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Spend For Britain-- Merged


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Perhaps the debtor should look at if their prices are right? Apparently, those who need the bank credits have decided to raise price in order to get more of 'bank credit' as opposed to dropping prices..

Just the usual causual-effect dilemma in economics, perhaps we should raise the IR to force the debtor to drop the prices in order to get the 'bank credit' moving ?

In the bigger picture, it may be the case, but that wasn't the point I was making - I was merely pointing out that a debtor can't repay a debt if he can't get hold of any money, because it's being hoarded.

Whether a debtor has the inclination to repay (as opposed to going bankrupt) or whether they are able to reduce their prices (things like national min. wage get in the way) is another thing. They may just throw in the towel and unless people want debtors prisons back, there isn't much anyone can do about that.

People seem to forget that lending money to banks is risky too. Yet, people want the interest, but don't want the risk. When the banks get it wrong, due to irresponsible lending or not, savers still gave them their money to play with. Perhaps it would have been more prudent to withdraw their money, when they saw it being piled into property? Where is the sense of responsibility of the savers? Did they apply due diligence or did they not care?

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no, they will have their credit eroded.

and yes, the above is inflationery, and its why there is a target of 2% and not -2%.

Most people think their bank credit is their wealth. Just read those spitting feathers here to realise this.

Of course, anyone with wealth can monetise it afresh...so its not all just a question of spending.

I'm not sure I follow - you mean anyone can liquidate their assets if there is a market for them?

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'A' should never have lent the money to such an insecure risk originally - he wouldn't even negotiate on price. He'll know better in future.

In the meantime he'll have to save more and spend less and certainly not be lending to risky propositions.

And he'll just see the big bankrupt in the big city and his lies, threats and blackmail for what they are.

Maybe As shouldn't be bitching that the interest rates are too low, when they're the ones being bailed out with this printed money then? The less they spend, the more Bs there will be who are unable to repay their debts. Follow with more printing or hair cuts, rinse and repeat.

EDIT: Unless they have wised up, spent their financial capital (cash) on other stuff and left the big city to do as it pleases.

Edited by Traktion
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In the bigger picture, it may be the case, but that wasn't the point I was making - I was merely pointing out that a debtor can't repay a debt if he can't get hold of any money, because it's being hoarded.

Whether a debtor has the inclination to repay (as opposed to going bankrupt) or whether they are able to reduce their prices (things like national min. wage get in the way) is another thing. They may just throw in the towel and unless people want debtors prisons back, there isn't much anyone can do about that.

People seem to forget that lending money to banks is risky too. Yet, people want the interest, but don't want the risk. When the banks get it wrong, due to irresponsible lending or not, savers still gave them their money to play with. Perhaps it would have been more prudent to withdraw their money, when they saw it being piled into property? Where is the sense of responsibility of the savers? Did they apply due diligence or did they not care?

People think bank is safe because Gordon and the government elected to run the country 'properly' gave people the impression that the banks are regulated by a world class regulator called FSA which was the 'envy of the world' ? (Yes..that no more boom and bust thing also).

The People elect a government so that their ensure that the financial system is safe. HK/SG government knows that banks are to be regulated properly and hence there was no crisis there even when the property prices dropped 50% post 97 crisis. This is the same that I don't have to research every cough medicine on the shelf because I can trust that the government have done the work - that is what the tax money are for - paying for a group of civil servants to perform certain functions that are useful to the society.

If you read any FSA literature or FSA certified investment courses, you will find that 'saving account' is classified as risk free.

The debtors take the risk, in the hope for greater (or quicker) reward (e.g. higher property prices, new car now) and I am afraid this is not going to be a one way bet.

On the other hand, there really isn't that much thing to buy out there that are offering good value really... perhaps you can give us some tips where to spend the 'bank credit'? (Other than to buy up claims against real asset, e.g. equities, or precious metal (for some), which then the bank credit is hoarded by the seller of the asset).

ps: Most major retailers seemed to be doing rather nicely (record profit being reported and rising prices) and so maybe there isn't even a serious 'hoarding' issue there - credit are being 'moved' when sensible things are being offered. It maybe just that the economy does not have that much things to offer other than overpriced houses (and in areas where something useful is offered, capacity is constrained and the retailers in those areas are taking advantage of that)..

