Friday, Dec 21, 2007
Greedy banks? Who would've thunk it?
Daily Express: Home buyers cheated out of rate cuts
Mortgage firms were last night accused of cynically boosting their profits by not passing on the latest Bank of England rate cut to borrowers.
4 out of 5 lenders have not cut their rates by the full 0.25% yet, although some have announced cuts to take place in the New Year.
Posted by little professor @ 01:06 AM (467 views) Add Comment
10 Comments
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1. little professor said...
2. lvmreader said...
Well, Duh!
Did these suckers think these cuts were to help them? What do people think is going on, I wonder.
From Gold Money Blog
In case you missed this news, the European Central Bank yesterday created 348 billion euros. That's equal to about one-half trillion dollars. Presto! Like magic, one-half trillion dollars of so-called "liquidity" appeared out of thin air.
It really isn't liquidity though. Let's call it what it really is. It's just newly 'printed' currency, created not with a printing press, but rather, with a simple book entry on the ECB's balance sheet.
Let's flash back to Weimar Germany in 1923. As that country's monetary problems worsened, the central bank, the Reichsbank, in the misguided thinking of that day printed one-half trillion of Reichsmarks. It also had the aim to provide liquidity.
Is there anything essentially different between what the Reichsbank did and what the ECB just did? Absolutely not.
Last week I wrote the following for one of my regular commentaries on the Kitco website, responding to the $40 billion of new currency that had just been 'printed' in an instant by the Federal Reserve: "Creating money this way is a barbaric process because it further debases the dollar, but is hailed by the banking insiders and their apologists as a brilliant maneuver to fight the worsening liquidity crunch. Of course it is a view of those with vested interests, and bluntly, is just their selling pitch to the masses."
We are in a monetary crisis, not unlike the one that plagued Weimar Germany. It is a crisis of fiat currency, where 'money' can be created out of thin air in an instant and in any quantity, which are actions that cause people to distrust the money. This lowers the demand for the debased money, and eventually leads to a flight from it. The demand for the Reichsmark was declining for years before its collapse, just like the demand for the dollar, euro and other fiat currencies is now declining as people seek safe alternatives.
Over the past few weeks John Rubino and I have been updating our book, The Coming Collapse of the Dollar, for a new paperback version that Doubleday plans to release in January. Not only has the content been updated, but Doubleday wants to update the title too. The proposed new title is: "The Collapse of the Dollar", to reflect the downward path of the dollar since writing our book back in 2004. The following is from the introduction to this new version:
"The stage is set, in short, for not just a further decline in the value of the dollar, but a collapse. Which means the turmoil-and profit opportunities-of the past few years were just a taste of what's coming. But note that despite the title of this book, it's not only the dollar that's headed for the trash heap of history. The real problem isn't U.S. economic mismanagement, but the whole concept of fiat currencies. Put simply, when politicians have the ability to buy votes by printing money, they do so. This lack of monetary discipline leads to an oversupply of currency which causes its value to decline until most citizens give up on it altogether. In the past this has happened to one country at a time, but today it's happening everywhere, with the world's dominant currency, the dollar, leading the way. The inevitable result will be a tumultuous few years in which the world discovers that fiat currencies -i.e., government-created-and-controlled currencies with no externally-imposed discipline on the printing press-are inherently flawed, and abandons them en mass."
As 2007 comes to an end, it is time to think about what lies ahead in the New Year. My conclusion is that the present crisis is going to get much worse and then end badly. How badly?
Well, no one of course can predict the future, but when you are on a road, you can obviously see where you are going. The dollar, euro and the other national currencies are on a road that is well traveled. We know where it is going. It's the same road the Reichsmark was traveling. It's the road to the fiat currency graveyard.
3. george monsoon said...
Nice work Ivmreader.
It still doesn't offer much comfort to those of us with little or no savings to convert to safer currencies.
Looks like I will be stung not only by the housing boom, but by the great depression to follow. And I have no debt! what a *$£**!!
Still, I can always take the geetaaar out and play on the streets for my soup!
4. Afrobaggie said...
But George what is a 'Safe Currency' by the sounds of the above then the majority of currencies will be heading down the same path. It sounds like the only way out is to buy physical gold and bury it in your garden!
5. it_is_going_with_a_bang said...
Cheated out of Rate Cuts????
How is that then? I have never expected a direct link between rates and mortgage rates !!
Unless you have a tracker mortgage you are at the mercy of the banks on interest rates.
I think the only people who really feel cheated are the VI's who were hoping to grab onto a branch as they fell out of their money tree.
6. george monsoon said...
