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Bland Unsight

Check Out The Riotous Escalation Of Lending To Indviduals

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Posted these data series back in July in this thread.

Here's where we are now...

Lending+to+individuals+January+2014.png

My anxiety regarding missing the boat remains limited. If that's all FLS and HTB can achieve then I can't wait to see what madness Osborne is forced to come up with next to forestall what's coming, ;) .

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Posted these data series back in July in this thread.

Here's where we are now...

Lending+to+individuals+January+2014.png

My anxiety regarding missing the boat remains limited. If that's all FLS and HTB can achieve then I can't wait to see what madness Osborne is forced to come up with next to forestall what's coming, ;) .

Is that net loans, or gross lending?

Thanks

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Is that net loans, or gross lending?

Thanks

As per the title of the thread (and the graph axis label, ;) ) it is the total outstanding (about £1.4 trillion). If by net loans you mean the monthly movement in the total outstanding, then no, it is not net loans. If by gross lending you mean the gross value of new loans made each month, then no, it is not gross lending either. It is the total outstanding. HTH. This is all freely available from the BoE interactive database.

It's 'monthly' because they release an updated total each month.

Edited by ChairmanOfTheBored

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As per the title of the thread (and the graph axis label, ;) ) it is the total outstanding (about £1.4 trillion). If by net loans you mean the monthly movement in the total outstanding, then no, it is not net loans. If by gross lending you mean the gross value of new loans made each month, then no, it is not gross lending either. It is the total outstanding. HTH. This is all freely available from the BoE interactive database.

It's 'monthly' because they release an updated total each month.

does it include payday loans from unregulated sources, like sharksrus?

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does it include payday loans from unregulated sources, like sharksrus?

Only the loan sharks who collect their loans thusly...

Subtle collection methods can be effective. One lender hired a very attractive young woman, decidedly blond, to visit borrowers at their jobs. She talked to the men in a low, confidential tone, nicely asking them to pay their debt. She was not at all the typical bill collector. Co-workers of the borrower saw only a pretty girl calling on the man at his office or plant. After one or two visits, co-workers became curious and asked the borrower about his new girl friend. The embarrassment of a married man and the difficulty of explaining the secretive visitor to friends can well be imagined

Source: Collection Tactics of Illegal Lenders

Such loans are immaterial compared to the £1,400,000,000,000 worth of residential mortgages, :P .

I assume the payday lending will be in there in the unsecured total.

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Only the loan sharks who collect their loans thusly...

Source: Collection Tactics of Illegal Lenders

Such loans are immaterial compared to the £1,400,000,000,000 worth of residential mortgages, :P .

I assume the payday lending will be in there in the unsecured total.

1400 billion in total, that seems to be the trend, a constant, a figure they are trying to maintain at 1400 billion?

I am curious, what is the total figure of money on deposit in the UK? Similar about 1200 billion?

http://www.moneyreformparty.org.uk/

Total UK Money Supply and Debt

The total UK money supply (according to the Bank of England's Monetary and Financial Statistics) is £2,200 billion. Of this total, a mere £57 billion is in the form of notes and coins, and a whopping £1000 billion consists of what the commercial banks owe to each other – interbank debt.

This money supply is supported by nearly £1,500 billion of household debt - mostly mortgages, about £500 billion of corporate debt, over £900 billion of government debt - the National Debt, and, of course, £1000 billion of interbank debt.

If one removes the interbank debt from both sides of the equation, then the money available to the productive part of the UK economy - £1,200 billion - is supported by nearly £3,000 billion of private and public debt.

Edited by Panda

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Similar graphs on:

http://themoneycharity.org.uk/debt-statistics/

Here's the latest report:

http://themoneycharity.org.uk/media/Debt-Stats-Full-February-2014.pdf

... graph is on page 4 if interested.

Appears to be complete debt saturation. Usually in a downturn you'd get some debt being paid off but not this time - it's just stuck at £1.4 trillion for 6 years!

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... graph is on page 4 if interested.

Appears to be complete debt saturation. Usually in a downturn you'd get some debt being paid off but not this time - it's just stuck at £1.4 trillion for 6 years!

money+charity.png

Good to see that the Money Charity obtain the same graph from the same data. I prefer mine. Theirs is a little bit 'Somebody-let-the-intern-loose-on-the-formatting', but tastes differ.

