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The Masked Tulip

U.k. Will Regret Hiring Rock Star Central Banker

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The hope is that Carney can work the same kind of magic in the U.K. that he did in his own country. There are two big problems, however. The minor one is that the Canadian economy is not looking in nearly such good shape now as it was when Carney was appointed. The bigger one is that he will be tempted to go for flashy, quick solutions.
But now it looks as if the wheels are coming off the Canadian bus. The property market is starting to wobble and may well crash. Growth has slowed down sharply. The credit-rating agencies have downgraded a raft of Canadian banks on their exposure to property loans that could easily turn sour. Increasingly Carney looks like a man who just managed to keep the debt bubble going longer than anyone else — rather than someone who managed to find a way of getting a mature economy to grow without pumping up borrowing.
The only real ways to get the economy back on track is to reduce debt and reduce state spending. A start has been made on both, but it is a long, grinding process. There is no quick fix. If Carney starts to search for one he will do more harm than good — and the British will end up wishing they had a more low-profile governor with less to prove.

http://www.marketwatch.com/story/uk-will-regret-hiring-rock-star-central-banker-2013-06-05?link=home_carousel

Alas, I fear he has been hired exactly to be a quick fixer just in time for the election in 2015 so I expect to see him print, devalue sterling and create bubbles.

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http://www.marketwatch.com/story/uk-will-regret-hiring-rock-star-central-banker-2013-06-05?link=home_carousel

Alas, I fear he has been hired exactly to be a quick fixer just in time for the election in 2015 so I expect to see him print, devalue sterling and create bubbles.

Unless of course he's a secret forum reader and can't wait to halt QE, hike IRs and behave like a sensible man to make the country finally take its necessary medicine and start a real recovery. Stranger things have happened. (Though I won't hold me breath)

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Alas, I fear he has been hired exactly to be a quick fixer just in time for the election in 2015 so I expect to see him print, devalue sterling and create bubbles.

His wife seems to have some very strong tendencies towards fairness. Why would he marry someone so radical if he didn't have some sympathies that way himself? I think she was being ironic in her reported tweet of just about being able to find and afford a place to live in London (on the housing package for renting with Carney's BOE Governor job.)

I'm not sure some of the extreme HPI in some parts of Canada in latter years can be blamed on Carney. You might lower rates to help business and smooth out forces affecting business, but people have their own responsibility for choosing to take big debt and overpay. He also didn't force QE to bailout gambling losers who had lived it up, to keep them in position over those who had saved, afaik. Crash might be coming to Canada but only as a result of decisions made by others in the market. Just got a sliver of hope he could be the opposite of what the HPI crowd believe he is, where the UK is far more topped out than Canada.

The British wife of the new Bank of England Governor is a strident environmental activist who urges people to spend less money on possessions, and once declared: “Having more stuff does not make us happy.”

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His wife seems to have some very strong tendencies towards fairness. Why would he marry someone so radical if he didn't have some sympathies that way himself? I think she was being ironic in her reported tweet of just about being able to find and afford a place to live in London (on the housing package for renting with Carney's BOE Governor job.)

I'm not sure some of the extreme HPI in some parts of Canada in latter years can be blamed on Carney. You might lower rates to help business and smooth out forces affecting business, but people have their own responsibility for choosing to take big debt and overpay. He also didn't force QE to bailout gambling losers who had lived it up, to keep them in position over those who had saved, afaik. Crash might be coming to Canada but only as a result of decisions made by others in the market. Just got a sliver of hope he could be the opposite of what the HPI crowd believe he is, where the UK is far more topped out than Canada.

How do you think the job interview went between him and Osborne? OK, Osborne technically does not appoint him but has a huge say in it no doubt. I imagine there have been one or more dinner conversations between the two prior to his appointment?

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http://www.marketwatch.com/story/uk-will-regret-hiring-rock-star-central-banker-2013-06-05?link=home_carousel

Alas, I fear he has been hired exactly to be a quick fixer just in time for the election in 2015 so I expect to see him print, devalue sterling and create bubbles.

Create a bubble in what.

I estimate with wages not going up, cost of living shooting up disposable imcome is back to where it was in 2007 when it all collapsed, I dont think there is any scope to push up house prices beyond the still crazy levels they are.

The only thing different he can do is a Zimbabwe.

Edited by TheCountOfNowhere

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How do you think the job interview went between him and Osborne? OK, Osborne technically does not appoint him but has a huge say in it no doubt. I imagine there have been one or more dinner conversations between the two prior to his appointment?

