Jump to content
House Price Crash Forum
Reluctant Heretic

Mpc Today Program - 7.49

Recommended Posts

I just happened to turn on the Radio this morning to catch this resume of the divisions in the MPC. I have to admit I found myself cheering John Redwood (but for the first time I might add). He said that Charlie Beans remarks had been foolish and insensitive to those people who are struggling to stay afloat: after a crisis caused by overspending to advocate more spending as the solution was ridiculous. He also said that QE had achieved very little in real terms and that growth, though slow, was resilient without it. What should happen, he said, is that the banks should be allowed to pause building their reserves and allowed to lend to business (apparently this is presently being heavily discouraged).

http://news.bbc.co.uk/today/hi/listen_again/default.stm

Share this post


Link to post
Share on other sites

I just happened to turn on the Radio this morning to catch this resume of the divisions in the MPC. I have to admit I found myself cheering John Redwood (but for the first time I might add). He said that Charlie Beans remarks had been foolish and insensitive to those people who are struggling to stay afloat: after a crisis caused by overspending to advocate more spending as the solution was ridiculous. He also said that QE had achieved very little in real terms and that growth, though slow, was resilient without it. What should happen, he said, is that the banks should be allowed to pause building their reserves and allowed to lend to business (apparently this is presently being heavily discouraged).

http://news.bbc.co.u...ain/default.stm

is there a law against lending to business?

or are these your words?

Share this post


Link to post
Share on other sites

is there a law against lending to business?

or are these your words?

You picked up on the one bit I wasn't sure about. I was surprised by this too - I think what he meant was that banks have been told that their priority should be building up their reserves (by the FSA?).. It is there though! I will listen again and give you the precise wording ...

...Ah! - you can only listen to yesterday's program.

Edited by Reluctant Heretic

Share this post


Link to post
Share on other sites

What should happen, he said, is that the banks should be allowed to pause building their reserves and allowed to lend to business (apparently this is presently being heavily discouraged).

"Debt-free" money reformers take note. This is what happens you allow the government to control the money supply, they spend the money where they think it is needed rather than where it's actually needed.

Share this post


Link to post
Share on other sites

is there a law against lending to business?

or are these your words?

He was spinning. They're being required to hold slightly higher reserves becomes they're being forbidden to lend. It's a fair point, or would be if the banks didn't keep telling us they already comfortably meet the new reserve requirements.

Share this post


Link to post
Share on other sites

"Debt-free" money reformers take note. This is what happens you allow the government to control the money supply, they spend the money where they think it is needed rather than where it's actually needed.

I think the other point to note is that the committee is split three ways each division, I presume, representing the school they come from. Hence Sentance is worried about inflation, Posen wants to 'add further stimulus' and Bean wants to stimulate spending. They seem to be at odds with mission statements from the coalition about fostering productive industry at the expense of 'money' created by speculation. Just throw money around and in uncertain times all that happens is you inflate the price of assets classes.

Edited by Reluctant Heretic

Share this post


Link to post
Share on other sites

He was spinning. They're being required to hold slightly higher reserves becomes they're being forbidden to lend. It's a fair point, or would be if the banks didn't keep telling us they already comfortably meet the new reserve requirements.

Redwood said that their reserves were adequate for now and that there should be a return to reserve building once the economy is clearly back on track. It seemed he was contemplating a period of a year or two.

Share this post


Link to post
Share on other sites

He was spinning. They're being required to hold slightly higher reserves becomes they're being forbidden to lend. It's a fair point, or would be if the banks didn't keep telling us they already comfortably meet the new reserve requirements.

Sorry guys, not an attack on the OP, just its a bit odd to suggest banks arent "allowed" to lend to business.

the problem, Mr Redwood, is that successful business may decide NOT to borrow and actually live of REAL profits for a while, as bankers have raised rates and fees for business finance, it is cheaper NOT to borrow.

as for the reserves...as you say....

the problem is the repayment of the SLS...then again, net lending was UP about 1.5bn IIRC, and thats barely a scratch on the "Profits" banks make as a whole....cant see where the lending problem is...unless...the profits are ENRON accounting based...ie..on future returns.

course, im not sure why, if the bankers had made so much money in the past 15 years, they needed a bailout at all. Maybe their profits are as ethereal as their credit....all in the mind.