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Does this mean we is b*ggered?

During the credit expansion phase you had more people borrowing more.

My interpretation of the behaviour of the secured lending measure now, which is static at a time when house prices and income multiples are increasing, is that the herd is becoming divided. Some people are sticking with the 'House prices only ever go up, borrow as much as you can' rule of thumb and borrowing outlandish sums at the present low rates. Others (possibly forced by falling incomes, rising living costs, astronomical house prices and tighter credit underwriting) are being excluded from the game - 15 years ago they would have taken out a mortgage and added to credit expansion, but now regardless of being a bear or a bull or neither, they can't so they don't.

One hopes that still others are staying out of property by choice, but this is the pwoperdee mad UK, so that's probably about one third of the hpc massive and nobody else, ;) .

Enough is being done by the Bank of England and the Treasury to ensure that these two forces offset one another and thus we do not see good old fashioned debt deflation emanating from the evisceration of the median household as its housing equity vanishes.

Obviously, this comes at a considerable cost for the portion of the population who did not ride the expansion of the credit bubble, because they arrived too late, or for whatever other reason, and thus do not have a great slug of housing equity.

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Does this mean we is b*ggered?

It means we've wasted 8+ years, pretending every is OK, when it became apparent that 'it really wasn't different this time' and we should be develeraging before the cost of credit starts getting ratcheting up.

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It means we've wasted 8+ years, pretending every is OK, when it became apparent that 'it really wasn't different this time' and we should be develeraging before the cost of credit starts getting ratcheting up.

How do you define 'we'?

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Is there a graph showing this adjusted for inflation? The rise is staggering of course but the trend has clearly moderated and even gone into reverse for a time.

There is now.

secured+2013+prices.png

I used the ONS CPI figures from here, compounding annually using the annual CPI figure to bring the prices for 1998 onwards forward to 2013.

Feel free to check my working

2013+calc+data.png

Edited by ChairmanOfTheBored

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There is now.

secured+2013+prices.png

I used the ONS CPI figures from here, compounding annually using the annual CPI figure to bring the prices for 1998 onwards forward to 2013.

Feel free to check my working

2013+calc+data.png

CPI is no use - you need to use wage/income inflation since that it used to repay the debt. Rising food and oil costs have little in relation to the amount of debt people have borrowed.

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One more thing:

I wouldn't expect borrowing to be rising since the bulk of sales are to Johnny foreigner, then cascading out from London.

As long as foreigners keep repatriating the PAST debt we exported there is need for internal debt to rise.

Chinaman has £1m in some offshore bank he paid no tax on, which has been accumulated by selling people plastic crap on credit cards. That money suddenly returns to the UK, but only into real estate,l you will see real estate hyperinflation.

If that money gained from selling the London house goes into stocks, then that will push up the stock market, but if used to pay down debt it will be deflationary. Since debt it quite stable, then I would imaging an equal mix of debt repayment and investment from the sold London property.

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One more thing:

I wouldn't expect borrowing to be rising since the bulk of sales are to Johnny foreigner, then cascading out from London.

As long as foreigners keep repatriating the PAST debt we exported there is need for internal debt to rise.

Chinaman has £1m in some offshore bank he paid no tax on, which has been accumulated by selling people plastic crap on credit cards. That money suddenly returns to the UK, but only into real estate,l you will see real estate hyperinflation.

If that money gained from selling the London house goes into stocks, then that will push up the stock market, but if used to pay down debt it will be deflationary. Since debt it quite stable, then I would imaging an equal mix of debt repayment and investment from the sold London property.

A lot of fair comment in both your posts that I don't disagree with but to emphasize different parts of the puzzle I'd say that one thing missing from your argument is that the 'model' needs credit expansion to produce inflation and the 'model' requires inflation, that's why we target it. You're right in your earlier post to focus on the fact that wages are used to pay down the debts and therefore it is an important lens to inflate/discount historical nominals using a wage inflation metric to see whether or not the debts are growing more or less manageable, but that's just one focus out of many that can be brought to bear on UK property and the UK residential mortgages that back about 25% of it.

Hence, whether or not you expect borrowing to rise is pretty small beer compared to the matter of whether or not some form of modest credit expansion shows up. That's how the system works, to the limited extent that it does work, ;) . If that credit expansion can't be conjured into being, things get very interesting.

