February 2009 Archive
Saturday, February 28, 2009 
AEP goes off the deep end......
Telegraph: We need shock and awe policies to halt depression
"We have been lulled into a false sense of security by the lack of "soup kitchens". The visual cues from Steinbeck's America are missing. "The temptation for investors is to see this as just another recession, over by the end of the year. But this is not a normal cycle. It is a cataclysmic structural breakdown." I read AEP and end up feeling like I have been repeated beaten over the head with a plank. All the negative figures & quotes. Can it really be true? Is this the end of days? Or is AEP just a Cassandra de nos jours?
More Brown stuff from Brown
Vnunet: Brown wants science and technology to surpass financial services
Err, excuse me Mr Brown but just how are you going to 'invest' in science and technology without a healthy financial services sector and how are you going to 'commercialise' the results if the major governments of the world have poured all their citizens money and the proceeds of their future taxation into the very economic black hole you and you fellow conspirators created?
No problem
BBC: Brown promises to clean-up banks
Mr Brown told members of Labour's National Policy Forum that there had been "the biggest collapse in the banking system that the world had ever seen". We are exploring all the legal action necessary to recover pension payments from people who received too much Gordon Brown He said: "Our task must be nothing less than to rebuild a financial system where it has failed, and then to create an economy in which banks are no longer serving themselves but are serving the public of this country."
Currency collapse: someone thinking ahead
SCI: Stable Currency Index
I recently became a subscriber of EWI because their direct advice on surviving the looming financial collapse has impressed me (also Techieman recommended them). They have developed this Stable Currency Index. "The SCI blends four major currencies, each selected for stability, into a new, super-stable composite that hedges against extremes of any individual currency in the world." The countries are Switzerland, Singapore, New Zealand and USA. Currently it is only an index but they seem to be working on making it into an ETF and other investment vehicles. Shame about including the dollar though. Alternative to gold perhaps as a hedge against GBP collapse?
Et tu, Brute?
Telegraph: HSBC to launch record $20bn share issue
HSBC is preparing to raise around $20bn (£13bn) from shareholders in a fundraising to be announced alongside its full-year results on Monday.
Now it's the euro's turn for an ugly spell
MoneyWeek: Now it's the euro's turn for an ugly spell
In 2007 the forex market marked down the dollar. Late last year it focused on the pound. Now it seems it's time for the euro to come under the cosh.
The dark side of MEW
Guardian: I squatted my repossessed home
This chap managed to lose his house even though he bought it 30 years ago.
Half a million Lloyds/HBOS customers in negative equity
The Times: Lloyds counts cost of HBOS takeover and property slump as 500,000 customers slip into negative equity
The number of mortgage-holders borrowing from Lloyds Banking Group that are trapped in negative equity surged last year to half a million, the group, which is 43 per cent owned by the taxpayer, revealed yesterday. The bank, which controls 28 per cent of the mortgage market, said that most of these homeowners were customers of HBOS, the bank that owns Halifax and was rescued by Lloyds TSB last month. HBOS, Britain’s biggest mortgage lender, revealed that 381,669 customers, about 16.8 per cent of its mortgage book, owed more than the value of their homes. At Lloyds TSB, 162,000 homeowners, 15 per cent of its mortgage book, were in the same position.
The F-word goes mainstream
FT: Housing market woes wipe out five years of property gains
To my knowledge this is the first article that talks about prices being five-year-on-five-year negative (though I must have missed some). Apart from that, it's just another rehash of the Nationwide press release.
Friday, February 27, 2009
Mandy vs Rogers. Place your bets.
Telegraph: Peter Mandelson rejects 'foolish' claims by Jim Rogers that Britain has 'nothing left to sell'
Sorry, I wouldn't normally post this but it's Friday night and I see some light relief in this article: 'Lord Mandelson rebuffed the accusations from Mr Rogers, the former business partner of George Soros, who has said that Britain has been crippled by the global financial crisis. Lord Mandelson acknowledged that the UK was in the grip of a “painful recession”, but insisted that it would be among the countries best placed to recover.' Sure Mandy. Sure.
Unelected Prime Minister guilty of taking pension for failing BIGTIME !
The Daily Mash: "BROWN REFUSES TO HAND BACK PENSION "
"GORDON Brown last night dismissed calls to surrender his £123,000 a year pension when he is forced to stop being prime minister next June." - It's OK going on and on about £16 million quid (Mr Goodwin's pension fund) but this complete and utter jerk has totally wrecked the economy. Him and his right wing predecessor (now right wing, newly religion changing, earning a fortune in the USm, liar) have done more to damage our economy that all the bankers put together. Their 'light touch' and their idiotic 'let the bankers police themselves' fiasco has meant that we are all up tom-t!t street for at leat a decade, maybe more.
Finally An Article Saying The Fsa Are Considering Limiting Lending To 3.5 Income
Telegraph: Mortgage borrowers face restrictions on income multiples and minimum deposits
An article I have been waiting for for months and finally some common sense seems to be filtering into the system , Lord Turner said: "The issue [is] whether we should regulate maximum loan-to-value or loan-to-income, because actually loan-to-income is a slightly better predictor of whether people get into trouble than loan-to-value. WELL DONE THAT MAN GIVE HIM A GOLD STAR. As I have been saying ALL week now all we need to hear is that the FSA are going to fix 3.5 and 2.5 for 2 incomes and we will know EXACTLY what is about to happen to house prices, and then sadly House price crash will be no more. Sadly only in as much as you have proven such a support through such a dreadful time . Can I just add that on one of the blogs there is an e-petition to sign on this very issue
Destination planet zorg!
CNBC.COM: Half of Bankers Would Quit UK If Bonuses Capped
Half of British bankers would consider leaving the country if a cap were put on their cash bonuses, a survey showed on Friday. The poll by jobs website eFinancialCareers.com found that 49 percent of British-based bankers would consider voting with their feet such a limit to their income were introduced. That figure rose to 71 percent among financiers with six to ten years experience.
Drove its net worth below zero.
Ft: Fannie to draw further $15bn
Fannie Mae said on Thursday it would draw more than $15bn of assistance from the US Treasury after a sixth consecutive quarterly loss – $25.2bn in the fourth quarter – drove its net worth below zero.
Opel to be effectively nationalised - Bye-Bye Vauxhall!
CNN: GM spins off Opel, asks for $4B
Looks like the UK will get the dirty end of the stick as GM seeks to spin off Opel as a separate company with $4 billion government bailout the bulk of which will be from the German government.
Now We've Got Loadsamoney Too!
FT Alphaville: Eastern Europe gets €24.5bn
"Eastern Europe has received its own special bailout after all. Well, not technically a bailout, it comes as “aid” via the World Bank, European Bank for Reconstruction and Development and the European Investment Bank in a bid support the region through its first technical recession since the breakdown of the communist system".
End of the Euro?
Bloomberg: Euro Area Risks Breakup on Bank Woes, Subprime Bear Hayman Says
Feb. 27 (Bloomberg) -- Hayman Advisors LP, the firm that earned $500 million betting on the U.S. subprime mortgage-market collapse, says Europe’s monetary union is about to fall apart. Richard Howard, a managing director for global markets at Dallas-based Hayman, said Germany may opt to shore up its own economy, Europe’s biggest, rather than bail out fellow euro nations such as Austria, Italy and Spain as their banks sag under the weight of bad debts. That might lead to defaults and compel Germany to renounce the euro, he said.
Keeping the housing crash secret
UK Bubble: Council of Mortgage Lenders stops releasing arrears and BTL data
Until last year, it was possible to download data on arrears and the buy to let market for free from the Council of Mortgage Lenders website. Now, the data is restricted to members only. I wonder why they changed their data access policies. Do they have anything to hide, like for example, rapidly rising arrears rates?
Will the banks survive?
CNN: Will the banks survive?
Now the storm is entering an entirely new phase that's potentially even more dangerous: a historic meltdown in the bread-and-butter businesses of credit card, home-equity, and mortgage lending.
Still thinking UK can get away with -2.8%?
CNN: US GDP slides 6.2% on slower spending
Gross domestic product, which measures the output of goods and services produced in the United States, fell at an annual rate of 6.2% in the fourth quarter, adjusted for inflation, according to a preliminary report from the Bureau of Economic Analysis.
Sports global deleverage begins.
BBC: Bank ends Yankees stadium talks
Bank of America and baseball team the New York Yankees have ended talks about a major sponsorship deal at the new $1.5bn Yankee Stadium.
Off with their heads
Guardian: Executive pensions: how Sir Fred Goodwin's gold-plated package fits in
If you thought public service schemes were good take a look at what the execs get, led of course by Fred Don't Shred My Pension. Corruption is with us now.
This will speedup houseprices crashing....
Yahoo: US recession deepens
I am sure they mean depression.........
Almost Caught up Almost
Guardian: Official figures show 15.1% fall in house prices
The average price of a house in England and Wales fell by 0.8% during January and by 15.1% in the year to the end of the month, according to the latest figures from the Land Registry. The official figures show the average house price now stands at £156,753, down almost £28,000 on January 2008's figure.
The Steep Decline of the British Economy
Spiegel Online: The Steep Decline of the British Economy
As the global economic crisis takes hold, hardly any other country has seen its fortunes wane as brutally as the United Kingdom. Once a model economy, the country has been overcome by a deep sense of uncertainty.
Local councils feeling the pressure
Timesonline: Council tax increases: a guide to your area
Local authorities have been forced to cut services and tens of thousands of jobs to keep average council tax rises to 3 per cent this year. A comprehensive survey by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Times published (online) today shows that all local councils have so far kept their rises below 5 per cent to avoid their budgets being capped.
How to Make Money in Credit Crunch
BBC: Ryanair mulls charge for toilets
Sorry, off topic. Irish budget airline Ryanair has said it is considering charging passengers for using the toilet while flying.
Banker lynch mob diverting attention from losses to taxpayer
Daily Mail: Is BBC reporter Robert Peston a government stooge?
Fresh questions have been raised over whether BBC Business editor Robert Peston is being used as a Government stooge during the financial crisis. On Wednesday's 10 O'Clock News, Mr Peston breathlessly reported that Sir Fred Goodwin was already drawing a pension of £650,000-a-year. He said that his pension post was worth a 'handsome' £16million. It was revealed yesterday that Sir Fred can actually claim an annual pension of £693,000. The announcement completely overshadowed yesterday's disclosure that RBS had made a record £24billion loss - the biggest-ever in UK corporate history - and that the taxpayer would be insuring the bank against future losses of £325billion.
New figures suggest negative equity is double what was previously thought
Telegraph: Nearly 4 million home owners are already in negative equity
The calculation is the most gloomy yet, and shows how the property crash has caused serious financial problems for an increasing number of people. Previous estimates suggested that, at most, two million home owners were suffering from the predicament.
Shares aren't cheap - they have much further to fall
MoneyWeek: Shares aren't cheap - they have much further to fall
As stock markets tumble, most people assume shares are getting cheaper. But in fact they're getting more expensive...
Utterly missing the point. Why should *anyone* get a bonus if a company is doing really badly?
BBC 'News': Bank staff deserve bonuses too
She argues that most bonuses are targeted - 75% of her bonus last year was performance related - based on a mix of sales and own her own performance - while the final 25% relied on the bank's performance. Meanwhile, most lower level jobs in the industry are advertised as a package, which is usually a basic salary bonus plus free shares or share incentive schemes as their package.
Fun Online Poll
Pollcode.com: What would you like the government to do?
The options are: "Use taxpayers' money to prop up house prices"; "Use taxpayers' money to build 'affordable housing'"; "Use savers' money to subsidise borrowers"; "All of the above"; (and finally) "None of the above". I'm genuinely interested as to what people think, I do wonder whether the government's ruthless vote-buying policies are actually buying any votes.
NS&I put their tin-foil hats on
NS&I: Grow your own
NS&I is supporting the RHS Grow Your Own campaign. Previously known as Grow Your Own Veg, the campaign encourages people to grow their own fruit and vegetables and highlights the many similarities between growing and saving.
Cheap properties now suddenly seems were expensive
Independent.ie: Suddenly, those overseas 'dream' properties are back to haunt us
Anyone who bought and kept property in Bulgaria was a complete mug and I have been saying that on these pages since before our current collapse.
Gold: still the only serious safe haven
MoneyWeek: Gold: still the only serious safe haven
With demand for investments in gold still surging, its eight-year bull run looks far from over. Fears of currency debasement are growing, making gold look ever more appealing.
US Housing Debate - An Option
Reuters: First 100 days: A fix for the housing crisis?
"In his speech to Congress, President Obama spoke of how the proper response to the economic crisis is not just a matter of immediate fixes, but also an opportunity to make investments that will serve the nation’s long-term interests. The same idea should govern the housing recovery plan. Otherwise, we get nothing more than a crutch when we need a cure. The opportunity before the U.S. government with a housing recovery plan is to set up a new system that will keep us from ever getting to this crisis point again. How? The devil is in the details.....".
Give a dog a bad name and hang him
Reuters: UK says no longer can alter banks' bond terms
"Credit analysts said the Treasury letter was unlikely to reassure the market that the government would not change the ground rules for bank debt in future." Credibility, once gone, is hard to get back. Bank debt is now viewed as liable to original contract default, as the government have established a precedent to "write off contract law", or worse, swapped unilaterally for equity(bank ownership...ugh). No wonder Mervyn thinks even yet more bailouts will be required, as they are playing fast and loose with alternative funding sources. On the plus side, better that somebody other than the taxpayer gets ripped.
To passionately believe in Things That Are Wrong is apparently stronger than reality itself.
STR: Further Adventures in the Quantum Wrongness Field, Economic Crisis Edition
For some reason, we aren't handing the zillions of new dollars we are creating to just anyone. No, Our Leaders know what's best (despite their constant failure in the past) and they have decided to be picky, and to hand most (although not all) of those galactic-sized piles of your money to failed bankers (only some of whom may be guilty of teensy amounts of mortgage f*&%$), But somewhere, in a dark and anxious corner of our minds, we know the truth: hard work and savings are needed to create and sustain prosperity. Constantly going into debt to spend more money than you actually have while closing down productive industries and shipping the work overseas – living like parasites on the savings and labor of other nations – is a sure-fire way to turn a prosperous nation into a poor ones
UK housing has a long way to fall
FT: Short View: US housing
Comparison between US and UK price changes. In US, prices rose 78% above 1995 level; in UK, 200%, but falls still only 20%.
Now the rush to announce QE is understandable
Reuters: UK gilt future falls nearly 2 points on bank plan, supply
People are starting to turn their noses up at government debt. Fortunately QE has already been announced. "There's a very negative feeling for gilts at the moment. We've more than enough supply out there,"
Build for England
Rightmove: Price of Building land
Given the price of building land abroad (see link), shouldn't we release land that that doesn't currently have permission with a max price of £30k per 1/4 acre plot. Each town/village throughout the country should make and always have available 5-10 building plots for owner occupiers to build there own houses. This would have the benefit of bank bailout money being pumped directly back into the economy (instead of being instantly locked up in another depreciating asset) and generate many micro climates of economic activity. In the long run it would also have the effect of making existing dwellings more affordable.
The Central and Eastern Europe region is the sick man of emerging markets. While the global crisis m
Forbes: Will The Economic Crisis Split East And West In Europe?
The once high-flying Baltics--Estonia, Latvia, Lithuania--look headed for double-digit contractions, while countries relatively less affected by the crisis--the Czech Republic,
80% fall in Profit
Telegraph: Lloyds reports HBOS loss of £10.8 billion
"Lloyds also confirmed it's in "advanced" talks to dump toxic loans in the Government's asset protection scheme, with expectations it could put as much as £250bn of debt in the scheme". (Guess who gets the toxic stuff - yeah, its the taxpayer).
A bit exaggerated but good housecrash porn nonetheless
Metro: 5m could slip into negative equity
"Their fall into negative equity has the potential to be a 'mammoth welfare disaster', a group predicted yesterday. It is estimated that 3.8million homeowners are facing a significant decrease in the value of their property compared to borrowings by the end of the year. A further 1.2million are likely to fall into negative equity should house prices drop another ten to 20 per cent as predicted, added researcher GfK NOP after a survey of 60,000 people." I think that five million is wildly exaggerated, I'd expect two to three million by the end of 2009, but I like the way the article says "should prices drop another ten to twenty per cent as predicted".
There will be no quick fix for this recession
MoneyWeek: There will be no quick fix for this recession
This is no normal recession, but a globally synchronised downturn following a huge debt bubble. It's not going away any time soon.
Apparently house prices or banks have nothing to do with the rescession... Blame inflation instead
BBC News: Inflation: the hidden factor behind the downturn
I used to think the BBC was relatively honest overall, with only rare moments of insanity, this article changes my mind...
$521,000: The average pay of Goldman Sachs employees and that includes secretaries
A blast from the past (2006): Independent
Last year, Goldman Sachs paid out $11.7bn (£6.7bn) to its 22,425 employees - around 3,000 of whom are in London. Hank Paulson, the chairman and chief executive, was paid $38m in salary, shares and options - a 21 per cent increase on 2004. An average figure per staff member of $521,000 bursts through a barrier not even breached during the dot-com boom in 1999 and 2000.
Thursday, February 26, 2009
New bank rescue plan called 'exercise in futility'
Market Watch: Calm waters don't last long after Bernanke
Following behind Bernanke, economists and financial analysts appeared before Congress on Thursday expressing alarm that the bank bailout could be more expensive than the Fed or the Obama administration is admitting and might not even work as drawn up.
FSA say house buyers will have to pay 15% deposit minimum
This Money: House Buyers May have to pay 15% Deposit
Finally we are hearing from the FSA . They have had enough of Mr Brown and the mess he has got the country in and are saying minimum 15% deposits.....so let us hear ONLY 3 x's income and as someone has just said, "we will all miss this website"
Greed is good for Goodwin
FT: Goodwin stands firm over £16m pension
"Sir Fred Goodwin, former RBS chief executive, refused to bow to government pressure to hand back some of his £16m pension pot on Thursday, as a row erupted over his claim that ministers approved the deal last year."
Another one bites the dust
Yorkshire Post: Maverick property tycoon forced to call in administrators
ONE of Yorkshire's biggest property developers has gone into administration, blaming "continued difficulties" in the financial sector. KW Linfoot, the firm behind the mothballed Leeds Lumiere which was to be the tallest residential skyscraper in Europe, claimed that banks had "effectively strangled" the business and denied it any opportunity to trade through the downturn. He was one of the pioneers of city living but Kevin Linfoot's multi-million pound empire is now in ruins.
Average property lost 21% from Peak
Telegraph: House prices fall to 2004 levels says Nationwide
Seema Shah, property economist at Capital Economics, said: The sharp drop in prices in February dispels any hopes that the housing market has moved into 2009 on a stronger footing. Indeed, if the average rate of decline seen in the first two months of the year persists, house prices will be more than 30 per cent below their peak by December."
Another 20% fall in house prices predicted
Moneyweek: The Last Gasp for British Consumers
David Wighton said in The Times, the smart money is on consumers eventually giving up the ghost. But perhaps it will not mean the end of life, just the end of life as we have known it. For every end there is a new beginning but perhaps the new one will not include using houses for anything other than homes
Is the Government about to cash strip the Royal Mail pension scheme
Telegrath: Government admits taking advice on cutting public sector pensions
Last paragraph; 'Far more likely is that the Government itself would take the scheme over – and I believe that is what the Treasury may well actually want to do. They would be very keen to take in the billions of pounds of assets held by the Royal Mail pension scheme. This would give the Treasury a huge cash flow boost today and then it will be up to another government to find the further funds to keep paying pensions in coming decades'.
Down Down Deeper and Down
The Economist: Down Down Deeper and Down
Finally someone SPELLING IT OUT at 3 x's income house prices, that have inflated 190% in 10 years have to come down down down or wages have to go up up up. So why am I still reading that Mr Brown will Nationalise ALL the banks if they don't start lending 90% mortgages ? How does Mr Brown, who said at the weekend "no more 6x's income" think people can lend at 3 x's income with a 90% mortgage and anyone can afford anything? Will somebody PLEASE ASK HIM!! So PLEASE will he just say, "look sorry I should have capped mortgage lending at 3x's years ago, we are now all in a dreadful mess but doing anything right now to put more people into debt supporting a mortgage market none of us can afford IS NOT GOING TO WORK. We have to come to terms with what has happened and houses HAVE to drop 50%.
"Interest rate rises needed in the long-term may fall foul of political short-term expediency"
Moneymarketing: 20% chance of Armageddon
PSigma income manager Bill Mott believes there is now a 20 per cent chance of Armageddon for the UK economy. Mott says that the UK economy is now at a long-term inflection and that we can no longer rely on financial services and consumption to drive the economy forward.He says: “We need several years of anaemic growth so that our savings rate can be restored and so that the economy can rebuild its productive manufacturing base. This can only be achieved gradually over a number of years. In our view, there is a good chance that the measures already taken will deliver this readjustment.”Mott says the 20 per cent chance of Armageddon is one of three scenarios, one of which he says is a 50 per cent chance that ‘green shoots’ of recovery appear in the likes of cyclicals and start to rally.
Good news for renters
Guardian: Steep fall in rents as unsold homes flood the market
Glut of unsold properties brings rents down - hooray!
Do you really believe this man?
Ft.com: King prepares for quantitative easing
Mervyn King, Bank of England governor, insisted ...he would not allow ”a great inflationary surge”, as the monetary policy committee prepares to embark on the process of quantitative easing.
Was there insufficient base money?
Cynicus Economicus: No explanation of policy from BoE
The article points out that, unusually, there is a somewhat unsatisfactory veil of secrecy concerning the BoE proposals, in that normally information would be published, whereas the public are currently expected to obtain their information solely from the minutes of the meeting. Although I disagree with some of his assumptions, I like the real world analogies he presents. I have one of my own which explains the current recession which I shall post in a comment. Essentially I blame the expansion of the state sector.
In other words "don't rent because this could happen to you"
BBC 'News': Perils of the defaulting landlord
This is another piece of shameful reporting from the state media. There is a REALLY simple way of preventing this situation - Stipulate in the letting agreement that for the agreement to be binding, the landlord has to pay any outstanding mortgage. If the landlord defaults, they default on the tenancy agreement. The BBC also fails to point out that under the Housing Act 1988, the property must be in vacant possession, so any tenant is entitled to the Notice To Quit period. If they a thrown out without notice, it is a criminal offence, for which the lending institution's principal representative get receive a stint in the slammer. Finally, if the letting agent refuses to credit check the landlord, a magistrate is very likely to view the agent as volunteering their indemnity for the landlord
RBS Gets £13bn, State ownership increases to 84%
Sky News: Darling: 'Taxpayers Will Benefit From RBS'
Chancellor Alistair Darling says taxpayers will benefit from the money the Government has injected into RBS. It has been revealed the Government is inject an additional £13bn into RBS. "We have decided that injecting the capital will be done by purchasing non-voting shares,"the Chancellor told MPs. "This means that the Government could control 84% in economic terms, but the institution will remain as a publicly-quoted company. "This will provide potential gains in the long-term for the taxpayer, and a return to full commercial ownership when the shares are sold and the proceeds come back to the taxpayer." "The challenge today is to provide certainty against the background of a sharply deteriorating global economy," he added.
Why the latest bank loan plan could do real damage
MoneyWeek: Why the latest bank loan plan could do real damage
The latest scheme to 'save' the economy could do more harm than good. Forget throwing money at banks to hand to naïve first-time buyers. David Stevenson suggests a better way to get much-needed finance to struggling businesses, and it doesn't involve subsidising broken banks...
More MSM quoting from Nationwide press release
Telegraph: Average house prices back below £150,000
The only bit of the article that doesn't appear to be directly from the Nationwide press release is this: "The figures are in sharp contrast to ones reported by Halifax for January, which showed house prices rose by 1.9 per cent during the month, although at the time economists cautioned against reading too much into the rise. The Nationwide data also suggests that anecdotal evidence from estate agents showing a pick-up in interest from potential buyers has not yet filtered through into sales."
Government financing and guarantees for illiquid mortgage-backed junk
Infomation Clearing House: It's Time to Break up the Big Banks
Timothy Geithner is putting the finishing touches on a plan that will dump $1 trillion of toxic assets onto the US taxpayer. The plan, which goes by the opaque moniker the "Public-Private Investment Fund" (PPIF), is designed to provide lavish incentives to hedge funds and private equity firms to purchase bad assets from failing banks. It is a sweetheart deal that provides government financing and guarantees for illiquid mortgage-backed junk for which there is currently no active market. What's got Geithner worried, is the fear that the public will see through this latest boondoggle and set off a political firestorm. If that happens, the markets will go into a swan-dive and Geithner's career at Treasury will come to an abrubt end. ~~~~~ meanwhile Darling does a weasel.
