed. The risk is social unrest but I do not believe the current strategy is going to end in anything other than that anyway, just later.
What we are going to get is exactly the opposite - a succession of false dawns, weak recoveries, periodic slumps and a desperate searching to find a bottom that is actually a false floor - as many many people have commented before the fact that there is an election in about a year makes my scenario unpalatable to the government so they are hoping that they get lucky and find a false floor at the right time.
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What a splendid metaphor
The cuckoo drives out its host. Bad money drives out good.
A crisis amongst the bloated and decadent institutions left a beautiful opportunity for radical reform for the 21st century, and new, updated financial institutions. The cuckoo driving that out and strangling the productive economy is the government's unfair competition: massive bailouts, politically-driven artificially low interest rates, and printing money. All in a vain attempt to keep house prices inflated and a generation (of non-cuckoos) priced out.
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This is the expected illusion when lots of funny money is pumped into the economy.
It is a fictitious state where only those gambling on the stock market in the expectance of high inflation to come are benefitting in the short term
Of course it will appear as if things are improving in the short term. How can they not?
Everyone needs to be cautioous whether it be buying a house or spending on high value assets for in the longer term interest rates will have to rise dramatically to stem the inevitable inflation.
It is highly unlikely that wages will rise to keep up with the rising prices so we are going to feel and be much worse off.
This is only a short term fix which we will have to pay the price for later.
Most of us have seen through Brown's conjuring tricks. No doubt there will be many more in the coming budget.
Once bitten twice shy.
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The lengths you go to to avoid saying "green shoots"!
And you are wrong! So are the markets. Someone provided credit for years, and many many people took advantage of it to buy stuff at stupid prices. To compensate, the government is devaluing the pound like crazy, taking wealth from savers to give to borrowers. This completes the vandalism that started with destruction of our pensions system. Those of us that have not yet started the impoverishment of pensioner-hood are nervously looking unemployment in the face.
Now the government are encouraging borrowers again, and you are encouraging them. You have a cheek talking up the situation. You and you New Labour chums are deluded.
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The quality of journalism I've seen over the last week on this site and others has been quite poor, shallow. The folly of making conclusions from just a few figures released was highlighted by how the Halifax and Nationwide figures went in opposite directions. Its as if during a recession there is always going to be bad news, and anything else is being reported as an indicator of the beginning of the end of it.
There are multitudes of people who have loads more money available each month because they have been winners from lower mortgages. The fact that they start spending on house extensions, holidays or new cars is not any indication that the recession is nearing its bottom.
My daughter has told me of 2 of her close school friends who's parents have both lost their jobs in the last week alone. And one had been fearing this and actively looking for 4 months but not found anything suitable.
So over the next 2 years we will see an increasing split society. One house will have 2 earners with safe jobs, buying a new car at a bargain price, and next door will be in despair as the main bread winner cannot find meaningful employment.
As a journalist you can pick either positive or negative real life stories to support whatever bent you want to apply to the current news.
Surely as a top tier journalist you should be stating what you think are real markers of the end of recession, or the beginning of the end, and reporting on these. I would put my money on using figures like overall employment levels, especially new job creation numbers in the private sector, and in the building industry.
Surely the real markers of real lasting improvement are when we create more real wealth, greater productivity, increased exports. Its so "last year" to base UK success on the price of houses, or the ease of which we can get into even more debt.
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For Nautonier (# 91)
"the huge benefit to the economy of the pension funds as their stock buyers have their pick of the market and now switching investments and starting to buy stock in the high demand areas eg good banks, energy, fuel, utilities, green companies, commodities and most important stocks are probably the best inflation hedge with property being weak and low interest rates."
I was interested to read this morning, on a blog of a national newspaper, that the Bank of England's own pension fund managers dumped the bulk of their equities in 2006 and last year showed a remarkable fund gain of 12%.
Guess what they're invested in at the moment?
I'll give you a clue.
It isn't equities.
Their money is in INDEX-LINKED GILTS.
As the poster of this fascinating piece of information suggested, FOLLOW THE MONEY.
For the ordinary saver, the only thing he should be putting his money into right now is INDEX-LINKED SAVINGS CERTIFICATES.
Buy now before the crowd realises what's happening to the economy, stages its rush and these certificates are withdrawn.
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Deflation is a monster. But if a car is priced at 10K - can it be priced as high if cheap credit were not available? What is the real value if people were to buy cars only with their own money? Wouldn't it be natural that prices would go down to figures that folks could buy without borrowing money off banks? Is that deflation bad?
On another note, Pesto - if not for the recession, who would read your blog?
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I think that the downturn may be slowing as well. Afterall the recession has been going for the best part of 3 years in the US, and it is 18 months since Northern (C)Rock. 2008 was an undeniably bad year, where even BRIC countries got hit and where vast amounts of savings and sovereign and hedge fund wealth was wiped out.
2009 will still be another year of decline, but the decline will be relatively less than in 2008 for most countries - though exporters will continue to struggle. Especially Japan and Russia (however, both will have very good years around 2012 onward)
The problem is we need to avoid the next bubble. Now we are in a period where conditions for another boom can be laid, we must take care to prevent the boom before it begins - the taxation poicy of loans, mortgages, stamp duty etc must be examined, and we must be prepared to raise interest rates in 2010 or 2011 to quite high levels. I am not sure if they will get to the 13/14% seen in the late 80s, but 9-10% seems possible.
In addition we must take serious measures to ween ourselves off cheap oil and gas, this deflation was made all the more severe by the very high prices in early 2008, and high prices in a few years' time will only cripple importer nations' growth. Further there are environmental and geopolitical advantages to alternative energy supplies - and in the short-term there's 100,000s of jobs that can be created and new industries started.
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Ref 39
Thanks for the link. Well worth half an hour's listening. Is it comforting to know that only 10% of USA Bank
CEO's knowingly and actively engaged in fraud?
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#102 "Surely as a top tier journalist" that is the question then.
Lord Bob seems to be letting the real journalism to be occuring on his blog, trouble is its Not Feeding back into the News.
PS you could apply that to the whole BBC. must lazy journo's over the last 13 years indeed.
Lord Bob who about public spending over the last 13 years and how much of this has been wasteful.
Wasteful public spending is a bad as those greedy bankers ? ie
profligate chancellor where is the endless debate on this ?
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105. At 2:36pm on 06 Apr 2009, Cyborgia wrote:
....................
The problem is we need to avoid the next bubble. Now we are in a period where conditions for another boom can be laid, we must take care to prevent the boom before it begins ......
Absolutely agree.
Which is why we need a real post-mortem to understand why we are where we are and stop us sowing the seeds for the next catastrophe. Unfortunately the 'bodies' seem to have had new life breathed into them instead of a decent burial - hopefully they are not Frankenstein's monsters waiting to wreak future havoc?
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an american banking analyst mark mayo has just published a report that the american banks have only marked down loans to 98 cents on the dollar, .....he says Loan Losses Will Exceed Depression Levels, if this is true you aint seen nothing yet!
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1yCkrhVtOks&refer=home
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103 noninflatable
The bank of England were not alone in moving away from equities to cover their pension fund many have moved away and are now using inflation linked instruments, dare I say it most doing this are not using expensive inflation linked gilts but are using inflation linked derivatives to cover their exposure which before the doom and gloom merchants say anything is the best way of covering pension exposure, The naïve out there still believe that to maintain a surplus in a pension fund so as to protect peoples pensions you must pick the right assets, well they are wrong, its covering your liabilities that is the key and a pension fund is most exposed to inflation ( most pension payouts go up annually in line with inflation) and interest rates ( the higher the prevailing rate the more future payments are discounted) so a low inflation high interest rate environment is ideal for any fund.
The movement in asset value (equities) was not the cause of many pension funds going into deficit in the recent past, it was their failure to cover the lowering of long term interest rates coupled with the increase in life expectancy that had the biggest effect, now you cant cover life expectancy and equities will not cover interest rate movements, but derivatives will.
So Nautonier (# 91) please don’t expect any help from pension funds in supporting the equity market, pension fund have been and will continue to be net sellers of equities as they have now fund a better way to hedge their exposure.
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Robert
Inthe markets its a called a DEAD CAT BOUNCE, i.e. an upward tick on a downward trend...
There is little to take from any set of figures bar people yet again rashly talking up the economic conditions (here we go..).
The reality is we still have a long way to go for unemployement to peak which means that real estate particularly in the UK has much farther to travel downwards ...if you look statistically the bottom is another 2-3 years away.
As for equities there will be another set of false dawns though the smart money is in mid 2010 for any longer term bull market but that is premised on a number of events not happening - like potentially large bankrupties such as GM etc not setting off an economic domino effect much like lehmans...
Sadly there is a lot more pain to come at SME level (read the various reports. The only bird spotted is a dead dodo.
