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Future Boe Deputy Governor Sees No Uk Housing Bubble

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http://uk.reuters.com/article/2013/10/14/uk-britain-boe-cunliffe-idUKBRE99D0D720131014

Britain's housing market is not entering a new price bubble but bank lending must be watched closely after the launch of a new state mortgage guarantee programme, the Bank of England's next deputy governor said on Monday.

"It doesn't look that we are in a bubble," Jon Cunliffe, who starts at the central bank next month, told members of parliament's Treasury Committee.

He said the British government's "Help to Buy" mortgage programme did not pose a risk to the country's banking system, but could be a danger to individual households.

"In terms of whether it leads to households becoming over-exposed because they can now borrow higher amounts, there is a possibility it could do that and that would create more of a risk."

"That, I think, is one of the reasons it's necessary to keep a very firm eye on the lending standards that lenders use, the underwriting standards," he added.

Cunliffe is due to replace Paul Tucker as the BoE's deputy governor responsible for financial stability on November 1.

Excellent news. He doesn't see any bubbles.

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I listened to the whole of Cunliffe's evidence to the Treasury Committee this afternoon and I can tell you now that you won't find a more compliant, conformist government lackey than this guy. For a while I thought it was George Osborne talking and not the man who is soon to become Deputy Governor of the BoE with responsibility for financial stability.

When questioned about the UK housing market he seemed to be devoid of any independent thinking or in-depth knowledge on the subject, regurgitating the well-worn script that has been used recently to deflect any concern over a bubble - price/earnings ratio being roughly where it was ten years ago, prices rising from a low base, any froth being localised to London/SE and not nationwide etc.

Of course he reassured everyone that the FPC would be 'monitoring the situation carefully' but he was confident that there were no real threats to financial stability at present.

In short, he's your quintessential career civil servant who will do whatever his political masters tell him in exchange for a peerage further down the road.

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New Bank of England Deputy Governor Sir Jon Cunliffe: No Housing Bubble Yet

October 14, 2013 7:07 PM BST

419290.jpg

Sir Jon Cunliffe (left) gave evidence to the treasury select committee before he becomes deputy governor at the Bank of England (Reuters)

The incoming deputy governor of the Bank of England said that he will sound the alarm if a housing bubble is developing in the United Kingdom.

Sir Jon Cunliffe, who assumes his new role on the 1 November and will be responsible for financial stability, gave evidence before the Treasury Select Committee.

When asked by Conservative MP Mark Garnier if he felt confident enough to go on public record to say that he thought there was a housing bubble, Cunliffe replied "yes".

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They will keep monitoring and being vigilant.....right up until the whole system implodes and collapses - and then say that nobody could have seen it coming!

Edited by anonguest

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In fact thinking of my reply above, reminds me of that scene from the classic Yes Prime Minister, that one can almost see being repeated again in political circles - but this time merely substitute 'Treasury' for 'Foreign Office'......

Bernard Woolley: What if the Prime Minister insists we help them?

Sir Humphrey Appleby: Then we follow the four-stage strategy.

Bernard Woolley: What's that?

Sir Richard Wharton: Standard Foreign Office response in a time of crisis.

Sir Richard Wharton: In stage one we say nothing is going to happen.

Sir Humphrey Appleby: Stage two, we say something may be about to happen, but we should do nothing about it.

Sir Richard Wharton: In stage three, we say that maybe we should do something about it, but there's nothing we *can* do.

Sir Humphrey Appleby: Stage four, we say maybe there was something we could have done, but it's too late now.

Edited by anonguest

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I listened to the whole of Cunliffe's evidence to the Treasury Committee this afternoon and I can tell you now that you won't find a more compliant, conformist government lackey than this guy. For a while I thought it was George Osborne talking and not the man who is soon to become Deputy Governor of the BoE with responsibility for financial stability.

When questioned about the UK housing market he seemed to be devoid of any independent thinking or in-depth knowledge on the subject, regurgitating the well-worn script that has been used recently to deflect any concern over a bubble - price/earnings ratio being roughly where it was ten years ago, prices rising from a low base, any froth being localised to London/SE and not nationwide etc.

Of course he reassured everyone that the FPC would be 'monitoring the situation carefully' but he was confident that there were no real threats to financial stability at present.

In short, he's your quintessential career civil servant who will do whatever his political masters tell him in exchange for a peerage further down the road.

We have politicians masquerading as economists in the Bank, and spivs in the Treasury. We don't stand a chance.

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In fact thinking of my reply above, reminds me of that scene from the classic Yes Prime Minister, that one can almost see being repeated again in political circles - but this time merely substitute 'Treasury' for 'Foreign Office'......

Bernard Woolley: What if the Prime Minister insists we help them?

Sir Humphrey Appleby: Then we follow the four-stage strategy.

Bernard Woolley: What's that?

Sir Richard Wharton: Standard Foreign Office response in a time of crisis.

Sir Richard Wharton: In stage one we say nothing is going to happen.

Sir Humphrey Appleby: Stage two, we say something may be about to happen, but we should do nothing about it.

Sir Richard Wharton: In stage three, we say that maybe we should do something about it, but there's nothing we *can* do.

Sir Humphrey Appleby: Stage four, we say maybe there was something we could have done, but it's too late now.

What a chocolate fireguard. He's been in the heart of it right up to the financial crisis and never saw anything then either.

http://en.wikipedia.org/wiki/Jon_Cunliffe

The plot thickens! Could this be the Treasury "genius" behind this whole sorry mess?

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as usual, the banker is looking at cost of lending v salaries.....doesnt mention the efforts made to ensure the ratio doesnt change...and the tool they use?....interest rates.....ie, discredited affordabilty criteria.

Edited by Bloo Loo

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Classic BoE 'regulation' strategy. Compare 2013 bubble with 2003 bubble, observe little change and conclude not only that there is no bubble in 2013, but that there will be no bubble in the foreseeable future.

When the crash comes in 2015, 'no one could have predicted this, it started in America.'

Q

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