The costs are colossal, but the costs of not doing it are also colossal," said Darling
Earth Times: EXTRA: Darling defends Royal Bank of Scotland (RBS) support
London - The British government Thursday defended its renewed large-scale intervention to secure the survival of the Royal Bank of Scotland (RBS) which has announced record losses of 24.1 billion pounds (34.7 billion dollars). Alistair Darling, the Chancellor of the Exchequer, said by offering a massive asset insurance scheme of 325 billion pounds to RBS, the government "recognized the fact that banks need to clean up their balance sheets." The move will enable RBS to separate "toxic" parts of its business from "healthy" core operations with a view to disposing of troubled sections of its business at a later date.
One of Europe's most respected former central bankers says there is a serious threat to the survival of the Euro
Sky: Threat to Euro survival
Karl Otto Pohl, president of the German Bundesbank from 1980 to 1991, gave the warning in an exclusive interview with Sky's Jeff Randall. He said countries
Prices down 1.8% MoM, 17.6% YoY
Nationwide (pdf): "Improving affordability helps buyers"
The average house price lost over £2,700 in value in February. Prices fell 1.8% on the month, after a 1.3% fall in January. The annual rate of decline has increased from 16.6% to 17.6%. From peak, prices have now fallen by over £38,000 (20.5%0 Commenting on the figures, Nationwide spokeswoman Fionnuala Earley said "blah blah blah improving affordability blah blah low interest rates blah blah increase in new buyer enquiries blah blah blah."
Moral Hazardous Waste
Time Magazine U.S.: I Bought an Expensive House. My Bad, Not Yours
"Much as it pains me, housing prices need to come down a lot more for the sake of the country. It's not that the housing market has suddenly gotten sick and needs medicine. It was sick, and it's getting better. Just like $4 gas, Pets.com and Jim Carrey's career, we are undergoing a needed correction."
Alister Darling Statement Soon
4UTV: RBS wrangles over toxic assets insurance
Amid hopes that an agreement could be sealed in the early hours of the morning, the Treasury was urging RBS to sign up to the so-called "asset protection scheme", which it hopes could become a model internationally. RBS, which had originally been expected to insure £150bn of assets, is now expected to put as much as £350bn into the scheme. The bank, now almost 70% owed by the taxpayer, is expected to pay for the insurance - which could cost £10bn - by issuing shares that do not carry voting rights but pay dividends. If it was forced to issue ordinary shares, the cost of the insurance would effectively require the government to take full control of the bank, a situation Chancellor Alistair Darling made clear yesterday he wanted to avoid. ~~~~~ WEALTH EXTRACTION
Hooray, the DCB is over
BBC: House prices down another 1.8% in February
House prices fell by 1.8% in February as confidence in the UK property market failed to pick up, according to the Nationwide building society. The lender said that the average UK property has fallen in value by 17.6% over the past 12 months, to £147,746.
Another nail in the BTL coffin
BBC News: 'Rents down' amid flooded market
Many BTLers were so indebted with their 'portfolios' that the very fact that could no longer liberate equity from them by re-mortgaging has forced them to default on their loans. But then there were those who had been a little more cautious, and thought they could ride out the storm. Many of those will now be crucified, as rents fall and voids increase...
What is this 'Debit Card' you speak of?
The National: Credit card users offered a debt-free alternative
Here is the part where a debit card is explained in simple man's terms: "They can be used for most kinds of transactions and cash withdrawals from ATMs, but unlike credit cards, which rely on borrowed money, they function like electronic chequebooks by drawing only on whatever cash is available in current accounts." This is the funniest thing I ever read. I have been bashing my head on a wall for a long time asking, "why, oh, why can we only spend money on credit when I have it in my bank?"
Why, Why did it take so long?
Scotsman: Estate agents included in OFT study of homes market
ESTATE agents are to come under Office of Fair Trading scrutiny after the watchdog launched a study of the home buying and selling market yesterday.
The real supply and demand.
BBC: 'Rents down' amid flooded market
The cost of renting a home has dropped as frustrated property sellers have been flooding the market, according to two separate surveys.
Wednesday, February 25, 2009
Anybody got a cricket bat?
Daily Telegraph: OFT orders debt collector to stop sending threatening legal letters
The OFT action against 1st Credit comes amid wider concerns that a number of debt collectors are using aggressive, intimidating practices to recover money. A spokesperson for 1st Credit said: "We have since late 2008 made improvements in our training and processes in all of the areas highlighted and suggested proposals in response to the OFT requirements which were accepted by them." Stop using letters and use cricket bats! People get angry when there money is not returned.
Fred 'The Shred' £650k pension at the age of 50
BBC 'News': Huge pension for former RBS boss
Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland, is already drawing a pension of £650,000 a year, despite only being 50. Not bad when your firm is announcing a £28 billion loss
RBS ends sponsorship.
BBC: Williams F1 hit by RBS cutbacks
The Royal Bank of Scotland is to end its sponsorship of the Formula One team Williams as a result of the economic downturn, BBC Sport has learned. The partnership, which began in 2005, will conclude when the current contract finishes at the end of the 2010 season. The move is part of RBS proposals to cut its funding of British sport by a massive 50% by 2010.
US bank nationalisation isn't far away.
Bloomberg: U.S. Sets a 6-Month Deadline for New Bank Capital
Feb. 25 (Bloomberg) -- The government set a six-month deadline for the biggest 19 U.S. banks to raise any new capital deemed necessary after a mandatory review of their balance sheets. The regulators will complete their so-called stress tests by the end of April, which will identify how much extra cushion each bank will need, the Treasury said today in Washington. Lenders will have six months to raise private capital or accept government funds and the conditions that come with it. “While the vast majority of U.S. banking organizations have capital in excess of the amounts required to be considered well capitalized, the uncertain economic environment has eroded confidence in the amount and quality of capital held by some,” the Treasury said, announcing guidelines for new bank reviews.
Let's use CPI on the way up, RPI on the way down
Telegraph: UK needs 'shovel-ready' jobs, says Blanchflower
The UK should spend £90bn on 750,000 new "shovel-ready" jobs to stop the unemployment rate rising to 10%, according to Bank of England policy maker David Blanchflower. Professor Blanchflower also questioned whether the benchmark CPI index was the right tool for the MPC to measure inflation, because it does not take house prices into account. He suggested that including house prices could have helped the MPC to justify rate cuts sooner, amid growing evidence that the economy is facing the worst downturn for many decades.
Something fishy about inflation
Reuters: Petrol prices rise more than inflation
I find it hard to accept that in this time of collapsed global demand that fuel, of all things, is rising more than the stated inflation figures. I worry about a sudden and unpleasant end to deflation, and a discovery that actually inflation was worse. I looked to see if the UK basket of goods has been moderated recently and I can't find anything, however, if car manufacturers are running down their production facilities, then people are -not- buying cars and so the price of cars for example, should receive a lower weighting than previously. Zimbabwe didn't include flat screen hd tvs in their basket of goods because nobody was buying them. Similarly now, most expensive goods are being studiously avoided by the consumer (..cont..)
Even Robert 'The man who broke Northern Crock' Peston is gobsmacked !
BBC 'News': FSA admits huge mistakes
Peston's take on today's Treasury select committee meeting with the FSA. I too, watched with a gaping mouth, catching flies, at the absolutely inadequate and quite frankly, moronic way that the FSA was being run. It's like the police saying "look we only try and catch criminals when we see someone running away with a shotgun and a swag bag!". "...It wasn't apparently proper for the FSA to challenge banks on whether they should be growing so fast in the mortgage market, or loading themselves up with collateralised debt obligations manufactured from toxic subprime loans, or funding themselves to an ever-increasing extent from the sale of mortgage-backed securities." - Not me guv', 'onest I never touch securitisations.
When is this clown going to disappear?
BBC News: Rate-setter wants £90bn stimulus
The British economy needs a massive economic stimulus package of up to £90bn, according to Bank of England rate-setter David Blanchflower.
Bodycote cuts jobs worldwide
Manchester news: Bodycote cuts jobs worldwide
CHESHIRE-based engineering firm Bodycote International said it was cutting about 1,500 jobs and closing or combining 31 sites to save £18m a year.
Leeds developer K W Linfoot has gone into administration.
Contract journal: Developer goes down fighting
Linfoot was behind the Lumiere scheme in Leeds and was a main driver in the regeneration of the city centre. The statement read: "City centre properties remain popular and this is reflected in the continuing demand for rental properties, rising rental values and 90 per cent plus occupancy rates. ***You think, if demand was that high why did you go bust?*****
Wonder if they will ge Tescos to sell free range chickens!
CNN: Angry shareholders demand change
NEW YORK (CNNMoney.com) -- At long last, angry shareholders may finally have their day.
Coming soon to a country near you
CNN: Bernanke: Bail out bad borrowers, too
NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke said Wednesday that the embattled housing market has crippled the economy, and at-risk homeowners need a bailout - even if they knew they couldn't afford their home in the first place.
FSA - "there was political pressure to be less intrusive when looking into banking organisations"
FT: FSA admits regulation of banks was flawed
The Financial Services Authority's (FSA) "philosophy" of regulation which saw several banks fail was flawed, the chairman of the regulator admitted today (25 February). Giving evidence at the Treasury Select Committee this afternoon, Adair Turner, the chairman of the FSA said while there was competent execution, "in retrospect" the style of regulation was not.Lord Turner said that prior to the banking crisis, there had been political pressure to be less intrusive when looking into banking organisations. As a result, he said a style of regulation had developed where it was the FSA's role to look at institutions structures and systems as opposed to probing its business strategy.
This statement also can be used in the UK...
CNN: Existing home sales lowest since '97
"Another false dawn? That's what December looks like, considering the dismal performance of the existing home market last month," Larson wrote in a research report. While tight credit and waning consumer confidence continue to depress home sales, the biggest challenge facing the housing market is unemployment, Larson said. "If Americans are worried they won't have a job next month, next quarter, or next year, you've got a real problem," he said. "It doesn't matter if mortgage rates are 3% or 8%. People just aren't going to buy many houses." To top of page
The numbers tell the story. Art Capital expects to make about $120m in loans against art this year
Guardian: Annie Leibovitz pawns rights to all future work
Rothko and Warhol among works offered as collateral as recession-hit wealthy using art to raise cash. The Hedge fund version of pawning the family silver.
Land prices in big cities crumbling
Japantimes: Land prices in big cities crumbling
The figure suggests the global economic downturn rooted in the collapse of the U.S. housing market and the collapse of U.S. securities house Lehman Brothers Holdings Inc. sent land prices diving, observers said.
Even the neighbours are worried about us
Bloomberg: EU Officials Concerned About Risks of Pound Drop
Bloomberg obtained a document, which was prepared ahead of the Feb. 14 Group of Seven meeting in Rome which stated - "the pound’s "very rapid” drop “raises questions about the financial stability of the British economy,”. The currency’s weakness “is a source of concern for the euro area.”
Bubble economics.
CNBC: The Next Economic Bubble To Burst? Take Your Pick
The next economic bubble is on its way—if it's not already here, analysts believe. The problem is, there's no clear consensus on what it will be or when it will hit. But there is a feeling that another crisis is about to burst. And as analysts debate over which bubble will break, they also differ on the impact it will have on the economy. "Bubbles are neither good nor bad," says Ed Greback, Chief Executive Officer for Tempus Advisors. "They are simply a normal market reaction to freely available funding or lack thereof."
Me Thinks Your Business Model may have relied on a Wing and a Prayer!
PropertyWeek: KW Linfoot goes into administration
The company behind ambitious plans for Lumiere in Leeds, Western Europe’s tallest residential building, said it had been hit by the difficulty in securing debt finance and the reduction in people completing the purchase of apartments in its schemes....mmmm...are you sure its nothing to do with the fact that every metropolitan city is drowning in flats and now selling at up to 50% below "market" value!!
How far will stock markets fall?
MoneyWeek: How far will stock markets fall?
After a brief rally into 2009, the markets have ground lower. But they are now at key technical levels. A breakdown from here and things are going to get even nastier – with uncomfortable parallels to the 1929 crash.
Boom & Bust officially re-instated
BBC: UK economy slide size confirmed
The UK economy shrank by 1.5% in the last three months of 2008, official figures have confirmed, unrevised from the initial estimate issued in January. But the data showed a 0.7% drop in the previous quarter, from the 0.6% fall previously reported. This confirms that the widely accepted definition of a recession - two consecutive quarters of negative economic growth - has been met. It is the first time the UK has entered recession since 1991.
Barratt Developments headed the same route as Barratt Shoes?
BBC: Barratt loss on house market woes
UK housebuilder Barratt Developments has reported a loss of almost £600m in the second half of 2008 after having to write down the value of land it owns. It reported a pre-tax loss of £592.4m from a £192.4m profit a year earlier. Though it said there were "some signs" of increased activity in the housing market, it added mortgage availability was hampering demand for new homes. The results came a day after rival Redrow also said it had fallen from a profit to a loss in the same period.
Crisis averted, it's alll over, back to normal
Times Online: Obama tells America: 'We will rebuild, we will recover'
President Obama declared today that America faced its "day of reckoning" in a prime-time address to Congress in which he also promised an anxious nation: "We will rebuild, we will recover, and the United States of America will emerge stronger than before."
Liar loans
Daily Mail: Pensioner squatting in her own £2m home says she will 'fight to stay'
Aged 71 and the daughter of a millionaire property tycoon, she's not your average squatter. But Rosalie Reeves-Fisher says she has no choice. The spinster, who has never had a job, inherited her £2.2million home from her mother. But a mortgage company evicted her when she was unable to maintain payments on a £1.2million loan. Miss Mason, who was a joint borrower on the self-certification mortgage, listed her income as £1million. But although an accompanying note made it clear that she had not earned anything in the previous two years, this was not questioned by lenders. At the height of the property boom, in 2005, lenders were prepared to overlook her lack of steady income. Miss Reeves-Fisher has vowed not to leave and plans to sue the mortgage firm for reckless lending.
Editor at large of Country Life talks the market up
The Times: You won't be the only one to spot a bargain when the market recovers
"It is better to buy in a declining market than a rising one". No it isn't. It is better to keep your money under the bed than in a large single highly leveraged asset that is falling in value by 1-2% a month. Also there will be no hurry when the market finally turns. In the 1990s the market fell for 3.5 years, then was flat for another three years. This time the bubble has been much larger, so the collapse and turnaround will likely take longer too.
Babygloomers bailing out their kids
Telegraph: More than half of parents give almost £12,000 to their children
The research, which questioned almost 6,000 adults, also reveals that almost half of all parents with children aged 16 plus that have already given money to their children are expecting to have to dig deeper into their pockets and give them more in future...Nearly a quarter of adult children or grandchildren are using or have used parental handouts to fund their day-to-day living expenses or spending money, the research said..."It's questionable as to whether the current younger generation of adults will ever learn the necessary savings habit if their parents continue to bail them out in this way" Mr Greig said.
Economy saved
Telegraph: RBS and Lloyds 'will pledge to increase mortgage lending by £40bn'
The two banks have agreed to increase loans to .... £40 billion ... in return for about £500 billion of taxpayers' assistance. Is this not what got us into trouble in the first place - disconnection between those arranging finance and those accepting the risks
Any rational person could be forgiven for thinking that this whole edifice of illusion will collapse
BBC: Japan exports drop 45% to new low
"Any rational person could be forgiven for thinking that this whole edifice of illusion will collapse" greytornado HPC 25-02-09 ~~~~ Japan also had a trade deficit of 952.6 bn yen ($9.9bn; £6.8bn), the lowest figure since records began in 1979. The demand for Japanese cars in particular dropped by 69%. Demand for electronics and other goods has also slumped as global economies and consumer spending contract, pushing Japan deeper into recession. Serious crisis Japanese exports to the US, which is at the centre of the slide, fell nearly 53% in January while shipments to the European Union retracted by 47%, Japan's finance ministry said.
Repeat ad nauseum: derivatives are nil sum...derivatives are nil sum ......
Market Ticker: AIG Update
Let me be perfectly clear - I don't care who wants to trade with whom, provided that I as a taxpayer am not called to bail them out when they fail to supervise their positions. Since it is now clear that none of these firms will (or can) perform their own supervision of these positions there is only one answer that will work to prevent this sort of systemic damage: The trading of CDS contracts off a regulated exchange sans a central counterparty must be banned.
Downfall - House prices crash
YouTube: Gordon Brown's downfall - House prices crash
It would be even funnier if it wasn't so true.
Tuesday, February 24, 2009
Niall Ferguson..Harvard Prof, tv economist and prophet of doom
Report on business: There will be blood
Harvard author and financial crisis guru Niall Ferguson has landed with a thud in Ottawa, spreading messages that could make even the most confident policy makers squirm. The global crisis is far from over, has only just begun, and Canada is no exception, Mr. Ferguson said in an interview before delivering a presentation to public-policy think tank, Canada 2020. Policy makers and forecasters who see a recovery next year are probably lying to boost public confidence, he said. And the crisis will eventually provoke political conflict, albeit not on the scale of a world war, but violent all the same. “There will be blood.”
Savers are no longer required thank you
Telegraph: Bank of England gives clearest indication of zero interest rates
The Bank of England has given its clearest indication yet that interest rates will have to be slashed further towards zero as the recession intensifies. Andrew Sentance, a member of the Bank's Money Policy Committee, said that "more stimulus" would be needed to avert the risk of Britain sliding into deflation - with prices falling as they did in 1930s America. The warning comes with interest rates at only 1 per cent, and will be taken as a sign that the Bank is preparing to cut them even further in the coming months.
75% drop from peak
Telegraph: Property freeze is worst since 1950s
A record low of 43,000 homes worth £40,000 or more were sold in January, according to figures published by HM Revenue & Customs. At barely a quarter of the total activity when the housing market was booming, this was the lowest number of transactions since monthly records began in 2005.
Living in another world
Independent: ‘We need a pay rise’ bankers demand
Senior City bankers are demanding pay rises of up to 10 per cent this year to make up for the clampdown on the bonus culture, a senior City head-hunter has told The Independent. Shaun Springer, chief executive of Napier Scott, which specialises in recruiting senior bankers for posts in Europe, Africa and the Middle East, said bankers were attempting to rebalance their financial packages in favour of higher salaries. And he predicted that, over the next few years, city salaries could more than double to compensate investment bankers.
The cost of bankruptcy protection on German debt has reached an all-time high
Telegraph: German CDS debt spreads hit record as economy crumbles
“The entire Landesbanken system is rotten,” said Hans Redeker, currency chief at BNP Paribas.”Credit will collapse if they are allowed to fail so they have to be recapitalized. But it is not just the banks in trouble: Germany’s entire export structure has been hit drastically.” “German CDS spreads are going massively higher. German bank exposure to Eastern Europe, although less than Austria, is still very high. The markets have started to price in a de facto bail-out of Eastern Europe and they think that Germany that will have to pay the bill,” he said.
Nationalisation unnecessary
MarketWatch: There are no zombie banks, Bernanke says
Despite operating in a regulatory grey zone, the nation's largest banks are not "zombies," Federal Reserve Chairman Ben Bernanke said Tuesday. The term "zombie" has become popular to describe a bank that exists but is only alive because of government support. The term was first used to describe Japanese banks during the "lost decade' in the 1990s. Just how damaged the banks are remains a mystery, even though the government has pumped billions of dollars into them in return for partial ownership stakes. The government is going to begin the process Wednesday to uncover exactly how big the "hole" is at the banks and has agreed to provide additional capital to fill the gap. Just how much capital is needed is also a mystery.
Equation: a mathematical statement that two expressions are equal
Reuters: Citigroup sub CDS trades upfront, banks weaker
Sellers of credit protection in the credit default swaps market were asking to be paid on an upfront basis to insure Citigroup's subordinated debt on Tuesday, traders said, a sign of greater perceived risks at the third-largest U.S. bank.
Why is the Government using our money to bribe a bank to puff up a new house price bubble?
Daily Mail: Why is the Government using our money to bribe a bank to puff up a new house price bubble?
"This Government’s economic policy has proved a one-trick pony - the only ‘success’ Ministers understand is a debt-fuelled consumer and housing boom, and to return to that land of lost content they will throw around any amount of our money."
Glubberment in trouble
Telegraph: Creditors fear new losses on Northern Rock bonds
Apparently retrospectively rewriting bond contracts has been noticed."Bondholders, who have £12bn in Northern Rock, have been spooked because the Government tore up the rule book on traded debt on Friday by unilaterally rewriting creditor contracts with Bradford & Bingley to delay payment of both interest and capital." Imagine turning up with your bit of scrip and asking Darling for some cash "My scrip says here you owe me a million mate", and then he whips out a biro and strikes out the offending line... Thank the Lord we will at least have stability as our economy crumbles.
There have been occasions when the couple have gone several days without eating.
OpedNews: America's Most Desperate: Why 35.5 Million People Are Going Hungry
Wyoming resident Mary sets out from her home everyday to collect discarded wooden pallets. Despite debilitating pain from spinal arthritis, she then uses an axe to chop them into firewood. Like many senior citizens across the country, her social security payments do not cover her medical expenses, or her household and fuel expenses. Mary, who is also diabetic, visits the Salvation Army Food Pantry in Casper for a food box. via sott
US House Prices Slip Again!
Bloomberg: U.S. home prices fall at record pace, consumers fret
U.S. home prices plunged at a record pace in December and consumer confidence hit a new low in February, data showed on Tuesday, as Federal Reserve Chairman Ben Bernanke warned the recession could extend beyond this year.
Going Down
CNNmoney.com: Home price drop is record in S&P Case-Shiller index
NEW YORK (Reuters) – U.S. home prices plunged at a record pace in December and consumer confidence hit a new low in February, data showed on Tuesday, as Federal Reserve Chairman Ben Bernanke warned the recession could extend beyond this year. Good news for those like me still looking. But I wish someone would have told all the vendors around my neck of the woods.
Is old money propping up the economy
Telegrath: Savers withdraw record amount from banks
British Bankers' Association says that customers withdrew £2.3bn in January, the biggest drop since records began. Bankers have their own version of where the money is going but I think it's probably being spent before it's worth less or being used to prop up falling incomes.
We Live In Non-linear Times The Classic Economic Models Do Not Apply
Ananova: Strict Financial Regulation Urged
Can anyone offer a Dummies view of "non-linear times" . President of the European Central bank said "We live in non-linear times - the classic economic models and theories cannot be applied" Predictions I assume require deterministic / linear / analytical thinking. Non- linear I assume takes time out of the equation along with deterministic linear analysis and predictions because non-linear times are linked with systems theory which is about WHOLES not fragmented parts. If a butterfly can cause a hurricane etc non-linear times imply conditions far from stability so what do "non-linear times" mean with regards the way we live our lives, the values we hold and where we invest our energy? Presumably proppping up a housing market for fear of the chaos that might ensue is predictably doomed
BoE can't be telling the whole truth about the gilt buyback
GB Eggertsson: How to fight deflation in a liquidity trap: Committing to being irresponsible
This pdf explores the various ways that the government can avoid deflation. There were some posts about the BoE going on a buyback of gilts which is still suggested in the media. But this article suggest that "open market operations in -any asset other- than bonds eliminates deflation..". Anyway there a number of interesting points in this, perhaps one that isn't so obviously stated is that government debt won't be reducing in the future, and gilts are going to come down in price and up in yield. Further, the intervention would ideally be against assets or foreign exchange. Foreign exchange (as deliberate devaluation) is out, which leaves assets. So asset holders (banks) could be looking at an unfair transfer of wealth away from the general population (-over- and above default covering).
Forensic Underwriting - when is 'enough' too much?
Irish Mortgage Brokers - Blog: Forensic Underwriting
The hardening of credit criteria in Ireland is only one facet of the restrictive flow of lending, another is the increasing evidence we are seeing of 'forensic underwriting' where lenders are looking deeper and deeper into applications before giving approvals. While prudent lending is to be championed, going too far is not. The article talks about some of the factors involved.
Taxpayers may become liable for £500 billion worth of bad loans and investments made by RBS and Lloy
ITN via Yahoo: Taxpayers may become liable for £500 billion worth of bad loans and investments made by RBS and Lloyds Banking Group.
Chancellor Alistair Darling is set to wipe away bad assets in the banks to free up cash and encourage them to start lending again. This means £500 billion worth of bad loans and investments made by the banks will disappear - the burden of which lays firmly in taxpayers' pockets.
Third Time Lucky for Soros Predictions?
Bloomberg: Soros Says Crisis Signals End of a Free-Market Model
Billionaire investor George Soros said the current economic upheaval has its roots in the financial deregulation of the 1980s and signals the end of a free-market model that has since dominated capitalist countries. Liberalization of the financial industry begun by the Reagan administration has led to a series of crises forcing government intervention, Soros told economists and bankers at a Feb. 20 private dinner at Columbia University in New York. The global recession, triggered by the collapse of the U.S. housing market, has “damaged the financial system itself,” he said.