I think people need to get a grip and realise that when the upturn does come it will not resemble the heady days of 2006-7. After the G20 everybody was congratulating themselves (we can all go to the IMF now!). Everybody has been saying 'don't do what Japan did in the 90s by not crystalising the toxic debt'.
You can slap me with a fish but I don't see any difference in what UK/US is actually doing really. The toxic debt has to work itself through and with record bankrupties forecast both here and US I don't see the toxic waste reducing for a considerable time.
And then there's the public sector debt..............
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103 noninflatable
As for putting your money into inflation linked savings certificates, these are linked to RPI so are currently not much if any better than an ordinary savings account so I would suggest now is exactly the wrong time to be going into inflation linked savings bonds. Chances are RPI will only start going into positive territory again when mortgage rates start to go up again.
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rbs_temp
Mischief making?????
You`re out of touch yourself if you don't believe this country is heading straight toward a massive waterfall.
Interest rates came down in no time and they will be going up again just as fast - and it won't be stopping at 5.5%.
Come back and talk to me when your mortgage is through the roof.
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103. At 2:26pm on 06 Apr 2009, noninflatable wrote:
For Nautonier (# 91)
"the huge benefit to the economy of the pension funds as their stock buyers have their pick of the market and now switching investments and starting to buy stock in the high demand areas eg good banks, energy, fuel, utilities, green companies, commodities and most important stocks are probably the best inflation hedge with property being weak and low interest rates."
I was interested to read this morning, on a blog of a national newspaper, that the Bank of England's own pension fund managers dumped the bulk of their equities in 2006 and last year showed a remarkable fund gain of 12%.
Guess what they're invested in at the moment?
I'll give you a clue.
It isn't equities.
Their money is in INDEX-LINKED GILTS.
As the poster of this fascinating piece of information suggested, FOLLOW THE MONEY.
For the ordinary saver, the only thing he should be putting his money into right now is INDEX-LINKED SAVINGS CERTIFICATES.
Buy now before the crowd realises what's happening to the economy, stages its rush and these certificates are withdrawn.
>>>>>
Thanks for the quote.
I think you'll find that your quote actually reinforces what I have said as the Bank of England are still holding shares - but they are just being more selective (now) although their performance with buying and selling shares does not sound like it inspires much confidence. Much has happened since 2006 and the fact is that as the stock market indices are showing some trend in growth then that is because there is real price movement. Stock market prices are not yet a government lie.
I would agree with your comment with regard to personal savings but my comments relate to actual price movements in the stock market and pension payments/stock market investments are obviously another issue.
Investing in UK index linked gilts (part of the government's 'black hole') may give a saver a better rate of interest but it has much less direct benefit to the UK corporate sector than pension fund investment in stocks and shares. It is the corporate sector that is in recession - not the government.
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The cuckoo ate the green shoots of recovery. Then a fat cat ate the cuckoo. Unfortunately, the cuckoo was toxic, so the cat is expected to be dead soon. Hopefully the "dead" cat will bounce back soon.
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98. At 2:13pm on 06 Apr 2009, GRIMUPNORTH77 wrote:
#91 - not sure I can support the residential property in SIPP's idea.
The mistake govt made was stating they would be allowed as a SIPP investment then the last minute U turn; but in my opinion should not be in. Would just lead, for example, to more Lake District properties being owned by rich individuals down south and not lived in whilst the locals live in caravans and small terraced houses.
>>>>>>>>>>>>>>>>
Yes - those are serious problem issues but any pension/mortgage/SIPP breakthrough in the budget would need to have a lot of conditions attached and I agree that second homes in some rural areas are a massive problem but can also be dealt with by planning law changes in the budget. The fact is those 2nd homes in Cornwall, Lake District are still being bought whether or not pension monies are used - I think it would be beneficial to people living in the Lake District to buy a smaller house locally using their pension and e.g. rent it out to their family members. Revision of pensions would mean that more people would be able to buy and compete for once with those moving in to the area and as having the most money and little local competition. We let non doms purchase houses in the Lake District why not let local British taxpayers paying into a UK pension use their pension to buy one aswell - and also while property values/prices are down?
It's not rocket science its just letting people have more control of their own money.
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Well it's all looking like the bottom is in and here we go. Or is it. Back in 1931 it was about now people started to pile back in to stocks. But a year later the dow had lost another 80% from it's most recent low. It was this second leg down that destroyed wealth.
So the question is this? Is there more to the current recession than a business cycle downturn accompanied by several years of very poor lending. Government and the great and the good think not. But aren't they the same peope who thought there was no problem with house prices rising far far beyond wages.
So here's the reality check. Unemployment is rising around the world, production decreasing, wages falling, house prices falling and the west is printing money out of thin air.
In this enviroment it will take more than a few infrastructure projects and monopoly economics to replace the jobs gone and push up wages enough to get people spending again.
I believe the cause of our woes is that the necessary turn towards growing income inequality in 1971 has run it's course. It's now time for the workforce to recieve a larger share of the proceeds of economic growth for 3 decades or so. Evidence of this is the constantly declining living standards of middle class americans since 1971 and the last 9 years of consumption being fuelled by equity withdrawl on crazily inflated home prices instead of a genuine growth in middle class incomes.
So show me rising living standards in a society that has moved beyond the prejudices of peasant politics and i'll show you an economy to invest in. And sorry for us, that isn't here.
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#113. jd6969preston wrote:
"Mischief making?????
You`re out of touch yourself if you don't believe this country is heading straight toward a massive waterfall.
Interest rates came down in no time and they will be going up again just as fast - and it won't be stopping at 5.5%."
You may be right.
But I was talking specifically about the fact that in post #39 you exaggerated an already-alarmist projection in a national newspaper and then attributed the result to Lord Turner. You should be prepared to justify what you write in a public blog - and you have still not offered anything to support your assertion that "Lord Turner in his FSA report told us to be prepared for 9 or 10% mortgage rates". And you cannot, because what you wrote is untrue.
You're amongst the first to criticise Robert Peston when he writes something that you believe does not stand up to close scrutiny... so how about applying the same standards to your own contributions to this blog?
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Robert, you wrote...
....... Or to put it another way, a pre-condition of economic recovery is that asset prices have to stabilise and then rise in a sustained way.
For asset prices to rise, investors' appetite for risk has to increase ......
----------------------
Let me try to get this clear from the above excerpt
- investors taking greater risks will push up asset prices and as long as this is 'sustained' it will lead to 'recovery'.
As Victor Meldrew would say, "I DON'T BELIEVE it!". Surely this helped get us here in the first place, a misplaced belief in ever rising house prices, no Boom & Bust any more etc
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The bits of good news we are seeing are all based on smoke and mirrors. The rally in the markets was all kicked off in early March when Citi, JP Morgan and Bank of America all came out within 3 days of each other and said they were back in profit as Jan and Feb were good months. All they did was some creative accounting. Then they turned around on March 27th and said "March has been a difficult month". If you want to read about it here it is:
Big Banks Pull off The Ultimate Bait & Switch
http://tinyurl.com/dj7w37
Next we learn the banks are on a right little number - thanks to Githener`s new PPIP plan. They can bid on each other toxic assets under PPIP to drive the price up to a level they want and not the true market value. In doing this they shift the assets from their own balance sheet and on to the shoulders of the taxpayers. Dodgy Assets still there. Banks Plan To Bid Up Each Other's Toxic Assets With Taxpayer Money
http://tinyurl.com/cnkeko
Then last week we see the mark to market accounting rules are suspending over in New York. This again works to the banks benefit in that it allows them to move toxic assets off of the balance sheet. Dodgy Assets still there.
I think we can see the pattern playing out here. Brown is also very good at re-packing things to present it as something new as was the case with much of the new IMF money last week. If we all focus on the left hand no one can see what the right hand is doing.
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#116 - due to unexpected enhanced moderation speed we can for once have a proper ping pong debate of these important issues.
I agree with your observation about the homes being purchased anyway and that with, or without, the SIPP situation changing something needs done to prevent second and subsequent ownership in these areas from completely distorting the property prices - perhaps a complete ban on ownership of second home in a National Park if a UK resident and a matching complete ban on ownership overseas which is equitable as simply mirrors the position for a UK resident. Sure its not quite as simple as that but needs a policy of some sort.
My concern regarding the SIPP/residential property debate remains however for other reasons. I think that had this legislation come in the property bubble would have had capacity to grow even more obscene before popping - surely this can not be a good thing based on what we are currently seeing?
Finally I'm not certain your final assertion that property prices are down is correct - sure they are down from an unsustainable high 18 months ago - are they going to go up from here? Thats not my view - I think a brief stall then another 20% down then stagnation - but your guess is as good as mine i'm sure!
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This is not theonly "cuckoo" around. Given the BBC description of the cuckoo as a cheat, parasite etc, this morning, a description that fits this NuLab Govt. very well. But then may be I am overstressed and cynical by the BS about the G20.
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#51 Dave_NW and #52 JavaMan1984
With you on that.