Edited by easybetman
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Maybe As shouldn't be bitching that the interest rates are too low, when they're the ones being bailed out with this printed money then? The less they spend, the more Bs there will be who are unable to repay their debts. Follow with more printing or hair cuts, rinse and repeat.

EDIT: Unless they have wised up, spent their financial capital (cash) on other stuff and left the big city to do as it pleases.

Maybe Bs shouldn't be bitching on about lack of lending and savers spending when As have are having their savings eroded and pensions destroyed through a bunch of neerdowells, spendthrifts and crooks and eroded to help the same. Maybe Bs and the big bankrupt in the city should just apply for the bankruptcy papers.

And the big bankrupt's suggestions aren't going to solve anything. Either give savers an incentive to spend or let everyone take their own penalty, As and bankrupt Bs alike and the sooner the better if only for the young people in the UK. Maybe they'll get affordable housing.

If As are just another group of lenders they should have got a better rate of return wnen the crooks and spendthrifts were making merry with their multi levered derivatives during the boom - but no then they were just depositors and only entitled to safe savings in those days and "the rate of return reflected the safety and no risk". Now it's they're lenders and think of the risk, how things change in casino UK with the big bankrupt running things.

The economy is sinking rapidly. Worse than any time in living memory and beyond so they can do as they please (print as much as they like) but they're fighting a losing battle most likely at least for a good while yet.

Edited by billybong
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People think bank is safe because Gordon and the government elected to run the country 'properly' gave people the impression that the banks are regulated by a world class regulator called FSA which was the 'envy of the world' ? (Yes..that no more boom and bust thing also).

The People elect a government so that their ensure that the financial system is safe. HK/SG government knows that banks are to be regulated properly and hence there was no crisis there even when the property prices dropped 50% post 97 crisis. This is the same that I don't have to research every cough medicine on the shelf because I can trust that the government have done the work - that is what the tax money are for - paying for a group of civil servants to perform certain functions that are useful to the society.

If you read any FSA literature or FSA certified investment courses, you will find that 'saving account' is classified as risk free.

It is a fallacy - you can't make lending risk free. That's why we're in this mess!

The debtors take the risk, in the hope for greater (or quicker) reward (e.g. higher property prices, new car now) and I am afraid this is not going to be a one way bet.

If people don't repay, they get a mark on their credit history and are pursued for as long as legally allowed. This doesn't mean the creditor will get their money back - there is no way to guarantee this. The government can print up the difference, but that will be inflationary, and the real value of savings will be eroded, even if the nominal value remains in tact.

On the other hand, there really isn't that much thing to buy out there that are offering good value really... perhaps you can give us some tips where to spend the 'bank credit'?

(Other than to buy up claims against real asset, e.g. equities, or precious metal (for some), which then the bank credit is hoarded by the seller of the asset).

I'm not giving out investment advice, I'm just illustrating what will happen if everyone hoards. You could take a punt with gold, antiques, art - that's up to the individual to decide. I have some gold and silver, but it's up to others what they want to hold.

Who says the seller will hoard the money - perhaps they are in debt and need to liquidate to repay it? Perhaps they have developed a penchant for booze and cheap whores?

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He can f==k right off.

He can indeed!

I am speaking to you from the cabinet room at 10 Downing Street. This afternoon the City Of London and the Bank Of England handed the British people a final note stating that unless you spend every penny you have and hand over the future liberty of your children by 11 o'clock, that a state of war would exist between you and them. I'm happy to tell you now that no such undertaking will be made, and that consequently the British people are at war with those f*kcers..

:lol: Love it!

Ok- for the very first time I am taking Gold seriously- but that market itself is on the verge of blowing up too.

If all the the paper stuff gets called in at the same time, imploding the market for gold IOU's what would the fallout be on the real stuff?

Think about it. If people discover that there's less available of something (anything) than they thought, what would happen to the price.

I never thought I'd be doing this but....

