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InlikeFlynn

Carney Making Liquidity Available

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F**king criminal

We voted not just against the EU buit aaionst these corrupt institutions robbing us blind

The police need to go round there, viaa No 11 downing street and put them in a van.

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Hmm .. let me guess what he'll do ..

political expediency .... 100% track record

lowering interest rates ..... 100% track record

greasing the palms of his mates ... 110% track record

support for insane leverage everywhere especially housing .. 100% track record

I'm guessing he'll have a really hard time picking only one of those objectives as the piggies who are rolling over their infinitely sized 0% interest rate US treasury contracts will be screwed if he doesn't support the pound but by engineering the largest most over-leveraged asset price absurdity in the history of all mankind he can't do that without it being obvious what a massive cluster**** he created.

All it needed was some moderate house price falls a few years back and none of this would be a problem as people would be appropriately wary and the financial system would be able to handle the volatility. Oh .. and of course something slightly less insane than 0.5% interest rates (doesn't the guy know how to price an interest rate contract ffs ... he's started wars with that).

Gets a AAA moron rating from me.

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Is this the end of 'austerity' that Labour have been clamoring for?

Nope. It doesn't go to government coffers, nor to the public to spend, nor to infrastructure to circulate within the economy.

Apparently it goes in as 'asset purchases' at banks, pension funds, etc. Presumably it depends on which (if any) companies experience difficulties.

At the moment it is just an "availability pledge" rather than an action.

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Hmm .. let me guess what he'll do ..

political expediency .... 100% track record

lowering interest rates ..... 100% track record

greasing the palms of his mates ... 110% track record

support for insane leverage everywhere especially housing .. 100% track record

I'm guessing he'll have a really hard time picking only one of those objectives as the piggies who are rolling over their infinitely sized 0% interest rate US treasury contracts will be screwed if he doesn't support the pound but by engineering the largest most over-leveraged asset price absurdity in the history of all mankind he can't do that without it being obvious what a massive cluster**** he created.

All it needed was some moderate house price falls a few years back and none of this would be a problem as people would be appropriately wary and the financial system would be able to handle the volatility. Oh .. and of course something slightly less insane than 0.5% interest rates (doesn't the guy know how to price an interest rate contract ffs ... he's started wars with that).

Gets a AAA moron rating from me.

Hilarious! Class post.

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Carney would love to raise rates......only we are not affluent enough to sustain it, can't have it all ways......have your cake and eat it. ;)

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Something has to give eventually. Where does this liquidity come from? Government's balance sheet debt.

What do lenders need to keep things going smoothly? A flow of loan demand.

We can't have massive reflation on massive reflation, and "no one is a loser" without eventual consequence.

It is all too simple to think that central banks have magic powers. They don't. They can create liquidity by creating debt. But this is not the same thing as creating capital. Any time a central bank monetises an asset by buying it, in essence, with printing-press money, it also creates a liability. Only the market can create capital by valuing assets above liabilities. Turning on the printing presses at a higher speed destroys more wealth than it creates.


The notion that easy money is a magic tonic that can counter the forces of contraction is likely to seem more alluring as an argument than it proves to be a fact.

This looks like the next step for me, for all the liquidity they might offer. Relative had dinner with friends a couple of weeks ago. His pal told him his clients had positioned to put some projects (sadly I can't reveal) on hold in case of an exit vote. Also his wife was telling my relative about how house prices are going up, and encouraging them to buy. She was made redundant the following week.

May 2013.

Deflation is in almost all cases a side effect of a collapse of aggregate demand -- a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers...

When the nominal interest rate has been reduced to zero, the real interest rate paid by borrowers equals the expected rate of deflation, however large that may be… In a period of sufficiently severe deflation, the real cost of borrowing becomes prohibitive. Capital investment, purchases of new homes, and other types of spending decline accordingly, worsening the economic downturn....

Even if debtors are able to refinance their existing obligations at low nominal interest rates, with prices falling they must still repay the principal in dollars of increasing (perhaps rapidly increasing) real value.
-- Ben Bernanke: "Deflation: Making Sure 'It' Doesn't Happen Here," November 21, 2002

Is this not what is happening?