I have been told that even gold is far too volatile to risk investment. A very wealthy and informed friend of mine is singing the praises of platinum.
Given that inflation is about to go nuts, what If I take out a loan, invest the cash in a precious metal and pay off the loan, which should depreciate over time?.
7. planning4acrash said...
Phew, George, that'd be a hairy investment m8. Fluctuations could put you in negative equity in the space of days and many loans don't let you pay them back early. I would simply put in a percentage of your wealth at this stage, watching the price daily, in a place where you can pull in and out of the market depending on where it goes, maybe 5-10% of your cash, and only put in a larger amount, maybe up to 30% if there is a clear trend, ensuring that you get out before it comes crashing down again. Not stuff for the faint hearted!
8. dohousescrashinthewoods said...
George, I think that's the best comment I have ever read on here. Genuine question: were you being ironic?
I ask because of the gorgeous parallel with the housing market - buy on borrowed money in the hope that inflation/capital appreciation will wipe out the loan. If you intended it, that is a superb parody of or very reason for being here - a speculative bubble.
Taking p4c's argument on a step, the question is, how much exposure do you want. Little -> put in less than 100%, lots -> put in more than 100% (aka borrowing/leverage). I have modest savings and a little of those in gold
9. dohousescrashinthewoods said...
If this story is still there, George, here's my personal set-up - see what you think:
I use a very simple rule to drum up investvent cash - live on 80% of what you earn (either by getting a jump in income and not taking the payrise, which I did back in 2000, or by shaving a little off each increment over the years). I take 10% and give it away and the other 10% I save (we finished paying off all our debts earlier this year. Now that's what I call privileged). I just have to trim my lifestyle.
That probably sounds crazy, or else too little to do anything serious with, but I think it keeps things proportionate. If you take home £1000, you can't save £500 a month, so no point trying, but equally, saving a tenner all will get you nowhere. I also think, however much I need or want to spend it all on myself, that sharing a little is fundamentally better than me moaning and feeling like I don't have enough. The other beauty is that, as your wages inch up over the years, you can avoid fiscal drag (If I'm going to be mad at Broon, I can at least try to avoid his mistakes)
I'm also just about to implement short-, medium- and long-term pots. Short goes on maintenance and holidays, medium saves for a new car or a house deposit and long goes towards the "investment fund" which one day may, with luck, judgement and determination, lead to financial independence. Never touch the principal.
Right now, between me and my wife, that's not much in each pot and it feels a bit weedy, but over the last year we've managed a bit of cash ISA, £500 at bullionvault and another £500 in my company's shares (which are busy going down the toilet, but if I get them tax free in the end, halving in value won't really dent the amount I would have got in Gordon's tax-hungry world).
I'd like to double my gold, but don't want it to get out of proportion. It's meant to be a small "nuclear insurance" holding -- Zimbabwe-proofing. Next priority is buying into timber, water and possibly oil, though with a depression waiting in the wings, I can imagine oil falling back (but realistically I just don't know). Anyhow, out of equities, ponds, propery and cash and into "real stuff" (albeit through ETFs, but if they went bust, that is what the gold is there for).
Hope this is food for thought and not just me self-indulgently thinking aloud.
10. Corporatebully said...
Att: RBC President Gordon Nixon - Salary - 11.73 Million!!
$100,000 MISTAKE - (FISHERMEN'S LOAN)
--------------------------------------------------------------------------------
I'm a commercial fisherman fighting the Royal Bank of Canada, (RBC Centura) over a $100,000 loan mistake. I lost my home, fishing vessel and equipment. Website http://www.corporatebully.ca Thanks, Paul Fraser. If you are interested in supporting my cause, phone or e-mail :
RBC President, Gordon Nixon, Toronto (416)974-6415
RBC Vice President, Sales, Anne Lockie, Toronto (416)974-6821
RBC President, Atlantic Provinces, Greg Grice (902)421-8112 mailto:greg.grice@rbc.com
RBC Manager, Cape Breton/Eastern Nova Scotia, Jerry Rankin (902)567-8600
RBC Vice President, Atlantic Provinces, Brian Conway (902)491-4302 mailto:brian.conway@rbc.com
RBC Vice President, Halifax Region, Tammy Holland (902)421-8112 mailto:tammy.holland@rbc.com
RBC Senior Manager, Media & Public Relations, Beja Rodeck (416)974-5506 mailto:beja.rodeck@rbc.com
RBC Ombudsman, Wendy Knight, Toronto, Ontario 1-800-769-2542 mailto:ombudsman@rbc.com
Ombudsman for Banking Services & Investments, JoAnne Olafson, Toronto, 1-888-451-4519 mailto:ombudsman@obsi.ca