400_F_1731144_ruETM6hapvA3eOHfu97MjyjgQJhwBQ.jpg

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Maybe Bs shouldn't be bitching on about lack of lending and savers spending when As have are having their savings eroded and pensions destroyed through a bunch of neerdowells, spendthrifts and crooks. Maybe Bs and the big bankrupt in the city should just apply for the bankruptcy papers.

That's nice - I'm not sure how it helps the As, though.

And the big bankrupt's suggestions aren't going to solve anything. Either give savers an incentive to spend or let everyone take their own penalty, As and bankrupt Bs alike and the sooner the better if only for the young people in the UK. Maybe they'll get affordable housing.

The incentive to spend, is the threat that debts will go unpaid if they don't. It's how the monetary system works.

Sure, FTBs (of which I would be one) would benefit if there were lots of bankruptcies, but I'm not sure why the resulting printing or hair cuts as banks fold would help savers.

If As are just another group of lenders they should have got a better rate of return wnen the crooks and spendthrifts were making merry with their multi levered derivatives during the boom - but no then they were just depositors and only entitled to safe savings in those days and "the rate of return reflected the safety and no risk". Now it's they're lenders and think of the risk, how things change in casino UK.

I agree, As were lead into a false sense of security, by the government and their agencies, promising to guarantee the impossible. If the government couldn't do the job, they shouldn't have tried to do it. It's left a right mess!

Lending money is always risky and this risk should always have been illustrated and apparent, not hidden by government lies and incompetence.

The economy is sinking rapidly. Worse than any time in living memory and beyond so they can do as they please (print as much as they like) but they're fighting a losing battle most likely at least for a good while yet.

The government can print to keep savers whole, but savers would be helping themselves and others, if they didn't hoard cash. Hoarding anything but financial capital is fine, but everyone from debtors to savers would benefit if cash wasn't hoarded.

Edited by Traktion
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Bizarrely I can't spend for Britain, even if I wanted to.

A large part of my sterling savings are locked up in a 3 year ISA (the only way I could get half decent rates). If I take that money out now, it will cost me to do so.

The rest is earmaked for day to day spending, a small buffer of savings (for peace of mind). The rest is going into gold and silver.

How do you like them apples Mr. Bean?

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People seem to forget that lending money to banks is risky too. Yet, people want the interest, but don't want the risk.

Its impossible to do "due dilligence" on a consumer bank account since they are all supposed to be backed by AAA securities which are officially zero quantifiable risk. How exactly do you differentiate between one "0" and another ??.

And, for the record, show me a bank that will hold my funds in 100% reserve and I'll transfer every penny over tomorrow happily forgoing what is laughably called "interest" at the moment (and yes I would even pay for the privilege).

Edited by goldbug9999
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That's nice - I'm not sure how it helps the As, though.

....

The incentive to spend, is the threat that debts will go unpaid if they don't. It's how the monetary system works.

.....

Sure, FTBs (of which I would be one) would benefit if there were lots of bankruptcies, but I'm not sure why the resulting printing or hair cuts as banks fold would help savers.

....

The government can print to keep savers whole, but savers would be helping themselves and others, if they didn't hoard cash. Hoarding anything but financial capital is fine, but everyone from debtors to savers would benefit if cash wasn't hoarded.

So when does saving become hoarding. Who are the hoarders - don't say it's the boomers, I might have known they would be in it somewhere. Is there a cut off line for saving/hoarding. From wise and thrifty to mean hoarder in the blink of an eye. Is a youngster with a house deposit a hoarder or a saver or a retiree with lifetime retirement savings just another hoarder. Actually it's nobody's business to tell them what to do with their own money right now, it's not that long ago that saving was supposed to a good thing.

It's not enough incentive to spend and I'm not saying that the As should be specially helped. Nor should savers be expected to or have to understand theories of capitalism, the banking system aka these days the casino to justify having a bit of savings and not wanting to spend it right now despite what Bean says. The system should be run responsibly.

The market should be allowed to get back into balance with saving, lending and borrowing etc. If it involves bankruptcies big and small including the fat bankrupt in the city they should get on with it now and if savers also have to take a shave then so be it but it's not enough incentive to spend now.

