Monday, December 3, 2007

Cut and Paste Journalism & Desperation all rolled into one from the Telegraph ?

Pleas for rate cut as interbank loans dive

"Has the economy suddenly and totally fallen out of bed? We don't know yet, and it would be dangerous at this stage to bet it has. There is a risk rates will have to go up next year, not down," he said. - No the economy fell out of bed years ago ? Credit conditions have tightened abruptly since then, driving Libor back to crisis levels of 6.60pc. The Nationwide house price index dropped 0.8pc in November, the steepest fall in 12 years. - So what and good, that's what most people want ! Really, this article is all over the place, getting desperate now, Shadow MPC my @rse !

Posted by darren @ 06:54 AM (2358 views)
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44 thoughts on “Cut and Paste Journalism & Desperation all rolled into one from the Telegraph ?

  • SMPC member Peter Warburton “A profoundly deflationary credit downturn has taken hold,”

    There, ladies and gentlemen, is the first “official” indication that the UK is heading headlong into a Japan-style deflationary spiral.

    Remember, the credit boom was brought on with the full backing of the MPC in 2003.

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  • tyrellcorporation says:

    Question is Paul are they about to inject more herion into the twitching cadaver?

    Is X blogger suggesting the next IR move is UP? Does he know something?

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  • tyrellcorporation says:

    …heroin.

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  • No. Very little chance of the UK following in Japan’s footsteps.

    What we are seeing is the start of a great global re-balancing act that will ultimately see the US replaced by China as global top dog.

    For the UK there will be a period of recession, unemployment and rampant inflation; that will only end when the western currencies have collapsed against those of the developing world, and the manufacture of everyday items resumes in the west – in place of the dependency on imports.

    It will be messy, not least because the Americans are likely to get very aggressive towards China.

    Taiwan could prove a flashpoint – watch closely once the Olympics are out of the way…

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  • tyrellcorporation says:

    UT fancy a punt on the MPCs decision this week?

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  • tyrell

    I am not trading it.

    My point was if they raise I will be very sussy.
    Read my past post again. I have no inside knowledge just my Warren B guts.

    GOOD LUCK!!!! Cant post anymore.

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  • Tyrell,

    As I explained in a post yesterday, there’s a lot of pressure to reduce the rate – but if they adhere to their remit, an increase should be on the cards.

    Our Merv knows that this cowardly govt will make him a scapegoat given half a chance, so I would expect him to pass the buck to Darling – even if it doesn’t become public for a few years.

    As Darling is pretty clueless at his job – but knows a bad poll rating when he sees it – I expect he’ll press for a cut.

    So when Merv finally writes his memoirs, he’ll probably say ‘we didn’t want to cut the rate, but the Chancellor told us to’

    On the other hand, Merv might be defiant and do the right thing in the face of govt pressure..

    Remember that Merv’s job is up for renewal, and the decision on his re-appointment has been deferred to the New Year. If he thinks he’s out anyway he’ll probably ignore political pressure – if he’s desperate to keep the post he’ll probably browbeat the others on the MPC into agreeing a cut..

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  • tyrellcorporation says:

    Surely a ‘hold’ is the most likely option until retail and inflation data come out after Christmas? The bleating is deafening through from the media though and they’re trying to influence the financial markets to believe a cut is on it’s way.

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  • voiceofreason says:

    X Blogger, you say we are a nation of squatters living on borrowed time ? Is that right ?
    And that the banks control the money supply.

    Are you saying that it is somehow in the bank’s interests to raise IRs, thereby causing massive repossessions where presumably the losses acrue not to the banks, but to those they syndicated the loans to ?

    I don’t think that is the case. A good proportion of the financial intistutions still own a lot of the mortgage debt and would lose out big time…

    So banks want high IRs ?

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  • I agree with Paul,we are heading for a deflationary environment. I cannot see where the inflation is going to come from, employees have very little say when it comes to wage bargaining, retailers can’t raise their prices or they will go bust, I believe oil will fall back to $50/60 a barrel, food price could stay firm, house prices will fall. Unless we have an all out war with China and consumer goods dry up what will push prices up, there is just way to much stuff out there being produced to force prices up.

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  • I am saying the banks could be future direct landlords.
    Think about all I have said in the past. CRAZY i know, but these money men are now desparate.

    Anything is possible.

    I have said just what I think. That is why i am leaving.

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  • tyrellcorporation says:

    MrMickey, aren’t commodities such as oil and precious metals gradually disappearing forever? I read recently that mankind had ‘lost’ approx 25% of all the estimated gold deposits into landfill or simply dropped/misplaced. With precious metals used more and more in PCBs and electronica, this loss is set to increase dramatically. With a global scramble for energy and resources, I believe inflation is about to take off with avengeance.

    Also, if climate change is really happening then food/crops will be severely hit, add surging popultion growth and this will be another crunch point for inflation.

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  • Why is anyone asking X blogger for his opinion? The cryptic oddball doesn’t have anything to say. Unless you count the word “sussy”. Which to be fair isn’t actually word. Thus proving that X Blogger is talking out of his rear.

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  • tyrellcorporation says:

    I just admit ‘sussy’ threw me a bit. Can you substitute ‘sussy’ with happy?

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  • Being a non-word I assume you can substitute it with anything you want. “phlegm” perhaps?

