Cameron Says We Can't "pump The Bubble Back Up"

[Tired of Waiting]

Cameron said "bubble", not boom. I think this is very important. The language is becoming much more clear.

He said: "We can't just flick on the switch of government spending or pump the bubble back up."

This is important people. I think we missed this very important "detail".

Besides, he said that we can't "pump the bubble back up". This is also essential, as it means that the coalition does get the core of it. That it was bubble, and that the government can't pump it.

However, there is a negative angle: He said "back up". This could mean that they think 2007 was a bubble, and we have already landed or almost landed. This part is worrying.

Remember what we started with in the UK: an economy built on the worst deficit, the most leveraged banks, the most indebted households, the biggest housing boom and unsustainable levels of public spending and immigration.

And now think of where we need to go: an economy based not on consumption and debt but on savings and investment not on government spending but on entrepreneurial dynamism not on one industry in one corner of the country but on all our businesses in all our regions, with a new emphasis on manufacturing, exports and trade.

To get there isn't easy. We can't just flick on the switch of government spending or pump the bubble back up. Making this transformation - and it is a transformation - requires painstaking work and it takes time. It involves paying down billions of pounds of debt. New plants and factories need to be built. New products designed. New innovations taken to market. New businesses nurtured.

It's going to be tough - but we must see it through. The scale of the task is immense, so we need to be bold in order to build this economy of the future.

Cameron's speech in full: http://www.politics.co.uk/features/economy-and-finance/david-cameron-s-davos-speech-in-full-$21386920.htm

[The Masked Tulip]

Alas, most people are oblivious to any bubble ever occurring and hence will have no idea what he is talking about.

[interestrateripoff]

The majority will have no idea of the difference.

[Democorruptcy]

There he goes again "an economy not built on debt but on savings"

Interest rates 0.5%

NS & I Index linked certificates removed

Every time he opens his mouth a lie comes out.

What's happened to your 2009 pledge to remove the 20% tax on savings Davlie?

http://www.guardian.co.uk/politics/video/2009/jan/05/david-cameron-tax

[Stars]

However, there is a negative angle: He said "back up". This could mean that they think 2007 was a bubble, and we have already landed or almost landed. This part is worrying.

He could also mean that although we can't just pump up a real estate bubble now, we can get real estate prices up in the longer term if we box clever

[exiges]

There he goes again "an economy not built on debt but on savings"

Every time he opens his mouth a lie comes out.

I dunno, he's honest, it's the savers getting only 0.5% which is helping build the economy letting the banks recapitalise.

We can't have an HPC until the banks have the wherewithall to realise losses in loans. That money has to come from somewhere.

[mdman]

There he goes again "an economy not built on debt but on savings"

Interest rates 0.5%

NS & I Index linked certificates removed

Every time he opens his mouth a lie comes out.

What's happened to your 2009 pledge to remove the 20% tax on savings Davlie?

http://www.guardian.co.uk/politics/video/2009/jan/05/david-cameron-tax

+100

Last week he was going on about linking bank bonuses to increased lending targets while also talking about prudent bank lending.

All this while going on about affordable housing and low interest rates (which of course shoots prices into the stratosphere, all other things being equal)

And the line on student debt is that because the monthly repayment is less, they must be better off. No mention of the debt servitude they'll take on

He's an Orwellian creep and bankster tool

[Democorruptcy]

I dunno, he's honest, it's the savers getting only 0.5% which is helping build the economy letting the banks recapitalise.

We can't have an HPC until the banks have the wherewithall to realise losses in loans. That money has to come from somewhere.

Recapitalise = stealing money from savers to feed billions in bonuses.

If it were building the economy why are SMEs all saying they are unable to get loans?

[Number79]

I read that quite badly tbh with no positive side.

"To get there isnt easy" means that getting back there is what he wants to do.

"We can't just flick on the switch of government spending or pump the bubble back up" without the word 'just' in there this may have given hope. As it is I read that as he wants to reinflate the bubble but cant do it with the gay abandon that labour did.

[exiges]

Recapitalise = stealing money from savers to feed billions in bonuses.

I think the billions in bonuses has predominantly come from the investment banking sector rather than the saves/mortgages side of banking.

If it were building the economy why are SMEs all saying they are unable to get loans?

Because it's not built, it's being built. Tough times are ahead. Do we want irresponsible lending again ?

I'm a saver, having been screwed over massively by the fall in interest rates, but I understand banks need to have a massive discrepancy between savings + loan rates to recapitalise. I don't like it, but I understand it.

That's the trouble with recessions, once you've got people understanding the need for pain they're OK with it, so long as it doesn't affect them.

Edited January 31, 2011 by exiges

[Democorruptcy]

I think the billions in bonuses has predominantly come from the investment banking sector rather than the saves/mortgages side of banking.