Bankers ask for 10% wage increase following lost bonuses
Evening Standard: Bankers 'asking for 10 per cent rises to make up for lost bonuses'
BANKERS are seeking up to 10 per cent salary rises in the wake of the clampdown on bonuses, a City headhunter said today. He predicted that salaries could double in the next few years as the excessive bonuses of the Nineties are withdrawn. "We are looking at a much bigger emphasis on salary rather than commission in future," he said.
More housing market props being assembled
Mortgagestrategy: MPs call for tough sanctions on repossessing lenders
Lenders that repossess too quickly should face tough sanctions from the government, a government committee has recommended. A report from the Communities and Local Government Committee entitled ‘Housing and the Credit Crunch’ argues that lenders’ attitudes and behaviour towards repossession should be closely monitored by government. MPs are calling for more effective sanctions for lenders that do not comply with repossession guidelines.
City fraudsters are worse than terrorists, says former DPP
Mail online: Worse than terrorists
City fraudsters cause more damage to society than terrorists or drug dealers and should be treated more harshly, the former head of public prosecutions warned yesterday.
This is without question a depression
Cnn: Stimulus: Can it feed the hungry?
"We're in the midst of a perfect storm: We've received budget cuts, we've seen an increase in the number of people coming in, and we've seen the cost of food going up," said Taylor, senior director of Community Kitchen, a food pantry and soup kitchen run by the New York City Food Bank.
In england they bail them out instead...
Yahoo: Fraud Squad Raids Anglo Irish Bank HQ
The raid followed remarks by Transport Minister Noel Dempsey yesterday in which he accused those involved in wrongdoing at the bank of engaging in "economic treason".
Brown's version of events
HM Government: The credit crisis - how did we get here?
In America people were encouraged to buy homes with cheap credit and low starter interest rates, but salespeople made no proper assessment of what level of lending they could afford to repay. As US house prices fell and the US economy slowed the number of people defaulting on their mortgage started to rise, and once other lenders realised that was happening, the system started to panic, as everyone was trying to work out how many other risky assets the other banks held.
Results of recession poll
Yahoo: Results of recession poll
interesting to see most people think it will last 2 years
An insider's story on banking culture
Times Online: How the lust for money powers the City
Not strictyly about housing, but the mentality behind the boom -- " I once tried to block a large derivative deal because the maths didn’t make sense. It just wasn’t going to make enough profit to justify the 30 years of credit risk it was going to leave on the balance sheet. But the head salesman, who was behind the trade, would be paid his bonus in one year, not 30. Needless to say, he disagreed with my analysis. "
Laughably desperate
BBC 'News': Mortgage approvals up in January
Tucked away in the article is the paragraph "Another effect of the low Bank Rate was a £2.2bn fall in personal deposits in January. The BBA suggested that this was due to people moving their savings from ordinary savings accounts to alternative assets which offered bigger returns."
Northern Rock’s revival won’t kickstart the property market
MoneyWeek: Northern Rock’s revival won’t kickstart the property market
Northern Rock is back from the dead and being unleashed on the public once again. But this latest attempt to revive the housing market won't work, and prices will keep falling for some time.
Comedy Club Chief February 2009 offering
FT: Assetz reveals increase in foreign enquiries
Property investment company Assetz said it has seen a 55 per cent surge in enquiries from overseas investors wishing to purchase UK property.It said “swathes of investors” from Europe and the Far East were looking at UK residential property with a long-term view. Stuart Law, chief executive, said: "Despite the falling property market, investors still recognise London in particular as one of the most desirable places to own property in the long-term, with the supply/demand imbalance set to support a recovery in prices.”
Buried in the Business section
Guardian: N Ireland house prices down 28%
Northern Ireland – which until recently had the fastest growing prices in the UK – is experiencing a sharp drop in the value of property. House prices fell 28% over 2008, according to a University of Ulster/Bank of Ireland survey released today – one of the worst drops in property values since the early 1980s. The survey showed house prices down across the board, with traditional family homes taking the biggest hit. Properties which saw their values slashed included detached houses (down 27.3%), semi-detached houses (down 26.4%) and detached bungalows (down 34.9%).
Apparently the whole country is confused not just me
Mail online: Labour's contradictory advice has evoked a sense of panic - and fuelled the very instability it is trying to remove
Does anyone know what sensible means anymore. At last someone confirming that I am not the only one that is confused. The past week the Bank of England / Gordon Brown /FSA have all said there must be a cap on mortgages and no more 6 x's income. Yet at the same time Gordon Brown has threatened lenders who need financial help saying that the government will not help unless they return to irresponsible lending, 90% mortgages to first time buyers. So if not 6 x's income what does the BOE /Mr Brown / FSA consider sensible lending? At what level will Northern Rock give these 90% mortgages to first time buyers? The median I believe is 3.35, so what are sensible lenders lending currently does anyone know?
AIG may have lost $60bn in 4Q'08.
Reuters: AIG in talks with U.S. government, sees $60 billion loss
American International Group Inc, rescued twice last year by the U.S. government, is asking for more aid and bracing for a fourth-quarter loss of roughly $60 billion, a source familiar with the matter said. It would be the biggest loss in a quarter in corporate history. The $60 billion would exceed Time Warner's $54 billion single-quarter loss in 2002 and dwarf the $24.5 billion loss AIG posted in the third quarter, when the government increased its rescue package for the insurer to about $150 billion. By contrast, two analysts polled by Reuters Estimates have forecast on average a net loss of $5.46 billion. ** $5bn, $60bn what's $55bn between friends nowadays?
Lloyds gets different kind of bailout in exchange for lending promises
Telegraph: Lloyds in lending deal with Alistair Darling
Alistair Darling is set to scrap the £480m annual interest bill charged to Lloyds Banking Group if the bank promises to make billions of pounds in extra mortgages and loans available to customers, the Financial Times has reported. The chancellor is prepared to convert £4bn of government preference shares – which carry a 12pc per coupon – to ease financial pressures on Lloyds and as part of a wider deal to boost lending in the economy, the report said, citiing unnamed sources.
Planning applications were down 16.5% in 2008 from 2007 levels; fee income just dropped 1.5%.
The Planning Officers Society (POS): Further Evidence by POS of Reduction in the Submission of Planning Applications and Fee Income
The Planning Officers Society (POS) has added further responses to its previous analysis of the reduction in the number of planning applications and also included statistics on reductions in fee income. 65 local planning authorities have now provided data. Whilst the average drop in the number of applications received is 18.8% they range from 40% to an increase of 1.1%. For fee income the average reduction is 16.3%, ranging from a massive 50% to an increase of 27%.
Poor Returns in Housebuilding
Times: Redrow house sales halve as downturn deepens
"Redrow added to the gloom surrounding the housing market this morning after revealing that sales of its houses halved in the last six months of 2008. The number of completed house sales in the period was 1,042, down from 2,111 over the final six months of 2007".
It's not nationalization, it's protecting the taxpayers' interests
KX News: Harry Reid: Government Takeover Of The Banks Isn�t Really Nationalization
So don’t you dare call it that. Senate Majority Leader Harry Reid said he supports efforts of the federal government to dramatically expand its stake in Citigroup, but wants people to back off from the dramatic rhetoric. �It�s not nationalization, it�s protecting the taxpayers� interests,� Reid (D-Nev.) told MSNBC�s Morning Joe program on Monday. That the government is now going to be holding stock in at least one private company is bad enough. But to have someone like Reid tell us that what’s happening isn’t really happening is just plain…Orwellian. ~~~~ and meanwhile, here in the UK we're nationalising banks and privatising the Post Office ! yeah right. Now that's what I call Orwellian.
Big brother is getting hacked off
Bbc news: Blears attacks political bloggers
Political blogs are fuelling a culture of cynicism about politics, communities secretary Hazel Blears has claimed.
New Yorkers the economy and derivatives
Village Voice News: What Cooked the World's Economy?
It's been a tough century so far: 9/11, Iraq, and now this. At least we have a bright new president. He'll give you a job painting a bridge. You may need it to keep body and soul together.
Pity it's Toynbee
Guardian: Owners must be weaned off the house-price drug
House prices are still far too high - they are only back to about 2006 levels, still crazy money. Prices need to fall further to regain any reasonable multiple of people's incomes. But every time prices fall, another round of bad debts hurt the banks' balance sheets and the taxpayer has to pump in more. The nation is still deeply dependent on house prices rising for ever. We still live in a bubble economy, with no way to live except by reinflating it. The state itself has been mainlining on the house-price drug, as addicted as the happy home-owners. Please can we have our bubble back, clamours just about everyone. The 70% who own homes and those who dashed into buy-to-let property yearn for the magical unearned wealth that came from nowhere.
Monday, February 23, 2009
It's all going to be great from now on - Right?
SKY: American Shares Plunge To 12-Year Low
US shares have plunged to a 12-year low after President Obama announced plans to prop up America's crippled banking system. Shares savaged in New YorkThe Dow Jones Industrial Average sank 250.73 points (3.40%) to 7,114.94 at the closing bell, breaking its November bear market low and hitting the lowest level since May 1997.
Loan rates
Bloomberg: Geithner Bad Bank Alternative May Rely on Loans to Hedge Funds
Treasury Secretary Timothy Geithner’s financial-rescue plan may be doomed if he doesn’t offer low-cost loans to hedge funds and other investors to help them buy toxic assets weighing down bank balance sheets. Meanwhile, adverts for card APR's on the HPC homepage are a wopping 34.9%.
Our kids are knackered...
BBC: Taxpayer may get £500bn liability
Taxpayers may become liable for £500bn worth of bad loans and investments made by Royal Bank of Scotland and Lloyds Banking Group, the BBC has learned... BBC business editor Robert Peston says that if the deal is completed it will take the total support by British taxpayers to the banks to £1.3 trillion.
Give it a stress-test, quick.
New York Times: A.I.G. to Seek More Government Aid
The American International Group, the battered insurance giant that is now effectively majority-owned by the federal government, is in talks to receive more government aid as it prepares to record one of the biggest losses in corporate history. A.I.G. could take as much as a $60 billion hit when it reports earnings during the next week. It expects to disclose losses across a wide variety of holdings, from commercial real estate to credit default swaps, the private contracts that helped lead it to the brink last fall.
And who's going to pay for that?
Bloomberg News: U.K. Should Build Homes to Escape Recession
The U.K. government should build public housing to help the economy emerge from the recession, a group chaired by Bank of England policy maker Kate Barker said. Funding the construction of 100,000 new homes over the next two years would save 30,000 jobs and prevent a shortage of housing supply from inflating property prices in the future, the 2020 Group said in London today.
Branson still waiting to swoop on bargain priced bank
Bloomberg: Virgin's Branson Sees Expansion Into Mortgages, Banking
Video interview with Branson on his Virgin Money plans.
Scandalous!!!!!
The Times: Northern Rock to pay bonuses despite £1.4bn loss
"Northern Rock crashed to a £1.4 billion loss in 2008, the state-owned bank revealed today and warned that the number of mortgage customers getting into difficulties was rocketing. But senior staff regarded as essential to the company's future will still receive bonuses for the year, it said."..........If you have the right job you can get away with anything
London landlords being hit by a fall in rental income
Mortgagestrategy: Lack of overseas tenants pushes down London rents
London landlords are being hit by a fall in rental income as the numbers of applicants from overseas declines, figures from Hamptons International reveal. The company has reported that the number of overseas applicants looking for a property to rent in London has fallen by 20% in the last six months. Prime areas of London including Tower Bridge, Kensington and Knightsbridge have been hardest hit by the fall-off in overseas tenants, with rental prices over the last six months down by up to 16%.
Stick this in your pipe and smoke gordon
Yahoo: Vodafone To Cut Hundreds Of UK Jobs
Vodafone has seen conditions worsen in the UK and other key markets as the recession has deepened, hitting sales of handsets.
Even the BBC put the word 'recovery' in quote marks now
BBC 'News': Brown launches 'recovery' website
This desperate man and his desperate government are scraping the barrel now. The new website http://www.realhelpnow.gov.uk/ is just another vehicle in his propaganda and justification campaign. I am seriously narked now. This country and it's politics is really going downhill faster than the house price index. I hope that he and the liar Blair Naff Off and leave the country as soon as we get the chance to vote them out. Dispicable, Desperate, Dirty and Down-right Dreadful. Even the BBC, Peston, the broadsheets, most media and newspapers think this man and his perty are a joke now! The Party's over Crash, just give up and go away!
US$668 trillion (gross) or about 15 times the size of the world economy
The Star: Mystique of global crisis unravelled
From the article: The entire derivatives market is very large. Latest estimates point to US$668 trillion (gross) or about 15 times the size of the world economy. Their underlying worth is about US$15 trillion, slightly larger than the US gross domestic product (GDP). Now if deleveraging is taking place, why is this figure growing?
Robbing your granny's gold teeth
FT Alphaville: The gold tooth indicator
Gartman, meanwhile, seems convinced of further downside to come. His reasoning? The rush of “cash for gold” type commercials on TV. As he explains: "Perhaps from an anecdotal perspective, one thing has our interest above all else: the commercials on television recently by the companies asking the public to bring their gold rings, jewellery, necklaces, heirlooms to them and get paid for the gold content are commercials beckoning the public to sell gold, not to buy it…" Funny video I will post the link.
Robert Peston's View on Developments at Northern Rock
BBC: Rock Revival
"In total, the Treasury's decision to revitalise this nationalised bank will mean that there should be £28bn of additional finance for mortgages in the UK over the next year or so compared with 2008. That's equivalent to more than 10% of all gross mortgage lending last year - making this arguably the government's most significant attempt to prop up the housing market. My understanding is that the Rock will endeavour to exploit what demand there may be, by offering mortgages that may be more suitable for first-time buyers than much of what's on offer from the big banks. I'm told it will offer mortgages worth 80% or 90% of the value of properties, compared to the 75% loans that are now the industry norm."
Why the dollar will stay strong for now
MoneyWeek: Why the dollar will stay strong for now
"...although the Chinese could cause serious problems for the US by refusing to lend it any more money, that’s unlikely to happen right now. The Chinese don’t want to spark a run on the dollar, as that would wreck the value of their own dollar holdings. But at the same time, there’s always the risk that by printing lots more money, the US will simply try to inflate its way out of its debts. That wouldn’t be good for China either. So it’s understandable that Beijing is looking for reassurances that if it keeps buying US debt, it’ll eventually be repaid in money that’s actually worth something."
Followed by winter of discontent
ITN: Police braced for 'summer of rage'
Police fear there may be a "summer of rage", with a wave of protests against the economic crisis. David Hartshorn, who heads the Metropolitan Police's public order branch, said he feared there could be "mass protest" at rising unemployment, failing financial institutions and the downturn in the economy. He said that "known activists" were planning returns to the streets, and intelligence revealed that they may be able to call on more protesters than normal due to the unprecedented conditions. He said: "Those people would be good at motivating people, but they haven't had the 'footsoldiers' to actually carry out (protests). "Obviously the downturn in the economy, unemployment, repossessions, changes that. Suddenly there is the opportunity for people to mass protest."
Mandy's Mate - A Crunch Victim?
BBC: Van firm LDV seeks government aid
"Struggling van-maker LDV has asked the government for millions of pounds in loans to help secure its future. It wants access to bridging loans to tide it over while it presses ahead with plans for a management buy-out". "Gaz is controlled by oligarch Oleg Deripaska, a friend of Business Secretary Lord Mandelson". - the guy wants his money out - left it a bit late, I think.
Euro(n) your own?
Telegraph: Will Germany deliver on the Faustian bargain that created monetary union?
Apologies for the creaking title. AEP is about the only mainstream writer currently worth reading in my opinion, gathering stats that matter even if you don't agree with the overall view,
A couple of you can get a 100% mortgage
Money Hospital: Are 100% mortgages making a return?
100% mortgages used to be things you could get quite easily… …but then as the credit crunch hit, many mortgage lenders wanted to reduce their risk, and so 100% mortgages died a death. Now, Coventry Building Society has thrown a lifeline to those of you in negative equity after becoming the first mortgage lender to offer remortgage deals worth 100% of a property’s value.
Pointless? Futile? Wealth Extraction!
Reuters: Northern Rock plans new mortgage lending-UK Treasury
LONDON, Feb 22 (Reuters) - Britain's state-owned Northern Rock bank plans to increase its mortgage lending by up to 14 billion pounds over the next two years, a Treasury official said on Sunday. The plan to get Northern Rock lending again is part of a series of initiatives expected this week designed to get credit in Britain flowing again after the economy shrank by 1.5 percent in the last three months of 2008. "The government is implementing a new business strategy for Northern Rock that will see it make a significant return to the mortgage market," the official said.
Economy contracted even more than feared
Telegraph: New figures may show UK economy in worse shape than feared
Economists said weak industrial production data is likely to trigger a downward revision to the initial estimate by the Office for National Statistics that gross domestic product fell by 1.5pc in the fourth quarter of 2008, the worst performance since the second quarter of 1980. At the time ONS had factored in a 3.9pc decline in production over the period, whereas figures released since then revealed a 4.5pc fall. That would have dragged GDP down further, resulting overall in a 1.6pc drop in GDP, economists said. The publication of the first revision on Wednesday will provide more details on which areas of the economy are being hit hardest, and could provide a better idea of the shape and scale of the recession going forward.
Hospitals and schools throughout the country are under threat of closing
NYT: Latvia’s Government Falls on Economic Toll
KIEV, Ukraine — Latvia’s center-right coalition government collapsed Friday, a victim of the country’s growing economic and political turmoil. The government in Riga, faced with forecasts of a severe drop in the economy this year, was the first in Eastern Europe to succumb to turmoil caused by the crisis. Its collapse rounded out a week in which worries about feeble investment and output and shaky banks in Central and Eastern Europe coursed through international markets. Meanwhile, the country’s export-driven economy, which burned red-hot when easy credit flooded the world banking system, has ground to a halt.
This should cheer you lot up on Monday morning !!!
Mail online: Credit crunch 'victims' Anthea Turner and Grant Bovey to sell their £5million mansion
Victims! They owe the money, they have left debts, they have left creditors and companies out of pocket!!! These awful, slimy people, who threatened legal action to those who scoffed, are now heading for the knackers yard! Their BTL empire is gone and now the poor, poor no-hopers are having to sell their £5 million pound home (bet it's not worth that) ! "Perfect housewife" - Perfect pair of parasites if you ask me. They've lost "£100" million - They never had it !! - They had debts not the actual cash, they had supposed values of properties. These two nasty people, with their 'charity' work, have gone belly up, Phil Spencers company has gone the same way......Please, please, please (I may even start believing there is a God) Let it be KIRSTY next ! Happy days campers, happy days !
Chickens and roosting
Guardian: Britain faces summer of rage - police
Police are preparing for a "summer of rage" as victims of the economic downturn take to the streets to demonstrate against financial institutions, the Guardian has learned.
Return of 90% Mortgages - funded by Taxpayers
Daily Mail: New hope for prospective buyers as Northern Rock returns to offer 90% mortgages
"Northern Rock will make a £14billion return to the mortgage market today, offering loans of up to 90 per cent. In a dramatic U-turn, the state-owned bank will resume lending on a major scale after a year of driving away customers and slashing the number of outstanding loans. The move will offer new hope to prospective buyers struggling to raise finance. It is now virtually impossible for would-be buyers to borrow more than 75 per cent of a house's value. But the Rock has been given Treasury approval to go to 90 per cent - funded by taxpayers - in the latest Government attempt to get the market moving."
The name's Bond, Junk Bond.
Telegraph: Hillary Clinton pleads with China to buy US Treasuries as Japan looks on
US Secretary of State Hillary Clinton has pleaded with China to continue buying US Treasury bonds amid mounting fears that Washington may struggle to finance bank bail-outs and ballooning deficits over the next two years. "It's a safe investment. The United States has a well-deserved financial reputation," she told Chinese television stations at the end of her diplomatic tour of Asia. "We are truly going to rise and fall together. Our economies are so intertwined, the Chinese know that to start exporting again to their biggest market the United States has to take some very drastic measures with this stimulus package, which means we have to incur more debt," she said.
Sunday, February 22, 2009
Migrants face tighter work rules
BBC: Migrants face tighter work rules
Who is this latest con trick meant to appease ? Let's just ignore the fact that loads of UK based jobs have been "out-sourced" from these shores over the last 5 years ?
Government desperate to kick-start housing market
BBC: Northern Rock to take on £14bn mortgages
Northern Rock is set to revive its mortgage lending business with up to £14bn in new loans by 2011, plans to be released on Monday are due to show. It is expected that Northern Rock will take on about £5bn in new mortgages this year and up to £9bn from 2010. They will be financed with money from new deposits, repayments on existing loans and more government money. Previously the bank had been encouraged to pay off its loan from the Bank of England, but this policy will now be relaxed.
Lunacy....it's going to end very, very badly......
BBC: UK may get cash injection 'soon'
''A government minister has suggested that plans to inject more cash into the economy could happen "quite soon". Treasury Secretary Stephen Timms told the BBC the government and the Bank of England were in talks regarding so-called quantitative easing.''
'If banks start offering better fixed rate savings it can only mean one thing.....'[Fred]
Times: Rates war on the cards for savers
''Savers are poised to enjoy a bonanza of higher interest rates in the coming weeks — after suffering months of falls — as desperate banks and building societies vie for cash to rebuild their balance sheets. Abbey and Nationwide launched new leading fixed-rate bonds last week, and a cash Isa war is in the offing in the run-up to the end of the tax year.''
Another day another failed
Times: Astra plant named as car factory at risk of closure ‘within days'
CAR industry sources last night named Vauxhall’s Ellesmere Port plant on the banks of the Mersey as the one a union boss claims faces imminent closure, with the loss of 6,000 jobs.
How safe is Darling's seat in parliament?
The Guardian: The global crisis finds its way to Darling's doorstep
"The chancellor is battling the downturn from Westminster. But when he goes home to his Edinburgh constituency, he finds a city numbed by the collapse of RBS and HBOS".......maybe he will dye his hair black and his eyebrowns white to disguise himself "Anxiety will be heightened on Thursday when that once-turbocharged engine of the Scottish economy, Royal Bank of Scotland, unveils what is expected to be by far the worst performance in the institution's 282-year history. Its 8,000-plus employees in the city, just under 7.5% of the national workforce, will be on tenterhooks awaiting news on whether or not they will have a job."......The wise man builds his house on solid foundations....no sign of that here
Bit late now Gordon
BBC News: Brown signals 100% mortgages curb
Mr. Brown making the best use of hindsight yet again
Finance moving east
International Herald Tribune: McDonald's gets $423.7M loan from Japanese banks
I thought this was interesting in view of Jim Rogers opinion that finance is moving east, because thats where the money is. McDonalds (the hamburger chain) is probably going to increase sales over the duration of the recession, and I think probably everyone agrees that in it's nature to do well in economic downturns. So basically a safe loan pretty much. However, this bit of bank business seems to have got away from the US and UK.
Forced landlords in holiday homes -
Times: How to earn money from your second home
Last year Paul and Julia bought a second home near Boscombe Pier in Bournemouth. In November, Paul, a credit-risk manager, lost his job and Julia’s work as a freelance human-resources consultant began to dry up. “We went from being a fairly comfortable two-income family to a no-income family,” Julia says. “There’s no way we want to sell the flat – and we’d lose money on it if we did – so we’ve had to offer it as a holiday let to pay the mortgage." In the current climate, such properties are rapidly turning into an expensive indulgence many can no longer afford. The most obvious solution is to sell, but this can be painful financially. As second homes are essentially discretionary purchases, their prices have been particularly hard hit by the down-turn. Holiday lettings are up 77% this year
Haven't had a ramping article for a while
Times: No time like the present
“We felt we’d never be able to afford anything of our own,” said Cleak, 28, a PR director for the fashion company my-wardrobe.com. Then, all of a sudden, house prices began to fall, sellers became desperate and things started to look promising. “We knew we were in a better situation in the market than ever before. With renting, we felt the money was virtually going down the drain every month. We wanted to invest it instead.”
Stocks – In the Clutches of Uncertainty
Investment Postcards: Words from the (investment) wise for the week that was (February 16 – 22, 2009)
A perfect storm of a deepening global recession and banking woes last week battered equities and supported the safe havens of the US dollar, government bonds and gold bullion. Negative sentiment dragged the S&P 500 to seven points below its October 2002 low, whereas the Dow stopped only 80 points short of this key level. The next few days will tell whether the key chart levels will arrest the indices’ declines and the three-month trading range will hold, or whether more catastrophe lies ahead. Read more about this, together with some thought-provoking news items and quotes from market commentators during the past week, in the weekly “Words from the Wise” review.