Secondly, you can't label this as internal debt - that's a mistake. These BoE figures are a record of the outstanding loans including those that have been securitised and are now held 'externally', i.e. by foreign nationals/corporations. This is one side of the balance sheet only; the asset side from the banks point of view. How this lending has been financed is a whole other kettle of fish.

Finally, the by suggesting that foreign money is the "bulk" of sales you're overselling the bogeyman.

Take this claim from an August 2013 Reuter's piece:

Overseas buyers of high-end London homes accounted for 38 percent of deals last year compared with 23 percent in 2005, data from property consultant Savills shows. Just over half were for use as a main home.

Source: Overseas spree on luxury London property chokes local business

Even for high end London it's not the majority of transactions. Foreign money is certainly important, but I rather suspect that it will be when it reverses that it matters most.

Take this Wall Street Journal piece, BOE Can’t Stop the Craving for London. Time to Worry?:

More worrying might be what would happen if falling prices fed a vicious cycle where foreigners not only stopped buying but started selling. Foreign demand for British property fills a big hole in the U.K.’s current account deficit. Shorn of those flows, sterling would quite probably plummet. This would push up inflation and quite possibly force the Bank of England to tighten policy if it became a full-blown currency crisis.

Given that the economy remains highly leveraged, rising interest rates would do real damage to domestic demand.

It’s true the Bank of England can’t do much to stem these foreign flows into British property. But that’s not to say it shouldn’t think about what might happen if these flows stopped.

We're forestalling a correction to a horrendous bubble by allowing hot money to flow into London from all over the world and inflate the bubble further. Hence we need an unceasing line of your hypothetical Chinamen, each willing to pay more than the one before, and we need them to continue showing up forever, even as China attempts to negotiate some tricky economic waters. What are the chances that that is going to work out for the best?

I'm pretty sure that the sequence of events set in train we started inflating this bubble back in the mid to late nineties is not played out yet. This is not a return to normal. More like waiting for the other shoe to drop.

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A lot of fair comment in both your posts that I don't disagree with but to emphasize different parts of the puzzle I'd say that one thing missing from your argument is that the 'model' needs credit expansion to produce inflation and the 'model' requires inflation, that's why we target it. You're right in your earlier post to focus on the fact that wages are used to pay down the debts and therefore it is an important lens to inflate/discount historical nominals using a wage inflation metric to see whether or not the debts are growing more or less manageable, but that's just one focus out of many that can be brought to bear on UK property and the UK residential mortgages that back about 25% of it.

Hence, whether or not you expect borrowing to rise is pretty small beer compared to the matter of whether or not some form of modest credit expansion shows up. That's how the system works, to the limited extent that it does work, ;) . If that credit expansion can't be conjured into being, things get very interesting.

Secondly, you can't label this as internal debt - that's a mistake. These BoE figures are a record of the outstanding loans including those that have been securitised and are now held 'externally', i.e. by foreign nationals/corporations. This is one side of the balance sheet only; the asset side from the banks point of view. How this lending has been financed is a whole other kettle of fish.

Finally, the by suggesting that foreign money is the "bulk" of sales you're overselling the bogeyman.

Take this claim from an August 2013 Reuter's piece:

Source: Overseas spree on luxury London property chokes local business

Even for high end London it's not the majority of transactions. Foreign money is certainly important, but I rather suspect that it will be when it reverses that it matters most.

Take this Wall Street Journal piece, BOE Can’t Stop the Craving for London. Time to Worry?:

We're forestalling a correction to a horrendous bubble by allowing hot money to flow into London from all over the world and inflate the bubble further. Hence we need an unceasing line of your hypothetical Chinamen, each willing to pay more than the one before, and we need them to continue showing up forever, even as China attempts to negotiate some tricky economic waters. What are the chances that that is going to work out for the best?

I'm pretty sure that the sequence of events set in train we started inflating this bubble back in the mid to late nineties is not played out yet. This is not a return to normal. More like waiting for the other shoe to drop.

Well there is enough of them. Chinamen I mean.

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Well there is enough of them. Chinamen I mean.

Well, apologies to anyone who is finding the term Chinaman offensive, I understand that it is not the preferred nomenclature. Language advisory at the link.

The dude abides!

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