...Though he wouldn’t admit it, Bernanke met his match in 2011. The consumer balked at attempts to stimulate aggregate demand via inflationary policy of negative real interest rates, and ever since, has been raising real interest rates by reducing inflation through lower aggregate demand. This is perhaps the most unappreciated yet significant market development since the financial crisis.

Rising real interest rates is Bernanke’s worst nightmare. Everything he has worked for in academia and implemented in monetary practice is imploding before his very eyes. Contrary to his assertion in 2002, aggregate demand in the real economy has in fact met the limit of monetary policy, rendering QE’s impact ineffective and obsolete.

http://www.minyanville.com/business-news/the-economy/articles/Bernanke2527s-Worst-Nightmare-Rising-Real-Interest/5/28/2013/id/50031?page=1

Watched a video of top RBS guy the other week claiming uncertainty with the referendum itself was affecting loan demand. What now?

The idea that government can easily interrupt or suppress economic cycles is more a civic myth than a fact.

"The Federal Reserve policy of cheapening credit through the purchase of government bonds has been unable to make a dent in the conservatism of borrower or bank lender, in short, every anti-deflationary effort has yet to provide positive results." (Editorial, Barron's, July 11, 1932)

--

The conclusion to be reached after 10 years of madcap lending is that house prices are not a function of demand, but are simply a function of how much money the lenders are willing, and able, to advance. And how much qualifying borrowers are willing to borrow. Almost everything else is immaterial.
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The psychological aspect of deflation and depression cannot be overstated. When the social mood trend changes from optimism to pessimism, creditors, debtors, producers and consumers change their primary orientation from expansion to conservation.

As creditors become more conservative, they slow their lending. As debtors and potential debtors become more conservative, they borrow less or not at all. As producers become more conservative, they reduce expansion plans. As consumers become more conservative, they save more and spend less.
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With the value of real estate collateral falling, the true market value of construction and real estate loans will fall. Bankers and other lenders, like their predecessors after 1929, will not wish to magically turn one dollar of cash into a loan worth eighty cents, much less sixty cents. When the value of collateral falls, and the public's demand for saving safety rises, even easy money at the Fed (ECB) may not stop deflation.

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RBS Chairman Davies Says Brexit Potential Saps U.K. Loan Demand

June 9, 2016

Royal Bank of Scotland Group Plc Chairman Howard Davies said the taxpayer-owned bank is seeing slower demand for loans because of the U.K. referendum on European Union membership later this month.

“We are seeing a slowing down of the pipeline of loan demand,” Davies said in an interview with Francine Lacqua and Tom Keene on Bloomberg Television on Thursday. “Not necessarily the pipeline emptying, if you like, but not coming through very quickly as people are pausing.”

more + video http://www.bloomberg.com/news/articles/2016-06-09/rbs-chairman-davies-says-brexit-potential-saps-u-k-loan-demand

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From the title of the thread, my first thought was that he'd wet himself.....

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From the title of the thread, my first thought was that he'd wet himself.....

He could bottle that and sell it! Austerity solved!

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Am I the only who thought the positioning of the lectern in the doorway made him look like he was a bank teller talking through the counter window in an actual high street bank branch?

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Brexit is a disaster for the uk. We are the printing champions of Europe already, now we're off the leash.

Economically what will we gain? We print more money than the eu, we have more govt debt, more private debt, less manufacturing, worse trade numbers. oh, and no gold. The Eu has the most gold in the world (since we can't be sure what China has). The UK will disintegrate as Scotland will demand exit.

At least in the EU we had free trade with the richest economic bloc in the world. Now we haven't even got that and still got all the downsides and more. Maybe a decade of trade negotiations ahead just to get back to where ww were.

can't figure out what the celebrations are for. it's an economic disaster and the market smells it.

having said that, the EU is also toast, as is the usa. But, We may just sink without trace a whole lot faster now.

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and all those foreign house buyers, who are the marginal buyers holding up the entire uk housing ponzi, are they going to have a go and double down on this? I don't think so, I think they'll run for the hills. With more expensive foreign debt to service and without a property ponzi "wealth effect" we really have nothing left.

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