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Rbs/uk Government Not Interested In Debt 'boom'

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Well well. This is rather interesting. And straight from the horses mouth. Now of course whether they mean what they say is another matter - but the general jist of it is plain to see. The sheeple will NOT be happy.

Debt boom is not way to rebuild economy

"warned that creating a debt-fuelled boom would be a "false recovery" as he again defended the bank's lending record."

"financial services are an essential lubricant of recovery but not quite as essential as some would have us believe."

"We need an intense focus on how the government makes its way in the world. It will not be through asset driven bubbles."

"He said that it was recognised that the banks made mistakes through lax lending standards or by the banks themselves taking on too much debt. Banks had searched for double-digit growth in an industry "that didn't deserve double-digit growth".

:o:)

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So it's just me that thinks this is huge news then ? Head of one of UK's largest Banks (With Government backing) saying clearly that Asset bubbles are a big no no ? And that Banks are not anywhere near as important as they think they are ? In fact it's 2 huge stories in one !!

Ah well. I find it interesting anwyay. :P

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So it's just me that thinks this is huge news then ? Head of one of UK's largest Banks (With Government backing) saying clearly that Asset bubbles are a big no no ? And that Banks are not anywhere near as important as they think they are ? In fact it's 2 huge stories in one !!

Ah well. I find it interesting anwyay. :P

asset bubbles are great for speculators.

not for a stable economy.

but his own bank was too big to fail three years ago...whats changed?

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I'm going out to buy a nice healthy snack, I'm not interested in committing a carbocide.

Of course I will return with a multi pack of mars bars, a dairy crunch, walkers crisps and a bottle of coke.

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Well well. This is rather interesting. And straight from the horses mouth. Now of course whether they mean what they say is another matter - but the general jist of it is plain to see. The sheeple will NOT be happy.

Debt boom is not way to rebuild economy

"warned that creating a debt-fuelled boom would be a "false recovery" as he again defended the bank's lending record."

"financial services are an essential lubricant of recovery but not quite as essential as some would have us believe."

"We need an intense focus on how the government makes its way in the world. It will not be through asset driven bubbles."

"He said that it was recognised that the banks made mistakes through lax lending standards or by the banks themselves taking on too much debt. Banks had searched for double-digit growth in an industry "that didn't deserve double-digit growth".

:o:)

Watch what they do, not what they say.

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Perhaps Stephen Hester meant to say that RBS is no longer able to perpetuate the debt boom, nor will they ever be in a position to fuel one again.

That had crossed my mind. Using persuasive logical arguments as to why they are not lending.

Good point. Either way the end result is the same.

asset bubbles are great for speculators.

not for a stable economy.

but his own bank was too big to fail three years ago...whats changed?

They are no longer throwing money at people to buy houses ? Whether that is on purpose or because they do not want to ? Only they will really know.

Me too. Very good. Saw your comment too. :D

:D

Watch what they do, not what they say.

Well they are not throwing money at people. So on that count it seems to tally up with his comments.

Anyway - I just think it is a big deal a head of one of the bad boys is actually saying this stuff. Whether they mean it or not is another matter. The fact they are stating though is - on its own - stilll a big thing IMO.

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So it's just me that thinks this is huge news then ? Head of one of UK's largest Banks (With Government backing) saying clearly that Asset bubbles are a big no no ? And that Banks are not anywhere near as important as they think they are ? In fact it's 2 huge stories in one !!

Ah well. I find it interesting anwyay. :P

I find it very interesting.

I think this is another clear signal that they intend to inflate the state issued money supply whilst allowing the commercial bank issued credit supply to contract. They call this rebalancing. I call it biflation. On the face of it, it seems a sensible approach.

The trick will be if they can do this without destroying velocity.

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He is practically screaming it. He's making two main points, and he makes them both three times.

ROYAL Bank of Scotland chief executive Stephen Hester yesterday warned that creating a debt-fuelled boom would be a "false recovery" as he again defended the bank's lending record.

He told business leaders in Edinburgh that RBS had the capital to meet demand and was approving more than eight in every ten applications for loans.

Addressing the annual CBI Scotland lunch he said: "We have the money to lend what you need to borrow from us. There may be imperfections in how we apply it. But we have the capital."

(...)

He said the bank's growth was tied to the recovery of the economy as a whole. "We want to support you but it has to be on a commercial basis," he said. "Britain's recovery does not have to be debt-fuelled and if it is it will be a false recovery."

Hester, right, pointed to those economies doing well, such as Germany, where the recovery was not built on lending: "They are using credit but companies are investing and creating their own cash flow."

"So financial services are an essential lubricant of recovery but not quite as essential as some would have us believe. We should not be going back to the amount of leverage that weakened us."

1. There is plenty of bank capital.

2. Inflation Growth will not come from excess credit creation.

So where will it come from? How will we get more money into and flowing round the economy?

Who else has the power to create money?

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I find it very interesting.

I think this is another clear signal that they intend to inflate the state issued money supply whilst allowing the commercial bank issued credit supply to contract. They call this rebalancing. I call it biflation. On the face of it, it seems a sensible approach.

The trick will be if they can do this without destroying velocity.

Which would lead to the much maligned deflation ?

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Which would lead to the much maligned deflation ?

Yes, and if that happens they may open the credit floodgates.

But that is not the plan.

Not yet.

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The answer was in your quote:

"They are using credit but companies are investing and creating their own cash flow."

Trade and credit are interlinked. Company can either grow its borrowing power or grow its own cash resources. Perhaps paying people less, spending less, paying out lower dividends...or alternatively growing the business (which often requires credit). He's really saying that if you want to grow and invest, you need to look at your own cash flow.

I'm pretty sure he knows how business works and his remedy is the sort of remedy of depressions. :)

Won't paying people less, buying less and paying lower dividends reduce activity in the wider economy?

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So it's just me that thinks this is huge news then ? Head of one of UK's largest Banks (With Government backing) saying clearly that Asset bubbles are a big no no ? And that Banks are not anywhere near as important as they think they are ? In fact it's 2 huge stories in one !!

Ah well. I find it interesting anwyay. :P

I think you are being naive. We have been taught time and time again that when contemporary politicians say something, it is in preparation to doing the opposite.

Remember "No more boom and bust"?

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I think you are being naive. We have been taught time and time again that when contemporary politicians say something, it is in preparation to doing the opposite.

Remember "No more boom and bust"?

True. However this is not a politician. And at present his actions match up to his words.

A step forward from the usual.

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True. However this is not a politician. And at present his actions match up to his words.

A step forward from the usual.

Sorry, I hadn't read the article. Bank CEOs today are born politicians though, that's how they got their jobs.

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Sorry, I hadn't read the article. Bank CEOs today are born politicians though, that's how they got their jobs.

Aye probably. Still - I like what he is saying so fingers crossed he actually means it. If this is the view of the banks/Government then there really is no stopping house prices falling to reasonable levels. Just a question of time.

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Are they still loss making?

The answer to the question varies according the the proximity of the bonus season- if bonus payouts are imminent there will be no losses to report- while the likely hood of losses being discovered on the books are highest immediately after bonus payments are made.

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  • 312 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%



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