This is what Mark Carney knows but dare not say out loud

[Red October]

 

[Mapatasy]

 

http://uk.businessinsider.com/uk-savings-rate-consumer-debt-mark-carney-bank-of-england-2017-8

[Funn3r]

I'm stunned; that's something you expect on ZH not MSM

[longgone]

[Uncle_Kenny]

It's functional. Mark Carney most likely has an excellent understanding of how ridiculous the situation is. You don't get to have a successful career at Goldman Sachs without some serious smarts. But, it's functional. He has to keep rates low, otherwise he is out and somebody else is in who will tow the line.

[Eddie_George]

Quote

We don't know how dangerous all that debt is. 

Or where the most dangerous debt is located. 

The usual suspect is the housing market, but that has moderated recently — an increase in the "stamp duty" tax on house sales and buy-to-let mortgages has reduced the number of people who buy property as an investment rather than a place to live.

Phew! I'm glad the housing market isn't the problem anymore.

Edited August 6, 2017 by Eddie_George

[Noallegiance]

Does this article not miss the following:

Raise minimum wage requirements and you may get capital relocation, but we would have far fewer people employed as businesses could not afford them. Cue more automation and/or more businesses going bust, more jobless, and even less ability for society to service debt.

'Ka' followed by an unhealthy 'boom'.

For the record, I believe there is no way out other than a painful one.

 

[Habitationi Bulla]

50 minutes ago, Noallegiance said:

Does this article not miss the following:

Raise minimum wage requirements and you may get capital relocation, but we would have far fewer people employed as businesses could not afford them. Cue more automation and/or more businesses going bust, more jobless, and even less ability for society to service debt.

'Ka' followed by an unhealthy 'boom'.

For the record, I believe there is no way out other than a painful one.

 

You mustn't have got the memo, Brown ended the "bust" part of boom & bust.

Recessions are not allowed anymore we now have growth guaranteed from now until eternity, as if it looks like falling they'll print or give money to the banks for fook all to lend to anyone with a shopping habit.

Besides the Tory party are already raising the minimum wage to £9 by 2020 .. though i do wonder what that will be in dollar terms by then.

[sideysid]

Im glad this sort of article is finally being published in MSM and it echoes what we've been saying on these forums for years, but there is one glaring omission. £30bn a year spent on tax credits.

People have happily accepted minimum wage at part time hours for the maximum tax credits. Companies have been only too eager to let the government fund their staff for them. Any change to upset the apple cart will cause the whole house of cards to come crashing down.

[“Nasty Piece of work”]

7 hours ago, Uncle_Kenny said:

You don't get to have a successful career at Goldman Sachs without some serious smarts. But, it's functional. He has to keep rates low, otherwise he is out and somebody else is in who will tow the line.

The BoE is not remotely independent.  It does Phil's bidding.  Carney is just the "personality".

[spyguy]

8 hours ago, Uncle_Kenny said:

It's functional. Mark Carney most likely has an excellent understanding of how ridiculous the situation is. You don't get to have a successful career at Goldman Sachs without some serious smarts. But, it's functional. He has to keep rates low, otherwise he is out and somebody else is in who will tow the line.

GS recruits traders. They may be smart. Or they may be lucky.

GS was looking at being very unlucy when it was the counterpart of all those RMBS. Until the Fed bailed it out.

[Fromage Frais]

4 hours ago, sideysid said:

Im glad this sort of article is finally being published in MSM and it echoes what we've been saying on these forums for years, but there is one glaring omission. £30bn a year spent on tax credits.

People have happily accepted minimum wage at part time hours for the maximum tax credits. Companies have been only too eager to let the government fund their staff for them. Any change to upset the apple cart will cause the whole house of cards to come crashing down.

It does feel like that I would add that we seem to have created a Tax credits gentry who do not wish to do certain work and may also look down on those who do.  These jobs are undertaken by Eastern Europeans so in effect we are paying people to stay at home whilst importing people who then sent the money out of the uk in many cases.