But tell me someone, doesn't the cuckcoo' mean that we have been 'had' and as they usually return year after year, though maybe not this year in abundance, does that mean we've been 'had' year after year.
#39 jd6969preston and the link to William Black - I think the majority of us/we/ have been oft repeating this on here and elsewhere, trouble is Black seems to be a lone voice in the wilderness but one can but hope.
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#74. grave_sniffer wrote:
Rob, you're out of touch - you need to get up to speed - here's what's coming next...
http://www.pbs.org/moyers/journal/04032009/watch.html
I watched it and thought it to be VERY, VERY INTERESTING!
Robert,
I don't suppose you would be up for trying to get Lord Turner, or the Chancellor, to comment on the "U.K. equivalent" of that story?
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99 and 117 - you are totally right.
Bad money/debt drives out good i.e. government borrowing and existing loans on over-inflated property is driving out good borrowing to finance improvements in technology and property purchases by sensible people at realistic valuations.
With the exception of exhange rate falling everything the government has done is counter-productive in the long term and attempts to maintain the status quo and protect bankers and labour-voting civil servants.
There is too much concentration of money which comes as a result of feedback loops, not 'merit'. One person (Bill Gates say) with 34 Billion $ still only buys 3 or 45 cellphones or 3 or 4 cars. 34,000 people with $1,000,000 each create a lot more demand. This kind of wealth should get destroyed in a mega-recession and teh shake-up allows other people with newer ideas to have a chance of success. Governments are trying to prevent change by preserving the biggest, worst managed companies (like banks and GM) and letting the smaller more enterprising companies fail.
There should be a usuary law which limits credit card interest to 10% - if you cant make money on 10% interest you are lending to the wrong people.
The bailout should be funded by wealth taxes rather than income taxes - bailouts preserve existing wealth and should be paid for by wealth owners not income generators. They are different people. For example, industry might actually do OK in a year or so with low exchange rates but why should industry pay high income taxes to pay for a bailout which helps people that got rich in the banking/property boom.
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There is game here. How to create wealth. In this regard what goes around comes around. The very people and institutions including governments who created this economic mess will be the very same parties who will regenerate the creation of wealth and distribution in the global market. The only difference now is due to this economic crisis the rules of the game will change. But the game will remain and will either become more active or more restricted. The interesting part is to see which players (countries and companies within those countries) will continue to play the game and at what level. My instinct tells me the dominant players in the game will now shift from the West to the East.
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The land registry figures,those based on completed sales ,showed an accelerated pace of decline in February to 2%.This is a lagging indicator and this figure is all the more powerful when one bears in mind that it includes neither auction nor cash sales.Furthermore during the last crash,which lasted 70+ months,prices rose for 22 months at different stages of that correction,including a 3 month spurt followed by a 20+ month fall.This is a classic "bull trap".Beware "good" news coming from vested interests.
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121. At 4:06pm on 06 Apr 2009, GRIMUPNORTH77 wrote:
#116 - due to unexpected enhanced moderation speed we can for once have a proper ping pong debate of these important issues.
I agree with your observation about the homes being purchased anyway and that with, or without, the SIPP situation changing something needs done to prevent second and subsequent ownership in these areas from completely distorting the property prices - perhaps a complete ban on ownership of second home in a National Park if a UK resident and a matching complete ban on ownership overseas which is equitable as simply mirrors the position for a UK resident. Sure its not quite as simple as that but needs a policy of some sort.
My concern regarding the SIPP/residential property debate remains however for other reasons. I think that had this legislation come in the property bubble would have had capacity to grow even more obscene before popping - surely this can not be a good thing based on what we are currently seeing?
Finally I'm not certain your final assertion that property prices are down is correct - sure they are down from an unsustainable high 18 months ago - are they going to go up from here? Thats not my view - I think a brief stall then another 20% down then stagnation - but your guess is as good as mine i'm sure!
>>>>>>>>>>>
I agree that the second home thing in places like the Lake District is a disgrace and needs addressing urgently.
Yes a new deal with pension property regulation relaxation (PPRR) would put cash into the market to purchase houses and in a boom could have a negative effect but could easily be stopped temporarily if the housing/commercial market overheats as could include commercial property aswell.
Property prices are certainly well down but all estate agents say that houses would be bought and sold if stamp duty was lowered/removed and mortgages become available.
PPRR would put cash/transactions into a low activity housing market and the general economy. If pension holdesr are allowed to use a proportion of their pension pot to pay off the residue of their mortgage this would move a lot of money from the big pension funds - some of which are hundreds of billions/even trillions? GBP in surplus back to pension holders which would mean cash injections/mortgage redemption with banks and building societies who would have more money coming in to lend to busineses and new mortgagors. The benefit of pension drawdown would not mean that a another house would have to be purchased - the money could also be used to fund home improvements/repairs and pay off existing debt and/or reinvest in eg bars of gold, government gilts, Sipps etc etc.
The level of property prices is not an issue in itself - it's the lack of property transactions that is most damaging - not the prices themselves. If anyone thought that prices would be lower next year - they they could buy next year but the mere intention to buy, enquiries etc NOW itself would send signals to the market. 'Fence sitters' would start buying now while they have choice if they thought that more money is coming into the property market.
What is really, really 'wrong' is that some pension institutions and banks in tax havens are cash rich - we're talking many trillions of pounds here and the banks and nearly everyone else are struggling - moving this money around and using it better and encouraging everyone to invest in corporate pension stocks would benefit all and sundry.
£1 going into a UK corporate section pension is worth how many going into the government's financial blackhole in terms of boosting the UK corporate economy?
The other thing is that UK pensions are already regulated and easier to control than funds invested overseas.
I think that it's a 'no brainer' and that the current focus of the government in terms of ignoring PPRR is entirely wrong. PPRR is a potentially massive unused mechanism which could bring that direct cash boost to the hosuing market/corporate sector. It is not dependent on job stability as many using such a scheme could use money to pay off existing debt and would have more net income and would in fact be more secure financially as a result.
The other thing is that pension funds pay rubbish rates for retirement pensions and so there would be more value in our pensions.
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The recession will not be over until the rich start making money again.
This will not be achieved until they can find a way round the new legislation which was brought in to clip their wings.
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It is interesting to note that most of the bloggers on here do not believe that this is the beginning of any sort of recovery.
Quite right too!
However there are many who are not so well informed and are desperate enough to believe anyone who tells them that everything is fine and on the up.
We know this government will be playiong all sorts of tricks to convince them of this with an election not too far off.
A responsible media should be ensuring that those not financially aware are given all the facts to prevent any further suffering.
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What has a considerable bearing on everything is that there has to be a general election within the year so GB has to engineer some sort of feel good factor by then if Labour are to stand a chance of being returned.
I suspect therefore that short term political expediency is what is driving policymakers to the detriment of a sustainable recovery.
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With all the inflationary pressures in the economy such as food inflation which is currently at 18% and the government adding to these pressures weekly there is little scope for a consumer led recovery any time soon, cheap vehicles are fine till the Road fund licence, Insurance and MOT along with any repairs thet might be needed come around, just check out the price inflation of car spares, oh, and then more expensive fuel to boot.
I think someone might have just flown out of the Cuckoo's nest if they think the stock market is any indicator as to the direction of the economy.
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130,000 were added to last months dole figures and the BEEB are trotting out the 'green shoots' garbage, why?
What does Peston know, a snap election?
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127 richpugnose
Whichever way you look at it houses look overpriced still. An ave of 125k looks sound and sustainable, thats roughly pre brown bubble plus inflation, maybe a bit more. But we are still over 150k. Even if the projected ave is put at 135k there is still some way to go downwards. It may well stop and drift up but I just can't see it. Another million, or best part of, to join the dole queue, 4 million households due in neg equity this year, no economic uplift likely for say 18 months, mortgage funds low, valuations low due to fright of falls, all the pressure is downwards. Employment pick up typically lags the upturn by 2 to 3 years. Interestingly a property came on the market near here which has been priced at a level I would have thought was very realistic, and it has not gone, there would have been a rush to view it in 2002 at the price it is now. The latest guestimated figures on the disasterous state of the public accounts, which are hardly surprising in view of Brown and Darlings track record, hardly show any comfort. A squeeze on public expenditure and a tax hike look likely. Less money and more jobs to go. 5 years of bumping along ties in with your figs neatly. Must go, thought I heard a cuckoo, hope it hasnt impaled itself on the green shoots.
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So-it will all be over by Christmas? I remember what happened the last time this was said.
#120-thanks for the links, some interesting stuff.
#89-good to read your perecptive comments.
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Anyone thinking that one cuckoo makes a spring should swallow hard.
When house prices reach the bottom they will bump along for some time. The HIP's and Stamp duty will ensure that nothing really goes up until affordability is achieved.