Share this post


Link to post
Share on other sites

Maybe their profits are as ethereal as their credit....all in the mind.

No offence taken at all - I think that this is the point.

Share this post


Link to post
Share on other sites

How on earth can he know that?

There was an international money market run on the banks.

If they hadn't supported the banks with qe (which was behind funding the sls) the banks would have been forced to start calling the mortgages in. That wouldn't have worked either and then they would have been bankrupt, leaving their creditors (depositors and bond holders) out of pocket and the shareholders with nothing.

So - a pretty wild assertion from someone who knows nothing.

some banks...not the banks.

Share this post


Link to post
Share on other sites

Yes - all banks.

not all banks relied on constant new loans IN to keep afloat.

I understand that the UK banking SYSTEM needs to keep borrowing in this way.

BUT, many individual banks dont need to.

Sure, some biggies would have gone...but its not MONEY that makes the system...its Wealth...when the banking system was sufficiently defaulted, so that the credit had some bearing on the WEALTH we make...then the process would have stopped...

unlike our present course...where there is an open end to collapse.

if every man in the UK can produce a chicken everyday, then we are all fed. If 1 man wants 2 chickens, he has to take his from someone else. this is what bankers are doing. stealing our chickens.

Share this post


Link to post
Share on other sites

All banks suffered the problem. The big mortgage/property lenders and those betting on their own account suffered the most. So yes, to this extent people like HBOS, RBS, were more visibly at the front of the queue with the BoE partly because of the sheer size of their balance sheets.

And also you are correct re 'SYSTEM' - one of those goes down and the entire banking SYSTEM goes down because of the nature of the inter bank lending markets (which you remember froze for a protracted period).

I cite the case of Lehmans....had to rescued or the system would collapse.

it didnt.

otherwise, the way through this through printing, the debt remains...we will be zombies for the next 25 years.

saying that, there are noises in the US about "foreclosure mills", sets of Attornies counterfeiting MERS documents to prove a right to foreclose. Cases of people WITHOUT mortgages being foreclosed, wrong banks foreclosing....blank proformas sent out to courts....see the vid on denninger.net today..its getting to congressman level.

the problem here, is that the assets that our banks have, our pension funds have and our government agancies have, are based on this lot.....if they were issued fraudulently, which many were, then the MBS and CDOS based on these are also fraudulently issued.

problems are a brewing.

all based on non existent wealth in little boxes made of ticky tacky.

Share this post


Link to post
Share on other sites

This is very simple.

Banks made a fortune ignoring capital ratios and lending into the property market.

Inevitably, it imploded and we have a credit crunch.

Banks need to rebuild capital and, having observed that they have fecked the economy, realise that a lot of businesses are going to go under - so they won't lend to them.

Bankers are as rich as Croesus and don't give a feck about us, the economy or anything else. The ones who took millions in bonuses are already running boutique hotels in the West Country or some such nonsense.

They will only lend into the residential mortgage market if they are convinced the money is safe. Hence the dearth of mortgages.

The banking system needs to be heavily regulated and policed and a ruthless asset reclamation scheme should be launched to get the millions, sorry billions, back.

Share this post


Link to post
Share on other sites

Banks need to rebuild capital and, having observed that they have fecked the economy, realise that a lot of businesses are going to go under - so they won't lend to them.

Why would banks be worried who they lend to? They have a shitload of bad debts but in what way have they suffered for it? The bonuses are still rolling in. They just sweep bad debts under the B of E's magic carpet don'tcha know?

Banks won't lend to businesses because they are blackmailing the government into doing more QE so the free buffet can continue. If you had a licence to steal money you would want to use it as often as possible.

Share this post


Link to post
Share on other sites

Redwood said that their reserves were adequate for now and that there should be a return to reserve building once the economy is clearly back on track. It seemed he was contemplating a period of a year or two.

Pretty much Alastair Darling's line.

Redwood's turned Keynsian.

The problem is people like Turner proposing counter-cyclical controls after the horse has bolted which are actually now pro-cyclical. It's astonishing how utterly incapabable these people are.