Totally unsustainable.

I employ a few eastern europeans nice people.....but I have to admit that a couple of have recently discovered the tax credits gravy train and now only want to do the minimum hours as they have council houses now.  

In terms of work ethic my UK staff are just as good its just that you do have a lot of unemployables who clog up your recruitment interviews as they are target hitting for the job centre rather than actually wanting a job.

 

 

[stuckmojo]

I agree that the only solution is a painful one. 

But never forget that the whole system is based on money=debt and without people taking on debt the system fails. 

[Errol]

11 hours ago, Uncle_Kenny said:

It's functional. Mark Carney most likely has an excellent understanding of how ridiculous the situation is. You don't get to have a successful career at Goldman Sachs without some serious smarts. But, it's functional. He has to keep rates low, otherwise he is out and somebody else is in who will tow the line.

On this basis, couldn't they replace him with an algorithm/Computer? 

[ThePrufeshanul]

6 hours ago, spyguy said:

GS recruits traders. They may be smart. Or they may be lucky.

GS was looking at being very unlucy when it was the counterpart of all those RMBS. Until the Fed bailed it out.

They are crooks - I recommend reading Matt Taibi's book Griftopia where he devotes a chapter to them.

[simon49]

I don't think that raising the minimum wage will help, as it will only push housing/ rents even higher. If they reduced all wages then the bubble would deflate itself.

[scottbeard]

The fact that another recession is looming isn't surprising, or even THAT alarming - Gordon Brown did not in fact abolish boom and bust, and it's been 10 years since August 2007 kicked off the last recession, so we're kind of due one.  These things happen from time to time. 

The more difficult to call and more interesting point is whether it will be another crisis recession as per 2007/08 or a more ordinary one.

If it *is* a "big one" then with interest rates and savings rates already rock bottom there is very little room for manoeuvre.

[ftb_fml]

While I'm all for an interest rate rise and would welcome an enforced pay rise as I'm decidedly at the crappy end of the wage spectrum, tbh I'm dubious of the "benefits" of raising minimum wage.

As fru-gal suggests small businesses are already having a hard time of it, while the economy as a whole is hardly healthy and certainly doesn't look to be be getting better any time soon (I don't think I'm alone in expecting a massive recession soon). IMO raising minimum wage will push a lot of small employers under, directing their ex-employees straight in the direction of the job centre.

Again I agree that the most legitimate targets should be the fat corporations who use every loophole to gain cheap and expendible labour and gain a massive advantage over smaller, disadvantaged competitors. Heavy taxation of these massive companies (or at least enforcing the law as intended by closing all the tax loopholes) and giving tax (and other) breaks to  smaller businesses would be a start. However, like all potentially pragmatic, fair and sensible approaches to our economic situation this would tread on the toes of establishment VIs though, so there's sod all chance of this actually happening.

 

[goldbug9999]

26 minutes ago, ftb_fml said:

While I'm all for an interest rate rise and would welcome an enforced pay rise as I'm decidedly at the crappy end of the wage spectrum, tbh I'm dubious of the "benefits" of raising minimum wage.

Wage increases will just get soaked up by rent increases and bigger mortgages.

[oracle]

4 hours ago, fru-gal said:

Reducing tax credits could actually make the Government look good. It reduces the benefits bill, rewards work (if the minimum wage increases) and would encourage people to work more hours (as they would be getting their income from work rather than tax credits). It also means more tax or NI (no part time jobshares) and the onus is on businesses to make up the income shortfall rather than other taxpayers. 

As the article suggests, the problem is getting businesses to pay higher wages. Perhaps other taxes could be reduced (such as business rates) and there could be some way of helping small businesses with the burden of paying employees more. They definitely need to do something about big multinationals not paying tax (Amazon, Starbucks etc) and making it harder for small businesses to compete when the bigger ones have the tax advantages.

business will quite happily pay a bit more tax if they are left alone to create the revenue in the first place.