Inflation is not dead (unless your name is Gordon Brown)and the man in the street (but not in parliament) is going to pay, pay and pay again for the fiscal incontinence of the last 11 years so don't call a change too early. Markets go up and down, they never level off.
Don't be unemployed or on PAYE. My best advice is to be an MP and protect yourself from the reality of Brown's Britain.
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Remember when GB told us "No more boom and bust"?
Here`s a little video montage.
Gordon Brown's House Price Boom and Bust
http://creditcrunchedoutinuk.blogspot.com/2009/04/gordon-browns-house-price-boom-and-bust.html
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whether we are on a step or messanine floor they ultimate direction is down until we reach the bottom , maybe in another 3 years time, there may well be a slowing of the dissent but when we are there thats where we will stay. The "city" will not be contributing anything like it has over the last 10 years, which is where the fake growth came from.
So we will have very high umemployment until we get some proper ecomonic/social policies that benifit the masses/majority NOT
just a few minorities. The last 13 years has been a Desert of idea's in the economic arena.
A example is 50% of students to go to UNI , why other than it panders to the left of the labour party about so called social exculsion. What we have is so called degree people with massive debts that are unwillingly to say work on the land not enough wages (can understand that) , therefore it pulls in more migrants to to the jobs. An exapmle of zero thought by the powers about the balance required in the work force.
There has to be a sea change but all Brown can see is the coming election.
if you were any opposition you would only want to get in if you could get a landslide and guarantte 2 sessions or more as that is how long its going to take.
if you poor enough fuel (money) on a fire (economy) you may well actually put it out, as there is no oxygen. the path we are currently following.
if there are signs of a fake floor will brown go for a snap election , maybe after the next bugget ? june at the same time as the euro-elections.
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Someone heard someone else say some guy overhead another guy who thought he might have heard a cuckoo.....
Funny, I was there.... he didn't hear a cuckoo at all.
We won't hear any cuckoos until the truth is out, the parasitic banking vultures are forcibly removed and the regulators start regulating.
Until then our journalists are going to be force-fed with seductive tit-bits of 'good news' to keep us in the dark.
Must try harder...
Regards,
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re. 37 Pretzel Logic
Thelonius my old friend-
Little Feat -Live (Waiting for Columbus) Mercenary Territory.
Now that was a tune and a message.
Regards
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I cannot see sterling holding its present value, now 25% lower than last year, once Darling makes his "Budget"
Sterling is set to fall yet further and inflation will be back with our food and fuel. House prices are the enignma, maybe they will stall, go up if more money is lent out by the BANKS?
We are certainly an "Out of Balance" Society with the possibility of ten million people living on State benefits or credits, one 4 Million unemployed is reached next year. Whether Britain is "broken" or just Bust, we shall have to see. So far the Players, (Bankers and Politicians) are looking only to their own advantages, not ours.
I feel there is no one left to represent me in my own Country.
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139. allmyfault
"We won't hear any cuckoos until the truth is out, the parasitic banking vultures are forcibly removed and the regulators start regulating".
Sadly, I agree with you.
But, this is all based on a very simple system really. The financial industries are, in some ways, "rich and powerful" or at minimum, "too big to fail". Politicians need to get themselves elected and to reach many people they need the "rich and powerful" to sponsor their ever-more-expensive election and other media campaigns. So, whilst politicians might 'smack the wrists' of the financial industries a little, they are unlikely to significantly deal with the menace that these individuals are, nor with their corrupt and deceitful practices and customs.
So, the "parasitic bankers" (and the like) are not going to be (substantially) removed, nor are the regulators (really) going to regulate, because there are, quite simply, too many conflicts of interest inherent in the political and financial systems which will tend to prop up the status quo.
Whilst this Bill Moyers / Bill Black interview is from a U.S. point of view, much the same (with some variations) probably applies to the U.K. too. http://www.pbs.org/moyers/journal/04032009/watch.html
If we start with that reality, then what do we have by way of any solution to this mess for ordinary folk?
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No More BOOB and Bust!
I see that the associates of our Somali friend have been up to it again. (By the way, what does it feel like living so close to Execution Dock? ;-) ) I had the momentary thought: "What does it matter? It's chicken feed compared to what the bankers have stolen, and are still stealing!" Not so long ago I would have been indignant. This is the morally corrosive effect of the debt crisis.
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This is so chicken and egg it's unreal. If there is a bounce in asset prices then banks will have more confidence and lend more - but this is exactly what caused the problems in the first place. It really does seem that in this one instance there is a justification for us being nannied by the state. We don't have the common sense to put our collective feet down when house prices spiral and say "this is mad and we're not paying these ridiculous prices" and the banks don't have the control to stop lending. We need nannying against our own greed.
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#37 and 140
Currently listening to The Eagles 'Desperados'.
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"Now, since it was a collapse in the availability of credit that pushed the world into the worst economic conditions since the 1930s, an improvement in the supply of credit would be (for most people) an encouraging sign."
More bestial necrophiliac flagellation, Robert ?? The myth that it is the lack of credit that created the economic collapse presupposes that the world could have lived off the never-never indefinitely if the credit hadn't collapsed !! In other words, you are presupposing the world's largest Ponzi scheme !!
This is the myth that our Glorious Leader tried to sell to the world to justify his never-ending borrowing spree !! There was *NO* mention of how the borrowings were going to be repaid other than by devaluing the debt(s) !!
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If a cuckoo cuckoos in the middle of the woods and there is no one there to hear it , does it make a sound ?
I suspect the reason many are seeing people building houses is the fear that their cash that is not earning anything in interest and is in fact decreasing in value may crash and burn for a number of reason,
so best put it into something of use and future value when or if a new currency is adopted.
Green shoots will not appear and not because they are not trying to promote a recovery, but because everyone involved has been involved (without wishing to sound sensationalist) in a massive fraud.
We should all just say not with our money and see what they do then.
The politicians can pay themselves tens of thousands for 2nd homes, when most of us dont spend that on our main homes and we are paying for it. The all say trust us , but we cant
the banks say we have sorted it all out now trust us, but we cant
G20 says we have sorted it all out trust us, but we cant
why on earth are they trying to reinflate the sucker punch ball again
Our own government are at pains now to point at anyone demonstrating as rioters
George Orwell was a genius when you see all this , if anyone has the right to say i told you so, he has.
Finally there was a big piece done by one of the main investigators of the savings and loans crisis in the states, and he is saying America is bust and there is a big cover up to the fact that all the financial institutions are bust and they are scared silly of the big bang that will happen.
All this money being pumped in here and there is being hoovered up and used by the people who least need it , to let them get the things they need for power when america goes bang.
Obama talked the talk yet Hong Kong and that other place that escapes me is the backdoor haven for the money to flow to as a prelude to the perfect storm
Dont get me wrong , life will still go on, people will still trade after the bang, but there are going to be a lot of people left behind and you will see the wealthy become mega mega wealthy
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A slow down to the SLOWDOWN??
We aint seen NOTHING YET like the impact of Sterling devaluation for a
start.Government debt building higher by the day etc etc. . . .
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the markets are in decline, realy ?? i would never have believed it with this government incharge they tell us they have every thing in hand and are honest to the core so i believe them.
mass hysteria is causing prices to fall shops to close and jobs to be lost, banks are doing a great job their bosses deserve their high wages and bonuses.
but people are still out and about buying in towns, shops still have goods to sell so smile and enjoy life.
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Rob the Job. Still thinking out-loud? One appreciates your financial/journalist degree, but we also congratulate you for still having a job and a career that continues to rise from your opinion as the economy falls below you? Well done young Mr Peston, perhaps you could put your education to even better use, and investigate the scam that is pensions?
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THE POLITICAL ELITE DONT SEEM TO HAVE ANY FINANCIAL PROBLEMS??
TRIPPLE WHAMMY ON THE OLD EXPENSES FIDDLE OBVIOUSLY ALL AT OUR EXPENSE!!
NEW LABOUR? BRITAIN NEVER NEEDED THEM!!
BOOM BOOM BOOM ALL THE WAY TO THE EXPENSE ACCOUNT.
WELL DONE GORDY & THE GANG!!
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PLENTY OF SHOPS DOING WELL??
TRY ALTRINCHAM TOWN CENTRE 38 EMPTY SHOPS!
END TO BOOM & BUST?
BUST BUST BUST ALL THE WAY GORDY!
TIME FOR A BUSTED FLUSH TO GO GORDY!!
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TIME WE PLACED A CUCKOO IN THE DOWNING STREET NEST TO GOBBLE UP ALL THOSE
NEW LABOUR FREELOADERS.
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No, we haven't heard a cuckoo announcing green shoots or anything like it. The Grocer magazine reports that the price of staple foods has risen by 18 per cent in the last year. Many forms of protein that were good and fairly cheap alternatives to (expensive) meat now cost 30 per cent more. Those price rises are not about to be reversed.
Another comment made here a day or two bears repeating: a million people in the UK with jobs today will not have jobs by next Christmas.
