Jump to content
House Price Crash Forum
interestrateripoff

Boe Says Banks Would Be Vulnerable To Abrupt Rise In Global Rates

Recommended Posts

http://uk.reuters.com/article/2013/06/26/uk-britain-boe-fpc-idUKBRE95P0FU20130626

The Bank of England warned banks and borrowers on Wednesday they may be vulnerable if there is an abrupt rise in global interest rates which could require lenders to bolster their capital cushions again.

Global bond yields have jumped since U.S. Federal Reserve Chairman Ben Bernanke said last week that the U.S. central bank may start to scale back bond purchases later this year.

"The violence of the adjustment over the past fortnight underlined the extent of the search for yield over the past months and the need for the authorities ... to pin down whether or not there are any vulnerable links in the financial system that could jeopardise stability," BoE Deputy Governor Paul Tucker told reporters.

Lots of threats about rates over the past week. Clearly this is a coordinated PR campaign.

Share this post


Link to post
Share on other sites

Is it a "buy now before rates go up " or is it a "you have been warned, don't blame us"

That one? The Japan experiment and all the other nonsense from CB`s is not keeping rates down any more, so they are just saying "Be ready"? Hopefully a few million people will default on credit cards etc, and a few more banks will be taken out of the game.

Share this post


Link to post
Share on other sites

Is it a "buy now before rates go up " or is it a "you have been warned, don't blame us"

It's a "rate rises will be bad so let's emphasise the pain, make it bigger and more immediate than it really is, and then give Carney a mandate to save us all by printing as much as he wants"

Share this post


Link to post
Share on other sites

It's a "rate rises will be bad so let's emphasise the pain, make it bigger and more immediate than it really is, and then give Carney a mandate to save us all by printing as much as he wants"

That's exactly how I see it. The current status of Abenomics complicates tings somewhat, but I honestly think all this grief that's going on at the moment is a way of saying "Look, we talked about ending QE and the world went into a tailspin, so clearly we can't stop it yet. In fact we'd better do it a little more enthusiastically just to be doubly sure".

However, I'm usually wrong about everything, and in this case I'll be very happy to be.

Share this post


Link to post
Share on other sites

It's a "rate rises will be bad so let's emphasise the pain, make it bigger and more immediate than it really is, and then give Carney a mandate to save us all by printing as much as he wants"

Shoot, that sounds childish enough to be their plan. That's taken the wind out of my sails or piszed on my bonfire. :(

Share this post


Link to post
Share on other sites

That's exactly how I see it. The current status of Abenomics complicates tings somewhat, but I honestly think all this grief that's going on at the moment is a way of saying "Look, we talked about ending QE and the world went into a tailspin, so clearly we can't stop it yet. In fact we'd better do it a little more enthusiastically just to be doubly sure".

However, I'm usually wrong about everything, and in this case I'll be very happy to be.

That's why Fisher's (and Greenspan's) comments were interesting as they talked about not submitting to the negative market reaction.

Share this post


Link to post
Share on other sites

All rubber stamped in Watford a few weeks back?

I see US GDP figures just announced are "disappointing".

As Ed Wood would say....

CUT!

PRINT!

What they do, not what they say.

Share this post


Link to post
Share on other sites

One thing is for sure if banks want to get money from general public that are going to have to offer much better rate that 1%.

If I had small amount of money spare . I don't see much point of putting it in savings account.

If I had large amount spare I would have brought a house by now,

which leaves me with 3% isa I still have till October. please rates by then markie

:D

Share this post


Link to post
Share on other sites

That's why Fisher's (and Greenspan's) comments were interesting as they talked about not submitting to the negative market reaction.

It all fits though. The way I see it, Fisher and Voldemort's comments roughly translate as "We really really really really really aren't going to be pushed around by the markets. Not at all. Nosiree, not never. ****** me! Look how bad the markets are! Priiiiint!"

Share this post


Link to post
Share on other sites

Exactly.

And when they start to go up - shortly - there's going be carnage on the streets.

But it no good shouting and screaming - you had been warned, and should have paid down your debts.

Or they are just trying to scare people off trackers onto fixed rates.

Share this post


Link to post
Share on other sites

They (the central bankers and governments) have created a bigger problem that the housing bubble that they created in the first place :unsure:

Basically when this lot goes down, a new system will emerge.

