Friday, Jun 04, 2010
Time to make your mark Mr Cable!
Management today: Banks 'have not served enterprise in this country', says Cable
A little off-beat, but those who control the volume of money..., and all that. It's been obvious for sometime that government needs to control this beast (Financial institutions). Let hope Vince is our knight in shining armour, or at least has more balls than Mandy will ever have.
Posted by markj69 str05 @ 07:20 PM (1790 views) Add Comment
15 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. mark wadsworth said...
Sure, bank bashing has become the national sport. Those evil bankers, who now refuse to continue to prop up the house price bubble. That's why I have never indulged in bank bashing, it's a pots-kettles type situation.
2. markj69 str05 said...
'pots-kettles' my @rse. A lot of people have been duped into thinking they can afford the debts they have, by greedy financial institutions, who should have been there to guide. Not enough or no regulation by non-VI parties. Self regulation by VI parties, working to make a profit. And at the expense of who??? Joe public.
Those banks deserve an awful lot of bashing, if only to make sure this doesn't happen again.
3. charlie brooker said...
I agree with Cable's sentiment: Getting a mortgage over the last decade was a cynch but getting a business loan?
The phallacy of basing a nation's future prosperity on property has been shown to be an absolutely busted flush.
Just imagine where the UK might be now if just 10% of the value of loans handed out on property had instead been handed out to SMEs?
I wonder what the ratio of the value of domestic mortgages to the value of SME loans has been over the last 10 years?
4. the number cruncher said...
CB I agree with your sentiments and the banks have got a lot to answer for as many bankers activly seek to manipulate our political system.
But the problem with business loans is also one of security and accountability.
Its easy to get a business loan if you put up security. I know a few business people who see business as a one way bet and look to risk the banks money on their business ventures and not their own. (guilty of it myself)
5. icarus said...
Hot air. No detail. The idea that there are lots of job-creating SMEs constrained only by lack of credit is moonshine.
6. cat and canary said...
Some anecdotal evidence,
A while ago I went to several well known banks for a small business loan and was asked to stump up 50% of the money as a flat outright policy of most banks. Regardless of the business, business potential, etc. They werent even interested in looking at the business.
So in my case, i would disagree that the banks are not constraining SMEs.
I also wonder how many investors preferred to invest in property or property "entrepreneurs" or in property companies during the boom, as a lower risk alternative to investing in start ups etc?
So what happened? Well, I approach customers, manufacturers, OEMs etc for development money and a few months later got it. So stuff the banks. Right now i do not need to fund my business via debt....
Who knows, perhaps SMEs will all find more creative and adaptable ways to fund their business, and become leaner and meaner companies as a result of it, and ultimately the banks miss out. Perhaps the banks attitude is not a bad thing after all?
7. icarus said...
I didn't say banks weren't constraining SMEs. I said Cable and others are talking as if lack of credit were the ONLY constraint. Banks don't think that SMEs in general are a good risk at a time when consumers are paying down debts and saving.
8. charlie brooker said...
My gripe is that you could have no income, no job and no assets, you could self-certify, you could no-certify and you could lie until you were blue in the face to get mortgage you needed no deposit, you could borrow 125% of the value, you could borrow 8, 10, even 12 times your income and the banks were still happy.
Yet to obtain finance for a business that would create income, create jobs and create real wealth that would help boost GDP, tax revenue and net exports? Forget it.
Admittedly assessing the potential for a business to succeed takes effort, but the banks made no or little effort to assess who they lent hundreds of billions in mortgages to. Besides if mortgage risk can be bundled up and sold on the market (MBS), so too can SME loan risk be similarly bundled and sold (SMEBS?). In principle there's no difference.
When a mortgagee succeeds all that happens is they live in a house. Big deal. But when a business succeeds the sky is the limit - billion dollar businesses flourishing from a relatively small initial loan.
9. dbc reed said...
Loth as I am to criticise CB ,there is the matter of a lack of demand in the economy. Shops appear to be closing by the streetful.What is the point of giving SME's loans if they can't sell anything?Should n't the idea be to give the punters loadsa money to spend like no tomorrow with the proviso ,of course, that you simultaneously impose LVT which triggers as soon as house prices go up showing the system has sprung a leak and cheap money is escaping from the virtuous circle of production > consumption?Suggest Gov's QE money (cheques backed by nothing) go to pay for public sector and that old favourite, backed by the Ezra Pound (and J.M Keynes ):time limited bank notes that demonetise if you don't spend them. But if you can get to the situation where houses like cars cost their production value circa 8OK with ,thanks to LVT, little or no tradeable land value,production would boom thanks to much more disposable income not disappearing into rents and mortgages.