Liam Halligan - Meltdown when China stops buying our Gov't Bonds, and Eurozone disintegration
Sunday Telegraph: There will be slim pickings if China loses its appetite for Western debt
Liam Halligan points out two important points: 1. The entire credit boom was funded by Chinese sovereign savings in western currencies (and gov't bonds) and this will have to stop, especially as the UK and US plan to borrow unprecendented amounts.. He leaves the scary question: "Just what happens when China stops buying US government debt?", with the implication is that extreme measures, includng aggression, may not be out of the question. 2. Eurozone strains caused by PIIGS (+Austria) weakness are starting to show. Once Germany starts bailing these counties out (like an EU IMF) there may be German or EU demands on how it is spent. "eurozone voters will become extremely nervous at an implicit transfer of sovereignty – and the central contradictions of monetary union are exposed"
The reduction of the debt burden of insolvent private agents (households and non-financial companies
The Age: Roubini warns of 'sovereign' bank failure
Nouriel Roubini, the New York University professor who predicted the global credit crisis, said a government-backed bank ''may crack'' as officials try to bail out their financial systems. ''The process of socializing the private losses from this crisis has already moved many of the liabilities of the private sector onto the books of the sovereign,'' Roubini wrote on his Web site today. ''At some point a sovereign bank may crack, in which case the ability of the governments to credibly commit to act as a backstop for the financial system -- including deposit guarantees -- could come unglued.'' ''The global economy is now literally in free fall as the contraction of consumption, capital spending, residential investment, production employment, exports and imports is accelerating cont
Only 10 years late
Telegraph: Gordon Brown to bar 100pc mortgages
Gordon Brown is to prevent banks and building societies offering 100 per cent mortgages in an attempt to usher in a new era of "responsible lending". The Prime Minister and Alistair Darling, the Chancellor, will make the move in a tacit admission that the Government did not do enough to stem the wild lending policies that played a major role in creating the credit crisis.
The 'good' zombie
Guardian: Rock to be reborn as a 'good bank'
Plans were being drawn up this weekend to transform Northern Rock into a "good bank" by injecting up to £10bn into the state-owned lender and hiving off its existing mortgage book. As the government tried to thrash out the terms of an insurance scheme for Royal Bank of Scotland that could involve the troubled bank issuing non-voting shares, attempts were also being made to turn Northern Rock back into a major player in the mortgage market.
Saturday, February 21, 2009
Confidence is key
Market Ticker: Confidence Destroyed
This follows a post on Soros by someone yesterday, but puts present US economic peril in the context of confidence. It highlights the housing market, so it's not completely off topic. Its anger represents growing protest - in the UK and US - voiced by an erstwhile silent majority who are being doinked with their pants on that they are, in fact, being doinked with their pants on. If world leaders don't respond properly to this crescendo at April's G20 meeting, it will be (one of) the last.
More Brown stuff from Brown
BBC: Brown wants 'old-fashioned' banks
Wait for it - Brown says 'banks should not dabble in complex international investments', people should 'save longer before buying their first home and not be handed mortgages without a deposit. Brown also wants 'to see the reinvention of the traditional savings and mortgage bank in Britain', which are all things we used to have before his watch.
Busy snapping up those bargains
C4 News: Buy-to-let mortgage lending plunges
Mortgage lending on buy-to-let properties has dived by nearly two-thirds during the past year ... One in 10 properties of the 40,000 properties repossessed across all lending last year were buy-to-let properties. There has also been a steep jump in the number of buy-to-let mortgages that are more than three months in arrears, with the figure soaring from 7,500 at the end of 2007 to 26,800 at the end of last year.
Market going crazy for hard assets
BBC: Last' pic'n'mix fetches £14,500
Somebody thought ahead about the possible fate of sterling.
LESS transparency? BAD idea!
BBC: New Banking Act comes into effect
The Bank of England will be able to give hidden support to stricken banks, with the aim of maintaining financial stability. However, critics of the act say it throws a cloak of secrecy around the banking world, which could be detrimental for consumers. The act allows certain decisions to be exempt from disclosure under Freedom of Information laws.
Meanwhile in the UK, everyone is happy...no?
BBC: Economy protest gathers in Dublin
An estimated 100,000 people have gathered in Dublin city centre to protest at the Irish government's handling of the recession. The trade union Impact said workers did not cause the economic collapse but they were being forced to pay for it.
How to square a debt circle
Bloomberg: Bradford & Bingley Bond ‘Madness’ May Hurt Capital
The subordinated debt of Bradford and Bingley need not pay the interest due to the holders, as it may be deferred. Although obviously this wasn't in the original contract, the UK government has retrospectively rewritten bond agreements so that although the money is not paid, it doesn't qualify as a default ! Because such deferrals are part of the original contract, not the actual original contract of course, but the new one which now represents the original one. Apparently this has damaged sentiment in the market?! How fortunate that debts due can be deferred, like mortages, and how much tax we need to pay. This almost certainly -won't- lower bond values, exacerbating a credit crunch...
The penny finally drops
Reuters: Soros sees no bottom for world financial "collapse"
Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis. Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.
Welcome Back
Daily Mail: Desperado to come Home
Cest la vie mes amis, but the grass aint greener only the benefit system.
High structural deficit
Independent: The chickens have come home to roost for our public finances
The main cause of public debt during recessions and their aftermath, is not in fact the cost of bail-outs(the media headline) but rather the collapse in tax revenues. The UK seems to be facing a huge structural deficit that will change the nature of taxation(up) and public services(down) for many many years to come. When I first read about 2030 being the estimated time of a recovery in public finances, I thought "surely not", but it would seem that for those in the UK aged around 35-40 the majority of their remaining working life will be in a regime of high taxation and lower social provision. Perhaps most won't notice lower social provision but almost certainly taxes will be noticed.
No loans for the good
FT: 90% loans prove elusive
"...borrowers with pristine credit scores are being rejected for these riskier loans."
Mandelson positioning
Guardian: Mandelson vows to take on the doomsters
Slightly off topic, but Mandelson has been mounting a very heavy PR campaign in his own favour recently. He seems to have morphed into some UK industrial fighter. These manoeuvres bode ill for the election. The very good reason why Hitler wasn't assassinated was due to the fact his replacement would have been much more competent. Further, there hasn't been a squeak from either party over the need to shrink the public sector, perhaps we can hope that such steps will take place after the election. I am concerned that there will be no popular will to change UK direction.
BBC mentions tenants
BBC: 'Steep rise' in tenant evictions
"There has been a "steep rise" over the last six months in numbers of tenants evicted after landlords defaulted on mortgages, Shelter has warned. Tenants can get just days' notice to leave their home, says the charity, which wants ministers to "act quickly to give tenants far, far longer". "
Freds Weekly analysis
Renegade Economist: Six Minutes with the Renegade Economist - 20th February 2009
D word mentioned twice, QE - what is it and will it work? Land Prices always increase until there is a bubble when they dont.... all answered in well just under six minutes.
Bash a BTLer
Independent: Buy-to-let landlords hit hard by recession
The number of buy-to-let landlords unable to keep up payments on their mortgages more than doubled during the second half of last year, hitting record highs of almost 27,000. Meanwhile, the number of repossessions of privately owned homes rose by 55%. The number of landlords who are three months or more behind on their mortgage payments rose by 257 per cent between the end of 2007 and the end of 2008, as landlords failed to secure the rents they needed to meet their loan payments. New lending in the buy-to-let sector has also plummeted, falling by 56 per cent in the final quarter of last year.
An interesting people watching tool
Google: Google Trends
Google Trends allows you to enter search terms and see how popular they have been over the last five years and by geographical region. Housing type words are obviously of interest to us and you can even get an idea of buyer interest by entering the keyword "rightmove" - if you want to see the official rightmove web traffic flow, go to alexa.com
That didn't take long
Times: RBS gets around promise to end cash bonuses
The Times has learnt that RBS, which is 68 per cent owned by taxpayers after a £20 billion government bailout, is offering its staff loans against the bonuses that they are owed but which have been deferred until 2010 under a deal with the Government.
Friday, February 20, 2009
So much for deflation
BBC: U.S. Jan CPI rose 0.3 percent
Confounding analysts' predictions, US inflation actually rose in January. Deflationistas have been left feeling... deflated. I guess slashing interest rates to zero and printing money isn't the best way to avoid inflation after all.
Gold now $1000 an ounce, Gordon Brown sold for $250 an ounce
Times Online: Goldfinger Brown’s £2 billion blunder in the bullion market
''GATHERED around a table in one of the Bank of England’s grand meeting rooms, the select group of Britain’s top gold traders could not believe what they were being told. Gordon Brown had decided to sell off more than half of the country’s centuries-old gold reserves and the chancellor was intending to announce his plan later that day.''
Not yet Capsulation?
ShareCast: London close: Footsie closes below 3,900
Footsie closed below 3,900 points for the first time since November after a weak start in the US sent the leading index even lower following its poor start.
Rescue scheme still missing in action
BBC: PM 'raised false mortgage hopes'
Gordon Brown has been accused by the Tories of raising false hopes over a promised scheme to help people struggling with mortgage payments. When the PM announced the Home Owner Support Scheme in December he said it would be available from early 2009. The scheme will now be launched in April due to protracted negotiations with lenders over how it will work. The Tories said it was "completely wrong for the government to announce a scheme where the details haven't been worked out and where months later people's expectations will have been dashed because actually they are still losing their homes rather than the scheme being in place."
Putting off the inevitable
SKY: Govt Mortgage Support Scheme Slammed
A Government scheme to help homeowners struggling to stave off repossession has been criticised for being slow in coming, narrow in scope and likely to defer rather than solve problems.
Even CML admit 2009 will be worst year ever for repossessions
Bankrupt: One out of every 290 mortgage holders see homes repossessed in 2008
Interesting that despite all the efforts being made by the Government and apparently lenders, and despite the growth in sell to rent schemes, even the CML is saying repossessions during 2009 will be the worst ever. It was only a year ago that talking heads on TV were telling us that it was never going to be as bad as 1991 because it was different this time!!! Almost as way off the mark as the property experts urging people to buy before they were priced out of the market altogether.
Brown says "Don't worry you little heads" and all the homeowners sigh in relief
Press Association: Brown: Housing measures will help
Measures to tackle rising repossession levels will have an impact on homeowners, Prime Minister Gordon Brown said. Figures released by mortgage lenders indicate these went up by more than half last year. But Mr Brown insisted the Government is pulling out all the stops to ensure repossessions do not become as prominent in the current recession as in previous slumps. "We're going to do everything we can to stop repossessions," he said on a visit to his Fife constituency. "We're determined that this will not become as high a feature as it has been in previous downturns in the country. The measures we're putting in place are coming in and I believe that we will be able to see an impact on the rate of repossession."
New HIP document soon
HIP-Consultant.co.uk: Are you ready for the Property Information Questionnaire (PIQ)
The home information pack is getting a new addition shortly and doesn't actually sound that bad of an idea,
Friday funny
Daily Mash: HBOS RISK CONTROL RUN BY EVEL KNEIVEL
THE risk control department at HBOS was run by Evel Kneivel for nearly a decade, it emerged last night.Former executives revealed how the late US daredevil would approve multi-billion pound transactions while snorting cocaine off the buttocks of the prostitute he had been with drinking with all night. Tom Logan, a former HBOS accountant, said: "From about 1999 onwards the bank's business model was based very closely on Mr Kneivel's book Jumping the Grand Canyon on a Rocket Bike: A New Approach to Financial Risk."He rubber-stamped all the major deals. I remember how it was always slightly awkward going into his office, what with all the skanks and whores."We would give him a quick summary of the proposed transaction and then he'd bang the table and shout, 'f*** this pansy-ass shit!'
GM & Crysler's Attempts At Bullying
NY Times: Bankruptcy Could Be More Costly
Businesses filing for bankruptcy need loans to work out their troubles, or face liquidation. But General Motors and its smaller rival, Chrysler, have threatened that they will need $125 billion, in what would be the largest bankruptcy financing packages ever, if they do not receive the additional federal aid they are requesting. G.M. alone has said that it needs $100 billion to finance its bankruptcy. To many, that figure seems far too high, and may be a negotiating tactic to keep the companies out of bankruptcy. Several bankruptcy experts doubted that G.M. would need to draw upon anywhere near that amount to get court protection from creditors.
$28 trillion credit-default swap market
Bloomberg: U.S., Europe May Jointly Regulate Credit Derivatives
Feb. 19 (Bloomberg) -- U.S., U.K., and European regulators are in talks to jointly regulate the $28 trillion credit-default swap market, the Federal Reserve said today.
Depression levels of job applications
Cnn: Wanted: Lousy job, low pay
"I have asked several potential employers how many resumes they have received and the answers range from 200 to over 3,000," she said. "How do I stand out in a list of over three thousand people when the job market is impersonal and the field is flooded with applicants?" she asked.
Nice graphics
Crisis Of Credit: The Crisis Of Credit Visualized
For those of us that never really understood the difference between a CDS and a CDO.
Out Of Control?
Telegraph: UK national debt set to surpass £2 trillion
The ONS expects to have to add between £1 trillion and £1.5 trillion to the UK's public sector net debt, taking the total national debt to an unprecedented £2.2 trillion – just under 150pc of gross domestic product. This would be the worst debt total since the 1950s, when Britain was in the process of paying back its war debts. The figures were the latest in a blizzard of bad news on the public finances, which have been badly hit by the financial and economic crisis. The ONS confirmed its decision to add the debts of Lloyds and RBS to the public balance sheet, but warned that their complexity meant it was still working out exactly how much this would impact the national debt.
Oh The Irony..
Guardian: Doorstep lender's shares slide as it warns on profits
Shakespeare himself would be proud of this one. "The firm, which lends to people who have trouble getting loans elsewhere, depends entirely on wholesale funding, which has become more expensive during the credit crunch."
Never liked their cars, but its sad anyway.
BBC: Saab requests creditor protection
The board of the Swedish carmaker Saab, which is owned by General Motors, has filed for reorganisation, seeking protection from its creditors. The reorganisation process is the Swedish equivalent of going into Chapter 11 bankruptcy in the US. The announcement follows Thursday's extraordinary board meeting in which bosses considered the company's future.
Robert Prechter on deflation
Market Oracle: Government Intervention Will Fail to Spark Inflation and Prevent Deflation
Robert Prechter's view on why deflation is the final outcome because governments cannot force people to borrow for ever
European banks may need £16.3 trillion bail-out, EC document warns
Global Research: The Looming Collapse of European Banking
Gary North reveals how mainstream media editors are colluding with bankers to conceal the impending collapse of Europe's banking system
Latest CML figures better than expected
BBC 'News': Home repossessions rise to 40,000
The number of homes in the UK repossessed by lenders last year rose by 54% to 40,000, according to the Council of Mortgage Lenders (CML). The CML said this was fewer than it had originally predicted, and said lenders were making "strenuous efforts" to ensure repossessions were a last resort. However the CML expects repossessions this year will reach about 75,000.
Britain: heading for disastrous depression?
MoneyWeek: Britain: heading for disastrous depression?
The slump in household wealth, loss of jobs and threat of deflation could mean a destructive Japan-style slump taking hold of Britain.
Name: Sir John Gieve. Subject: The Bleeding Obvious
Telegraph: Mortgage deals 'should be capped', says Sir John Gieve
"the large and co-ordinated cut in interest rates at the start of this decade almost certainly contributed to the build-up of an ever larger bubble."
Excellent mathematical summary
Telegraph: Letter
A thought on house prices from Germany, where I live. Here, house prices have risen by 25% since 1990. The market is healthy. A friend of mine in London is trying to sell a house for 580,000. He bought it in 1976 for 15,000. Now, let's allow a factor of 12 for general inflation, makes 180,000. Let's allow a REAL average return of 2% -- not bad for a risk-free investment, and let's take the base to be the higher of the above figures. 180,000 accruing compound interest of 2% over 33 years is 345,600. That's what I think his house is worth. What other investment of 15,000 in 1976 would have produced such a return? But would he accept such an offer? In fact, would anyone be cheeky enough to make such an offer? No, and no. No wonder the market has collapsed.
Good Morning
Telegraph: Britain at risk of 10 year recession
Britain is at "serious risk" of entering a decade-long recession similar to that experienced by Japan in the 1990s, the outgoing deputy governor of the Bank of England has warned.
Repossession, Repossession, Repossession
BBC News: Home repossession rise expected
Repossessions rose to 42,000 in 2008, up from 26,200 the year before. I suspect 2009 will be even worse, though what about Mr Brown's mortgage rescue plan?
Rick Santelli slams mortgage bailout
CNBC: Santelli's Chicago Tea Party
Are you listening Obama? Even traders don't believe in the mortgage bailout
The government will take them over within the next 60 days. The announcement may come as soon as to
Chartingstocks.: Gone in 60 Days: Citi and Bank of America Won’t Live to See May
The US government has already committed half a trillion dollars to these two firms which is more than 10 times the amount it would cost to buy and control both companies. The market doesn’t believe that $500 billion is enough to save these companies. All the kings horses and all the kings men can’t put humpty dumpty back together again.
The Fed is nearly out of the picture, federal Gov now propping up the debt bubble
EWI via Market Oracle: U.S. Federal Government Fighting Deflation by Propping Up Debt Bubble
The ultimate source of all the bad credit in the U.S. financial system is Congress...Germany, for example, has issued mortgage-backed securities with a value equal to 0.2 percent of its annual GDP, the U.S. has issued them so ferociously that their value has reached 49.6 percent of annual GDP, a multiple of 250 times Germany's rate...“What's to stop the U.S. government from simply adopting all bad debts, keeping the credit bubble inflated?” Answer: The U.S. government's IOUs have a price...So the question comes down to this: Will the public put up with more financial exploitation? To date, that's exactly what it has done, but social mood is declining, and voters are likely to become far less complacent, and more belligerent, than they have been for the past 76 years.
Thursday, February 19, 2009
3 in 5 of Londoners (59%) think that now is a good time to buy
RightMove: What IS the real property picture in London?
"Over half of Londoners expect to buy a home to live in during 2009 [...] It’s encouraging that in London consumer confidence is relatively high; a great sign as we head towards a market recovery." Errrr, so let me think, is that genuinely half of all Londoners of half the number of morons who filled out a lame RightMove survey? Or... could it have been filled in by - gasp! - a bunch of estate agents?! Not that I'm suggest this is a corrupt, non-independent surveys. Given the vested interest. Hmm. I wonder how they're audited?? (Yeah, right...) Argh, this sort of twaddle really annoys me. I find it depressing to think that readers might accept it at face value. There should be laws against such misrepresentation...
Bookmakers know the score
Times: How Ladbrokes declined to gamble on debt
Even Ladbrokes, the bookmakers, knew that borrowing more than 3.75 x their earnings would be mad yet bankers were beseiging their finance director saying ‘Gear up, gear up'. We were told if we didn't gear up we would be taken over by private equity. It was absolutely bonkers.” .
Be seated, it will pass.
BBC: Withnail cottage "saved" for fans
Do you think he'll sell Camberwell carrots in the gift shop? I thought it might go for more. Then again, maybe not. At least Chris Evans didn't get it.
Another Government promise in tatters
Mortgagestrategy: House building hits record low
The number of new homes being built fell to a record low during the last three months of 2008, figures from the Department of Communities and Local Government reveal today. An estimated 16,310 were started in the December quarter 2008, down 27% on the previous quarter and 58% lower than the December quarter 2007.This is the lowest level recorded by the Department of Communities and Local Government since it began collecting the data in 1980.The biggest drop was seen in the private sector, with just 12,280 properties being started in the final quarter of the year, some 64% lower than the same period a year earlier.
Risks of systemic contagion across the eurozone
Telegraph: EU mulls action as Ukraine crumble triggers contagion fears for Europe
Europe's institutions are scrambling for ways to prevent financial contagion from Ukraine and the rest of Eastern Europe from setting off a full-blown banking crisis in Austria, with risks of systemic contagion across the eurozone. West European banks have lent roughly $1.6 trillion (£1.13 trillion) to the region, led by Austrian, Swedish, Italian, Greek, Belgian, and Swiss banks. Almost $400bn must be rolled over this year in hostile markets.
ONS move confirms the Government has in effect nationalised RBS
Moneymarketing: ONS classifies Lloyds and RBS as public sector bodies
The Office of National Statistics has classified both RBS and Lloyds TSB as public sector entities. The ONS says it has decided to classify the banks as public entities from October 13, meaning their liabilities are included in public finances.It could not confirm how much the banks will add to national debt, but the ONS estimates it is likely to add £1 trillion to £1.5 trillion to public-sector net debt. The ONS says: "As a percentage of the gross domestic product, this range is roughly equivalent to between 70 per cent and 100 per cent of GDP.”
May not be long before GB make his claim too!
BBC: Pets take a bite out of savings
BoE received 4,916 claims for a total of £113,000 in 2008 from people suggesting their money had been chewed or eaten - up 23% in value on the previous year.
Let em fail........... its the only way..
Cnn: Auto bailout tab could top $130 billion
GM and Chrysler say they need $21.6 billion more in loans. But that won't be enough to save Detroit. Here's a rundown of all the auto bailout proposals.
Action on the big tax dodgers
Guardian: Brown targets Switzerland in global tax haven crackdown
Not before time, but some weaseling at the bottom of the article about competitiveness.
Oh Dear
Yahoo: BNP latest bank to be hit by Ukraine woes
France's biggest bank said it will close 100 branches and cut jobs in Ukraine this year
Proportion of money backed by debt is falling
FXStreet: UK M4 Money Supply Growth Picks Up, Defies Falling Borrowing
The banks are expanding M4 through lending to each other using BoE as a guarantor intermediary. This lending is not as you imagine, A lends to B. Rather A lends to B, and also B lends to A. Hence the M4 expansion. However, banks are rather unusual because they produce nothing and so their debt expansion does not expand the economy in the way that, for example, I borrow a chicken from you and I give you a box of spuds back, would (encouraging both spud and chicken production). Somewhat sadly, "Borrowing by non-financial corporations is actually falling around 5% on the year,". Or our economy is shrinking, to put it another way. The weird thing about government money-printing-controlled default-led deflation is that the amount of money actually backed by a (continued in comment)
Lending even lower than in December
Independent: Mortgage lending halves in a year
Mortgage lending in January slumped to less than half the level it had been a year earlier, figures showed today. A total of £12.4 billion was advanced by the major mortgage lenders during the month, 8 per cent less than in December and 52 per cent lower than in January 2008, according to the Council of Mortgage Lenders. The group said there was typically a slight decline in lending levels between December and January, although it added that the figure was the lowest monthly level recorded since April 2001.
Worst Economic Collapse Ever
Market Oracle: Economic Collapse Worse than the Great Depression: Video
' Worst Economic Collapse Ever' - In 2009 were going to see the worst economic collapse ever, the Greatest Depression, says Gerald Celente, U.S. trend forecaster. He believes its going to be very violent in the U.S., including there being a tax revolt.
More abyss
Market Oracle: US, UK, Eurozone Banks Face Collapse: Global Banking System Insolvent
For those who look, a strong case can be made that European banks are as bad off if not much worse off than their US counterparts.
Bankrupt Britain, can you hear me Gordon
Yahoo: Bank bail-outs may add £1.5trn to national debt
LONDON (ShareCast) - The bail out of some of Britain's biggest high street banks could add as much as £1.5 trillion to the country's debt pile, equivalent to 100% of GDP, says the Office for National Statistics.
Buiter rants at home owners - yay
FT: Biggest-racket-since-al-capone
Willem Buiter (he of the excellent good bank proposal) takes aim at homeowners. This is preaching to the choir but good to read nonetheless.
More specifics on Land Securities attempts in the scramble for cash
Reuters: Land Securities plans 756 mln stg rights issue
Land Securities, Britain's largest real estate company, joined the scramble for capital among debt-starved property investors with a 756 million pounds ($1.1 billion) rights issue on Thursday. The company, a major landlord to the British government, is selling 291 million shares at 270 pence as part of a multi-pronged plan to prop up its balance sheet and protect against further downside in the [turbulent] UK property market. The 5-for-8 rights issue follows the sale of more than 3.4 billion pounds of assets since April, the mothballing of several large development projects, a 10 percent cull in its workforce and a 63 percent slide in its share price in the last 12 months.
Life assurers are in trouble
MoneyWeek: Life assurers are in trouble
As the economic picture worsens, more and more weak links are revealed. Banks are going bust, new scams are being uncovered every other day – even whole countries are tottering on the brink of insolvency. And it seems the life insurance sector is next in line to feel the pain. Potential carnage in corporate bonds is forcing these companies to make big loss provisions. Not only is that very bad news for these firms’ shareholders, but the overall fallout could be quite shattering.