Shall we run a sweepstake on when State benefits are withdrawn or drastically reduced - because of all that tax revenue lost when businesses go bust because banks won't lend them the wherewithall to fulfill their orders - after all, the State benefit system is a fairly recent innovation? There is no let up in my stockpiling of tinned food, extending my chicken run, etc. I see no hope whatsoever of things getting better for another decade. I do see politicians in league with bankers to keep the bubble in the air until the next election.
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As this bust was caused by a credit fuelled debt laden society sponsored by Gordon Brown and the USA,we cannot possibly let Gordon Brown continue to try and get us out of the mess when he didn't have a clue that the bust was coming.
Get ready for the depression and mass unemployment.
Never again should Labour be entrusted with the economy. They haven't a clue except how to spin and lie.
Or, and the champagne socialists certainly know how to milk the system. Just ask Darling, Smith, Hoon and Becket to name a few.
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Cuckoos aplenty, but no swallows until confidence returns. There will be no confidence until integrity is restored and the fraudsters have been removed from office.
Parliament is the first of the stables that needs to be cleansed. That's a tough one. Without a new party with substantial support it probably isn't possible.
The banks are the next stable. That one cannot be cleaned out and the fraudsters prosecuted until integrity is restored to parliament.
The stock market will go up and down purely on the basis of short term speculation. Its movements are indicative of nothing else.
No shadow of stability can be attained while interest rates are at zero. No interest equals no savings, equals no capital, - resident or foreign.
So, no swallows till unremitting integrity is restored to parliament. I don't want to worry you, but that could take twenty years.
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KINKY BOOTS AND BRAZILIANS IN SPEEDOS A BROAD CHURCH OF TASTE IN NEW
LABOUR?
TRIPPLE WHAMMY ON THE EXPENSES A DODGY MORTGAGE HERE AND THERE A FEW LIES
OVER WMD . . . . . . .
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Robert,
you forget another set of factors in your postulations
The number of people or businesses who no longer require credit because they've already gone to the wall, or had their property repossessed by the banks and thus liquidated their need for credit.
In any downturn you will always get movement, and I'm sure that some of the "money" in circulation now is simply that which could be pulled from the banks minimal deposit rates and is now being placed in either property to try to gain some cash flow from rents, or shares before the predicted up turn.
Meanwhile Darling of the Crash and Burn team, is saying "we got it wrong" so they really are talking down the market.
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"Or to put it another way, a pre-condition of economic recovery is that asset prices have to stabilise and then rise in a sustained way."
NO NO NO NO NO!
To go through all this pain, and THEN to make the same stupid mistake all over again would be just too painful to bear. At the end of all this, even if I lose all I have, I want to see a fairer system where my children will be able to afford to keep a roof over their heads.
Ever-rising asset prices is in no-one's interests apart from those who happen to own a lot of assets in the first place. It is simply a recipe for the rich to get richer and the poor to get poorer,
Sure, asset prices need to stabilise. But at a low level, and then stay there. Permanently.
There is no need whatsoever to have ever rising asset prices to keep the system going. With static asset prices, banks simply have to price in the extra risk. Their loans to capital ratio might have to be 10-15 instead of 40. So? Isn't that a good thing? To compensate there is a requirement that a larger proportion of the money supply is printer by the Government. Good thing again - it reduces the amount we have to borrow.
The Government should be actively talking down the markets so that stability can be achieved sooner rather than later, Not this nonsense.
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NEW LABOUR CAN NEVER EVER EVER BE TRUSTED. . .
END TO BOOM & BUST NO QUICK FIXES FOR SHORT TERM SOLUTIONS. . . . .
WELL DONE GORDY: NOW WE HAVE THE 35 YEAR PAYBACK!!
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Bit fed up - new to this stuff and no fresh blogs to comment on.
No early signs of spring whilst the ignored majority are concerned over their jobs, savings and pensions.
Change of government required asap
Pension time-bomb will ensure that any recovery will be short lived. All of us children of the 50s and 60s who are struggling to pay off our mortgages and cannot save for a meaningful retirement will become a huge drain on the next generation who will have to pay off student debt before they struggle to pay off their mortgages and cannot save for their retirement and so on. Still our glorious leaders and the huge public sector that they have spawned will be ok with their index linked pensions paid for by me and the rest of the ignored majority. It feels as if we, the ig. maj. are the victims of the worlds largest Ponzi scheme
Call for an immediate return to the tax breaks on private pension fund income. Call for immediate ban on index linked pensions for all but those with significant time of employment in the public sector. If all are in the same pension position the minds of the political elite will be concentrated on looking after the no longer ignored majority.
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ASSET PRICES RISING??
NO NO NO!
WHAT ABOUT WORKING FOR A LIVING?
ANY WAY WE WILL ALL SOON BE WORKING FOR 5 QUID A DAY BUILDING APARTMENTS
LIKE THEY DO IN DUBAI WHERE THE LAVATORIES ARE SO SO CLEAN!!
IN A VAIN ATTEMPT TO PAY OFF GORDYS DEBT MOUNTAIN!
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Robert
Unlike many of my colleages, I like to read up and contribute to political and economic blogs; I live in a blog bubble probably like of the others here.
Venturing out into the real world on a frequent basis, I am coming across several people who live outside the blog bubble and in the last month this is a vox pop of what they say:
If it's not good news, RP isn't going to report it.
RP is a fed a line from the Press Office and he does the government line.
RP is James Callaghan's son-in-law so he's not going to buck the party line.
What do you expect of the BBC, they're just full of pinky liberals.
RP is the the harbinger of good news
And so on.
I'm self-employed, work from home, so I don't need to get out often. I work in financial services, business is good and I'm based in the South West. When I do get out in front of clients, representatives from the local town and city, and they're those who come down from your patch, news isn't good and your reputation is going down the pan, admittedly with that of the BBC.
All people are calling out for is independent journalism, telling things as they are, rather than trying to hood wink everyone with the goverment party line, the rose tinted spectacles and the repitition of government party briefings.
If you want respect do it your way and be prepared to buck the party line. It won't do you any good with Number 10 or 11 but at least you'll grow in stature.
Top tip: Be yourself and if that's what you're doing now which I doubt, time for change; things don't go on forever.
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Robert
Any chance of a positive spin on things for a change.
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rbs_temp #49
Pedant's Corner
http://www.timesonline.co.uk/tol/money/investment/article5949354.ece
If it ain't in the review
It ain't true
However if it was said
Take it as read
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I am not an economist and that could explain how I cannot fathom how we are intending to get out of this current mess, let me see if I get this right we are collectively in the poo poo because both as individuals and goverment borrowed way beyond what we can comfortably afford to repay, from what I can gather is that the solution to the problem is for us to borrow more and then go out and spend it. (am I anywhere close?) now even to my meagre intelligence this would seem total folly as this is only piling the poo poo higher, we know earnings are going to fall as taxation rises (£1250 per family per year) and with employment rising and the associated benefit costs with it, how can this goverment cope seeing they needed to run up a deficit of £300 billion prior to the fan being started and the poo poo hopper being released onto it.
Please let me be wrong but I think we are only postponing the real pain probably to get through the next election, I wonder how much electioneering will actually take place as I see it no party will want to win!
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It's nice to see you're still managing on your BBC salary, Robert, whilst the rest of us (especially those of us who, as in my case, are self-employed) are struggling to keep our heads above water with few life-rafts to fish us out when the going gets rough (yes, I can do metaphors as well).
Like many people, I'm fed up with "financial journalism" of any kind in our mainstream media. Let's just start thinking positive - because it's the media-encouragement of negative thinking that's helped to get us into this mess. You might disagree, but that's your prerogative.
I'm not reading any more of your blogs because, to be honest, they serve no purpose whatever and only depress me. Goodnight, sleep tight.
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a little present from Rahere to share.
See the link below for his take on the 'Cuckoo' analogy.
pure genius..
http://scienceblogs.com/zooillogix/Cuckoo%20chick.jpg
A picture tells a thousand words...maybe a subconscious reference to the real Common Purpose of RPs post today..
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Its not a cuckoo, its the chickens coming home to roost. lol
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#165. andfinally wrote:
"Pedant's Corner
If it ain't in the review
It ain't true
However if it was said
Take it as read"
I am not denying that the article in the Times warns of the possibility of 9% mortgage rates.
I am taking issue with jd6969preston's initial assertion (in post #39) that "Lord Turner in his FSA report told us to be prepared for 9 or 10% mortgage rates."
Lord Turner said no such thing. And even that hysterical article in the Times does not claim that he did. Quite simply, what jd6969preston wrote was untrue.
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It's time to go to bed after yet another long day.
But before I do, there's just enough time to write another missive, and the reason I write it here is because they're not that many, sorry they're aren't any outlets on the BBC anymore; the propogandists are controlling the channel outputs.