Personally I think Osborne made assumptions before any interview. "Carney is ex-Goldman Sachs, lowered rates in Canada, must love money himself. Yes, he'll do fine." Even if they had meetings and dinner conversations, our side/Osborne may have interpreted Carney's technical answers into what they want to hear.

Our politicians don't think things through as much any more. Then all the U-turns.

It wouldn't surprise me at all if Osborne dreamt up Help-To-Buy the night before the Budget, perhaps whilst staying the night in the comfy bed of one of his parent's homes. Maybe that one they're trying to sell for £15M+. It didn't look like Merv had been consulted, judging from Merv's reaction later.

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Create a bubble in what.

I estimate with wages not going up, cost of living shooting up disposable imcome is back to where it was in 2007 when it all collapsed, I dont think there is any scope to push up house prices beyond the still crazy levels they are.

Enable people to borrow more - witness the tragically misnamed 'help to buy' scheme.

Introduce other incentives or tax breaks to borrow/buy - say hello to our previously departed friend MIRAS for example.

Offer explicit state backing for mortgage lending a la FMAC in the US.

Combine with continued repression of interest rates and lax monetary discipline forcing capital into speculative bubbles, with property looking like an attractive way to generate returns due to all the fiddling of the taxation and borrowing systems to make it a good bet. Let someone else worry about the nasty consequences down the line and count your future income from consultancy jobs with the VIs after you leave power.

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Default or hyperinflation. Pick one as there is not another way out of the mess we are in.

What's amazing is that there is just a total refusal amongst anyone in the mainstream to admit that the debts are so great that they just cannot be repaid (short of money printing which is another form of default) - something which is blatantly obvious to anyone with even a slim grasp of mathematics and logic.

Instead, we get politicians of various kinds offering completely unworkable 'solutions' and arguing with each other over which fantasy escape plan is the best. The media sits by and happily regurgitates their PR releases for them whilst assiduously avoiding asking any hard questions or exploring the underlying issues.

It shows just what a sham the political system is and how incredibly unfit for purpose the media has become.

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Default or hyperinflation. Pick one as there is not another way out of the mess we are in.

Homer: "Default? Woo hoo! Default: the two sweetest words in the English language... de fault, de fault, de fault"

I'll take default, providing the system can survive it, and even if it couldn't, still preferable to high inflation.

Creditors get hurt by losses on defaulted/suspended interest repayments, or haircuts even to capital, or losses in value of local currency, as market forces take their toll. That toll includes trying too hard to push inflation.

Creditors then restrict further credit (as they have done already, replaced by Gov pushing FLS, but credit-worthy business not really wanting to avail themselves of it, not seeing potential for growth in an overindebted country.)

Asset prices and value of businesses fall in absence of credit. Continues to fall and fall until the balance of assets (on price) is collateralised at much lower prices acceptably to the surviving creditors, so they get better value for money. Even if they've lost some money earlier in the process. Selective repudiation by default and not obliterated by inflation. The bad and unsustainable positions in the market are cleaned out, creating healthier conditions, if a lot of pain for the system in the process.

Edited by Venger

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Unless of course he's a secret forum reader and can't wait to halt QE, hike IRs and behave like a sensible man to make the country finally take its necessary medicine and start a real recovery. Stranger things have happened. (Though I won't hold me breath)

Although I'd really not sure that this would actually work (at least not without a debt-grandfathering/writeoff scheme), it would be hilarious to see the look on Osbourne's face when he announced that IRs were going up to 5%.

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Homer: "Default? Woo hoo! Default: the two sweetest words in the English language... de fault, de fault, de fault"

I'll take default, providing the system can survive it, and even if it couldn't, still preferable to high inflation.

Creditors get hurt by losses on defaulted/suspended interest repayments, or haircuts even to capital, or losses in value of local currency, as market forces take their toll. That toll includes trying too hard to push inflation.

Creditors then restrict further credit (as they have done already, replaced by Gov pushing FLS, but credit-worthy business not really wanting to avail themselves of it, not seeing potential for growth in an overindebted country.)

Asset prices and value of businesses fall in absence of credit. Continues to fall and fall until the balance of assets (on price) is collateralised at much lower prices acceptably to the surviving creditors, so they get better value for money. Even if they've lost some money earlier in the process. Selective repudiation by default and not obliterated by inflation. The bad and unsustainable positions in the market are cleaned out, creating healthier conditions, if a lot of pain for the system in the process.