Lending revival 'unlikely soon'
Bbc: Lending revival 'unlikely soon'
A "meaningful revival" in mortgage lending is unrealistic in the coming months as home loan values reach their lowest since April 2001, lenders say *******Does anyone else find the special K advert annoying on this website********
Expect very high tax rises....
FTimes: UK to miss annual borrowing target
''The public finances took a sharp turn for the worse in the crucial month of January as the recession and credit crisis hit corporate and personal tax revenues, making it almost impossible for the government to meet its borrowing target made in late November. In his autumn pre-Budget report, Alistair Darling forecast government borrowing of £77.6bn in the 2008-09 financial year, a sharp deterioration on the £35bn outturn for 2007-08.''
I hope none of you invested in REITS!!
FT/Yahoo: Property groups in £3bn call on shareholders
One of Nulabour first reckless throws of the dice to try and prop up property prices was to invent "Real Estate Investment Trusts" by which small savers would be conned into putting their hard-earned into commercial property. They went live in early 2007. They were quite highly geared - so for every 10% fall in commercial property means a 25% fall in the value of your REITS shares. Land Securities shares, for example, are down 75% since the beginning of 2007. So the insiders bailed out at the top leaving Nulabour & TOry core voters, the small savers, nursing huge losses. Not that I'm a conspiracy theorist or anything. Remind me, who votes for these people?
Countrywide flogged at 66% "off peak"...
Guardian: 'Distress funds' buy Countrywide
Three "distressed debt investors" - hedge fund Polygon, restructuring specialist Oaktree and private equity firm Alchemy - have taken control of Countrywide, Britain's biggest residential estate agent, which was bought by US private equity firm Apollo less than two years ago for about £1bn, mostly financed by debt. Together, they have taken a majority stake for one-third of the price paid by Apollo.
The Prime Minister lays out a four-point plan to end the excesses of the bonus culture
The Times: We won't pay for bankers' one-way bets
Everywhere I go in Britain, I sense and share the anger and dismay of millions of hard-working people who have watched in disbelief during a year in which irresponsible practices in global banks have brought the world's financial system close to collapse.
Wednesday, February 18, 2009
Let's all print.
Telegraph: Ukraine must be rescued
It would be tempting to leave this misgoverned country to its fate. That would be an error. If Ukraine defaults on its foreign debt – or lets its private companies default on their dollar and euro loans – it will lead to near instant contagion through much of Eastern Europe. This cannot be allowed to run its course. The European Central Bank is going to have to put a clothes peg over its nose and use its printing powers to rescue the region.
Bailout President shows what he is made of
Bloomberg: Obama Pledges $275 Billion to Cut Mortgage Payments
“It will give millions of families resigned to financial ruin a chance to rebuild,” Obama said today in Mesa, Arizona. “By bringing down the foreclosure rate, it will help to shore up housing prices for everyone.” [No, no, no. High house prices are the problem not the solution. Keeping housing expensive is like a massive tax on family incomes. Let house prices fall you foolish man. Clueless just like the last one.]
World economy to recover within next couple of months
Telegraph: Economy could recover in April claims Brown
Mr Brown said that the world could then "move towards recovery in the next few months" if agreement was reached The Prime Minister said: "If we can get that action in place and rebuild trust and confidence in the world economy then recovery will be quicker. That is why we are putting a lot of emphasis on the meeting on 2 April. If we can get agreement then that is a major step forwards
Inflation could be back sooner than you think Inflation could be back sooner than you think
MoneyWeek: Inflation could be back sooner than you think
Why inflation may not drop as far as many people think - and could soon be on the rise again.
Gordon has noticed another snag
Press Association: Bank to start 'printing money'
"The co-operation that's needed around the world is not something that has been achieved before - but I believe it can be achieved to meet the needs of our times." Gordon Brown "urged world leaders to strike a "grand bargain" ( very Faustian !). GB seems to hope that he can single-handedly talk all of the other countries into following his QE lead. Probably not such a difficult sell to your average politco. Free money. I'd do it. But.... you never can tell with pesky Johnny Foreigner. Wearing his heart on his sleeve as always, GB honestly declares "needed" cooperation and also this achievement resting on his "belief".
Off topic, but will be appreciated by many HPCers
CNBC: Goldman Sachs Partners Borrow to Cover Margin Calls
Tough times on Wall Street are reaching all the way to the highest levels of the most storied former investment bank—Goldman Sachs—as partners there are being forced to borrow money to cover margin calls, according to sources within the firm. Several Goldman Sachs partners have leveraged their Goldman Sachs stock to buy alternative investments such as hedge funds & private equity, and they have done so through their Goldman Sachs brokerage accounts. But Goldman stock has declined in value by more than 50 percent since last spring, meaning that Goldman Sachs is in the awkward position of making margin calls on its own partners, who can't meet those calls because their alternative investments are underwater and they don't have enough cash on hand.
Possible snag
AFP: BoE steps nearer 'quantitative easing'
The BoE is about to embark on a massive buy-back of government debt, gilts. This is a buy-back so of course they are not funding current expenditure (!). Anyway, my snag is this. I posted a while ago that nobody would be mad enough to buy low yield gilts in a declining country when they could put their money outside (as all gilts have lost considerable value against the euro, dollar, yen etc), and that the only buyers -must- be UK pension funds who are forced to hold gilts by government legislation. However, if the pension funds are legally obliged to hold gilts then how will they be able to sell them to the BoE ?!? ...continued in comment...
Time to spend more time in the garden?
Telegraph: Britain's AAA credit rating threatened by scale of bank bail-out
"Britain could be stripped of its prized AAA credit rating as a result of the Government's latest bank bail-out" Oh those ever-reliable ratings agencies.
Toyota freezes UK pay, bonuses
CNN: Toyota freezes UK pay, bonuses
Company to introduce voluntary severance plan for workers at its two British plants, considers shorter work week.
Just check out the comments!! lol
Daily Mail: Mandelson's foul-mouthed tirade at Starbucks boss over the state of Britain's economy
Yes Britain is screwed, it is failing the fastest and hardest of all (excluding iceland of course)
Their only option?
Times: Coventry Building Society offers 100% mortgages
Now Coventry is offering existing customers coming to the end of their mortgage deal a new five-year fixed-rate at 4.99 per cent worth up to 100 per cent of a property’s loan-to-value (LTV). The deal comes with no booking or arrangement fees.
Bank guarantee likely to deal a crippling blow to the econom
Irish Times: Irish Economy and Financial System Hangs on a thread.
This is a refreshingly precise and clearly written article by an Irish economics Professor. Morgan Kelly has been very vocal over the years warning us how the Irish economy was built on little more than a house-price bubble. In this article he details how the rushed state guarantees of Irish banks leave the whole state vulnerable to economic meltdown. This depends on the true extent of the banks' bad debts which nobody seems to know. The clarity and simplicity of this article shines through the smog of verbage from politicians and vested interests, it makes it for particularly grim reading.
Fudged
Daily Mail: City analysts bothered and bewildered by inflation figures
Yesterday's inflation figures left City analysts feeling bewildered. Although RPI fell to a 49 year low, CPI, the Government's favoured measure, barely budged at a heady 3%. The reason for the yawning gap is the absence of housing costs from the CPI. It is ridiculous that the Bank is being asked to target a measure of inflation that ignores the cost of housing. Back in 2003, Mr Brown switched the inflation target from RPI to CPI. Many suspected that, with house prices soaring, Mr Brown wanted to shift to a measure of inflation that excluded property to allow the Bank of England to cut interest rates. In retrospect this was a grave misjudgment. Higher interest rates might have helped curb the explosive growth in house prices that is now ferociously reversing.
Good intentions
Telegraph: Bank of England seeks power to inject more money into economy to fight recession
The Bank of England's Monetary Policy Committee has voted unanimously to seek Goverment permission to increase the amount of money in the economy as interest rate cuts lose their power to fight recession. The 9-0 vote by the MPC was revealed in the minutes of the meeting held on February 5. The Bank's Governor Mervyn King will now write to Alistair Darling, the Chancellor, to ask for approval to introduce measures aimed at raising the supply of money in the economy – known as quantitative easing.
Six Mins of Common Sense
Renegade Economist: Six Minutes with The Renegade Economist
Fred Harrison taking questions and telling it like it is...
Note to estate agents prices will keep dropping
Reuters: Recession will be worst since 1930s
He reiterated, however, that a housing recovery is a necessary condition for the end of the financial crisis, and said that "the prospect of stable home prices remains many months in the future."
Gold: why it could be time to take profits
MoneyWeek: Gold: why it could be time to take profits
Gold is hitting fresh record highs in almost every currency. And in the long-term it can only go higher. But Dominic Frisby thinks the mainstream is getting too excited about gold, and now could be a good time to take some short-term profits.
Please Sir - Can we print some more ....
Times: Bank will write to Darling to begin printing money
The Bank of England is set to begin "printing money" in a bid to boost the economy after its rate-setting committee unanimously agreed that its Governor must write to the Chancellor. The minutes of the Bank's rate-setting meeting earlier this month showed that as well as voting 8-1 to cut rates to 1 per cent, the nine-strong Monetary Policy Committee (MPC) agreed that the Mervyn King, the Bank's Governor, should write to Alistair Darling to seek permission to embark on "quantitative easing" — sometimes called printing money.
Quick - send Krusty and Phil to Baghdad
Independent: Boom time in Baghdad Property Prices Soar
As the price of housing collapses in the rest of the world, it is soaring in Baghdad. “Property is the fastest way to make money here,” says Mohammed al-Hadithi, who runs a real estate office in the wealthy Yarmouk district of west Baghdad. "Over the past two years there has been a big rise in the market because the security situation is calmer." House prices have risen by 50 per cent in many parts of central Baghdad during the past year, and rents have almost doubled. Mr Hadithi says that this is explained primarily by the end of the war.
The protests are starting..lol
Bbc: Dirty protest outside bank branch
HSBC confirmed that the branch was closed on Saturday. A spokeswoman said they could not comment further because the incident was being investigated by police.
You say nationalize, I say nationalise
Washington Post: Nationalize the Banks! We're all Swedes Now
The U.S. banking system is close to being insolvent, and unless we want to become like Japan in the 1990s -- or the United States in the 1930s -- the only way to save it is to nationalize it As free-market economists teaching at a business school in the heart of the world's financial capital, we feel downright blasphemous proposing an all-out government takeover of the banking system. But the U.S. financial system has reached such a dangerous tipping point that little choice remains. And while Treasury Secretary Timothy Geithner's recent plan to save it has many of the right elements, it's basically too late
Gold hits record against euro on fear of Zimbabwean-style response to bank crisis
Telegraph: Off topic, but any thoughts on this? Will gold hit $1000 an ounce?
''Gold has surged to an all-time high against the euro, sterling, and a string of Asian currencies on mounting concerns that global authorities are embarking on a "Zimbabwe-style" debasement of the international monetary system. ''
Tuesday, February 17, 2009
10.2% Decline in a year?
Telegraph: House prices falling at record rate
"Homes lost 10.2 per cent of their value during the 12 months to the end of December, the first time the Department for Communities and Local Government has recorded a double-digit drop since it first started collecting the data in 2003." This roughly tallies with my personal observations.
A Moody's report signaled that Eastern Europe would be worst hit by the global recession Tuesday. Ar
Cnbc: Europe Faces Deep Recession
A Moody's report signaled that Eastern Europe would be worst hit by the global recession Tuesday. Arnab Das from Dresdner Kleinwort and Kathy Lien from GFT Forex discuss the situation
FT's Martin Wolf - a MSM person who actually speaks sense
FT: Japan’s lessons for a world of balance-sheet deflation
We're repeating the Japanese mistakes. It's deflation and a lost decade we're facing.
How long until the next bailout and for how much? I'll go Sept and 5 Trillion.
BBC News: Obama signs $787bn stimulus plan
US President Barack Obama has signed his hard-fought economic stimulus plan in Denver, after Congress approved the $787bn (£548bn) package last week. At a signing ceremony in Denver, he said it was "the most sweeping recovery package in our history". The plan is aimed at saving or creating 3.5 million jobs and boosting consumer spending and rebuilding infrastructure.
The roots of modern economics are intertwined with institutional deceit on a massive scale because t
TS: CENTRAL BANKS AND SYSTEMIC COLLAPSE
Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade. Again, in this instance, Warburton’s last sentence bears repeating: “For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.” The roots of modern economics are intertwined with institutional deceit on a massive scale because the material rewards are so great.
Barclays says shutting US mortgage lender EquiFirst
Yahoo: Barclays says shutting US mortgage lender EquiFirst
said Tuesday that it has closed US subprime mortgage lending unit EquiFirst Corp. with immediate effect, citing current market conditions
It's dreek in the Scottish property market
Mortgagestrategy: Scottish house prices fell 2.3% over Q4
Scottish house prices fell by 2.3% over Q4 Lloyds TSB Scotland's latest House Price Monitor has revealed. The average house price in Scotland now stands at £158.820. It says that the latest fall is lower that the previous quarter and that on an annual basis house prices have still risen by 1.6%. But the volume of house purchase transactions is down a whopping 48% on the levels recorded for the same period last year.
Another Madoff - when will the Ponzie schemes end?
New York Times: Sir Allen Stanford accused of "massive, ongoing fraud" by SEC
Allen Stanford, the chap behind 20/20 cricket and one of the richest people in the world, has been accused of running a giant Ponzi scheme involving anywhere from $8-50billion of assets. As with Madoff, his funds offered suspiciously high and consistent rates of return even while the market tanked last year. That is, until investors started demanding their funds back - now it all unravels and the authorities step in too late as usual, to shut the stable door after the horse has bolted.
First Time Buyer Trap or the 'Contract Valuation Trap'
Irish Mortgage Brokers: The 'Contract Valuation Trap'
Briefing on an issue in the Irish property market where buyers are unable to complete upon a purchase because lenders are revaluing properties before closing. Unlike the UK system, Irish property is bought by private treaty (generally) and people enter into unconditional contracts meaning they have to rapidly come up with the difference in cash or lose their deposit and potentially be sued to close on the deal as well.
House prices are going up? Explain that to the people losing jobs!!!!
Bbc scotland: Hundreds lose jobs as mill closes
More than 350 jobs are to be lost after it was decided Inverurie Paper Mill is to close.
Losing their grip...?
London Evening Standard: Keep calm, says Mandelson amid leadership rumblings
Lord Mandelson today appealed to Labour to keep a "steady nerve" and not be driven into a panic by the deepening recession. His call came amid fresh signs of unease among ministers fearing election defeat next year. There are also reported to be stirrings of leadership manoeuvring within the Cabinet.Harriet Harman is being accused of positioning herself for a future leadership contest by putting herself at the head of critics of the City over big bonuses and sexism.
The three phases of a bear market
MoneyWeek: The three phases of a bear market
"It is now an accepted fact that we are in a primary bear market of historic proportions; however, there is a strong consensus that although the economic outlook remains appalling, that this bear market may have bottomed out. We would regard that as a possibility but we think it's wholly unlikely."
Hasta la vista, baby
Bbc: 20,000 jobs may go in California
it is clear things are only just starting to go bad in the real economies, look at leeds council 600 staff going, I know cheshire are talking about reductions too...
BTL lending now needs propping up
Mortgagestrategy: Buy-to-let will suffer without government support, warns IMLA
The Intermediary Mortgage Lenders Association has warned that buy-to-let lenders will not be able to cope with demand unless they are able to access government support. An IMLA survey of 506 mortgage brokers carried out in December found that eight out of ten first-time buyers unable to secure a mortgage through their broker were choosing to rent instead. Brokers expect business levels to drop in all sectors but are predicting that buy-to-let will be particularly hard hit.
Deflation
Guardian: Warning as UK heads for deflation
RPI at 0.1% in January.
Sense from Savill's?
Daily Mail: The 25% tipping point: That's how much you need to cut your asking price to sell your home
Estate agents have identified a 'tipping point' that they claim will bring buyers flooding back onto the property market. Homeowners willing to price their property at least 25 per cent below its peak value are swamped with offers, agency Savills said. The company's branch in Putney, London, said that this month it had seen several 'realistically' priced homes go to sealed bids after each spent only a week on the market.
Administration, Administration, Administration,
This Is Money: Location, Location star's firm goes bust
Property expert Phil Spencer's home-finding business has finally gone bust. The presenter of Channel 4's Location, Location, Location had put his own cash into Garrington Home Finders in a bid to save it.
A 25% reduction will sell your home
Evening Standard: 25% - That's how much you need to cut your asking price to sell your home
ESTATE agents have identified a "tipping point" that they claim will bring buyers flooding onto the property market. Homeowners willing to price their property at least 25 per cent below its peak value will be swamped with offers.
Rights issues could lose you money
MoneyWeek: Beware! Rights issues could lose you money
While companies that succeed in cadging some extra cash off their shareholders may see a short-term share price bounce, it's often driven by relief that these firms won't be running into more trouble for the moment. And in this market, rallies soon fizzle out...
Come on down Phil Spencer - we've been expecting you!
Daily Mail: Location Location host Phil Spencer's property firm goes bust
Property expert Phil Spencer's homefinding business has finally gone bust. The presenter of Channel 4's Location, Location, Location had put his own money into Garrington Home Finders in a bid to save it. But all 10 members of staff at the Chelsea-based company have now been laid off and the firm has gone into administration.
Highest annual DCLG fall on record
Independent: House prices falling at record annual rate
House prices dropped by 2.3 per cent during December, pushing the annual rate at which values are falling to a new record high, figures showed today. Homes in the UK lost 10.2 per cent of their value during the 12 months to the end of December, the first time the Department for Communities and Local Government has recorded a double-digit drop since it first started collecting the data in 2003.
UK Recession Forecast
The Market Oracle: UK Recession Watch- Britain's Great Depression?
UK recession forecast - Depth, Bottom, duration and recovery.
Latest official inflation stats
BBC: UK inflation rate declines to 3%
Consumer price inflation (CPI) fell in January to an annual rate of 3%, down from 3.1% in December, official figures have shown. The decline is less than expected - the consensus forecast was for an annual rate of 2.7%. Prices continued to fall during the month as shops discounted heavily to try to entice wary consumers back into the shops. The headline Retail Prices Index (RPI) fell to 0.1% from December's 0.9%.
The end of the age of credit is near
Information Clearing house: Davos Debt & Denial
We are at the end of an extraordinary epoch, the end of the age of credit. In 1981, Bucky Fuller predicted the collapse of the present power structures in tandem with an unprecedented crisis that would transform humanity. That time, the collapse of the world power structures, has now arrived. Transformation comes next; and when the crisis finally passes—and it will—tomorrow will be a far better day. Awareness, community, faith and a bit of gold and silver will be invaluable in the days to come
World on the edge of abyss - best start printing more money then
Information Clearing house: Eastern Europe is about to Blow
The global economy is decelerating at the fastest pace on record. 40 percent of global wealth has been wiped out. The banking system is insolvent, unemployment is soaring, tax revenues are falling, the markets are in shock, housing is crashing, deficits are soaring, and consumer confidence is at its lowest point in history. This is no time to cling to half-baked ideology. The global economy is undergoing a massive system-wide contraction which could spin out of control and plunge us into another world war. Political leaders need to grasp the urgency of the moment and keep the vehicle from careening into the ditch.
Using NR to kick-start the housing market
Telegraph: Northern Rock: one year on hard decisions still remain
The Government is almost certain to decide that Northern Rock should restart mortgage lending – providing homeowners with the credit other banks are reluctant to offer. To do so on a large enough scale, billions of pounds more taxpayer money will have to be pledged. In the past year, Northern Rock has successfully reduced the Bank of England's £24bn loan to £11bn – by attracting customer deposits and aggressively chasing mortgage redemptions. Now instead, the loan will start growing again. Northern Rock accounted for one in every ten repossessions last year and almost a fifth of its mortgage book is thought to be in negative equity.
Non-news from the BBC - note 'may' rise. Pointless.
BBC: Home sales may rise say surveyors
"By no means could this relatively small pick-up in transactions be seen as representing a move back to a more orderly housing market." 'MORE ORDERLY HOUSING MARKET' 15%+ growth a year defined as 'orderly'. These people live on another planet!
Sales may rise... doubt prices will
BBC News: Home sales may rise say surveyors
Property sales may pick up in the next few months, according to a survey from the Royal Institution of Chartered Surveyors (Rics). It says lower house prices have prompted renewed interest from potential buyers, especially those who already own a house or flat. However first time-buyers are still largely locked out of the market.
Words fail me.
FT: Redundant bankers to bolster Treasury
Bankers who lost their jobs in the credit crunch are to be offered work in the Treasury as Alistair Darling beefs up his department to try to keep pace with the financial crisis. The chancellor is looking to hire up to 70 people, with a focus on sharpening up the Treasury’s dealings with the Square Mile. He is expecting a flood of applications from former bankers.
Big Jump in USD
Quotes.ino.com: US Dollar Index
I am certainly no expert - rather the opposite - but something is happening....
Monday, February 16, 2009
Nothing is ruled out
FT: Lloyds has top credit rating removed
Lloyds Banking Group suffered another blow on Monday when it lost its long-held Aaa credit rating from Moody’s amid continued worries about accelerating losses from HBOS. Gordon Brown on Monday sought to damp speculation that Lloyds was set to come under majority public ownership. The prime minister’s spokesman stated: “While nothing is ruled out, no active consideration is being given to the nationalisation of Lloyds.” Peter Mandelson, business secretary, will on Tuesday argue in a speech in New York that the government is caught in the “politically difficult but economically necessary” position of having to take time to get its handling of the banking crisis right, while facing demands for instant results.
There but for the Grace of God
Telegraph: Zimbabwe introduces $100 trillion banknote
Hyperinflation has forced the central bank to continue to release new banknotes which quickly become almost worthless. There is an official exchange rate, but most Zimbabweans resort to the informal market for currency transactions.
What a green and pleasant land ?
BBC: Woman's eviction ordeal
Looks like the TV dimwhit production companies are filming their first episode of Repossession, repossession, repossession.
Fair enough, but when things deteriorate futher, will they 'print' even more?
FT: Bean defends Bank’s quantitative easing
''Charlie Bean, the Bank of England’s deputy governor, mounted a robust defence of its preparations to create money to buy government bonds on Monday, insisting the proposals were nothing like the ruinous policies of corrupt governments that have led to hyper-inflation. ''
Want to print?
BBC News: The history of payments in the UK
"Three banks in Scotland have the right to print their own money, The Royal Bank of Scotland, the Clydesdale Bank and the Bank of Scotland. " Hmmm. I thought that restricting the right to print money to the BoE was a way to ensure the safety of the financial system. RBS has the right to print money.....Or put it another way, RBS can expand base money, watch that disappear, and then reveal that the backing debt is in default. Surely this is a mistake.
Banks could make Britain go bust
MoneyWeek: The banks could now make Britain go bust
The pound has been plunging as international investors have got the jitters about British banks' $4.4trn of external liabilities. Add a large chunk of these to our other national borrowings, and we could reach a point where we can't raise the money to pay the bills. What's more, we have form. Don't forget in 1976, we had to call the IMF for help.
Time to pay the piper
Telegraph: Tax rises will be needed to pay off extra £100billion debt, CBI warns
In fact the debt will be 1000,000,000,000 pounds. The 100 billion mentioned is just an installment but clarified in the article. Taxes will have to rise, and spending cut until 2030. The suggestion is to place the burden on NI but Ken Clarke offers the olive branch of slashing services instead. National Insurance in the UK must be the only insurance scheme in the world where if your claim is approved then you get a small fraction of your yearly premium in return. The car insurers must be jealous. Also the idea that any recovery will be damaged by immediate tax hikes, I don't necessarily see that generational wealth transfers restrict spending myself. Anyway, I am sure everybody will stay loyal and nobody will move away to low tax regimes in resource rich abundant land nations.
It's A Mini Mis-Adventure
BBC: Sacked Mini workers express anger
** One word, harsh. ** The economic crisis had not escaped the attention of workers at BMW's Mini factory in Cowley, Oxford; they knew times were tough and their jobs were under threat. But what they did not expect as they turned up as usual for work on Monday was to be sacked with just an hour's notice. Several of the 850 who lost their jobs have told the BBC of their anger, confusion and despair. Silvia Fernandes worked at the plant for four years; she says she feels betrayed by the suddenness of the news. She told the BBC: "In this meeting they told us we'd all been sacked because of the credit crunch. But actually we already knew some of us would have to go, that was a fact of course because of the crisis - but what we never expected from BMW was knowing one hour before [our shift].
Lord Turner may have pressed the ejector button that could catapult Gordon Brown out of Number 10
The Scotsman: What an Appalling Mess
A LENDING bonanza, a credit bubble, a house price boom and now a slump: who was watching the bigger picture that allowed this catastrophe to unfold? We now have an answer: no-one.