Because it's not built, it's being built. Tough times are ahead. Do we want irresponsible lending again ?

I'm a saver, having been screwed over massively by the fall in interest rates, but I understand banks need to have a massive discrepancy between savings + loan rates to recapitalise. I don't like it, but I understand it.

That's the trouble with recessions, once you've got people understanding the need for pain they're OK with it, so long as it doesn't affect them.

How much has been paid in bonuses since the interest rate was cut to 0.5%?

Savers have lost out on interest worth almost £60bn since the Bank of England cut the base rate to its historic low, exclusive research reveals today

http://www.thisismoney.co.uk/savings-and-banking/article.html?in_article_id=521215&in_page_id=7

You don't like it but you understand it? Why do you think savers should be paying for it?

[Tired of Waiting]

I read that quite badly tbh with no positive side.

"To get there isnt easy" means that getting back there is what he wants to do.

You misunderstood it. "There" didn't mean "back there".

"There" was his previous paragraph: "an economy based not on consumption and debt but on savings and investment not on government spending but on entrepreneurial dynamism not on one industry in one corner of the country but on all our businesses in all our regions, with a new emphasis on manufacturing, exports and trade."

And now think of where we need to go: an economy based not on consumption and debt but on savings and investment not on government spending but on entrepreneurial dynamism not on one industry in one corner of the country but on all our businesses in all our regions, with a new emphasis on manufacturing, exports and trade.

To get there isn't easy. We can't just flick on the switch of government spending or pump the bubble back up. Making this transformation - and it is a transformation - requires painstaking work and it takes time. It involves paying down billions of pounds of debt. New plants and factories need to be built. New products designed. New innovations taken to market. New businesses nurtured.

[exiges]

How much has been paid in bonuses since the interest rate was cut to 0.5%?

Less than they've paid in tax.

You don't like it but you understand it? Why do you think savers should be paying for it?

Who else has money ?

I'm not saying it's morally right, but there are no alternatives. Blame Gordon Brown.

Edited January 31, 2011 by exiges

[Number79]

You misunderstood it. "There" didn't mean "back there".

"There" was his previous paragraph: "an economy based not on consumption and debt but on savings and investment not on government spending but on entrepreneurial dynamism not on one industry in one corner of the country but on all our businesses in all our regions, with a new emphasis on manufacturing, exports and trade."

It was the word 'investment' that I didnt like, to me that is just as likely to mean house/land prices.

[richc]

Less than they've paid in tax.

Actually, employee pay runs at about 30% to 50% of total income for most banks, generally higher for those banks with more focus on investment banking. Pay to the bankers dwarfs any tax they pay.

The steep yield curve created by the Bank of England holding rates at 0.5% flows directly as income to the banks, which are turning around and paying it out in salaries and bonuses.

[otters]

That's the trouble with recessions, once you've got people understanding the need for pain they're OK with it, so long as it doesn't affect them.

I am semi retired, I was hoping to be able to fully retire at the end of this year, I have enough put aside in NS&I index linked for later on, but whats not tied up with NS&I does not give me quite enough return without digging into capital. I'm sure there are lots like me, who, if they could get a 6/7 % return would be able to pack up work, freeing up opportunities for the unemployed young. I do however, like yourself I see the need for low interest rates to get things back on an even keel. My only concern is that once stablized I hope the banks do not start silly lending practices again.

[Tired of Waiting]

(...) Why do you think savers should be paying for it?

"Should" as in a moral/ethical/fairness issue?! They "shouldn't", of course. I think they should receive some 3 or 4% over inflation. And it would be much fairer too if house prices crashed immediately, and also that all people who Sold To Rent since, say, 2003 or 4 had a windfall tax on their unfair profits, with the proceeds given to people who were forced to rent in this period. And we should also have proper property taxes, and all NIMBYs should have their properties nationalised and rented as social housing. And I can't even write about my wishes for the Duke of Westminster. And... (I could keep going).

Unfortunately our political political system is far from able to provide this level and type of "direct" fairness. Actually, no political system or group can. I am a liberal not because I think markets are perfect, but because I've realised that all other alternatives are much much worse. If you put a political group in charge to dispense "fairness", and money, you will always always end up with growing bureaucratic incompetence and self-servicing views, practices, and even straightforward corruption.

Unfortunately we have to work with market forces and logic here, not against it. Believe it or not, they are on our side. They always bring down bubbles. After all, "gravity always wins".

Interest rates will not be this low forever. Patience my friend. We will get our just deserts.

[Democorruptcy]

Less than they've paid in tax.

Who else has money ?

I'm not saying it's morally right, but there are no alternatives. Blame Gordon Brown.

What does their tax have to do with anything? Are you saying banks shouldn't even have to pay tax now? £60bn lost in interest income while bankers are raking in billions in bonuses = theft.

