Saturday, Sep 12, 2009
Some wishful thinking from RBS chief.
BBC News: Bank boss wary of quick recovery
Stephen Hester, chief executive of Royal Bank of Scotland said that that "a rather gradual emergence from recession" where the economy could "rebalance" was the best way forward. He warned a "spend-not-save" culture could mean further economic downturn. Mr Hester the BBC he wanted to see a situation "where people can save more, borrow less, the balance of payments deficit closes, the government gets its own deficit under control. It is entirely possible that we actually enjoy a rather faster recovery, where people are tempted to say: 'That was a bad nightmare behind us, but don't worry it's gone and we can go back to where we were before."
Posted by wanderinman @ 11:24 AM (330 views) Add Comment
4 Comments
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1. happy mondays said...
Emmm, i heard this on radio 4 this morning, we can avoid a W dip recession if we go slowly and carefully.. But as smugdog said yesterday, humans are greedy..Also we do not think about future generations.. The american indians would take on the effect they would have on the enviroment and there children / grandchildren before they proceeded with any actions..
Only when the last tree has died, the last river has been poisoned and the last fish has been caught will we realize that we cannot eat money. Cree..
2. alan said...
Quoting the White Queen:
'I'm sure I'll take you with pleasure!' the Queen said. 'Twopence a week, and jam every other day.'
Alice couldn't help laughing, as she said, 'I don't want you to hire ME - and I don't care for jam.'
'It's very good jam,' said the Queen.
'Well, I don't want any TO-DAY, at any rate.'
'You couldn't have it if you DID want it,' the Queen said. 'The rule is, jam to-morrow and jam yesterday - but never jam to-day.'
'It MUST come sometimes to "jam to-day,"' Alice objected.
'No, it can't,' said the Queen. 'It's jam every OTHER day: to-day isn't any OTHER day, you know.'
'I don't understand you,' said Alice. 'It's dreadfully confusing!'
Economists and politicians caught on...the rest is history. The interview with Robert Peston took 23 minutes, by the way.
3. will said...
A fast recovery to where we were only 12 months ago is utter nonesense. So should we expect house prices to remain at around 7X earnings? That is what caused the economic crash in the first place. Too much borrowing and debt. Most other countries don't expect their nationals to borrow such huge sums of money to live in an average home. The Banks would obviously love to lend at the peak levels once again. Sorry guys it's just not going to happen.
4. wanderinman said...
The interview of Stephen Hestor by Robert Peston is online:
http://www.bbc.co.uk/iplayer/episode/b00mvfqv/Leading_Questions_Stephen_Hester/
To expand on the quote in the above article, Hester has a little dig at the government's spendaholics and implies that it is giving the economy a short term pre-election boost without actually fixing anything:
"Human beings find it extremely hard to deny themselves today in favour of a safer and calmer future, whether that's pensions or holidays or in the case of the governments, spending when governments have got to be elected. So it is entirely possible that we actually enjoy a rather faster recovery, where people are tempted to say: 'That was a bad nightmare behind us, but don't worry it's gone and we can go back to where we were before.' I think that might happen. If it does happen it will be dangerous because we won't have fixed the problems that have recently exploded in our face and until we fix them the world is an unstable place and our economy is unstable."
There has been debate on this blog about whether demand for loans has fallen or that supply has dropped. Hester says that demand has dropped and RBS are approving the same proportion of business loan applications as pre-crisis (about 20 minuntes in). And he tucks in a pointed comment about the government's spending.
"What has happened is that we are not approving less. What has happened is that people are asking for less. And that is because people and businesses, and I hope soon governments, are pulling their horns in, are spending less, are worried about demand. The vast majority of small businesses - their problem is not loans, their problem is customer demand. Their problem is the confidence that if they investment is inventory, or a new factory, or whatever, that there'll be customers to buy their products to make profit. And in that sense the economic adjustment that we need is happening. People are saving more and borrowing less. We need that to happen. I think that banks are doing their job because our job is to make sure that economic adjustment is smoothed so that it happens in a voluntary way with people voluntarily saving more and borrowing less rather than forced through credit starvation. And I'm very very clear that at least as it regards RBS there is no credit starvation. We're open for business, we want to lend to credit worthy borrowers and we continually invite them to come forward and I hope they will."