Even about their well paid (paid in advance by tax-payers)stars Johnathan Ross and Russell Brand.
They now sit in the same court of public opinion as Fred the Shred but my God did I laugh when I heard that we, the public, will have to foot yet another bill.
Jack Straw, Harriet Harman the lot of you. You are a shower.
But know that this is not a surprise because we already pay for you as well.
Your pensions...your porn films...your barbecues...you first, second, third homes...your illegal wars...your caravans...your electioneering...
How you can look yourself in the mirror? You are all an absolute disgrace...you should go!
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rbs_temp
Listen pal I didn't write anything in any of these postings where I blantly wrote something I believed to be untrue. I didn't read the Turner report myself and may have misunterpeted the original Times story. At the time there were various media throwing around the 9 and 10% figure.
Whatever the figure ends up at in the future is anyone`s guess at this point in time, but Turner did say we can expect high mortgages for a 6 - 9 year period and that`s what really matters to people in the end.
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Robert, you are kidding aren't you? As Gordon's economy slides gently from utterly dire to catastrophically bad, are you seriously arguing for better times ahead fairly soon? Give me a break. You, more than anyone, know that the economy is a super-super-tanker. It goes slow, dead-slow, stop and reverse. We're still at the dead-slow speed, heading for stop and then standby as we go into reverse. Anyone who sees recovery out of the current set of circumstances must indeed be cuckoo.
The almost incomprehensible financial (and soon-to-be social) mess that Brown has created has barely taken shape in terms of its impact on the day-to-day lives of communities, businesses and individuals. Please forget any nonsense about green shoots or lights at end of tunnels or first cuckoos. I would prefer it if our political elite got real about what now lies ahead and started talking sense about how we position our economy and society for a very, very tough decade (or more).
Starting with slashing public sector waste (roughly £100 - £200 billion pa) and releasing those resources to the wealth-creating side of the economy. Any other strategy is messing about at the edges. Neither of the main parties has yet to grasp this nettle. The longer they leave it, the harder we're going to fall.
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I see in the news tonight that HMG need to raise 39 billion one way or another. Thats an increase of 1,225 pounds per person a year. Not a great vote winner. Other options are increase tax and cut public spending. Not a great vote winner.
One of, if not the biggest, suppliers of tax revenue to HMG was the financial sector, and especialy the city. Not suprising that HMG are pinning all their hopes on a quick revival in the financial markets and a return to the good old days.
Although a few peace meal heads have roled in the financial sector I see little evidence that anything has changed, in fact the opposite may be true. We still have unfair bank charges, late payment charges double or triple what the OFT deemed unfair three years ago, 12% interest charges on bank loans, huge hikes in interest charges on credit cards.All that has changed or will change is the methods that the financial sector use to rip us off and avoid the regulations.
The recent G20 summit sums up the true stance of UK & USA with regard to regulation of the financial sector and their wish to go back go how it was. Both France and Germany were not happy with that stance and France was willing to walk away from the summit, a compromise was reached, which we are told kept every one happy. I do not know what that compromise was but I hope it will stop once and for all this cycle of greed boom and bust, I some how doubt it though.
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Robert, I am somewhat suprised at some of the learned responses to todays blog I am also suprised what you have read into the rise in the equities markets. Both the US and UK are following a monetary policy of QE. This in effect dilutes the value of every pound on deposit or on circulation in the UK. The effect of QE should be to push up asset prices ( valued in diluted pounds) of equities and property but simulataneously devalue the pound against other currencies as a result over time inflated inflation will feed through to the economy and uk service and manufacturing sectors should receive a competitive boost. The level of currency devaluation should be relative the differential in QE rates in the various economies. On the face of it this is what is happening it may turn out to be a dead cat bounce however, the fundemantal policy is sound. QE should have the effect of unwinding the asset bubble by devaluing all pounds in circulation not just its relative value to other currencies. The really difficult part is yet to come and that is judging how much QE is needed, when to stop and preventing runaway inflation.
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124. At 4:30pm on 06 Apr 2009, Sutara wrote:
> #74. grave_sniffer wrote:
> > Rob, you're out of touch - you need to get up
> > to speed - here's what's coming next...
> >
> > http://www.pbs.org/moyers/journal/04032009/watch.html
>
> I watched it and thought it to be VERY, VERY INTERESTING!
>
> Robert,
>
> I don't suppose you would be up for trying to get
> Lord Turner, or the Chancellor, to comment on the
> "U.K. equivalent" of that story?
First, Bill Black is exactly right in his analysis. Second, I heard this in an interview on the BBC at least a year ago from a senior European banking figure, so it shouldn't be news to anyone. Third, it is news because no-one much has been listening.
To prove you weren't listening, you ask what the UK equivalent is. The answer is incredibly simple. It was UK and European banks who were the ones buying what they were told were AAA assets when they were actually ZZZZs. That's how we became involved in this entirely US-Bank-initiated crisis and how it's spread around the world. The US fraudsters sold their toxic assets to us under a false premise. If not for that, the problem would've been seen in the US years earlier and it would've been largely contained there.
Yes, it's a fraud on a monumental scale and the fact that no-one in the US has been jailed for multiple lifetimes is a wonder. Regulatory failures on this side of the water have made matters worse after that, but the idea that Gordon Brown had any hand in the current crisis is unbelievably fatuous, with the vast majority of comments on this blog being stupid beyond belief. If I read one more person making a comment about what cuckoos are like I may have to slit my wrists over the lot of you giggling ninnies.
People here are wetting themselves over the fact that car sales or house sales or credit requests are down compared to last year, while simultaneously scoffing at the bubble of previous years. Well, of course they're down compared to last year - last year was part of the bubble, so was unsustainable. What part of this aren't you getting? You'll only be happy when we hit bubble levels again? Do you even realise what you're saying? Similarly the number of closed businesses now compared to when we were living on the proceeds of the various bubbles. If those businesses were barely hanging on with a bubble then they never were viable businesses in the first place and it's better that they're gone.
I don't want to be living in a world where our economic wealth is held up merely by inflated property prices and city bonuses on product sales for debts that can never be repaid. Demand will rebound to a lower level and that should be our lot. 125% mortgages won't return, so people won't be finding buyers at 10-20% per annum increases on property prices. You'll all have to earn your new car or foreign holidays on what you can genuinely earn, not on amounts you can speculate. One foreign holiday every 3 years is about right, not 3 holidays in one year.
Get used to it and stop demanding the UK Gov't "do something" about the crisis while simultaneously bewailing the debt he's building up by "doing something". The only person who can bail you out is you.
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Isn't it a larf being the Delphic oracle Mr Peston, not so long ago, in times of crisis, the great, the good and the ordinary people would latch onto and often acclaim a 'mystical semi-messianic figure' as their 'saviour'. The oracle (who is divinely gifted by the gods) would provide in response to earthly enquiry, would provide quasi-philosophical, semi-comprehensible, obtuse answers disguised as metaphors. Most oracles, mystics and semi-messianic figures have an achlielles heel, called 'hubris'; their success only serves to breed nihilistic delussions of grandeur ...
Similar to #167 I imagined Mr Peston et al, shared some sort of insight with us, a voice of calm reason in the wilderness of tabloid-style media frenzy, however after a period of reflection I have concluded that I was mistaken on several counts.
Previously, I understood Mr Peston to be functioning in some fashion as a neutral third party, guided by a righteous moral compass, 'the public good' and a well-placed, insightful journalist with standards and integrity beyond reproach.
Secondly many of the comments published here serve no useful purpose beyond a cathartic talking-shop, something even I have been guilty of ... while other HYS threads have wandered so far 'off topic' they ought to get their own 'chatroom'.
Thirdly, it just is not possible to 'run with the foxes and the hounds', power corrupts and so does rubbing shoulders with the powerful political elite, senior executives of powerful multi-national corporations, and the establishment ... difficult resist the persuasive and subtle influence of modern day 'king makers'.
Lastly comments has becoem a moaning/talking shop, when there are 1000 plus comments, who seriously (apart from the moderators) is actually taking the time to read them ... QED are people actually interested in the subject they were posting about, or are we all just after that fifteen minutes of reassurance 'I link, therefore I am' ... the mental equivelant of bubblegum.
Once the finest medieval theologians (Thomas Aquinas included)dedicated there time and efforts to the huge question including 'How many angels can dance on the point of a very fine needle, without jostling one another?' The answer was 'as many as should wish to do so'.
upon returning from the USA, just before the tidal wave hit the UK, I contacted a solicitor I knew and told them what was happening in the USA and abou to hit here ... their reply was 'The UK property market is very different to that of the US, besides Scotland's property never rose as much as the rest of the UK ... QED we may see some slow down and slippage, but the market will 'right itself' and the dip will pass quickly.
The recession is far from over, based on the current economic trends a more realistic recovery date would be mid 2011/12. As abhorent as it may seem self-Protectionism will be flavor of the day by 2010/11, unless political parties suddenly find te life-style of lemmings particularly alluring. Thus spake Zarathustra.