Who else has the money? Now you mention tax what about how much is being evaded offshore? Isn't it supposed to be £6bn Osborne Osborne let Vodafone off? CGT 28% when it was 40% prior to April 2008. Stamp duty removed from properties below £250,001.

[Democorruptcy]

I am semi retired, I was hoping to be able to fully retire at the end of this year, I have enough put aside in NS&I index linked for later on, but whats not tied up with NS&I does not give me quite enough return without digging into capital. I'm sure there are lots like me, who, if they could get a 6/7 % return would be able to pack up work, freeing up opportunities for the unemployed young. I do however, like yourself I see the need for low interest rates to get things back on an even keel. My only concern is that once stablized I hope the banks do not start silly lending practices again.

If there is any truth about Barclays being allowed to shovel £200bn into a bad bank - then the roulette wheel won't be spinning fast enough for them. What is the downside to reckless lending if you can ignore any bad debts?

On its present trajectory, Barclays can accumulate enough capital to deliver a Basle III core equity tier 1 ratio of greater than 10% by 2013, but will continue to deliver returns that fall short of its cost of equity. As this strategy is effectively a proposition offering limited growth and minimal cash returns to investors, we think it is unlikely to be favoured by either the market or Barclays’ new management.

The clearest way for Bob Diamond, the new CEO, of Barclays, to stamp his authority upon the group, in our opinion, is to initiate a restructuring at Barclays to exit low-return assets and businesses and deliver a higher return bank with a smaller balance sheet. We also think that his earlier than- anticipated succession to the CEO role makes it more likely that an announcement along these lines will accompany the full-year results. Quite how radical Barclays will wish to be is unclear, and we therefore use a probability-weighted analysis to consider the valuation of Barclays under differing scenarios.

Those could be everything from uneconomic mortgages to bits of BarCap’s investment banking unit, or even shedding some of the bank’s BlackRock stake — to get rid of up to £200bn of Basel III risk-weighted assets, according to UBS.

And back to those afore-mentioned restructuring scenarios — UBS figures that Barclays (currently valued at £34bn or, 275p a share) could ultimately be worth £60bn depending on the depth and breadth of its restructuring.

http://ftalphaville.ft.com/blog/2011/01/10/453391/next-up-for-barclays-a-bad-bank/

[Tired of Waiting]

He could also mean that although we can't just pump up a real estate bubble now, we can get real estate prices up in the longer term if we box clever

I think he was talking about economic fundamentals: "where we need to go: an economy based not on consumption and debt but on savings and investment not on government spending but on entrepreneurial dynamism not on one industry in one corner of the country but on all our businesses in all our regions, with a new emphasis on manufacturing, exports and trade."

And I think he is right.

[exiges]

What does their tax have to do with anything?

Because people are keen to focus on what the banks are taking without a thought for what they provide.

The previous government has effected the perfect bait and switch by shifting the blame for the position we find ourselves in onto the banks.

Let us not forget the country was already running at a massive deficit before it all kicked off in 2007. The trouble with the banks is a drop in the ocean.

Edited January 31, 2011 by exiges

[Democorruptcy]

Interest rates will not be this low forever. Patience my friend. We will get our just deserts.

For people relying on income from savings their standard of living has fallen and will never get back to what it was pre-crunch.

Even if you believe their inflation figures, we already have negative returns and they say it will get to 5% this year - then drop back. When it drops back prices won't get any lower - they just won't rise as much. If interest rates do rise it will be for a reason - high inflation - but they won't rise enough to have positive returns. The public have accepted that banks can steal their money.

People who say savers will have their day again seem to forget the effective of the compound losses. Interest lost from 2008 onwards is never going earn interest in future years. Charles Bean told savers to stop moaning and spend some capital - he is clearly mathematically challenged - if they do that it also has a compound loss effect.

[mdman]

It doesnt matter what he says. It's what he does

He talks about savings while approving of ZIRP, with a chancellor who constantly says low interest rates are needed, while incentivising banks to lend more

None of these measures are conducive to a savings/ investment economy

[General Congreve]

Who else has money ?

I'm not saying it's morally right, but there are no alternatives. Blame Gordon Brown.

The attitude of a few on here seems to be, we have to give our wealth to the banks, so they can recapitalise and then loan us our money back at interest, so we can be shafted twice.

If you don't like the system, you can opt out. Not only does it pay to do so now, but it will pay you many-fold in the future, while all those around you lose their shirts to the lying politicans and banksters

[Democorruptcy]

Because people are keen to focus on what the banks are taking without a thought for what they provide.

The previous government has effected the perfect bait and switch by shifting the blame for the position we find ourselves in onto the banks.

Let us not forget the country was already running at a massive deficit before it all kicked off in 2007. The trouble with the banks is a drop in the ocean.

I wondered how long it would take you to move the goalposts to talk about overspending. I agree Labour overspent. This does not change the fact that banks are stealing from savers.