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Banks And Shops Predict Boom As Economy Gains

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http://www.independent.co.uk/news/business/news/banks-and-shops-predict-boom-as-economy-gains-8862861.html

Britain’s tentative economic recovery has triggered a surge of optimism among the country’s banks even though their loans to companies fell in recent months.

That is the key finding of a major report out today from the CBI and PricewaterhouseCoopers, which chimed with similar improving figures on the retail sector.

Banks predict a boom in business volumes over the next quarter, having seen a subdued summer, while profitability is also likely to rise, respondents to the CBI survey said. The fall in activity with industry over the past quarter was dismissed as a “blip”.

Stephen Gifford, the CBI’s director of economics, said: “With optimism rising and jobs and profitability growing, this is an encouraging quarter for the financial services sector despite a fall in business volumes in banking. Firms are expecting positive momentum to carry into the next three months, alongside a strong recovery in business volumes, which will boost profits further.”

The CBI’s optimism is yet to be seen by many of its big company members outside the finance sector. Unilever last week triggered a widespread fall in share prices of consumer goods giants when it warned of weak sales in emerging markets and continued low growth in the developed West.

Banks expecting a boom because of the new banking bailout sorry I meant help to debt?

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reporter: "hows Business Mr Shopkeeper?"

Mr Shopkeeper, "Its been hard, but things are on the up..Im expecting things to get better in the run up to Christmas"

reporter. "Hows Business Mr Banking rep?"

Mr Banking rep. "as you will see, if you ask any real business man, its been hard, mainly thanks to us and forebearance they are still around, but we all think things are going to get better...can I get you an appointment with our loan advisor?"

NO businessman will ever tell a reporter that things are dire...They are ALWAYS optimistic...that is the job of a business...to encourage you to BUY from them...and people dont buy from down and out businesses unless the price reflects the clearance.

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After over five years, all the bank bailouts, printed money, interest rate repression, 'stimulus' for housing etc are finally starting to take hold.

Now TPTB have two choices:

1. Continue with it and see a 'recovery' lasting at least until the election.

2. Cut back on the money/credit pumping and see the whole charade collapse in an implosion bigger than what would have happened in 2008.

No prizes for guessing which they will choose. This is exactly how out of control inflations start.

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The CBI is clearly as blind to the impending global depression as it was in 2008.

Turkey looks like being the next christmas turkey.

http://www.telegraph...aper-looms.html

By Ambrose Evans-Pritchard

7:30PM BST 06 Oct 2013

IMF chides Turkey on reckless policies as taper looms

The International Monetary Fund has told Turkey to tighten policy without delay to control a ballooning trade deficit, warning that the country is a prime candidate for capital flight as the US Federal Reserve starts to withdraw global liquidity.

"The authorities' immediate priority should be to reduce imbalances," said the Fund in an unusually blunt report, criticising the Islamist government of RecepTayyip Erdogan for sailing dangerously close to the wind.

The IMF said surging imports will push the current account deficit to 7pc of GDP this year, far above safe levels at time when the Fed and other G10 central banks are starting to tighten monetary policy.

"The market reappraisal of advanced economies' monetary policies has exposed Turkey's main vulnerability — its external imbalance. A weakening or a reversal of capital flows present a major challenge," said the report. The IMF said the government must rein in spending to cool overheating and abandon hopes for growth of 4pc to 5pc a year.

...

The IMF's harshest rebuke was reserved for the central bank, which has burned 15pc of Turkey's foreign reserves trying to defend the currency since the emerging market squall began in May.

The Fund said the "immediate priority" is to raise interest rates – still negative in real terms – to restore investor confidence and choke off excess credit growth. "Foreign exchange rate interventions cannot substitute for the right monetary stance," it said.

The warnings come as the high priests of global finance gather for the IMF's annual meeting in Washington this week, an event that kicks off with a forum on emerging market travails.

The Fed's decision last month to delay the "tapering" of bond purchases has bought time for the so-called "fragile five" with big current account deficits – India, Turkey, Brazil, Indonesia, and South Africa (though Ukraine, Serbia, and others are equally at risk). Christine Lagarde, the IMF's chief, has warned repeatedly that emerging markets are not yet out of the woods, reminding the Fed it has a duty of care to unwind quantitative easing (QE) in an "orderly way".

Roughly $4 trillion (£2.5 trillion) has leaked into emerging markets since the rich world began printing money on an epic scale. Only a tiny fraction of this has flowed back out again so far. IMF officials fear this could accelerate abruptly once tapering starts in earnest.

Edited by zugzwang

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One thing puzzles me with all these bullish forecasts, why is the central forecast for UK GDP still only 1.3% for the year as a whole (2013). Should that that not be roughly the sum of all four quarters. Or do they quote on a 4 quarter moving average or something stupid as opposed to where we end up on 31 December.

How is 1.3% annual growth compatible with Q1 0.4%, Q2 0.7% and estimates for 1.2% in Q3. October 2013 forecast...........

http://www.pwc.co.uk/economic-services/global-economy-watch/gew-projections.jhtml

and another...

http://www.cbi.org.uk/media-centre/press-releases/2013/08/growth-picking-up-but-more-rebalancing-needed/

Admittedly this one two months out of date, but anybody would think the formula was guess the growth and divide by two just to be on the safe side.

Edited by crashmonitor

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