Counter-cyclical measures against lending on housing for instance will be a great idea after the low - not now. Now they're just helping to destroy capital. What banksters do best.

Share this post


Link to post
Share on other sites

Problem is, look at Ireland now – politicians are determined to do all they have to (screw the taxpayer) just to PREVENT the Irish banks from going down. By all accounts they are well and truly bust – the scene about the dead parrot comes to mind – but still they carry on.

Why?

Because UK institutions funded the Irish banks to the tune of 300bn, German institutions funded them 200bn and so on.

If one little country like Ireland is allowed to admit it is bust the whole ship goes down – 300bn wiped off UK institutions is enough to wipe the UK out or at the very least send us back to the brink.

But then there are banks all around the western world with the same problems as Ireland simply being able – through government snake oil – to pretend they are not dead parrots.

We’ve been painted into a corner by the banks.

I cite the case of Lehmans....had to rescued or the system would collapse.

it didnt.

otherwise, the way through this through printing, the debt remains...we will be zombies for the next 25 years.

saying that, there are noises in the US about "foreclosure mills", sets of Attornies counterfeiting MERS documents to prove a right to foreclose. Cases of people WITHOUT mortgages being foreclosed, wrong banks foreclosing....blank proformas sent out to courts....see the vid on denninger.net today..its getting to congressman level.

the problem here, is that the assets that our banks have, our pension funds have and our government agancies have, are based on this lot.....if they were issued fraudulently, which many were, then the MBS and CDOS based on these are also fraudulently issued.

problems are a brewing.

all based on non existent wealth in little boxes made of ticky tacky.

Edited by MinceBalls

Share this post


Link to post
Share on other sites

The thing that proves to me that the entire thing is a rigged and corrupt market place is the fact that there are no significant new entrants to the banking industry.

Imagine a High Street and with 4 cafes in a row and one empty one available, it had been on the news every day how the 4 other cafes were offering crappy food that was very expensive. Surely a new market entrant should open a new cafe serving nice food and make a huge profit at the expensive of the other 4. That is how capitalism is supposed to work.

Now we have a worldwide banking industry paying about 1% on savings, charging 5% on mortgages and 10%+ on loans.

Why has all the savings tied up in these zombie banks not deserted them and moved to new market entrants? Surely the profit margins on banking are higher than ever and all the competition are carrying masses of bad debt?

Share this post


Link to post
Share on other sites

If you read the term and conditions of your mortgage ( all mortgages including fixed rates) even if they are nominally meant to be for 25 years, there will be a clause in there stating that the mortgage is repayable on demand.

You are asserting the incorrect assertion. The extent of my assertion was that if they had had to call in all the mortgages they could and the books didn't balance and they went into bankruptcy, even a 5 year old could tell you that that would trip you into a Depression with pretty much immediate effect as the banking system imploded. I think that is a perfectly reasonable assertion to be fair. I make no value judgement about what is right or wrong or whether I would have liked to have seen the right people hurt.

not sure about that.

If you have a contract for 25 years, what worth is it if you dont have a contract for 25 years?

You either do, or your dont.

course, business loans often have the margin call clause, but not domestic homeowner loans.

Share this post


Link to post
Share on other sites

The thing that proves to me that the entire thing is a rigged and corrupt market place is the fact that there are no significant new entrants to the banking industry.

Imagine a High Street and with 4 cafes in a row and one empty one available, it had been on the news every day how the 4 other cafes were offering crappy food that was very expensive. Surely a new market entrant should open a new cafe serving nice food and make a huge profit at the expensive of the other 4. That is how capitalism is supposed to work.

Now we have a worldwide banking industry paying about 1% on savings, charging 5% on mortgages and 10%+ on loans.

Why has all the savings tied up in these zombie banks not deserted them and moved to new market entrants? Surely the profit margins on banking are higher than ever and all the competition are carrying masses of bad debt?

I'd not thought about it like that.

What are the barriers to becoming a bank? You need to have some seed capital to start the reserve banking ponzi pyramid ( my guess is that a bank won't lend you money to start a bank ). You need at the least access to the basic services ( money transfers etc ), which might be problematic if the system is rigged.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 259 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.