10. charlie brooker said...
@dbc reed:
"Shops appear to be closing by the streetful.What is the point of giving SME's loans if they can't sell anything?"
Should the banks just lend mortgages and nothing else then?
"But if you can get to the situation where houses like cars cost their production value circa 8OK with ,thanks to LVT, little or no tradeable land value,production would boom thanks to much more disposable income not disappearing into rents and mortgages."
So which is your preferred option?
11. braindeed said...
I feel me may truly be approaching the end game for what passes as western democratic capitalism.
Like the newly enlightened poor who discovered that a higher education (degrees) seemed to lead to a well paid life of riley, and piled in despite the cosy club suddenly raising it’s membership fees and simultaneously developing a two tier privilege system (….oh your dad knows who?) denuding a greater majority of the new members of any benefit……so it is with ‘investments’ and many wheezes that used to confer comfort.
The housing ladder has become a nasty little joke ( as anyone with even a basic grasp of arithmetic should have understood), and it’s high entrance fees are only defended by the most bitter of Neo Feudalists with their ‘pensions’. Similarly the quoted annuity returns on most pension pots, has been guessed at by surmising that future generations can be made as ‘efficient’ as the ‘returns’ on property (looking around at how ‘fried’ a lot of youngsters are, suggests the pips are just about to give up squeaking)……and ever increasing population growth that could only ever be sustained by ever increasing coolie immigration, arriving fully trained by some of the poorest counties on earth
The millions off the work hamster wheel are about to be put on workfare, and I’ll bet that they’ll be competing directly with a lot of the SME’s that people are concerned about…..all paid peanuts to support an economy based on ‘growth’.
And let’s not even go near the bonds bubble ….
I’m almost looking forward to seeing this whole stench ridden pile being binned…..I’m into rope futures……it’s just a pity Russia is full of Russians.
And Poor 'ol honest Vince, joined the club 5 minutes, and lying like the most battle-hardened NeoCon already.
12. dbc reed said...
@CB
Preferred option is to impose LVT at bottom of property cycle so property prices are taxed when they show signs of going up (This form of LVT is sometimes called Sentinel Tax).Since ,with Sentinel LVT, property investment is no longer the one-way bet it is now,banks will have to push new credit the way of SME's etc.Not having to pay so much for property/rents/mortgages (existing house prices are pinned down by LVT; new house get built on previously hoarded land which is now ,with Sentinel LVT ,too expensive to keep out of use),punters can afford to buy more goods and services off the freshly capitalised SME's.
But there may be reason to increase spending power further by re-directing Qe towards the public services ( in the way Lincoln paid for the Union Army) or instead of increasing the amount of money in circulation,you get people to spend it really quickly and not save it (Increase the velocity of money in the jargon).Keynesian inflation does this but velocity money is worth trying at some stage.Probably not yet though.
13. braindeed said...
12. dbc reed said...
But there may be reason to increase spending power further by re-directing Qe towards the public services ( in the way Lincoln paid for the Union Army)
Feasible, but beyond the ken of most in power, I'd guess
14. markj69 str05 said...
Hold on guys, am I missing something. We have record personal debt. DEBT - Money spent which is not yet earn't! We have had a huge shift in our national social behaviour. We have developed a 'DEBT CULTURE'.
The economy can not keep on going because people can no longer borrow the money needed to sustain that culture.
A QE shift from Banks to public sector, or private sector does not solve the problem.
Either every home owner needs to loose 30-50% off the value of their property, (Which increases the personal debt, maybe?), or the pound is devalued, the debt is de-valued, and we hope that the economy picks up with a little help from QE. Which if we are honest, hasn't made a any difference except to stretch out the depression we are currently living through. Also relies on inflation not getting out of control, and of course a reasonable salary inflation so that those debts don't seem so bad, debt to salary ratio.
IMO, I think devaluing the pound has been the preferred route, and it hasn't worked. Just a long drawn out recession/depression, to look forward to. There are a lot of people who have increased their personal wealth (Theoretically, on paper), because of property HPI. Now time for a little HPD. 'Swings and round-a-bouts', 'peaks and troughs', 'rough with the smooth', 'ups and downs', etc... Need I say any more?
Good old fashioned market principles (Without artificial influences).
15. dbc reed said...
@braindeed
"Feasible but beyond the ken of most in power I'd guess" (referring to plan for attaching hose of QE money to public services instead of to banks).These ideas are not entirely marginal or outside the scope of Establishment opinion: The Green New Deal Group proposes a similar public spending mechanism (but for new" green" infrastructure) in their report The Cuts Won't Work which is on the Net.Section 4 is the essential bit.