In my humble opinion, this cuckoo article effectively crosses the line between journalism and nihilism, with a dash of 'magic thinking' thrown in for good measure ... perhaps ideas as opiates of the people is not as far-fetched a concept as it once seemed.
So I for one will nolonger be wasting my time commenting here, as IMHO it is pointless to do so, it changes nothing, and simply acts as intelectual static, cathartic it maybe - but is that really it's 'raison d'etre' ...
While in my heart I sincerely hope that I am wrong, in my head commonsense tells me that this time we genuinely are in huge trouble with bells and whistles on ... fascinating as Mr Peston and his ilk are, they are not actually able to influence matters by one iota.
It's been a rollercoaster ride ...
Goodnight, 'bon chance' and as Dave Allen used to say, may your god go with you.
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A cuckoo ?.........
looking at it through one dodgy eye, and your fingers in your ears, maybe it appears to be a cuckoo
look a little closer, with the benefit of perspective, using two good eyes and what you will see is Air Force One gracefully disappearing into the sunset
now remove your fingers from your ears...and listen carefully to the onboard conversation
Michelle: "What a strange person that Gordon Brown, he would not leave you alone for a moment, what do you think of him ?"
Barack: "CUCKOO..........."
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172. jd6969preston wrote:
"Listen pal I didn't write anything in any of these postings where I blantly wrote something I believed to be untrue. I didn't read the Turner report myself and may have misunterpeted the original Times story. At the time there were various media throwing around the 9 and 10% figure."
Then perhaps you should be posting your own ideas and arguments on these blogs instead of simply regurgitating unchecked opinions and figures from other sources.
It is clear to everyone with the slightest knowledge of economics and business that the Times story is nonsense. It's the kind of sloppy journalism that you would quite rightly be criticising loudly if it were to appear on the BBC, and yet you lap it up uncritically from the Times. Why? Because it supports your own point of view?
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who says theres a recession anyway? theres plenty of money around,its all rubbish spoken by the media who have nothing better to do.what is a reccession? some man made unscientific measure that is meaningless brownwatch 419 days.
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142. Sutara
I agree with your points, but want to look at one of the phrases you use: banks "too big to fail". It's funny how everyone kind of accepts this phrase, but the reason behind this concept demonstrates the rod we have made for ourselves. Why are they too big to fail? One core reason is because, indirectly and directly, there is billions in savings that no-one wants to be lost. Any government that let the savings of thousands of pensioners be wiped out by a bank collapse or two would be cast into the pit. Why is there so much money invested in so few organisations? Because we, as a society, have come to expect that money makes money. As with the markets, HOW the money is made has long been obscured. The fact is that thousands of people put money into vast organisations that lend it out to others. No effort, no assessment of risk, no attempt to understand what happens with the money, just an expectation. We have long since lost the true meaning of the word "investing" and instead see money as some sort of self-replicating life-form that breeds itself.
Half of the posts here trundle out the old line "we're in this mess because of too much borrowing" but that's not true. We're in this mess because the expectation of growth and of returns now neccesitates borrowing. Those suckers who max out the cards or release equity for a plasma screen are just the unwitting pawns that allow it to happen. Time for a change of mindset in those with the money, as well as with those expecting easy loans. The calls to seperate banking and "merchant banking" should be heeded, but properly. Banks should be there for keeping money, no profit at all. You want return on an "investment" then go invest. Take decisions on who and what gets your support and your hard earned moolah. Put it somewhere ethical, if that rings your bell, somewhere risky if you like a gamble, a powerhouse blue-chip if you want something [somewhat] secure. Know how the investment is being used and you'll not be caught with a dead duck. The markets need to return to their purpose, to allow investment in companies. The dividend should be the goal, not the sell price. Can't be bothered to look up companies, to work out where to invest? Tough, no gain, you're not contributing unless you put in effort. The expectation of money for nothing, both by the debtors and the creditors, is the problem here. The distance between the two is what allowed this to happen.
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"#181. At 07:14am on 07 Apr 2009, rvpisneverinjureds wrote:
who says theres a recession anyway? theres plenty of money around,its all rubbish spoken by the media who have nothing better to do.what is a reccession? some man made unscientific measure that is meaningless brownwatch 419 days."
I can only assume that you work in the civil service, in the real world of small businesses in Kent there is a recession!
Im a Director of a company and speak to other small business owners in Kent, accross the board orders are down often 50 to 60%, payments delayed, suppliers are demanding up front payment, clients are going bust (this year we have had 20+ clients go bust, in the preceeding 15 years we have had 1). Most businesses I know have at best a recuitment and pay freeze, but a significant number are cutting hours, reducing pay and laying off staff. More and more comercial properties in my area are becoming empty, shop units in the high streets are being boarded up.
So i would like to know on what grounds you stat there is NO recession?
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The hypocrisy of Crash and his government is astounding. He, his colleagues and former colleagues were very happy to whip up a media and public frenzy against Fred because it suited their desire to find a scapegoat to deflect attention from their own failings. However, the Fred story was always only a side show compared to the economic problems of the country and world, however despicable its own facts.
According to yesterday's reports Crash was complaining that the media and public attention given to MPs expenses is an unwarranted distraction from attending to the economic crisis. Yes, it is a distraction but it is an important one as it highlights that greed is endemic in our lives -and our political leaders need to get their house in order before they can hope to tackle the wider problems of the country.
This government, and any aspiring government, needs to realise that we are at a cross-roads. One way points to changing the country for the better - tackling greed, driving out spin, removing stealth taxation, introducing honesty and openness, encouraging excellence (whether in sport, education or elsewhere), building our "green" characteristics, nurturing some leading industries for the 21st century etc. The other way points to repeating many of the recent problems as we try to re-inflate the bubble of the numerous excesses over the last decade.
We need an election to remove the Crash government which is firmly wedded to the latter path. We can only hope that Cameron will be sufficiently brave to go down the former path, which has a price attached to it in the form of a period of austerity and falling living standards.
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Seems the Serious Fraud Office is in for a very busy time .
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rbs_temp
"It is clear to everyone with the slightest knowledge of economics and business that the Times story is nonsense. It's the kind of sloppy journalism that you would quite rightly be criticising loudly if it were to appear on the BBC, and yet you lap it up uncritically from the Times. Why? Because it supports your own point of view?"
Your way off of the mark here. For starters what you say above is totally your opinion. The Times ran a story and whether it turns out to be ture or false at some point in the future no one - including yourself - can say. If it`s nonsense that`s your opinion and nothing more. Some many agree and some may disagree but people are free to express their views in this forum.
Second, I'm not a journalist nor are you or the numerous other people who post opinions on here. The whole point of these blogs are to allow people to express opinions. We`re not expected to act as journalists as you might like. If that were the case we would all have jobs with the BBC. Over the months I have seen all kinds of crazy comments posted on here but I don't choose to attack people for them whether I agree or not.
I never see you post opinions on here other than to attack someone every day for their`s. This country is in a bad way at the present time and their are many individuals and small business owners who are suffering as a result. They post on here to vent frustration at the many injustices we see going on all around us. You seem like a very angry individual who constantly wants to critise people on these blogs. Robert Peston gets paid big money to take critism for what he writes the rest of us don't.
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Anyway back to more important things!
Very worrying headline this morning.
Bankrupt Britain: 340 people go bust every day
http://tinyurl.com/dyhz6z
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174. I don't want to depress you anymore but its not that we need to raise GBP 39 billion in total but an additional GBP 39 billion compared to what Alistair thought at the pre budget statement.
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RP "Think of it as what happens when you touch down in a plane and the pilot turns on the thrust reversers at full pelt - the plane stops before it overshoots the runway (barring mechanical failure)."
____________________
Are we heading for the runway fence? Is there a big ditch?
Irish budget today? What price Lisbon Treaty second attempt?
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#182.
Just a thought but didn't pensions used to be paid in cash at the Post Office? So the recipiants could pay bills, buy food and save some if there was any left.
Wasn't it the government (HMRC) that made people sign up to getting bank accounts to receive their pensions etc.
Maybe if we hadn't been pushed into a plastic society by the banks to access our monies and cash was king still its facial value would have remained at the forefront of peoples minds.
Fairly simplistic I know, but as another poster mentioned earlier, the balck market is rising!
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Borrowing your AIRPLANE analogy for a minute Bob . .
('Pilots of the global Economy.')
Isn't it a bit like the survivors' of a mountain-top passenger-plane crash, who after a great struggle (including cannabalism!)
find their way back to civilization and on their first flight after
the mountain-accident, the Pilot and Co-Pilot of their aircraft will still be the same? (America and Britain.)
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#183 wombateye - I think rvpisneverinjureds was being a tad sarcastic !! His "brownwatch 419 days." is a countdown on the number of days our Glorious Leader can legally stay in power before a General Election is called !!
