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Denmark Targets Credit Contraction As Loan Demand Stalls

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http://www.bloomberg.com/news/2014-12-10/denmark-targets-credit-contraction-as-loan-demand-stalls.html

Denmark’s central bank is urging lenders to refrain from easing credit standards and says the financial industry still needs to undergo a contraction.

“One of the ways to achieve a sensible development is to remove the overcapacity there is in the banking sector,” Lars Rohde, governor of the central bank, said yesterday in an interview in Copenhagen. “There’s a capacity adjustment underway, but it’s probably not finished yet.”

Denmark’s bank industry has combined assets that are about four times the size of the $310 billion economy. Danske Bank A/S (DANSKE) alone has a balance sheet that is more than 180 percent of the nation’s gross domestic product. Since Denmark’s housing bubble burst in 2008, about 60 community lenders have been either wiped out or bought up. That number needs to rise, according to Rohde.

“If we’re doing anything, then it’s to support the capacity adjustment that’s taking place,” he said.

Lending is stalling as growth in Scandinavia’s weakest economy fails to return to pre-crisis levels. Gross domestic product will grow just 0.8 percent this year, the central bank estimates. That’s less than the average in the European Union, where the European Commission estimates growth will reach 1.3 percent.

A story full of mixed messages!

The financial industry needs to contract as there's over capacity. However to boost growth they need to boost lending????

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http://www.bloomberg.com/news/2014-12-10/denmark-targets-credit-contraction-as-loan-demand-stalls.html

A story full of mixed messages!

The financial industry needs to contract as there's over capacity. However to boost growth they need to boost lending????

Its all getting very weird and I cannot help but keep thinking of that lovely description "cognitive dissonance". Except it is occurring in groups of people not just individuals.

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Those they want to take it don't want it, the ones that have a low risk of defaulting... Those that want it they do not want to give it to......even interest free debt, few takers because it is the capital that is the biggest burden....paying back the ever growing capital required to do anything useful.....bring back the days of lower capital/principle and higher interest.

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At least Denmark's GDP, GDP per Capita and productivity figures have all been far higher than the UK's including last year. So they must be doing something right.


http://

en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita

http://

en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita

http://

epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tec00117

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At least Denmark's GDP, GDP per Capita and productivity figures have all been far higher than the UK's including last year. So they must be doing something right.

I read recently that Denmark has the highest ratio of household debt to disposable income of anywhere in the world. It's something like 350%, where the UK's is something like 150%. I find it hard to imagine living somewhere with household debts twice as high as those in Britain.

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I read recently that Denmark has the highest ratio of household debt to disposable income of anywhere in the world. It's something like 350%, where the UK's is something like 150%. I find it hard to imagine living somewhere with household debts twice as high as those in Britain.

According to the link below it's about 261% similar to the Netherlands which also has GDP, GDP per Capita and productivity far higher than the UK. The UK's figure is about 133%.

That's assuming the statistics in the link include everything and are accurate of course.

http://

epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tec00104

Denmark's public sector debt is apparently about half of the UK's as a percentage of GDP although the UK's official figures probably exclude a significant amount of off balance sheet stuff. Maybe more than Denmark?

Apparently Denmark has a very small budget deficit.

Edited by billybong

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The link below gives some interesting data on gross savings as a % of GDP upto 2012

[


http://

data.worldbank.org/indicator/NY.GNS.ICTR.ZS

In 2012 the UK's was 11% and Denmark's was about 24% a similar level to the Netherlands and Germany with France at 18%.

It's possibly another reason why they're having to free up pension savings and allowing people to draw it all down.

Mind you


7 April 2014

http://

uk.reuters.com/article/2014/04/07/uk-britain-economy-savings-idUKBREA360WC20140407

(Reuters) - The finances of Britain's households are likely to look a lot healthier later this year, but not because wages are about to jump. Instead, it will be due to changes in the way national statistics are compiled.

Britain's savings ratio - the amount put away as a percentage of after-tax income - is lower than in many other rich countries, raising concerns about the sustainability of the country's economic recovery from the financial crisis.

But under European Union accounting changes being introduced in September, that ratio is set to roughly double, according to officials from Britain's Office for National Statistics.

The new methodology will add five percentage points to the ratio - taking it to around 10 percent from the current 5.0 percent.

Edited by billybong

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At least Denmark's GDP, GDP per Capita and productivity figures have all been far higher than the UK's including last year. So they must be doing something right.

I think it's called land tax.

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