A 2% interest rate rise will bankrupt the banks - well lets hope inflation doesn't get worse or it will be a choice between hyperinflation or bankruptcy. Those that hold the assets will choose hyperinflation.

Share this post


Link to post
Share on other sites

The fact is, they're stuck.

Deflate and the economy is toast for 3-4 years while it resets, massive unemployment, soup kitchens, roving violent criminal gangs, civil disturbance, the whole 9 yards.

Inflate and eventually the economy will be toast as well, but the charade can be kept going for longer.

You're a politician, which are you going to choose?

Share this post


Link to post
Share on other sites

The fact is, they're stuck.

Deflate and the economy is toast for 3-4 years while it resets, massive unemployment, soup kitchens, roving violent criminal gangs, civil disturbance, the whole 9 yards.

Inflate and eventually the economy will be toast as well, but the charade can be kept going for longer.

You're a politician, which are you going to choose?

Is there a critical difference in the time-scale between the inflate and deflate options? I'm wondering if it's as different as it was once supposed it would be

Share this post


Link to post
Share on other sites
"The violence of the adjustment over the past fortnight underlined the extent of the search for yield over the past months and the need for the authorities ... to pin down whether or not there are any vulnerable links in the financial system that could jeopardise stability," BoE Deputy Governor Paul Tucker told reporters.

Nothing a few stress tests can't sort out, surely?

Share this post


Link to post
Share on other sites

I'm currently looking at remortgaging to make use of the current Government support and can't decide between a BOE tracker or a 10 year fix, 2.69% and 3.89% respectively :blink:

In your position I'd go for the ten year fix at 3.89% and I'd do it now because I doubt that offer will still be around next week. There's no doubt about it, the way is being prepared for interest rate rises, TPTB seem to have finally understood that ZIRP hasn't worked and isn't going to work.

Share this post


Link to post
Share on other sites

Mervyn had big farewell drinks party for lots of mpc members i wasn't welcome just as I wasn't when I joined wonder if @adamposen was or GB?

Are you sure you weren't welcome? I can't imagine why not, they did as you asked and then some, didn't they?

Share this post


Link to post
Share on other sites
The Bank of England warned banks and borrowers on Wednesday they may be vulnerable if there is an abrupt rise in global interest rates which could require lenders to bolster their capital cushions again.

Global bond yields have jumped since U.S. Federal Reserve Chairman Ben Bernanke said last week that the U.S. central bank may start to scale back bond purchases later this year.

"The violence of the adjustment over the past fortnight underlined the extent of the search for yield over the past months and the need for the authorities ... to pin down whether or not there are any vulnerable links in the financial system that could jeopardise stability," BoE Deputy Governor Paul Tucker told reporters.

So they need to pin down those capital cushions? It all sounds rather cosy when you put it that way- my old mum used a pincushion, back in the days when people knew how to make and mend their own clothes- maybe those skills will come back into fashion soon.

We are all kind of assuming that 'they' can choose to control rates at any time- but the tone of here suggests that maybe 'they' are losing control- maybe China is the catalyst here- their need to kill their own bubbles is possibly going to kill ours too?

Could turmoil in Chinese financial markets be the cause of the rise in interest rates on U.S. Treasuries?

Danske Bank's chief emerging-markets analyst, Lars Christensen, explained the theory to me earlier today. Last week, China's central bank deliberately withdrew liquidity and pushed up the short-term interest rates banks pay to borrow from each other, in an effort to shove the Chinese banking system toward less risk-taking.

That squeeze, Christensen explained, caused Chinese banks to dump Treasuries onto the market. (China's central bank is famous for being the largest foreign holder of Treasuries, but its four largest banks appear to have big stakes, too, according to annual balance-sheet statements.) The influx of sellers then sent Treasury yields up. The U.S. 10-year note now yields 2.6 percent, up 45 basis points since June 1.

It's hard to disentangle the China crunch from changes in U.S. monetary policy, which is also moving towards tighter money. Christensen explains why China might be part of the story: First, the Federal Reserve didn't tell investors anything new last week. Second, interest rates have continued to rise well after the Fed's policy announcement last week.

http://www.bloomberg.com/news/2013-06-25/is-china-to-blame-for-rising-u-s-interest-rates-.html

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.

  • 244 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.