Sunday, Jan 25, 2009
A summary of the past week
Telegraph.co.uk: British economy is on the brink
The Bank of England says the average ratio of debt to equity within British banks is more than 30 to 1. In other words, the bank balance sheets are roughly 440 per cent of Britain's GDP.
As a result, the government is too small to help, in trying to bail out the banks, is in danger of chucking not just good money after bad but the entire economy after the banks.
Posted by plato @ 08:38 PM (1587 views) Add Comment
22 Comments
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1. Dave said...
Hi.
If this article is correct then a HPC has become like this web site irrelevant as we are all up the creek without a boat!!!!!!!
Goodbye I enjoyed your site while it lasted but it is now useless.
Always be careful what you wish for!
Bye.
2. japanese uncle said...
Now this institution is saying something like this as if it had nothing to do with itself. I seem to recall that BoE had a responsibility as banking regulator. About time withdrawing the authority to issue currency to Parliament.
3. Hiccup said...
The boe may have had the responsibility but good old tony wouldnt let them use it nor Brown. This is all beginning to stink of corruption.
4. alan said...
I started looking at this site out of interest in the Housing Asset bubble. This situation is beginning to look like the last days of the Third Reich.
Contract jobs which are usually plentiful in early January have just dried up. Check the job boards for yourselves.
5. fjcruiser said...
It makes grim reading.The real issue is about all the babyboomers due to retire in the next 5 years or so. Not only, they wont have time to rebuild their pensions or get back the equity lost in their house, they are also the generation the governments had been relying on to spend and boost the economy once they retire. No chance, instead it will be a new generation of not so well off retirees.
6. Crunchy said...
3. fjcruiser
Yes, plus the next generation coming will be heavily taxed if this chaos continues. This is why house prices should be cheap and stay that way. Financial investment needs to be directed into NEW British indusry, making cutting edge products and the like to export. ( Patent process needs to be changed ££££££?????) Now let's cut down on some of those lame banks we don't need anymore and move on. Gordon?
7. Mr Plumbase said...
It will soon be time to take to the streets and reclaim our country from the crooks and theives.
8. gardeniadotnet said...
If the Banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.
9. str 2007 said...
Plato
You post this comment and expect a Spring bounce (earlier thread) interested in your thoughts on bounces.
JU
I will email you tomorrow to check I have it written down correctly.
Do you have an opinion on any dead cat bounces this year with regard to house prices ?
10. gardeniadotnet said...
In just seven days, Barclays has lost almost two thirds of its value – a colossal £10bn.
11. beartil2010 said...
No bounces in house prices whatsoever. A bounce will require lending to ease at the same time as people think it is the right time to buy in. This is going straight down all the way to the bottom - the only question is where that bottom is going to be. And every day it seems to be getting worse.
12. jack c said...
S2R1 theories/predictions that were derided in the past dont look so outrageous now !
13. buctootim said...
sorry guys, the end of ther world isnt coming just yet. Just the Telegraph politicing. Barclays and Lloyds share price will double in the coming three weeks.
14. drewster said...
buctootim -
So what if Barclays share price doubles? If the price falls from 100 to 1, then doubles to 2, how is that a positive sign?
The world will never end. The worst-case scenario is Reykjavik-on-Thames.
15. gardeniadotnet said...
9. buctootim said... sorry guys...
If the Banks create ample synthetic money, we are prosperous; if not, we starve.
What's there to be sorry about?
16. japanese uncle said...
str2007
Dead cat bounce is possible only in the parallel world of the confused minds of the charlatans. Be in no doubt. HPC will further accelerate in 2009 whatever useless effort is made by whoever.
17. growler said...
I'm starting to see a rent rout in my area: I'm thinking about a -15% offer for the house I'm in already as alternatives are appearing. "To let" boards outside my area have fallen down and noone has re-erected them in 3 months. The agents are also filling up their stock books with new instructions at pretty much 2007 (silly) asking prices. Trouble is, we're still in freeze mode here. As someone else said, HPC will accelerate. These high-priced houses will just not sell. There is one local agent around here who is still overpricing to attract the tiny amount of customers out there. I think we are still on the "denial" part of the curve - hence the thought it will accelerate by April.
18. bluebeach said...
Estate agent near me has come up trumps this time, replacing "Sold" with "Recently Sold" on many properties in their windows.....yeah, thats right!!!.. Recent reductions have been at that price for months and the "sold" are so very last year. They are just hoping that some fruitcase comes along and panics that they are about to miss the big push off... Nice place in Llangollen just been reduced from £695k to £575K....... another, say £150K off and I just might look again.... but please keep the "recently" off unless "Recently Very Desperate"
19. str 2007 said...
Can someone explain these discrepencies listed in the article to me please.
''Despite a week of increasingly awful news, some experts believe the whole drama is exaggerated. Research by Goldman Sachs claimed that the cost of the bail-out to the state should not exceed 8 per cent of GDP – painful but not fatal.''
and then taken from further down
'' The Bank of England says the average ratio of debt to equity within British banks is more than 30 to 1. In other words, the bank balance sheets are roughly 440 per cent of Britain's GDP. ''
Admittedly all the debts won't go bad but if it was only 2% or so as these 2 paragraphs suggest are a problem then we wouldn't be discussing it would we ?
20. mountain goat said...
The main stream media are always behind the curve. When we hit the bottom and things are about to get better you can bet the T'Graph will be saying we are in for a 20 year depression. If it wasnt for fundamentals like house prices are still unsustainably inflated, I would interpret this kind of article as a sign we had hit the bottom and things were about to get better.
21. maddison said...
The statement on British banks having a debt to equity ratio of 30-1 is misleading. Have a look at the Sunday Times where an explaination is posted. It seems that the Telegraph and Times are the bears and bulls here.
22. george monsoon said...
Let the banks fall..