They couldn't have made a worse mess of things if they'd tried.

Edited by billybong
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Its impossible to do "due dilligence" on a consumer bank account since they are all supposed to be backed by AAA securities which are officially zero quantifiable risk. How exactly do you differentiate between one "0" and another ??.

It shows that you can't put a figure on the counter party risks involved. They can 'have a stab' at assessing the risk levels, but that's as good as it gets. You either trust them or you don't. There will always be some risk, regardless.

BTW, Kotlikoff's LPB idea suggests adding risk assessment to a government department, to help remove some of the false incentives for credit agencies to say something is better than it really is.

And, for the record, show me a bank that will hold my funds in 100% reserve and I'll transfer every penny over tomorrow happily forgoing what is laughably called "interest" at the moment (and yes I would even pay for the privilege).

Any saver can buy a safe and stuff their notes in it or even a safety deposit box at a bank. There should be safe accounts too though (with access to the usual facilities) and there is a bill going through parliament suggesting that all accounts offer this option to trade counter party risk for interest or not. The problem is, while ever the deposit insurance exists, it totally fubars the market place for low risk alternatives, as all accounts are seen as risk free (up to a relatively high limit for most people).

Take away the deposit guarantees, let the market provide alternatives to FRB and I'm sure we will be presented with various alternatives, each with varying degrees of estimated risk.

EDIT: P.S. The likes of gold money and bullion vault are essentially 100% reserve PM banks.

Edited by Traktion
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The problem is, while ever the deposit insurance exists, it totally fubars the market place for low risk alternatives, as all accounts are seen as risk free (up to a relatively high limit for most people).

Take away the deposit guarantees, let the market provide alternatives to FRB and I'm sure we will be presented with various alternatives, each with varying degrees of estimated risk.

Thats true I guess, my "problem" is that I have well in excess of the limit so 100% reserve account would get some business from me. Anyone know Bransons email address - its the kind of Maverick anti-establishment thing he seems to thrive on.

EDIT: P.S. The likes of gold money and bullion vault are essentially 100% reserve PM banks.

I know, but (shock horror given my id here ...) I don't actually want my entire wealth tied to the fortunes of gold, especially at the price Id have to pay for it at the moment. Right now the options for preserving wealth in the event of a sovereign default or bank failure (and attendant catastrophic deflation) are pretty much limited to physical cash when one exceeds the 50k limit.

Edited by goldbug9999
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Dr Ros Altmann has criticised the Bank of England (BoE) for chasing short-term growth while "decimating" pensions.

The independent policy adviser made the comments after the deputy BoE governor, Charlie Bean, told Channel 4 on Monday that a key aim of the bank's monetary policy was to hit savers hard. Dr Altmann said this was not a side effect of the bank's monetary measures designed to help the banks but a deliberate policy choice.

She said: "The economic crisis resulted from too much debt and not enough saving - but short-sighted policy is repeating the same errors by attempting to undermine savers and damaging pensions.

"This will not solve our problems and, with an ageing population, damaging pensions just means that more people will end up in poverty, fall back on benefits or be forced to take more risks with their money that could wipe out their capital.

Dr Altmann said the BoE did not want people to save.

She said: "Pension funds have been decimated by low rates.

"This misguided policy has ignored the perils of low rates for pensions.

"Pension liabilities have soared, while annuity rates have plunged, which means people's pensions have been decimated. In an aging population, such policies are dangerously short-sighted.

She said the BoE had also failed to control inflation, damaging savers further.

While policy rates have been kept at 0.5 per cent, inflation is nearly five per cent on the retail pricing index and three per cent on the consumer pricing index.

Dr Altmann said: "Which means savers have suffered falling capital in real terms, as well as seeing their savings income disappear.

"The BoE needs to urgently re-examine its short-sighted policy stance.

"It may make people feel a bit better for a while to keep spending and not saving, but this will lead to an even worse crisis in future."

http://www.ftadviser.com/FTAdviser/Regulation/News/article/20100928/e412f7c2-cad9-11df-a726-00144f2af8e8/Altmann-says-Bank-of-England-decimating-pensions.jsp

Note "independent" advisor not one connected to a bank that profits from QE.