Not a good time to buy property
Yahoo: UK recession to be 'worse than expected'
Business leaders are warning the recession will be deeper and longer than expected with many more jobs lost. The CBI said the Government will also have to borrow around a £100 billion on top of their expectations.Spokeswoman Lai Co said ministers had spent heavily to bail out the banks and cut VAT but there was now less money coming in. In its latest dire warning on the economy, the CBI said the economy will shrink by 3.3 per in 2009, compared with its November forecast of a 1.7 per cent contraction.
Globalisation is heading for a fall
Canada.com: The Complexity Theory
Complexity Theory argues that societies become progressively more unstable and vulnerable as the network of interconnections within them increases -- not particularly good news for a globalizing system in which increasing complexity is precisely the thrust of economics, finance, manufacturing, technology and almost everything else we do. The sobering implications may explain why many proponents of Complexity Theory preface their comments with an apology. "We don't want to tell you this," goes the essence of their message, "but we think you should know."
Another bail-out on the way
BBC News: PFI 'may need government funds'
PFI's were supposed to be an off-balance sheet way for the government to raise money for schools 'n' hospitals. It seems now that the private sector is not prepared to fund government projects, to the tune of £4bn...
CBI revises their gloom
CBI: Global Confidence Crisis Pushes UK Deeper Into Recession
The rapidly deteriorating global economy and the continued difficulties UK businesses are facing in accessing credit will push the economy deeper into recession in 2009, the CBI said today (Monday 16th February, 2009). The CBI is publishing its latest economic forecast against a worsening international backdrop. Last month the International Monetary Fund revised its forecast for world economic growth sharply downwards, and recent economic data have dashed hopes that growth in the emerging economies would soften the impact of the global downturn. The UK’s leading business group predicts the recession, which began in the third quarter of 2008, will last throughout 2009. The economy is expected to contract by 3.3 per cent and unemployment will reach close to 2.9 million by the end of the year
UK in deep depression, 10000's loosing their jobs but the Express says.....
Daily Express - who else??: HOME SELLERS LIFT THE GLOOM
''EVIDENCE the property market could be turning the corner was growing yesterday after new figures showed asking prices jumped last month as New Year sellers defied the economic gloom. A £2,593 rise in asking prices during the four weeks to February 7 for homes in England and Wales lifted them 1.2 per cent to an average £216,163, according to website Rightmove.'' Yes, but asking prices isn't real money!
Rightmove UP 1.2% MoM, down 9.1% YoY
Times: 'False optimism’ pushes up property asking prices
Asking prices for homes in Britain are said to have risen by 1.2 per cent last month, a figure that you might think shows the property market bouncing back at last. In which case, you should think again. According to Rightmove, the property website, which revealed the increase, it is down not to a much-wanted revival but to a burst of “false optimism” among those marketing their properties. Miles Shipside, director of Rightmove, said: “A lack of fresh stock leads some agents to suggest a more optimistic initial asking price, influencing a seller to give the most bullish estate agent the instruction to sell. This is a traditional tactic employed at the start of every year to attract fresh stock, but is a shortsighted move for both parties in a falling market.”
Sunday, February 15, 2009
Turn-er for the worst
News of the World: Anthea and Grant owe £1.78million
TELLY presenter Anthea Turner and hubby Grant Bovey actually owe £1.5 million MORE than they claimed when their business went bust last year. We can reveal that the couple’s true debts are £1.78 million — NOT the £200,000 they admitted when Imagine Furnishings went under. Official figures prove 48-year-old Anthea’s design firm went bust with enormous debts owed to the bank and more than 70 companies.
From lawyers in Paris to factory workers in China and bodyguards in Colombia, the ranks of the joble
Nytimes: Job Losses Pose a Threat to Stability Worldwide
Worldwide job losses from the recession that started in the United States in December 2007 could hit a staggering 50 million by the end of 2009, according to the International Labor Organization, a United Nations agency. The slowdown has already claimed 3.6 million American jobs.
Not so immune after all
Firstrung: London house prices crash by 3.7% in January
Prime London residential prices fell 3.7% in January 2009, the second highest monthly decline on record, according to the Knight Frank Prime Central London Index. Overall prime London prices have fallen 21.4% since the March 2008 peak. Knight Frank Research has pushed its forecast for the peak to trough fall in prime central London from 30% to 35%. It still expects the bottom of the market to hit in mid 2009. Liam Bailey, head of residential research, Knight Frank, commented: "In early 2008 it was generally held that London's unique situation, with very strong demand set against weak supply, would help it escape the worst of the housing market downturn. As we reached late summer last year, it became apparent that no part of the market was immune. Every area and type of property was hit."
DofW in trouble
Guardian: UK's richest landowner hit by slump
DofW in trouble.
The UK's monster banks
UK Bubble: Just how big are the UK banks
Nice chart illustrating the frightening fact that the UK's four largest banks are approximately the same size as the UK economy. And how exactly are we going to bail them out? It puts me into a cold sweat just thinking about it.
Pressure mounting on Brown to go
ThisIsMoney: FSA admits failings as Brown stands accused
Lord Turner, the chairman of the FSA, said with hindsight the risks should have been seen, on the same day that the HBOS whistleblower, who forced Sir James Crosby's resignation as a Government adviser, said Gordon Brown should resign as Prime Minister.
Cash is King?
Cyclesman: August 21, 2008 Interview with Robert Prechter
For entertainment only....[so the website says]. Dow theory versus Elliott wave versus K-Wave - but who is right? And when will the cycles bottom...... Cash, Gold, Commodities, deflation, "liar loans", weimar republic, china, denial, house prices and other good stuff... August 2008. Also proves that no-one is right all the time. Only one way to find out..... sit back and turn the speakers on.. Have a good day of rest before some fireworks on monday - or will we have to waifor those nasty Americans to come back on Tues?
Tories and Labour advertise at the same jobcenter.
Mail Online: Top government welfare adviser defects to Tories in new blow for Brown
"David Freud, a key adviser to Work and Pensions Secretary James Purnell, resigned from the Government after being promised a peerage and a position on the Tory front-bench." Charming, what an honourable guy. It must be difficult to work out whether you should be in New Labour or the Conservative party. At least the rats have started running, so New Labour must finally be aware the ship is sinking.
Depression levels of applications for jobs
Contract journal: Desperate builders want to work in Antarctic
This reminds me of the 1000 applicants for 35 firemans jobs in USA.......
David Smith is in deep - what will bring him back to life?
Times: In deep — what will bring us back to life?
Smith starts the article by saying that economists got it wrong (the reasoning being that there's safety in numbers I suppose). He then goes on to reason that printing more money 'done properly ... could make a difference and because of that it is worth a try.' Dear oh dear. I'm sure that Mugabe would concur, after all quantitative easing made a big difference over there ...
All roads lead to Westminster
Sky: PM To Blame For Banking Crisis
I knew the rot would eventually go higher. There's been far too much complicit cozying up between the FSA, the banks and the PM's office, all for private gain of some means or other.
The Defences are crumbling
The Press Association: HBOS whistleblower: Brown must go
"Brown must go. He cannot remain in office. He has presided over the biggest boom in the history of the country as well as one of the biggest busts. But he promised no more boom and bust. He must be held accountable for his failure to oversee the stability of the country." Mr Moore added: "Brown presided over a policy based on excessive consumer spending based on excessive consumer credit based on massively increasing property prices, which were caused by excessively easy credit which could only ultimately lead to disaster."
Another hopeless interview by Andrew Marr
BBC News: Andrew Marr interview with FSA's Jonathan Adair Turner
Marr should have stuck to being a reporter, he just can't cut it an an interviewer. Especially when faced with someone so arrogant as the FSA's Jonathan Adair Turner......I was squirming as I was watching it, especially when Turner said that the FSA knew about the situation at HBOS......and Marr failed to follow up. Andrew Marr = ****ing useless!
Exposed, Gordon Browns part in the mess....
Independent: Brown's nemesis: Will Paul Moore prove to be PM's downfall?
''[Paul Moore] wants Gordon Brown to take the rap for his part in creating the credit boom, allowing people to borrow too much, and for letting us go bust. There is more to come. Moore is about to lob his next missile. This week he will be sending some of the more than 30 new documents he has compiled in his time at HBOS to the clerk of the select committee as new evidence, which he says will support his allegations of reckless lending at the bank.''
More of Browns fingerprints over banking collapse
Independent: Blame Brown: Revenge of the whistleblower
Apparently the HBOS 'whistleblower' has some more dirt to dish up....on Gordon Brown
Economic rescue boat to nowhere
Investment Postcards: Investment Postcards from Cape Town: Words from the (investment) wise for the week that was (February 9 – 15, 2009)
Events during the past few days were dominated by the announcement of US Treasury Secretary Timothy Geithner’s financial stability plan and a deal reached by Congress on the economic stimulus bill. However, the much-anticipated bailout bang soon whimpered as investors were disappointed about the lack of “beef”. Meanwhile, markets were also mired in uncertainty on the back of fresh evidence of headwinds facing the global economy – notably in major economies such as the UK, continental Europe and Japan. Stock markets were on the receiving end as risk-averse investors sought out the safe havens of the US dollar, gold and bonds. Read all about this and the implications for financial markets in the weekly “Words from the Wise” review.
Ha ha ha ha ha ha
FT: Lawsuit fears over mortgage holiday
Banks have warned Gordon Brown that his flagship £1bn scheme to underwrite a mortgage holiday for struggling homeowners could trigger a wave of lawsuits for misselling if house prices fall further. They have told the prime minister that they need to ensure they will not be sued by homeowners who could lose money if they are encouraged to stay in their properties. There are concerns that homeowners rescued from repossession could end up with significant negative equity instead - and that some could sue lenders.
Some happy renters!
The Guardian: Climbing off the property ladder
A few people seem to be tempted back in the market as their savings are not gaining interest. Not a ramping article, as further falls are mentioned and the people buying seemed to make a choice on factors other than money.
Twilight of the Gods
Telegraph: Failure to save East Europe will lead to worldwide meltdown
Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.
Saturday, February 14, 2009
Lenders advertising unavailable deals to appease government
Daily Mail: Mystery of the phantom mortgage
Phantom mortgage deals are being offered by lenders under pressure from the Government to help borrowers, claim angry brokers. The loans appear available, but when borrowers apply, they are turned down. Several banks and building societies, including Abbey, Cheltenham & Gloucester, Halifax, the Post Office, RBS NatWest and Yorkshire Building Society, advertise mortgages with only a ten per cent deposit. But brokers say that borrowers are being rejected even when they have an excellent credit history, stable job and high salary. Brokers say there is no apparent method behind the rejection of applicants. They also warn that lenders are 'down-valuing' properties, effectively reducing the amount that can be borrowed.
More ridiculous punishments for savers
Guardian: Building Societies face £1.1bn bill for bank failures
Britain's banks and building societies will have to pay more than £1.1bn to cover compensation to customers of the institutions that failed due to the credit crisis, it emerged today. The bill – paid, in effect, by anyone who has a savings or mortgage account in Britain — was revealed as the Financial Services Compensation Scheme (FSCS) published its budget for the next financial year.
How long until we all live in council houses again...?
Timesonline: The return of local authority mortgages in sight
Government cuts the interest rate that councils must charge homeowners for mortgages to 3.93 per cent. The Government has paved the way for the return of local authority mortgage lending by cutting the minimum interest rate that councils can charge homeowners. Council leaders said last night that the Department for Communities and Local Government had given them a green light to intervene in the UK’s stricken mortgage market after the “national standard rate” was cut from 5.07 per cent to 3.93 per cent yesterday.
Get ready for the Alastair Darling Bad Bank
Telegrath: Alistair Darling in row over Lloyds losses
Darling asks LTSB to get their nit comb out and go through the HBOS basket case to identify 'their bad assets so they could be removed from the system'.
Selfinterest and Selfdestruction
Times Online: Landlords attacked as rejection of Stylo rescue puts jobs at risk
“The tone of the meeting was set when one of the advisers pointed out that this agreement would protect the employment rights of 5,450 people – and one of the landlords said, ‘Yes, but we don’t care about that, do we?’.” Wow... I am speechless.
Where is my promised foreign investment?
Telegraph: Falling pound fails to boost tourism
Britain's tourism industry is failing to benefit from the weak pound, with latest figures showing a sharp drop in the number of foreigners visiting the country. The number of visits to the UK was down 12.5 per cent to 7.45 million in the last three months of last year compared to the same period in 2007, according to the Office for National Statistics.
Don’t hold your breath for house price rises
FT: Don’t hold your breath for house price rises
Don’t hold your breath for house price rises
Zombie banks
Business Week: Geithner Feeds Zombies
Zombie banks, banks that are too weak to lend, but yet are able still tie up capital and feed on taxpayers.
Yikes!
TheTRUMPET.com: Experts Say Economic Storm Has Barely Begun
Peter Schiff, president of Euro Pacific Capital and author of Crash Proof, on why the stimulus bill will lead to “unmitigated disaster”: “This week President Obama claimed that failure to pass his economic stimulus bill will have catastrophic consequences for the U.S economy. The reality is the catastrophe will be far greater with his plan than without it. If the trends of January and early February of 2009 continue, the rug will be completely pulled out from beneath the U.S. economy, and the full cost of the president’s ‘economic depressant package’ will be apparent to all.”
Actions speak louder than words Gordon!
Daily Telegraph: Gordon Brown to scrap final salary pensions for MPs
GB has called for an investigation into how MPs’ retirements are funded because he fears they are becoming too expensive for the taxpayer. The current total liability of public-sector pensions to the taxpayer is officially estimated at £650 billion, The move by GB could eventually allow politicians to propose scrapping all public-sector final salary schemes, currently enjoyed by millions including civil servants, council employees and health workers. Well if he does this before the next election and also puts in words the entire MP benefit package will be limited I might just vote for him! However, I think its all words no action. If he does take action then I am sure he will tell the MP's don't worry instead you can claim £2,000,000 per annum in expenses or second home allowance etc
Friday, February 13, 2009
We are all doomed unless he changes the banking system !
Utterly Witless News: The Conductor
This week has been stunning in every respect - Bankers - The Treasury Select Committee - HBOS whistleblowers - The FSA (Farsical Secretive Authority !) - Now HBOS loses of more than £10 billion in a year - Once the UK's largest lender - The nightmare continues - I won't make a habit of this but it's the weekend and the whole country is starting to wake up to the mess that we're in. £20 billion to HBOS and £10 billion or more has just vanished into thin air ! If our unelected Prime Minister doesn't wake up and smell the coffee we are going to go down faster than a fluffer at a porn movie shoot !
Asking Prices Rise - What About Selling Prices???
Findaproperty.com: Third Month Of Asking Price Rises In London
""While the recent stabilisation is welcome news, it is important to acknowledge that the substantial gains in early 2008 have been eroded and asking prices are only 1.61 per cent (£20,547) higher than this time last year." ....................THESE ARE ASKING PRICES OF VENDORS IN DENIAL AND EA'S SO DESPERATE TO GET ANYONE ON THEIR BOOKS THEY ARE WILLING TO GO ALONG WITH THE TRAGI/COM, BEING PLAYED OUT ACROSS THE UK.
Brown under scrutiny
Sky News: Brown Gets A Battering Over Banks
Gordon Brown gets gets his back up at his appearance before the commons liaison committee. Interesting reaction from Mr Brown when asked if the UK would go cap in hand to the IMF. The link needs flash.
Property 'rescue scheme' would change rules governing way in which housing associations spend money
Guardian: David Cameron reveals plan to bring empty homes back to use
The Conservative leader said he would change the rules governing the way housing associations spent their money to make it easier for them to buy or rent properties that were lying empty. Under the proposals, empty homes being taken over in this way would not have to comply with sustainability guidelines.
Utter disaster - HBOS announces a further £11billion of writedowns.
BBC News: Lloyds and HBOS humbled
The profits warning just released by Lloyds is shocking. The loss at HBOS - which is a fraction under £11bn - represents a new record loss for a British bank. Lloyds says that the loss on loans to companies is partly the result of Lloyds applying its more conservative accounting standards to HBOS's loan book - which is one serious kick in the tender parts for HBOS's previous executives. HBOS also suffered the indignity of incurring further big losses on its holdings of assorted dodgy investments. It is a terrible humiliation for HBOS's already bashed-up previous chief executives, Andy Hornby and Sir James Crosby. Shares in Lloyds - 43% owned by the government - fell by as much as 40% on investor shock
Long and deep recession, will it be worse though?
Reuters.com: U.S. consumers, economists unanimously grim
NEW YORK (Reuters) - U.S. consumers and professional forecasters have cast off the last remnants of economic optimism, reports showed on Friday, as they confronted the grim reality of a long and deep recession.
Gilt(y) as charged
Telegraph: Debt threatend UK AAA credit rating
CDS for UK debt hits 148 - will try to attach a comparative graph below
Can anyone trust Halifax HP data these days?
Telegraph: Lloyds shares tumble as HBOS slumps to £10bn loss
another hit
Fixed rate mortgages starting to rise - looking at inflationary an future?
Telegraph: Mortgages: 'There will never be a better time to fix'
Lloyds Banking Group, the owner of the UK's biggest lender, Halifax, and Cheltenham & Gloucester, has called the bottom of the fixed-rate mortgage market. The newly formed bank says the indications from the money markets are that fixed rates will not fall any lower. This poses a dilemma for many home owners who are already paying rock-bottom interest rates on tracker mortgages or loans with low standard variable rates (SVRs). These borrowers will find themselves paying more if they switched to a fixed rate now, but if Lloyds' prediction proves correct they could end up the losers when Bank Rate starts to rise.
Not an awful lot of symapthy
IHT: Former Northern Rock shareholders lose court bid
Not sure why this wasn't covered in the UK media - presumably now its state owned the only news from The Crock comes through the BBC, and they're not going to give the Crck shareholders any airtime!
Synchronised downturn
MailOnline: Dark time for Europe as recession deepens
Europe today braced itself for a deep and prolonged recession after figures showed the German and French economies in sharp decline.
Off Balance Sheet con suddenly jumps ON balance sheet - Ooops!
Telegraph: Chancellor to rescue public works projects with billions in bridging loans
A multibillion-pound rescue of building programmes involving schools, hospitals and motorways that are threatened by a lack of private finance is to be announced by the Treasury within days, The Times has learnt. Webmaster - The Special K advert at the top of the page is driving me nuts and severely compromises the smooth navigation of the site. Any chance you can take it off or get them to put in a non-scaling version?
Martin Jacques's essay on the subject
New Statesman: The New Depression
Since my earlier NS post has gone down so well, I'm posting this essay too. It's a substantial commentary on the situation, and there are not many of those.
Cash Rich Aberdeen Suffers
Press and Journal: North East House Sales Dire !!!!
Even cash rich oil capital Aberdeen and the north east of scotland is stating to feel the efects of the downturn .Who said it would never happen here ??
One business doing well out of the crisis – the regulators
MoneyWeek: One business doing well out of the crisis – the regulators
The FSA is to get an extra £438m from the banks in the hopes it will help it to regulate more effectively. But this only illustrates what's wrong with the economy, and how we got here in the first place...
Opportunity for a new politics
New Statesman: This is not just a devastating recession: this is the New Depression
Blunt speaking from the New Statesman: "For what we seek - and the country demands - is new ideas, urgent alternatives to the failed politics of the post-Thatcher consensus."
Anne Ashworth talking the market up again
The Times: Cash buyers scent rich pickings in property
If she was ramping a share she held without declaring it, she would be committing a criminal offence, but with property it's OK. Go on, type in a few choice comments to go underneath the article. Some of them might even get displayed.
UK House Prices Crash 2009
The Market Oracle: UK House Prices Crash 2009- Update
UK house prices bounce prompting many to look towards a new bull market. This is an analysis of real terms house price trends against nominal house prices.
Does anyone else get the impression that not one stone will lie atop another when this is done?
Telegraph: Bit by bit, Gordon Brown's fantasy is being pulled apart by the facts
Had the inquiry occurred in Beijing, it is likely that firing-squad rifles would have been loaded even before the chairman's opening remarks.
Anatole Kaletsky: Fool in denial, he failed to predict the downturn
Times: Unless governments stop posturing for the sake of headlines, the full nationalisation of every bank is inevitable
''If a minor flesh wound becomes infected and is allowed to fester, it can turn to gangrene and lead to crippling amputation or death. This is the situation of the world economy today.''
Because we're worth it
Times: Financial Services Authority staff to get £33m of bonuses and pay top-ups
Well they've been doing such a good job lately - even their senior staff are retiring early.
Zombie Banks
CSM: Obama buys time for zombie banks
Faced with a choice between spending upwards of $4 trillion to save wobbly banks or doing something else, President Obama has decided to do something else. His bank plan, rolled out Tuesday, almost seems designed to simply buy time in hopes the economy bottoms out soon. Maybe then, hard decisions about who sacrifices – taxpayers or financiers – won't be needed.
US rally on Obama mortgage bailout plan
Reuters: Obama eyes home loan subsidies in rescue plan: sources
The Obama administration is hammering out a program to subsidize mortgages in a new front to fight the credit crisis, sources familiar with the plan told Reuters on Thursday..U.S. stocks shot up from session lows on the report..Under the evolving plan, homes would undergo a standardized reappraisal and homeowners would face a uniform eligibility test, sources said. Bank regulators have used 38 percent of gross income as a benchmark for one mortgage relief program. If a homeowner is spending more than that amount on housing, they may qualify for a streamlined loan program, but the Obama administration may choose a lower percentage as a trigger for relief in any new plan.
Thursday, February 12, 2009
Amazing story that explains the mess we are in
Wall street journal: Would You Pay $103,000 for This Arizona Fixer-Upper?
The story of the two-bedroom, one-bath shack on West Hopi Street, is the story of this year's financial panic, told in 576 square feet. It helps explain how a series of bad decisions can add up to the worst financial crisis since the Great Depression
Fraud Sir? Surely not, Sir!
CNN Money: UK Serious Fraud Office Launches Probe Into AIG Unit
The U.K's Serious Fraud Office said Thursday it has launched a preliminary inquiry into the U.K. operations of AIG Financial Products Corp., a unit of American International Group Inc. (AIG). The SFO said in a statement that the inquiry involves conduct at AIG Financial Products. The office said it is cooperating with the U.K.-based Financial Services Authority.
Such a house price hike, then oh what a crash!
Property Match (UK) blog: Problems in the estate sector
My question is: Shouldn’t the board of HBOS have been operating far enough ahead of the curve; to actually be listening to good reason given from within its own ranks? I’ve been in a very similar situation in the estate agency sector, where the powers-that-be simply weren’t interested in listening to reason. This happened over a year before the house price collapse. If Mr Moore is now being branded as too “timid”, thats nonsense and to help show that, I give another shout at those with deaf-ears and hands on the tiller of progress. I was a Chartered Surveyor with over 25 years experience and no-one within my profession right up to the top was prepared to listen to arguments about inaccurate house valuations and inappropriate marketing methods, even after I resigned in protest ...
Home prices in record plunge - not over yet!!!!
CNN: Home prices in record plunge
The National Association of Realtors reports that home prices dropped a record 12.4% in the final quarter of 2008 - the biggest decline in 30 years.
Revealed: Mortgage Lending Played a Part
London Evening News: Let's be honest, Brown is just as much to blame for this disaster
"In the gung-ho real estate boom, when values were soaring, HBOS swept all before it. In just one year, 2002, HBOS loaned £5.5 billion to commercial property alone - more than the entire annual loan book of the more conservative Lloyds TSB". "What the Crosby case reinforces is an overall weakness. Moore was in his rights to complain and history shows he was on the right lines; Crosby should not have bolted a building society and bank together; Cummings went out on a limb; the FSA investigated only so far; the Government and Bank of England sat on their hands".
Does Anyone Take Up References ?
Times: Darling cuts loose bank bailout chief over secret tax link
An American financier looks set to be dumped as head of the body managing taxpayers' shareholdings in major UK banks because of his links with a Liechtenstein trust accused of tax evasion. Alistair Darling, the Chancellor, signally failed to support the banker Glen Moreno today when asked in the Commons about his appointment as head of UK Financial Investments Ltd, the company set up to oversee the state's £37 billion pound stake in bailed-out banks.
The BRICs may be roaring again
Bloomberg: BRICs Show No Death of Equities in Emerging Markets
The only major stock markets recording gains of more than 8 percent this year are China, Russia and Brazil, and India’s benchmark index is little changed. That’s enough of a sign that the so-called BRICs are showing a resilience unimaginable in the U.S., most of Europe and Japan.
British jobs for British [IT] workers eh Gordon?
The Economic Times: Britain seeks out Indians firms to help end technology woes
''LONDON: Indian companies are being drafted in to run the information technologies of British government departments whose blunders and gaffes Global crisis sparks unrest in Europe I 19 Indian cos in Top 500 Global Financial Brands 2009 I Ten people who could change the world have cost the taxpayer billions of pounds. ''
Edging ever closer to the quadrillion.