 

what we've got is a sort of "corporate cartel" who are trying to drive young upstarts out of business by CREATING loads of pointless unnecessary legal loopholes(courtesy of lobby groups,kickbacks,job offers after legislation passed and slush-funds etc).

and it's frankly a silly way to run a country.it does not at all create revenue,or jobs, or growth(apart from the cancer of officialdom and jobsworths doing ever increasing amounts of paper-shuffling)

..and all because a very,very few people with a hell of a lot of money want even more,at the expense of everybody else...but aren't up to playing a fair game and taking a beating when they are old and stale,and need replacing at the top table.....sorry but that it just law of the jungle.You can put it off, but you can NEVER stop it....old chaps should learn when to retire and grow old gracefully.

[Maynardgravy]

21 hours ago, Eddie_George said:

Phew! I'm glad the housing market isn't the problem anymore.

Quite. Just cos the dog's stopped shitting doesn't stop what's left behind from still being a huge festering turd.

[macca13]

It's the wrong way round, wages are fine, its cost of living, housing.. if we reduced rent/mortgages to a quarter of what they are now, would everyone still be poor? 

It's probably too late as they have indebted everyone up too their nipples! 

But imagine if your rent/mortgage was only £300, all that spare money you would have, even on minimum wage. You would have so much spare cash the government could increase taxes and improve the quality of public services. With high house/rent there is no money left to fund infrastructure and care.. 

i think Population increase is the number 1 problem.. if you stop that you fix the country.. house prices can't grow if population started going down, that's why they are sending us back to the slums, to line their greedy pockets, there's no money in the gig economy, just endless wage top ups and benafits.. 

automate the crap jobs. Invest in technologies and medicine, lower population, invest in eduction that is relivent to societies needs.. 

Edited August 8, 2017 by macca13

[goldbug9999]

4 hours ago, macca13 said:

It's the wrong way round, wages are fine, its cost of living, housing.. if we reduced rent/mortgages to a quarter of what they are now, would everyone still be poor? 

It's probably too late as they have indebted everyone up too their nipples! 

But imagine if your rent/mortgage was only £300, all that spare money you would have, even on minimum wage. You would have so much spare cash the government could increase taxes and improve the quality of public services.

+1

High housing costs are the scourge of western economies, except for germany of course where they have almost uniquely managed to keep a lid on housing costs, its almost like they know what they are doing. Oh and japan where cheap housing is a by product of rampant xenophobia.

Edited August 8, 2017 by goldbug9999

[Errol]

It's true, and if rent was say half what it is now people would have loads of money to put back into the economy to actually make stuff run nicely.

[Greg Bowman]

6 hours ago, macca13 said:

It's the wrong way round, wages are fine, its cost of living, housing.. if we reduced rent/mortgages to a quarter of what they are now, would everyone still be poor? 

It's probably too late as they have indebted everyone up too their nipples! 

But imagine if your rent/mortgage was only £300, all that spare money you would have, even on minimum wage. You would have so much spare cash the government could increase taxes and improve the quality of public services. With high house/rent there is no money left to fund infrastructure and care.. 

i think Population increase is the number 1 problem.. if you stop that you fix the country.. house prices can't grow if population started going down, that's why they are sending us back to the slums, to line their greedy pockets, there's no money in the gig economy, just endless wage top ups and benafits.. 

automate the crap jobs. Invest in technologies and medicine, lower population, invest in eduction that is relivent to societies needs.. 

I agree broadly with your sentiment and have said it for 20 years. Probably differ on the invest in technologies and automate the crap jobs.

Investing in technology is high risk and we are coming to a point where we will need to think very carefully about automating away many jobs. Whatever you might say work is dignity if it can provide a reasonable but not excessive standard of living. What I would invest in is infrastructure Victorian style because once its in it is an asset for the country

Lower housing costs create good organic opportunities, people move around more in careers or start their own proper businesses (not BTL S***) which have a better chance of survival and eventually get beyond one man band status to create wealth and opportunity for others