#187 "Bankrupt Britain: 340 people go bust every day"
What nonsense !! Of course not !! Our Glorious Leader had categorically abolished "busts" !! Therefore, it cannot happen !! This must be some fiendish plot against him !! Send in the Stormtroopers and sort this out !!
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Longterm economics to resolve UK's problems:
1) A 1% decline EVERY year in the number of people employed in the public sector [May have to last up to 25 years]
2) Government expenditure can only increase by a maximum of Inflation Minus One Percentile a year (e.g. 3% inflation means a maximum of 2% increase in total government expenditure) [This will have to be a 10 year policy as a minimum, probably 20-25 years in reality]
3) The retirement age must be increased to 75 by 2035 for men and women
4) More London-based civil service jobs need to be regionalised (as does the BBC)
5) MPs and Civil Sector bonuses and allowances must be capped and regulated
6) Income tax MUST go up (to about 60% on all income over the tax-free allowance); but the tax-free threshold should be raised to £15,000
7) VAT should be abolished [It creates unnecessary burden on business and the tax raised penalises the low income]
8) LUXURY TAX re-introduced [Set at various rates depending on the item; e.g a £1000 watch may incur 25% tax, but a £2000 car no tax, but a £50,000 car could have 10% tax, etc.]
9) Soft Drugs and Prostitution should be legalised [Raises taxes; reduces crime]
10) Crown servants (currently 30) and civil servants (currently 40) must work 45 years to receive full work-pensions. To achieve, must allow police, firefighters, and intelligence staff to crossover into 'safer' civil sector jobs. They could receive an additional boost to pension as a compensation for the 50% increase in years' worked
Earlier I supported the view that interest rates (and by virtue mortgage payments) could soar in a few years' time. The contra-argument is that we will have a decade of very low growth and low interest rates. Á la Japan. I think what will happen is that we will see house prices growing around 1.5% YoY as an average over the next 15 years, but inflation will be higher at around 2.5% YoY
Can we get inflation down to say 1% YoY? Only with huge capital investment in projects that mean we will not be held to ransom over soaring energy prices and the massive cost of farming. This should happen in ernest whilst resource/commodity prices are low, wages are suppressed and because the economy needs a kick-start.
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#192 I forgot that the "Glorious Leader" had saved us!!!
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This is a bear market rally.
A bull market trap.
Deflation is upon the world.
Credit is being repaid, defaulted on (deleveraging), faster than governments are printing it.
People are now are in a period of denial.
The Governments of the world will save us!
The Western Banks are not bankrupt!
Providing more credit to a world that imploded due to excess credit will save all.
Ralph Elliott Wave 1 'down' of 5 down has happened. It took 17 months.
The market fell 50% ish
Wave 2 is bouncing back a little.
Wave 3 is coming! Is is usually the largest!
This is bank technical analysis stuff.
Google "Elliot Waves" - Scary
Senior politicans behaviour as with that of some senior bankers is scandelous.
People who earn less than $5 a day are loosing their jobs!
I live in Thailand. No social security!
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mixed metaphors Robert .
Try the Elephant in the room.
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188 ian the chopper
Err thats todays figure. If you look at the figures that keep coming out they drift outward at an alarming rate. Thats 39 bn gap in 6 months. There is no reason it should stop there. Its noticable that the economist have reduced the interval of forecast bulletins - they were getting to be a joke, every fortnight they went outwards. Thing is that if 3.2 mill unemployed are due by most forecasts there is still a million odd to go, say 60,000 to 80,000 per month, month after month. Comical Ali and El Gordo are as useless as a chocolate frying pan and a chocolate teapot. No the chocolate pan and pot are more useful, the kids could eat the chocolate. When is the public spending axe going to fall.
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i wonder if north korea would be willing to aim one of its rockets at the house of commons and blast the lot out, it seems to be the only way of removing them as this government wont call a general election.
i dont remember a time when a leader has held on so long before going to the people.
sadly this country needs a change now but not any of the opposition as their ideas are as bad as neu labours.
our leaders seem to have lost the plot and handed us over to european mob without asking us the people.
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The idea came up that there is no current recession. Daft, on the face of it, unless you expect demand to rise up to the levels of the bubble years again.
Thinking about it, if the bubble years were so unsustainable, we don't want to get to that level again, so the current level should be considered the norm. So, if you're waiting to get bailed out by a 'recovery', don't bother. This 'recession' is the new norm.
Welcome to the new reality.
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Can't see it. Banks now lend 3x salary, average salary is circa 25K, average house price is now 150K. So unless everyone has 75K saved then the market must fall much further. Add to this that ALL brokers reckon gold will continue to rise which generally means everything else is falling. Add to this that business performance in 2008 was horrendous when most were unaware of a recession for at least 6 months of that year - everyone knows now so just how much worse will 2009 be? As well as throwing money at the problem governments are also laying the regulatory foundations which will actively prevent a recovery to the heady levels of 2007 and before. Get used to it. And if you bought your home in the last few years then prepare for 10-20 years before that home is worth what you paid for it - if even then!
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Deedser: perhaps. Banks now may only offer 3x salary...
but, let's make a guess: The average home is bought by 1.5 people with a [now demanded] 25% deposit.
This means 37500 salary, so with 3x salary loan (75%) and 1x salary deposit (25%), it means an average price of 150,000
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The recent rises in the stock markets will be checked by a fall over a year or so. I would think the FTSE will drop to about 3000 and the Dow to about 6000 by March 2010. Property prices will drop by 50% from their highest point (they should drop by 90% to reflect economic conditions but that won't happen). The important thing to do is to accept the situation we are in and plan for the future. The G20 soap opera was utterly pointless and does not help us at all. The hidden losses or should I say exposure of banks is enormous and well beyond the scope of government bail outs - that is the truth that nobody wishes to confront, especially those in positions of power, they share the largest denial. Robert, you are well connected so why not lead from the front and share with the public the truth as you know it? The time for unbiased reporting has come and gone. If I were to mention what I know I would not be believed. Let's all face it head on, accept it and start again. The model is dead .........long live the model!
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Property prices are already down 25% (fm 200k to 150k) over 2 years, but in real terms (inc inflation) that is around 33% down. By this time next year it will only take another fall of around 10% in nominal prices to be close to 50% decline in real terms
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yes there are green shoots and more confidence mainly form cash rich and a very few new loans.
but the banks have not got thier affairs sorted yet.They have swept some bad loans under the carpet which sooner or later they will have to foreclsoe on.
RBS have a declared policy to withdraw from commercial property loans for example just when commercail property is well priced ( drop of 40% according to IPD).No doublt they will come back in when it is up another 40%!
Alice in wonderland really!
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There used to be a phrase in the City - 'It always seems worst at the bottom and it always seems best at the top.' Perhaps no truer than now.
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Cookoo? no not really
What comes now is inflation.
The central banks all around the world have been pumping money into the system to keep it propped up, but its basic economics to realise that this only serves to weaken value in the larger economy.
What happens now is the geographical political problems that will arise from the various positions of each member state of the G20. Basically who's going to be holding the bad cards !
The UK has intrinsically the second highest debt per person of the G20 so i predict we will have high interest rates second only to the USA and that those rates will be blamed on external forces out of the governments hands, nullifying them from the contempt of the hard working taxpayer.
A rise in the money supply reduces a currencies value with the result that goods and services will increase in price this is called the economic curve there is a time lag within its function and is a secret tax on the ordinary hardworking tax paying majority.
The rich elite that's the 2% that control 98% of the worlds wealth will simply keep a low profile as its the pyramid scheme of those elite that is at risk during the turbulence to follow.
What we need is strong corporation tax law, Even stronger tax avoidance law and an end to the top heavy wealth distribution system of the old outdated and socially destroying corprotocracy.
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Kudos! I must honestly say that you Brits are pretty impressive here, lots of genuine insight. I've done loads of reading in the past few months, and it seems there is something very different about the mentality of a British 'discussion'.
Opinions here may well differ (as expected) but it's a comparatively logical, reasonable and intelligent discussion. It's pretty amazing to read a blog were most posts have something insightful, reasonable and genuine to offer.
I've lived in the UK a few times since 2000, and although many things can be very hard to take (class structure and sheep mentality to name a few), i found a huge percentage of Brits are grounded, intelligent, realistic and well mannered.
My two cents: that 'APATHY' of the masses is really to blame. We (the people) are simply not driving this bus! and if we don't then the 'fat controllers' certainly will.
Can't complain if we don't the destination!
Simple engagement by a reasonable percentage of the masses is the only thing that can change the world as we know it. Corporates, Banks, Governments etc.. would 'dance' for the people in such a scenario.
But i have had my doubts about the 'the people', the ability of the masses to comprehend the ride, or the ability of them to even care.
But, I hear a 'Cuckoo' calling for humanity right here, reading this blog gives me genuine hope for us all yet!
Kudos to you all!!
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