Telegraph: European bank bail-out could push EU into crisis
“Estimates of total expected asset write-downs suggest that the budgetary costs – actual and contingent - of asset relief could be very large both in absolute terms and relative to GDP in member states,” the EC document, seen by The Daily Telegraph, cautioned. "It is essential that government support through asset relief should not be on a scale that raises concern about over-indebtedness or financing problems.”
Rescue failed before it got started
Bloomberg.com: U.S. Stocks Drop, Extend Global Slump, on Stimulus Skepticism
Feb. 12 (Bloomberg) -- U.S. stocks tumbled, extending a global slide in equities, as jobless claims climbed to a record and investors speculated government measures will fail to revive the world’s economy.
Telling it like it is.
Telegraph: Barack Obama and Tim Geithner rob Main Street of $3 trillion
"The sparkle has gone from his eyes already," an American acquaintance said to me yesterday, referring to Barack Obama. "He doesn't know what to do." Obama's performance at his press conference confirmed that impression, with the rhetoric of the campaign trail, fluent and banal as piped musak, replaced with long hesitations not just between sentences, but between clauses. This was an auto-cue junkie suffering cold turkey.
Are the Scottish leading the way with initiative
HIP Consultant: Million pound prize for energy efficient Scottish homes
An interesting initiative by the Scottish government sees an annual prize fund of £1million.
A truly terrifying video of a US Representative describing what Paulson and Bernanke told the House
Daily Kos / C-Span: USA was 3 hrs away from Economic, Political Collapse in September 2008
Not sure if this has been posted before but I found it truly terrifying: " I was there when the secretary and the chairman of the Federal Reserve came those days and talked to members of Congress about what was going on... Here's the facts. We don't even talk about these things. On Thursday, at about 11 o'clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two. The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts, and announce a guarantee of "
A banker who got the message
Bloomberg: Citigroup’s Vikram Pandit to Take $1 Salary, No Bonus
Citigroup Inc. Chief Executive Officer Vikram Pandit said he will take a salary of $1 and no bonus until the bank, which has accepted $45 billion in government bailout money, returns to profitability.
Why the banking bail-outs aren't working
MoneyWeek: Why the banking bail-outs aren't working
Using public money to bail out the broken banking system is costing us all a fortune. And it's not working. David Stevenson explains why, and and looks at what we should be doing instead.
State propaganda at its worst
BBC 'News': Watchdog's early warning for HBOS
No documentary evidence to back up this claim. As they say in politics, the future is certain only the past is in doubt.
Looks like a crash to me
Home.co.uk: Prices Falling Faster in the South
"Asking prices fell in all English regions, Scotland and Wales over the last six months, although there is a marked North-South divide. During this period, asking prices have fallen much further in the southern English regions, exemplified by the South East, Greater London and East Anglia. Further north, market house prices have declined more slowly (North East –0.6%, Scotland -1.2%) since August 08." London prices slashed by 6.5% since August
"slump in lending and sales has been directly responsible for the sudden collapse of house prices"
BBC: Mortgage lending at 34-year low
The number of mortgages lent to house buyers fell last year to its lowest level since 1974, the Council of Mortgage Lenders (CML) has said. There were just 516,000 mortgages granted to house buyers, down 49% from the level seen in 2007. The squeeze on mortgage funds has seen widespread rationing by lenders, which meant that first-time buyers had to put down an average deposit of 22%. The CML believes that lending is likely to fall even further this year.
£750m for 1450 houses - thats a cost price of over 500k per house
Guardian: 'Super express' trains contract gives boost to British jobs
Government expects MASSIVE house price inflation - or they just can't add up!
Lets see how high the rot goes
Telegraph: Gordon Brown to be questioned on economy by senior MPs
Mr Brown may also be asked to comment on the row which on Wednesday prompted the resignation of Sir James Crosby, the deputy chairman of the Financial Services Authority and a former adviser to Mr Brown.
Property prices falling by 180% a year
NY Tines: Laid-Off Foreigners Flee as Dubai Spirals Down
OK, I know the math is wrong, but prices have fallen by 30% in 2 months in some areas in Dubai as expats are laid off and leave the country. NYT article rehashes what was in the Times a few days back, but still amusing to read. Again, what were they thinking was going to happen?
Just a bit of Thursday comedy
Timesonline: The 10 towns where house prices will bounce back first
I particularly like this comedic gem: "Islington, north London, has bucked the trend for falling house prices across the rest of the country as property values climbed 13.4 per cent in the last 12 months. Between December 2008 and last month the average price rose another 2.2 per cent to £584,206." Swiftly followed by the bargain of the week, two bed down from 430K to 390K - real world - NOT. Surely this only implies that the vendors in absolute abject denial live in Islington and have just continued to raise their asking prices and then sell for an apparent reduction.
Off topic: Silly pictures of gordon brown
Mail: Meet Labour's City cronies: The roll call of bankers rewarded by Brown and Blair
Have you noticed how more and more & more silly pictures of GB are appearing...are the press trying to make him look foolish? Surely not!
Wednesday, February 11, 2009
Michael moore turns his attention to exposing the Walls Street criminals
Michael Moore: Will You Help Me With My Next Film?
Friends, I am in the middle of shooting my next movie and I am looking for a few brave people who work on Wall Street or in the financial industry to come forward and share with me what they know. Based on those who have already contacted me, I believe there are a number of you who know "the real deal" about the abuses that have been happening. You have information that the American people need to hear. I am humbly asking you for a moment of courage, to be a hero and help me expose the biggest swindle in American history.
Ireland nationalises its most important banks
Herald Tribune: Ireland to take control of banks, while plans for Fortis are rebuffed
"The fundamental problem is that almost no one knows what is on the balance sheets of most banks, and as the recession deepens, even once solid lenders are being dragged down by uncertainty and investor nerves. Some analysts say it may be time for policy makers to do what they have been studiously trying to avoid: full-scale nationalization, at least in certain countries."
'Exponential rise' in mortgage fraud
La times: 'Exponential rise' in mortgage fraud
The economic crisis has sparked an increase in criminal fraud, including an "exponential rise" in mortgage scams that is straining the FBI's resources, a leader of the agency said today.
A perk of the job
MailOnline: Fury over 'stitch-up' as Jacqui Smith escapes sleaze investigation into £116,000 second home claim
"Jacqui Smith will not be investigated for claiming £116,000 of taxpayer-funded Commons expenses for her family home. Parliamentary sleaze watchdog John Lyon said there was 'not sufficient evidence for an inquiry' while the Home Secretary broke her silence to say she had 'played by the rules.' But critics claimed taxpayers had been 'stitched up' by the decision. They pointed out that lax regulations meant she could exploit a loophole worth £24,000 a year in order to subsidise the West Midlands home she shares with her husband and two children." Isn't she the lucky one!
So much for looking out for savers
Telegraph online: Mervyn King suggests savers will be sacrificed as rates fall
"Savers are going to bear the brunt of the Bank of England's attempts to revive the economy,".......I am so glad I tried to be prudent, careful and save for my and my families future, just to have it torn out from under my feet, in the interests of the greater economy; ie the imprudent and profligate socialist ideals.Thank you Mervyn, Gordon et al for ensuring a huge and permanent change in personal financial planning. There is absolutely sod all point in saving and living within your means, when it is plainly obvious that it is theose who indebted themselves and lived way beyond their means that actually count in this modern NUlab society.
And so it goes on
MailOnline: Homebuyers frozen out by loans crunch
In the past year, house prices have dived by a fifth and surveyors say that in some regions they are being forced to reduce values by more than a third, compared with the peak in August 2007.
A blip?
FT.com: China exports at lowest level in a decade
Imports to China declined by a dramatic 43.1 per cent in a further indication of sharply lower demand in the Chinese economy over the last few months which has caused unemployment to soar.
Do you agree with the Peak Credit idea?
Bloomberg: Property Investment to Fall Further as Buyers Search for Credit
"Banks have been reluctant to lend or refinance real estate loans as they try to conserve cash after losses and writedowns totaling $1.1 trillion." ... *** Are they really reluctant to extend loans? Who wants a loan? Rolling over loans is not -extending- credit. The Peak Credit idea is very convincing to me, why would this be wrong?
Deeper and deeper we go.....
Timesonline: 'Independent' KPMG earned millions from HBOS
The "independent" experts hired by HBOS to investigate allegations of serious failings at the bank in 2005 had been receiving millions of pounds in fees from the company for years. KPMG, which was hired by Lord Stevenson of Coddenham, the HBOS chairman at the time, to investigate claims by the whistle-blower Paul Moore, received fees for auditing, tax advice, information technology work and compliance advice. HBOS, which is now part of Lloyds, declined to comment. LOL
..So Why Did You Cut IRs Last Week?
BBC: Bank says UK 'in deep recession'
The governor of the Bank of England, Mervyn King, has warned that the UK is facing a deep recession in 2009 and said rate cuts may no longer work.
Finally, the bailout plan ... sort of
Investment Postcards: Finally, the plan ... sort of
US Treasury Secretary Timothy Geithner yesterday disappointed the markets with the lack of detail on the adminstration's Financial Stability Plan. This post considers the reaction of the stock market and asks the question: "where to now?".
The Bulls are back in the capital
FT: First-time buyers return to London property market
The number of first-time buyers (FTB) in London increased significantly in January, as property prices start to stabilise. According to estate agency Kinleigh Folkard & Hayward, buyer registrations were at their highest level last month since Spring 2008, with over 35 per cent of them coming from FTBs. Lee Watts, managing director of Kinleigh, said: "We have seen a sharp increase in the level of new buyer registrations during the first month of 2009, and even more encouragingly a significant week-on-week increase in the percentage of first-time buyers.
Crosby's gone
BBC: Sir James Crosby resigns from FSA
"Sir James Crosby has resigned as deputy chairman of City watchdog, the Financial Services Authority (FSA). "
Brown's fall guy
ThisIsMoney: Vince Cable: Crosby tried to silence me too
Banking regulator Sir James Crosby faced calls to resign today amid new claims that he tried to silence warnings about the risks being run by greedy banks. Let's see what happens this afternoon!
.....or maybe I just smoke too much skunk
Daily Wail: 'My house is haunted': Pete Doherty believes ghost parties take place in his country pile
Doherty said ghosts like to party in the £1million property's west wing. He said: 'My house is definitely haunted. All of a sudden you hear a mad party going on in the west wing. 'It used to be the servants’ quarters, which is creepy. When I hear it I just hide."
..And food inflation will be...?
Reuters: Bank sees inflation at 0.5 percent in 2 years
Inflation will hit just 0.5 percent in two years as the economy shrinks rapidly over 2009, new Bank of England forecasts showed on Wednesday, opening the way for further interest rate cuts ahead. In its quarterly Inflation Report, the central bank predicted inflation well below the 2 percent target for the next 3 years if rates were to follow the path set by the market yield curve.
If you’re not willing to cut your price dramatically, you’d better be able to rent out your property
Fool.co.uk: Sellers Need To Reduce Their Prices
RICS – the body for chartered property surveyors – reported today figures collected from 203 of its surveyors across the country. They have found that new buyer enquiries increased for the third month in a row. Yet they also found house prices still fell. More importantly, completed sales aren’t growing with increasing enquiries, staying flat at under 10 per surveyor in the last three months. (That figure comes from surveyors in England and Wales only.) That means sales are down 67% from a high of 30 in January 2007. That is the lowest number of completed sales since the RICS survey began in 1978. What’s more, this is all despite big rate cuts beginning back in October, which should have stimulated interest.
4Q 2008: 1.97m unemployed // 74.1% working age employment rate
Office for National Statistics: Labour market statistics
There has been a fall in both the number of people in employment and the employment rate. The number of unemployed people, the unemployment rate and the claimant count have all increased. The number of inactive people of working age and the inactivity rate have fallen. The number of vacancies has fallen. Growth in average earnings, both including and excluding bonuses is unchanged. In the latest reference period the working age employment rate was 74.1 per cent, down 0.3 percentage points from the previous quarter. The number of people in employment decreased by 45,000 over the quarter. The unemployment rate was 6.3 per cent, up 0.4 percentage points from the previous quarter. The number of unemployed people increased by 146,000 over the quarter. The claimant count was 1.23 million...
This development has been actively pushed by the government. When he was Chancellor of the Exchequer
Mail: Worried that Britain is going bankrupt? Cheer up – we’re about to be bought up by the Islamic world.
The $18billion (£12bn) in assets of Britain’s Islamic banks are said to dwarf those of Muslim states such as Pakistan, Bangladesh, Turkey and Egypt.
Why Government Is Powerless
ContraHour: Martin Armstrong: The Coming Great Depression
The stock market by no means predicts the economy. A stock market crash does not cause a Depression. The Crash of 1903 was properly titled – “The Rich Man's Panic." What has always distinguished a recession from a Depression is the stock market drop may signal a recession, but the collapse in debt signals a Depression. This Depression was set in motion by (1) excessive leverage by the banks once more, but (2) the lifting of usury laws back in 1980 to fight inflation that opened the door to the highest consumer interest rates in thousands of years and shifted spending that created jobs into the banks as interest on things like credit cards. As a percent of GDP, household debt doubled since 1980 making the banks rich and now the clear and present danger to our economic survival.
Another Bank with Big Losses
Bloomberg: Credit Suisse Reports SF6.02 Billion Loss on Trading
Credit Suisse Group AG, Switzerland’s second-biggest bank, reported a record fourth-quarter loss after the worst financial crisis since the Great Depression battered trading results
The rot goes higher and higher
Telegraph: HBOS whistle-blower: I warned FSA about bank risks
Will he be found dead on Hampstead Heath next weekend, full of painkillers, ulnar artery cut with his own pocket knife? "The regulator of all financial services providers in Britain, ignored his pleas because they wanted a "quiet life". "
Banks losing cash on a scale that nobody believed possible
Independent: 'This is the worst recession for over 100 years'
In an extraordinary admission about the severity of the economic downturn, Ed Balls even predicted that its effects would still be felt 15 years from now. The Schools Secretary's comments carry added weight because he is a former chief economic adviser to the Treasury and regarded as one of the Prime Ministers's closest allies. Mr Balls said yesterday: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years, as it will turn out." He warned that events worldwide were moving at a "speed, pace and ferocity which none of us have seen before" and banks were losing cash on a "scale that nobody believed possible". [????]
Tremendous draw-down of money market accounts in the United States
Information Clearing House: Rep. Kanjorski: $550 Billion Disappeared in "Electronic Run On the Banks"
Video At 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour or two.
A financial system tottering under the weight of bad mortgages ???
Reuters via yahoo/sott: U.S. offers $2 trillion bank plan but stocks slump
WASHINGTON (Reuters) – U.S. Treasury chief Timothy Geithner on Tuesday unveiled a new bank rescue plan that would put $2 trillion to work mopping up bad assets and restoring credit, but stock markets plunged on fears it would not work. Global markets had intensely awaited Geithner's ideas for a plan mixing private and public funding to stabilize a financial system tottering under the weight of bad mortgages, but were disappointed over the scant detail he provided.
Tuesday, February 10, 2009
Yep! Crash knows what he's doing !
The Independent: James Crosby: For the opening bat of consumer lending, it's a privilege to prop up the economy
Article re: - James Crosby - Published 3 days after the disastrous Interest Rate reduction in August 2005. "Everyone looks to HBOS as a bellwether of the health of the UK financial sector. It is by far the country's biggest housing lender" - "For good measure, a PricewaterhouseCoopers survey found that HBOS paid more tax to the Treasury than any other UK plc, bar BP. Giants like BT paid a third of HBOS" - "The only deal he would be tempted by in the UK would be to merge with one of the big four, and the competition authorities would not allow that." - Crosby states "As bankers, when we lend money it's rather important for us to get it back,". In 2006 this he was Knighted, on the Labour government's recommendation, by the Queens. Then Crash Gordon made him Deputy of the FSA later in 2006.
Swift change of plan on this one.....
BBC: Skipton admits mortgage 'mistake'
Skipton Building Society says an email telling mortgage brokers it would no longer lend to buyers of one bedroom flats was a "mistaken communication". The email was sent out to brokers early on Tuesday afternoon, causing much surprise amongst those who got it. Skipton is the UK's sixth largest building society, with 85 branches. Like many other lenders it will not lend on some newly built city centre flats but said there had been no change to its previous lending policy.
It doesn't look good
CNN.com: Wall Street: Thumbs down on bailout
NEW YORK (CNNMoney.com) -- Stocks slumped Tuesday afternoon after the Obama administration's overhaul of the bank bailout plan failed to reassure investors unnerved by the ongoing fallout in the financial sector.
Inflicting more economic damage on this country than hitler.....
Daily Mail: 'Top Brown adviser sacked and gagged me for warning banks were taking too many risks', says whistleblower
''One of Gordon Brown's key advisers was today accused of sacking a whistleblower who warned banks were heading for disaster years before the financial meltdown. Paul Moore, the bank's head of risk between 2002 and 2005, alleges he told directors as early as 2004 that the company was in danger of becoming out of control. 'Anyone whose eyes were not blinded by money, power and pride' would have realised problems were mounting for HBOS and the other high street banks, he said.''
The HBOS Whistlebower speaks !!! - read it and weep
Time online: HBOS whistleblower: statement of evidence
"Notwithstanding this I was dismissed by the CEO (he wrote that it was “... his decision and his alone”). I sued HBOS for unfair dismissal under the whistle blowing legislation. Ironically, I was also the “Good Practice Manager” for whistle blowing purposes at HBOS but could hardly report my case to myself! - HBOS finally settled my claim against them for substantial damages in mid 2005. I was subjected to a gagging order but have decided so speak out now because I believe the public interest demands it. " - Love to see HBOS sue him now.
That should do it! Then again....bring on the quadrillion!
BBC News: US unveils new $1.5 trillion plan
US Treasury Secretary Timothy Geithner has unveiled a comprehensive $1.5 trillion (£1.02 trillion) bank bail-out plan to beat the financial crisis. Under the plan, the size of a key Federal Reserve lending program will be expanded to $1 trillion from $200bn.
Rock & Dole
FT: Northern Rock sees 21 per cent rise in repossession losses
Northern Rock has seen a 21 per cent increase in losses incurred in relation to repossessed homes, as the number of people defaulting on their mortgage begins to increase. The data, from its Granite securitisation vehicle which was set up by the bank to raise money from investors, showed that the government owned bank suffered losses of £8.65m in December as a result of repossessing homes from those who had defaulted on their mortgages. This compares with losses of £6.82m the month
Not encouraging for house price optimists
FT: UK credit card woes lift bond delinquencies
"Missed payments by UK credit card borrowers surged in the last three months of 2008 and lifted delinquency rates in bonds backed by such debt to a historical high"
The race to the bottom in currencies
MoneyWeek: The race to the bottom in currencies
Recent action on the forex markets has been perverse. The lower a central bank's interest rate, the better it was for its currency.
South West property market hits the bottom
BBC News: Hopes improve for housing market
Usual ramping by RICS. It appears that where I live, it's time to buy.
Shhh... don't tell
Belfast Telegraph: Estate agent attacks house price fall forecasts
A LEADING Ulster estate agent has dismissed economic opinion that house prices will probably continue falling and attacked those who predict further falls in the housing market. Keith Mitchell, of Templeton Robinson, also said that UK-wide housing statistics should be ignored by potential house buyers, claiming that such reports could damage the "fragile confidence now developing" among potential buyers in Northern Ireland. "In Northern Ireland our prices exploded over a short period of time and have reduced just as quickly. In our view there is therefore no basis to suggest our values will become further depressed."
First against the wall
NYTimes: You Try to Live on 500K in This Town
PRIVATE school: $32,000 a year per student. Mortgage: $96,000 a year. Co-op maintenance fee: $96,000 a year. Nanny: $45,000 a year. We are already at $269,000, and we haven’t even gotten to taxes yet.
Video: Dr Doom meets The Black Swan (and get mugged by CNBC hosts)
CNBC: Predicting Crisis: Dr. Doom & the Black Swan
Great stuff. Bill Gates and Michael Dell stood in the queue for hours at Davos to see these guys. Nationalise the banks and sack everyone that got us into this mess, talented bankers, central bankers and governments, the lot. Are we near the bottom yet? LOL we haven't even started...
More evidence of the reckless stupidity and ignoring dangers in the British banking system
Times online: HBOS sacked and gagged bank risk whistleblower
"HBOS sacked and gagged a senior executive who four years ago warned the board of the bank they were taking excessive risks, according to explosive evidence revealed in Parliament this morning." - They sacked their senior risk assessing executive, then when he took them to an industrial tribunal and won they made a gagging order part of his settlement. Still, it's not like the banking system and the property market has suffered, is it?
Europes dependence on Russian energy bites
FT: Russian debt worries hit euro
The euro suffered on Tuesday as a report that Russia was looking to restructure $400bn of its outstanding corporate debt highlighted concerns over the eurozone’s exposure to problems in emerging Europe. Analysts said the report triggered a knee-jerk bout of heavy euro selling, given the eurozone’s high exposure to the region through bank lending. According to the Bank for International Settlements, European banks’ foreign claims on Russia totalled just over $200bn, or around 1 per cent of GDP.
Financial advantage of Council housing
Telegraph: Councils pay removal costs for tenants to move to the seaside
This article is a bit boring about Brent council attempting to move tenants to the seaside, but there are a slew of articles about councils attempting to dislodge tenants due to a shortage of supply against rapidly growing waiting lists. Everybody knows, at least those poverty struck like me, that getting subsidised council accomodation is a financial godsend, but how much of a godsend? Slowly there appears to be a -market value- being negotiated for council housing in the different areas. I hope that social housing can be seen for the distorting financial stipend it actually is.
Toxic Assets Unveiled
Times: UBS reports country's worst loss of SwFr20bn
UBS has reported the biggest loss by a Swiss company and outlined plans to cut a further 2,000 staff at its troubled investment bank. UBS has cut 9,000 jobs since the onset of the credit crunch, as well as writing down $49 billion (£33 billion), transferring $60 billion in toxic assets to a fund run by the Swiss National Bank and receiving a SwFr6 billion injection of fresh equity from the Swiss Government in return for a 9.3 per cent stake.
Volume and prices in residential market down again
Citywire: House sales fall to new low
The UK's housing market continues to suffer in 2009 amid the ongoing recession, with new figures released today showing house sales and prices are still falling. The Royal Institute of Chartered Surveyors (RICS) said that in January the average number of sales over the last three months had dropped again to a low of just 9.9 sales, down from 10 in December and its lowest level since the survey began in 1978. The majority of surveyors have also seen prices fall again, with an increased balance of surveyors reporting further declines in prices rising in January than in December.
December saw record 92% fall in current account surplus
Japantimes: December saw record 92% fall in current account surplus
he said, projecting that Japan may soon see its current account balance sink into the red because the world economy is unlikely to pick up in the near future.
Another highstreet going
Times: JJB calls in administrator for fashion division
JJB Sports, the struggling retailer, has called in the administrators for its loss-making fashion chains, leaving more than 800 jobs under threat.
Grilled bacon for lunch?
Telegraph: Senior bankers face MPs for live television grilling
We'll have to see if this really will be a grilling or just a just a light 'old boys fagging network' basting for the cameras followed by a slap up meal a whey and draff.
Why deflation won’t grip Britain for long
MoneyWeek: Why deflation won’t grip Britain for long
"I suspect the disinflation of recent years is coming to an end. How it’ll all pan out in the figures remains to be seen, but even though we probably will see consumer price deflation this year, right now I don’t see it being around by the end of 2010."
Its passe to mention news like this here these days.
BBC: Bad debt leads to big loss at UBS
UBS, Switzerland's largest bank, has reported a loss of 19.7bn Swiss francs ($16.8bn; £11.3bn) for 2008, due to write-downs at its investment unit. The bank, which has been hit by bad debts that sparked the credit crunch, said it made a loss of 8.1bn Swiss francs between October and December. UBS said it remained "cautious" about prospects and would cut a further 2,000 jobs at its investment arm. The firm got a 6bn-Swiss franc bail-out from the Swiss government in October. UBS was also told at the time that it could transfer up to $60bn of distressed assets to a fund supported by the Swiss central bank.
RICS report: no bounce in sight but buyers lining up
Telegraph: Number of properties sold slips to lowest level in more than 30 years
Jeremy Leaf, a spokesperson for RICS, said: "The latest survey provides further evidence of the eagerness of buyers to try and pick up bargains. This interest has yet to translate into sales but transactions may pick up in the coming months." The RICs survey indicated that house prices continued to fall in January, with the proportion of surveyors reporting a fall rather than a rise in house prices increasing from 73.9 per cent in December to 76.3 per cent last month. It blamed depressed prices on “the large stock of property on estate agents' books relative to the pool of able buyers”. The number of unsold properties per agent fell from 77.9 to 75.4 in January as owners chose to avoid selling for as long as possible or to withdraw properties from the market and let them instead.