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The ONS gives the following as the houselhold savings rate percentage:

1970 6.5

1971 5.0

1972 7.3

1973 8.1

1974 8.4

1975 9.2

1976 8.7

1977 7.6

1978 9.4

1979 10.9

1980 12.3

1981 12.0

1982 10.8

1983 9.0

1984 10.2

1985 9.7

1986 8.1

1987 5.4

1988 3.9

1989 5.7

1990 8.1

1991 10.3

1992 11.7

1993 10.8

1994 9.3

1995 10.3

1996 9.4

1997 9.6

1998 7.4

1999 5.2

2000 4.7

2001 6.0

2002 4.8

2003 5.1

2004 3.7

2005 3.9

2006 3.4

2007 2.6

2008 2.0 - went negative in Q1

2009 6.3

2010Q1 5.5

2010Q2 3.2

Clear correlation between rises in difficult economic times and falls in good times.

Notice though that the most recent number is already lower than it was during the huge economic boom of 1987-1989.

Anyone ever heard a pensions advisor say that the percentage you save should be equal to the age at which you start saving?

And what's the latest household savings rate?

3.2%

And the BoE think that is too high.

No wonder the country is in such a mess.

But that's going to be minor compared with what state we'll be in in a couple of decades.

We have an economy based on wealth consumption and property speculation.

It needs to be rebalanced fast away from borrowing to saving, away from wealth consumption to wealth creation, away from imports to exports, away from capital being invested in non-productive housing to where capital is invested in production and infrastructure.

But the BoE would rather destroy our future than admit to making mistakes in the past.

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Note "independent" advisor not one connected to a bank that profits from QE.

Well said Ros Altman.

It was an utterly despicable thing to say, underlying an utterly despicable policy.

If he'd have excoriated the Chinese or the Germans for not spending enough one could understand it. It just shows how totally divorced these 'public servants' are from day to day realities, with their massive salaries, gold plated pensions and invitations to Lords and so on.

I'm still seething he wasn't summarily dismissed for admitting their policy is outright theft.

On a separate but related topic the FSCS guarantee limit is apparently being increased to the sterling equivalent of 100,000 euros from 31.12.10 I've not seen much coverage of this and it seems it's not anything Bean wants to do it's come from the Eussr. Makes no difference if you believe it won't be honoured of course but still.

http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/deposit-limits/

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What are we supposed to buy? Biscuits from the ******ing Chinese?

I'm sure Posters can do their Own Research on the Chinese Biscuit Industry - But here are a few Pointers:

Perhaps likes of 'United Biscuits' (makers of Jaffa Cakes, Digestives, and the like...) have good reason to sell out to Chinese because of their advanced manufacturing techniques....??

chinese_cookie_factory.jpg

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No time to read the whole thread so apologies if it's been mentioned, but my understanding was that the BoE's legal remit was to keep inflation under control. Now we learn that actually they are more concerned with spending.

Surely something is wrong here. I'm not going to spend just because BoE says I should. Recessions are a time for saving money, not spending it, and the IR doesn't really come into it.

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The ONS gives the following as the houselhold savings rate percentage:

...

The household savings rate is a percentage of income saved (more here). It isn't the total savings, which must be the same as the total amount of debt. Credit and debt are on each side of the economy's balance sheet, which means they equal one another.

Additionally, it is an average, which means some households could be saving a small portion of a large income, while others might be saving a large portion of a small income.

Edited by Traktion
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The household savings rate is a percentage of income saved (more here). It isn't the total savings, which must be the same as the total amount of debt. Credit and debt are on each side of the economy's balance sheet, which means they equal one another.

Are you saying there are £1.5Tn worth of "savings" knocking about?

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...

On a separate but related topic the FSCS guarantee limit is apparently being increased to the sterling equivalent of 100,000 euros from 31.12.10 I've not seen much coverage of this and it seems it's not anything Bean wants to do it's come from the Eussr. Makes no difference if you believe it won't be honoured of course but still.

http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/deposit-limits/

:blink:

I hope those printing presses are well oiled!

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  • 440 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • up 5%



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