Well put. In essence, this is why govts often choose to default even when their external debt is denominated in the sovereign - they get some control over the trajectory of inflation. The alternative carries with it too great a risk of mass starvation and civil disorder.

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Well put. In essence, this is why govts often choose to default even when their external debt is denominated in the sovereign - they get some control over the trajectory of inflation. The alternative carries with it too great a risk of mass starvation and civil disorder.

Whilst some people say Government will always choose to inflate, they tend not to see the more subtle reasons why there are limits to such policy, including two possible consequences you've set out there.

How Governments can be forced to allow deflation, when debts have become so heavy and further inflation does not lead to growth, but to more damaging consequences, than allowing pain of deflation/restructuring. If you're carrying so much debt that you can't move, the sensible choice is to shed some of it, and not add more.

Although maybe I'm wrong. I'm surprised at how little anger there is from younger people. Work hard and the prospect of achieving ownership of a decent home in line with what they've achieved in a career, so restricted, without huge debt or Help-To-Buy. Carrying massive debts, then costs of raising a family, and trying to save something towards retirement.

With so much of the asset wealth in the hands of owner generations and those who've been willing to take on lots of debt, and those who are over-extended in but allowed to survive with low rates and more FLS. And silence over schemes such as First Buy and Help-To-Buy from younger people. It could run on for longer with so much compliance towards individual's choices on malinvestment. Some of course thinking about future inheritances from over-inflated asset prices.

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I can think of one young man who is happy that the older generation have over-inflated asset wealth ... in fact Mr and Mrs Osborne have two multi-million houses on the same street and young George made 600k IIRC on his taxpayer funded property investment. The rest of the young seem happy enough with Britain's got Talent and their iPads and keep paying rent and running up student debt.

Why do you think that IHT is seen as such a terrible thing..? (At least amongst the media/chattering classes)

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Increasingly Carney looks like a man who just managed to keep the debt bubble going longer than anyone else

That's what caught Gidiot's eye

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Does a banker grow potatos?

Does a Banker mend a lift?

Does a Banker drive a truck?

Just how does a banker create growth in anything other than that which he creates?

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Whilst some people say Government will always choose to inflate, they tend not to see the more subtle reasons why there are limits to such policy, including two possible consequences you've set out there.

How Governments can be forced to allow deflation, when debts have become so heavy and further inflation does not lead to growth, but to more damaging consequences, than allowing pain of deflation/restructuring. If you're carrying so much debt that you can't move, the sensible choice is to shed some of it, and not add more.

Although maybe I'm wrong. I'm surprised at how little anger there is from younger people. Work hard and the prospect of achieving ownership of a decent home in line with what they've achieved in a career, so restricted, without huge debt or Help-To-Buy. Carrying massive debts, then costs of raising a family, and trying to save something towards retirement.

With so much of the asset wealth in the hands of owner generations and those who've been willing to take on lots of debt, and those who are over-extended in but allowed to survive with low rates and more FLS. And silence over schemes such as First Buy and Help-To-Buy from younger people. It could run on for longer with so much compliance towards individual's choices on malinvestment. Some of course thinking about future inheritances from over-inflated asset prices.

The greatest achievement of UK govts post-2008 has been their ability to disguise the causes of the economic crash, which in turn has afforded them greater latitude to hold up prices than almost anywhere else in the world. The complicity of UK newspapers with the interests of the property and finance industries together with the suffocating establishment conformity of the BBC has ensured that few hard questions have ever been asked. The cost of that silence is a housing market that remains pathologically dysfunctional and a national debt which is racing off to infinity.

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Unless of course he's a secret forum reader and can't wait to halt QE, hike IRs and behave like a sensible man to make the country finally take its necessary medicine and start a real recovery. Stranger things have happened. (Though I won't hold me breath)

Hahahahhahahahahahahahahaha!!!!!!He is a QE maniac who has already expressed admiration for the enormous pumping up in Japan - which wil backfire......

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Why do you think that IHT is seen as such a terrible thing..? (At least amongst the media/chattering classes)

I read somewhere that of the total amounts that could be collected via IHT, only about 3% is actually collected due to the various easy to use legal loopholes.

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http://www.marketwatch.com/story/uk-will-regret-hiring-rock-star-central-banker-2013-06-05?link=home_carousel

Alas, I fear he has been hired exactly to be a quick fixer just in time for the election in 2015 so I expect to see him print, devalue sterling and create bubbles.

...Gordo the Clown in disguise ...except this one has the safe combination ....but the safe is empty ...thanks Gordo.... :rolleyes:

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  • 242 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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