FT - Credit crunch will exacerbate the commodity super-cycle
FT: Commodty prices will probably spike like crazy in 2010 and 2011
The world natural resources were grossly under resourced even before the credit crunch as so much money was squandered in real estate investment instead of extracting resources. Thats why we had the commodity boom before the credit crunch. Now because of deleveraging, commodity prices have temporarity collapsed making new investments in extracting resources uneconomic. Also thanks to the credit crunch, no spare money is available to invest in new resource developments. Anyway when we come out of the credit crunch (2010 and 2011 presumably) commodity prices should spike like crazy.
Britain is in deep trouble, which may grow into a cluster foxtrot on a scale witnessed recently
Huffington Post: Will Obama Have To Bail Out Britain?
According to the Financial Times, RBS has a balance sheet of around $2.7 trillion, much of it toxic. The GDP of the entire British economy is $2 trillion. Not only is RBS too big to fail, it's bigger than the entire annual British economy. RBS fails, Britain might as well. But it gets worse. The balance sheets of the largest British banks total nearly $9 trillion, or 4.4 times the size of the British economy. That $9 trillion is also about 65% the size of our own U.S. economy. It might take the U.S. $3 trillion or so to fix our banks, my best guess is it would take about $750 billion to bail out Britain.
One in five
Daily Mail: Housing crash 'to put 2.5m in negative equity'
One in five homeowners could fall into negative equity as the recession bites, the City watchdog warned yesterday. House prices may decline by 30 per cent from 2007 levels, leaving 2.5million people with homes worth less than they owe on their loans, the Financial Services Authority said. This represents more than 21% of all mortgage holders.Some 500,000 of these are thought to be holders of buy-to-let deals, which the authority singled out as a particular concern. The housing crash is already the worst since the 1950s, with prices falling at an annual rate of nearly 20 per cent. At this rate, up to 200,000 people are falling into negative equity every month.
RICS: house falls balance -76%
Reuters: House price fall quickens and outlook grim
House prices fell at a faster pace in January than in December and the outlook for prices turned gloomier as the number of completed home sales fell, says RICS. The number of agents reporting price falls exceeded those reporting rises by 76%, up from 73% in December. The average number of transactions dropped to 9.9 per respondent, the lowest since records began three decades ago However, enquiries from new buyers have risen for the third month in a row.
Balls, but not Balls (for once) - His Master's Voice on seriousness of crisis
Yahoo/Press Association: Recession worst for century - Balls
'The economic downturn will be worse than the Great Depression and could spark a 1930s-style resurgence of the Far Right, a Cabinet minister has warned. Children's Secretary Ed Balls said the current crisis was "the most serious global recession for over 100 years", and its effects would be felt for a decade and a half.' Still, on the bright side, house prices went up last month and it's a fabulous time to invest in property, don't miss out as prices will start shooting up again soon.
What noise do you think this will make when it bursts?
Times Online: Barclays defends derivatives-led growth as balance sheet balloons
Pop? Bang? I really don't know. I've never heard a £2 trillion balloon burst before. How exciting!
Trying to justify bonus pay?
The Times: RBS and HBOS executives to apologise for collapse of banks
"The bankers who led Royal Bank of Scotland and HBOS to the brink of collapse will offer a public apology today. But amid the furore over bankers’ bonuses, they will also seek to point out that they have personally been “punished for failure”, losing millions of pounds because of the meltdown in their banks’ share prices."........its ok to give bonus payouts then... "It is understood that Mr Hornby, who continued to work as an adviser to HBOS on a retainer of £60,000 a month after his resignation late last year, has seen the value of his HBOS shares fall from more than £10 million to less than £500,000. Similarly, Sir Fred is understood to have spent his 2007 £2.8 million bonus on RBS shares, which have since lost more than 90 per cent of their value.".........poor thing....
Monday, February 9, 2009
Moody's prediction - comments?
Bloomberg: U.S. Housing Market May Bottom in 2009
U.S. home prices will reach bottom by the end of the year, concluding a slide that will have cut values 36 percent, Moody’s Economy.com said today. “Notwithstanding the intensifying economic gloom, the bottom of the housing downturn is within sight,” chief economist Mark Zandi said in a statement today.
Global food problems looming
Market Oracle: Catastrophic Fall in 2009 Global Food Production
"After reading about the droughts in two major agricultural countries, China and Argentina, I decided to research the extent other food producing nations were also experiencing droughts. This project ended up taking a lot longer than I thought. 2009 looks to be a humanitarian disaster around much of the world." The fires in Australia are due to a severe drought. I have checked the claims in this article, there really is widespread drought in the world's bread baskets.
Maybe so, but why is it dropping in price?
FT.com: Bullion sales hit record in stampede to safety
''Investors are buying record amounts of gold bars and coins, shunning risky assets for the relative safety of bullion amid renewed fears about the health of the global financial system. The US Mint sold 92,000 ounces of its popular American Eagle coin last month, almost four times that which it sold a year ago and more than it shipped during the whole of the first half of 2007''
Labour MP's now attempting to state the obvious
BBC News: Crisis 'more serious than 1930s'
The financial crisis will be "more extreme and more serious than that of the 1930s", cabinet minister Ed Balls has predicted. Mr Balls, a former economic adviser to Gordon Brown, said the global recession would be the most serious for "over 100 years", the Yorkshire Post reported. And only a few months ago, Gordon Brown refused to acknowledge a recession was looming, and stated that the UK was well-placed to weather any economic downturn. . . . . what next ?
Balls to say it . . .
BBC: Crisis 'more serious than 1930s'
The financial crisis will be "more extreme and more serious than that of the 1930s", cabinet minister Ed Balls has predicted.
Dont care if this gets pulled
Wales Online: Cold spell kills off vulnerable pensioners
More bad weather heading our way......if you have any elderly or vunerable people living close who are alone please check on them.....your neighbours may be very frightened and cold at night....a little effort could mean life or death to them.....enough talk of a utopian world time to put things to action....even if they tell you f##k off it doesnt matter...what matters is the cold is fine when your young and healthy but its very scary for those who are not.
"2009 likely to see further large falls in UK house prices"
Citywire: Safe as houses?
Reflecting the national obsession with the value of our homes, there are now a number of measures published by banks, building societies, internet estate agents and the government suggesting UK house prices fell by more than 10% in 2008. There are also many economists that forecast what will happen to house prices. The consensus view is that they will fall by another 10% or so in 2009. Given their poor past track record, economists’ forecasts should be treated cautiously, but there are several reasons to suspect that a further substantial fall in house prices will occur. First, houses continue to be expensive.........
Inflate your way out of debt
CNBC: US Inflation Could Hit 200%
The US risks being hit by Zimbabwe-style hyperinflation and there are signs that the world's biggest economy risks turning into a banana republic, Marc Faber, author of the Gloom, Doom & Boom report, told CNBC's "Asia Squawk Box."
The Queen city is finally topppled
The New York Times: Striking Declines Seen in Manhattan Real Estate Market
“The worst is yet to come; there is a blood bath coming,” said Matthew Haines, a founder of the real estate site Propertyshark.com who prepared the Corcoran report.
Where to now?
FT.com: Roubini: Anglo-Saxon model has failed
He also criticised the US and UK approach to bank bail-outs, comparing it with attempts by Japan in the 1990s to solve its banking crisis. “The current US and UK approach may end up looking like the zombie banks of Japan that were never properly restructured and ended up perpetuating the credit crunch and credit freeze,” he said.
Slim pickings on mortgage offers
Evening Standard: Slump in number of mortgage products on offer
There are currently just 1,542 different home loans available across the market, compared with 15,599 in July 2007, according to financial information group Moneyfacts.co.uk. The latest slide in mortgage availability has been driven in part by lenders withdrawing their ranges of tracker products ahead of last week's interest rate cut.
John Prescott sets up petition for RBS to give up bonuses
IPetitions: No Ifs No Buts- Give up the Bonus, RBS
Following on from his Facebook page http://en-gb.facebook.com/group.php?gid=41481071905 Prescott has started a petition: "It's reported that the Royal Bank of Scotland (RBS), which received £20 billion of taxpayers' money, plans to give £1b of it out in bonuses to bankers and traders. We believe this is morally and economically outrageous and should be stopped. The taxpayer owns 68% of RBS so we are now ALL shareholders. So as shareholders, we therefore call on the board of RBS to announce that their bankers and traders will receive NO bonus this year. "
The next domino to fall
This Is Mone: Alt-A loans: New fear for middle-class subprime
The doom-mongers reckon America's property market is on the verge of a new crisis as big as the subprime disaster that began in 2007. The fear is that borrowers with better credit histories, who took out Alt-A mortgages, are defaulting on a similar scale. Rising unemployment in America, where a record 598,000 jobs were lost in January alone, means many borrowers are struggling. Late payments and repossessions are soaring. Dozens of banks are affected because they bought parcels of Alt-A mortgages that were sold as securities and traded around the world. The picture is bleak.
Anyone fancy taking a stab at when quadrillion will be mainstream? Billion? So yesterday!
Bloomberg: U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes
Feb. 9 (Bloomberg) -- The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.
Locked in
Need An Advisor: Capital Gains Tax : Currency Gains
I happened along this short bit of info. For some reason I thought that money, being money, couldn't be subject to capital gains tax, as it doesn't make sense. Just in case you are not aware, any gains in foreign currencies that have been made by selling out of the pound are subject to the flat rate 18% capital gains tax. A bit of a scam IMO. Obviously check your own arrangements. Is there some way, I wonder, for somebody who bought euros a year ago, then immediately bought back into sterling, to represent this obvious loss to the taxman as being deductible? We are all less wealthy with a pound collapse after all. Probably not....
Dear oh dear.
Independant: Northern Rock's losses on repossessed homes soar
Losses incurred by Northern Rock on repossessed homes soared nearly four-fold during 2008 as the economy deteriorated, figures showed today. The nationalised bank saw the steep increases in losses on mortgages that are held in its Granite securitisation vehicle, which represents around half of its total mortgage book. Figures for December 2007 showed that Granite had lost £10.2m from repossessed homes since it was first set up in 2001, but by December last year, the figure had mushroomed to £45.9m - a 350 per cent increase. The securitisation vehicle made losses of £8.7m from the properties during December alone, with an average £19,348 loss per property that was repossessed.
The world is bankrupt! Oh well, we'll need a new system then.
Telegraph: IMF may run out of cash to fight crisis in six months, Strauss-Khan warns
Dominique Strauss-Kahn said the Fund needed an urgent cash infusion if it was to continue bailing out troubled economies in the future. Mr Strauss-Kahn also indicated that the world's advanced economies were now tipping from recession into full-blown depression, cementing fears about the scale of the economic slump in rich nations. The IMF head made the comments in Kuala Lumpur in Malaysia over the weekend, where he is attending a meeting of central bankers from Southeast Asia. The Fund has bailed out a number of countries including Iceland, Latvia and Pakistan but Mr Strauss-Kahn said there would be many others in need of help in the months ahead.
Cable talking sense again
ThisIsMoney: Bring back the guillotine... for bankers
The crass behaviour of Britain's financial aristocracy rivals the last of the Bourbons. Marie Antoinette famously patronised the Parisian mob with her 'let them eat cake', while dining in luxury in the Tuileries.
Look forward to a long time of prices below average
Telegraph: House prices have much further to fall and that is no bad thing
"Why should we assume that the market will nicely settle down to "fair value"? After all, it has spent a long time above it. Accordingly, it would not surprise me if the market now spent some time below it. The recession looks awful and unemployment is set to rise to well over three million. Average incomes are all very well, but the average is computed over those people who are in work, a number which is set to fall." Great article, spot on
Didnt we all set the bells off 3 years ago?? Yet no-one listened
Bbc: Job prospects in 2009 'alarming'
UK companies are shedding jobs at an ever-growing rate, says the Chartered Institute of Personnel (CIPD). Its research suggests more than one in three UK employers are planning to cut jobs in the first three months of 2009.
A complete meltdown
MSNBC: The rise, and potential fall, of America’s banks
The federal government — working without a road map, and without a net — is putting together a plan to keep U.S. banks from collapsing. Not just to get the banks lending again. To keep them alive.
The government shows where its proprities lie
Independent: Government rejects call to cap every bank bonus
"These banks would simply not attract the best people, who would just go elsewhere," one senior government source said.
Supply and no Demand!!
PA: Million baby boomerangers move home
More than one million young people (under 24) have moved back in with their parents in a bid to save money towards buying their own home, a survey showed. AND with an estimated 440,000 25- to 34-year-olds returning home. AND a further 471,000 35- to 44-year-olds have also failed to fly the nest and are again living with their parents in a bid to save money. Wow!!
More nonsense from Kaletsky
Times: Now is the time for a revolution in economic thought
Kaletsky trying to show he can think outside the box (no doubt to atone for his past crapitude). No mention of Henry George, banking models etc. But people like Murdoch wouldn't like those issues to be discussed by their readers.
Asked by Bloomberg TV what caused the crisis, Latvia's finance minister shrugged: "Nothing special."
Alternet: Naomi Klein: Public Revolt Builds Against Rip-off Rescue Plans for the Economy
Similar demands can be heard these days in Latvia, whose economy has contracted more sharply than any country in the EU, and where the government is teetering on the brink. For weeks the capital has been rocked by protests, including a full-blown, cobblestone-hurling riot on January 13. As in Iceland, Latvians are appalled by their leaders' refusal to take any responsibility for the mess. Asked by Bloomberg TV what caused the crisis, Latvia's finance minister shrugged: "Nothing special."
Imagine this...
VOA: Radical Action Needed To Stop Zimbabwe Economic 'Death Spiral'
Hanke, an expert on the phenomenon of hyperinflation which in Zimbabwe has reached mind-boggling proportions with estimates of percentage inflation rates measured in the sextillions, currently declines to put a specific figure on Zimbabwean hyperinflation other than to set a frequency at which the general level of prices doubles - about every 1.3 days.
Back to business
The Times: RICS figures reinforce need for property groups' £2bn cash call
Britain's leading property companies are preparing to tap shareholders for as much as £2 billion in deeply discounted equity fundraisings as they seek to repair their balance sheets and ease pressure on covenants. The news comes as figures to be published today by the Royal Institution of Chartered Surveyors (RICS) show that demand for buying and letting commercial property has fallen to new lows after the fifth consecutive quarterly decline. Hammerson, the owner of Brent Cross shopping centre in North London, and part-owner of the Bullring in Birmingham, is today expected to kick off the equity rush by announcing plans for an estimated £600 million rights issue, underwritten by Citigroup and Deutsche Bank, at about half its current share price.
Sunday, February 8, 2009
......and it's goodnight from me......
MailOnline: President Blair: Former PM set to become EU chief as Sarkozy battles to win him the post
"Tony Blair is poised to become the first President of Europe after it was confirmed that French leader Nicolas Sarkozy is determined to help him win the post. A senior aide to President Sarkozy told a private gathering of senior British and French politicians that he is to tell fellow EU leaders that Mr Blair is the only man who can help Europe stand up to the rest of the world. The remark by Alain Minc, a key member of Mr Sarkozy’s inner circle, is the second French blow to Gordon Brown’s standing in two days"
Deflation, Deflation, Deflation
Telegraph: Bond Market calls Feds bluff as world falls apart
An article indicating that stimulus isn't working. A few on site think this is inevitable as it has been an attempt at a Keynsian blitz at the top of the cycle rather than at (or at least close to) bottom of cycle. I'm guessing I may not get many posts on this one !
We are all financial terrorists!
Scotsman: Jobs pain will continue until property prices turn around
On numerous blogs, you find bloggers intent on forcing house prices as low as they can. These financial terrorists, as I like to call them, have an obsession with their destructive vendetta against homeowners. We can all agree that runaway prices like those of the last bubble have been a disaster. Many of us warned it would all end in tears. But to seek revenge on homeowners by hanging them out to dry entirely misses the point. Like it or not (and many of us do not), a huge chunk of the economy, our national psyche and wellbeing are tied to the fate of the housing market.
So glad you haven't forgotten us Mr King sir!!!
The Times: We won’t abandon savers, says Mervyn King
"MERVYN KING, the Bank of England governor, will insist this week that the monetary policy committee’s aggressive cuts in interest rates do not mean savers in Britain have been abandoned."...........Thanks for that Merv I feel better now
That's a lot of insurance.
Telegraph: Taxpayer to insure Treasury's £400bn toxic loan scheme
The Treasury's scheme to ring-fence toxic loans made by British banks is likely to involve more than £400bn of assets being insured by the taxpayer.
Inflationary depression
Yahoo: Peter Schiff: Stimulus Bill Will Lead to "Unmitigated Disaster"
The problem, he says, is the government is trying to perpetuate a "phony economy" based on borrowing and spending. With the U.S. consumer tapped out, the government is "now taking on the mantle" of consumer of last resort, he continues, predicting the bond bubble will soon burst - if it hasn't already - ultimately leading to a collapse of the dollar and an "inflationary depression worse than anything any of us have ever seen."
Meh
Wales Online: Good time for a house bargain
WE might be in the grip of a recession but Welsh estate agents are telling house hunters that NOW is the time to snap up a good deal. Experts say that falling property prices have led to a high rise in fresh inquiries from potential new buyers, fuelling hopes of a quicker-than-predicted recovery in the housing market. North Wales estate agent Melfyn Williams said last weekend was one of his busiest ever for house viewings. “What this indicates is that, hopefully, we’ve hit the bottom and now we can look positively to when it will start recovering, rather than wondering whether it’s going to drop any more,” said Mr Williams. “That’s going to be the time when prices really start to rise, and if you haven’t bought before then, you might miss out.”
Great explanation of why the pessimists are right
Naked Capitalism blog: Why Ben's helicopter will fail
The article this blog entry references is by a reputable source - Steve Keen - who writes very clear explanations of flaws in conventional economic models. This article has (finally) made me come off the fence as to whether inflation or deflation is coming our way - he explains that it is the latter and that only truly Zimbabwe-style policies could possibly create the former. The piece explains why we're not, in fact, in a world of true Fractional Reserve Banking but that the credit creation tail now wags the FRB dog. We are doomed to repeat the great depression as a result. I am glad he refuses to indulge any of the stupid conspiracy theorists in explaining bankers' behaviour - they simply have incentives to lend lend lend in the current system and we'll all pay for that.
Borrowers face a repayments crunch in the summer
Times: Your guide to 0% mortgages
Millions of tracker borrowers face a repayment shock of up to £7,000 a year, despite interest rates falling to a record low of 1% last week. The jump in repayments will be most severe for the many thousands of borrowers whose deals track below Bank rate, some of whom are now paying 0% following the Bank of England’s half a percentage point cut last Thursday. They could see their monthly repayments leap by as much as eight times — from less than £100 to more than £600 on a £200,000 loan — when their deals expire. Most of these sub-Bank rate schemes were sold in summer 2007, so the repayment shock will hit home in just a few months’ time. Those on super-low rates need to be ready. Even the cheapest remortgage deals are at 3%.
Stocks higher, on a stimulus and a prayer
Investment Postcards from Cape Town: Words from the (investment) wise for the week that was (February 2 – 8, 2009)
Global stock markets shrugged off dire news on the US employment front, arguing that the gloomy data would hasten US lawmakers’ passage of a stimulus package. Read all about this and the implications for financial markets in Prieur du Plessis’s weekly “Words from the Wise” review.
So the bailout won't rescue the banks! Uhhhh
Bloomberg.com: Stimulus Battle May Signal Tough Sell for Obama’s Bank Rescue
President Barack Obama’s struggle to push an economic stimulus bill through Congress may seem easy compared to what he’ll encounter when he returns to Capitol Hill for additional funds to rescue the banking system.
Biggest credit binge in financial history is wrecking economy
Guardian.co.uk: Bank to issue grimmest warning yet on economy
Mervyn King will this week present the Bank of England's most pessimistic assessment yet of the outlook for Britain's economy, after a slew of official figures confirming that activity has "fallen off a cliff" since the autumn. When the Bank's monetary policy committee reduced borrowing costs to just 1% last Thursday, it acknowledged that "the global economy is in the throes of a severe and synchronised downturn".
Saturday, February 7, 2009
The deflation smokescreen.
Telegraph: Our economy is being held to ransom by deflation fear
Our currency has lost a third of its value in twelve months – pushing up import prices. But inflation isn't a problem. Inflation is yesterday's news. Politicians and commentators, instead, warn of deflation around every corner. I don't deny deflation is bad. Falling prices warp incentives, increase real debts and – if expected to continue – hammer retail spending. Such problems plunged Japan into a decade-long recession in the 1990s. But UK policymakers evoke the spectre of deflation not because it's an immediate danger; it's instead been conjured up as an excuse – so ministers can yank monetary policy back from the Bank and throw fiscal caution to the wind, using fear to trump objections based on common sense and economic lessons hard-won over many decades.
Don't worry, Mandy's on the case!
BBC: Treasury probes bank management
Sorry, I'll try that again.
Don't worry, Mandy's on the case!
BBC: Treasury probes bank management
As I was expecting. Stories get leaked to the press about fat-cat bonuses and then the government says it's going to get tough. But hang on a minute - who owns the RBS in the first place? - surely it's actually straightforward for the owners to prevent bonuses.
Royal Bank of Scotland victim of $9m bank robbery
Fox News: FBI Investigates $9 Million ATM Scam
Hackers broke into RBS's computer system, and used the details to clone cards used to withdraw $9m from ATM machines around the world. So far, nobody has been arrested for it.
How many hospitals and schools would this build?
The Telegraph: Royal Bank of Scotland to pay staff £1 billion in bonuses
"The bank’s board has begun discussions about the bonuses with UK Financial Investments (UKFI), the body set up by the Treasury to manage the Government’s shareholdings in Britain’s ailing banks. The scale of the plan is likely to increase public anger as the recession deepens, and add to the frustration of ministers. It comes as Alistair Darling, the Chancellor, announces in The Sunday Telegraph today his plans for an independent review of the way banks are managed, including the bonus system.".............Darling you are a laughing stock
Makes you want to riot..........
The Guardian: Disgraced HBOS bankers received their goodbyes in cash
"Disgraced banking boardroom executives at HBOS walked away with cash payments worth hundreds of thousands of pounds each, the Guardian has learned. Executives were handed the cash after HBOS was rescued by Lloyds TSB and the takeover formally activated a "change of control" clause in their contracts."........I dont know how much more of this I can take without doing something about it
'Priced to Sell'
Telegraph: Property overseas: our great escape
This property was put on the market for £975k......couple of WEEKS later it's £825k. The gist of this article is 'things are so dear, here'. Oh the irony ....nearly a million quid for a really unremarkable terrace house in 'Ove, ponzi schemed up over 10 - 15 years, and they're mystified why the currence is debased. If they can't sell for the right 'price' - they'll let it. Cheered me up no end - muppets.
Manufacturing starved of credit
Alice Cook - UK Bubble: The truth about the UK banking and the credit crunch
More shocking charts from the bitter renter in London. For every one pound that commercial banks lend to the manufacturing firms, 13 pounds are lent to the shadow banks. There doesn't appear to be much of a credit crunch within the UK's off-balance sheet dodgy and unregulated financial sector.
Tech Bubble - Mortgage Finance Bubble - Govt Bubble
Government Credit Bubble: Credit Bubble Bulletin
The public sector is now essentially on its own when it comes to stoking this bout of reflation. Moreover, it is being called upon after a couple of decades where private-sector Credit grossly inflated home prices, securities values, various other asset prices, household incomes, consumer borrowing and spending, corporate profits, and government receipts and expenditures. The Government Finance Bubble is being called upon to reflate with little assistance from private Credit, while at the same time it is faced with a Deeply Maladjusted Economic Structure still overly dependent upon inflationary Credit expansion. Throwing mega-Trillions at our distorted economy is just asking for trouble. Interesting data to begin but got to scroll down to get article.
Interesting analogy about pushing easy credit
Market oracle: Why Economic Deflation Despite Inflationary Government Intervention
There was an article and posts yesterday about a central bank policy goal of pushing easy credit, this article has some analogies relating to that.
Bank of England's low IR policy making everyone poorer
BBC 'News': Council funds facing rate squeeze
Councils across England expect the base rate cut to 1% will leave them more than £600m a year worse off. It is the Bank of England's low interest rate policy that forced many councils to seek better returns in foreign owned banks such as Iceland's Landsbanki. As the councils will have to seek better returns elsewhere again, the Bank of England's policy will undoubtedly come back to haunt them. The Local Government Association say it hopes for a return to a "more balanced and sustainable rate". Don't we all.