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  • @TC, I interpreted it as suspicious, but mainly based on the ‘x factor’ in his other quotes…

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  • waitingfor hpc says:

    if the IR is lowered watch the £ go! surely the MPC know this – look at the $. This for us is MUCH MUCH worse as we will see inflation via currency re alignments – or am i wrong?

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  • Suspicious.

    The banks cannot take a fall.

    Think through the possibilies guys that is what this site is for, Maybe you could split it into two sections or email each other with thoughts.

    You are smarter than I GOOD LUCK!!!

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  • I have to agree with inbreda. I think we’re witnessing a self-important I shall say this (not quite sure what this is) only once (not true) before sneaking off into the night followed by those people who watch my every move.

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  • Suspicious.

    Read my past post even if this may screw with your English middleism.

    Cut and paste all posts together and add you own angle but be objective otherwise you will not get it.

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  • China will only remain top dog whilst the USA is buying if they stop buying how long can china last??? After all if they are resorting to spying and computer hacking then they are despo!!.lol

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  • tyrell I think things in life are never black or white, I agree that there is a far greater demand for natural resources that’s why I believe we will never see $20 oil again and food prices will stay firm. But a lot of the high prices with regard to commodities are down to speculation, and although I know there is much resistance to GM crops they could help feed the world and therefore help keep food prices down. I think China will face hyperinflation, the Chinese will not be able to pass that inflation on to us because we no longer in the tired West have the wealth to pay the prices. Therefore I think there will be a “general” fall in prices in the West, some items will fall more than others, oil not so much ,food maybe not at all or up, houses much much more & DVD players only a little. This is not a replay of the 1970’s.

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  • X:

    Ah ahh ahha hhaha hahhah ahhh ha
    mwuauahh hahhha hahhahahhahh

    Reply
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  • X Blogger, you say we are a nation of squatters living on borrowed time ? Is that right ?
    And that the banks control the money supply.

    Are you saying that it is somehow in the bank’s interests to raise IRs, thereby causing massive repossessions where presumably the losses acrue not to the banks, but to those they syndicated the loans to ?

    I don’t think that is the case. A good proportion of the financial intistutions still own a lot of the mortgage debt and would lose out big time…

    So banks want high IRs ?

    If the banks freeze market with credit crunch. They become landlord with BTL still owing them debt.

    A win win situation.
    FU me guys do you want it on a plate.

    Reply
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  • F me you retard, we’ve already told you not to be cryptic. This isn’t a Fking game. Speak english or Fk off.

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  • MrMickey,

    Look at our trade deficit, look at the deficits of other developed countries – it’s a ticking time bomb that can only be de-fused by a major re-aligning of east-west exchange rates. The price of key commodities is likely to take a mid path, so while oil may get a little cheaper for the Chinese, it will almost certainly get a lot more expensive for us.

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  • X – by “English middleism” I assume you mean “Middle Englishness”, and conclude that you b’aint be from these ‘ere parts.

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  • Inbreda ask Uncle Tom or JU to explain and calm down !

    GOT TO GO, MY WORK IS DONE!!!!!

    Peace in a nasty world.

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  • Oh – you’re off again. OK, see you in 5!

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  • tyrellcorporation says:

    Is X blogger actually Yoda?

    ‘There may be odd talk in the future, yes there is. Lo, stupid fools may prosper in a climate of hate, tho no wiser men may come to befall a worse fate than what I will bestow on thee. No mortal can be sure the past will not spawn a sussy wind to crush you all, no there won’t, but maybe..ahhh, my work here is done, yes it is!’

    It’s actually pretty cool, I’m gonna speak like this at parties over Christmas.

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  • dohousescrashinthewoods says:

    6.60pc is still easy money compared to the long-run average of 8pc.

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  • tyrell

    “The gem cannot be polished without friction, nor man perfected without trials.”
    (Confucius) my Christmas present to you.

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  • tyrellcorporation says:

    Bless you, that’s a great one, it is.

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  • Mr Mickey……..I am afraid i just don’t follow you at all. ‘I can’t see where the inflation is going to come from’. I am almost speechless man!

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  • sold 2 rent 1 says:

    UT,

    We all know that western currencies will devalue massively against the emerging economies.
    We all know that we are heading for at least a recession and high unemployment.

    The key difference is that you see the debts being eroded by huge inflation

    See graphs of Japan v UK debt levels
    http://www.financialfoundations.com.au/news/56.pdf
    They are higher in the UK now than in Japan in 1990.

    200 years of economic history says that when debt levels reach an extreme only defaulting on those debts will reset the clock.
    We are headed for a deflationary sump.

    Why are we trying to avoid a recession so much?
    Because Ben Bernanke and his mates know it will progress to a depression.

    A great phrase I read the other day. “We are trading recessions for bubbles”

    My biggest fear is that if a recession is avoided, one final bubble will be created that will destroy all world currencies.

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  • sold 2 rent 1 says:

    mrmickey,

    You are spot on.
    It will be deflation and not inflatioon for us.

    Forget rising oil and food, forget falling exchange rates. The number 1 item required for huge inflation (that can seriously erode debts) is rising wages.

    Without rising wages any increase in goods and services is like a tax.
    The effects of rising oil and food and falling exchange rates will actually work against inflation because the consumer, who cannot borrow any more, will have to cut spending massively elsewhere.

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  • There is very little similarity between Japan 1990 and UK 2007 – Japan’s dilemma at the end of the 80’s stemmed from their collective determination to rise from their post-war sense of shame. The resulting ‘economic miracle’ was overly protectionist, and they were aptly described at the time as being ‘all dressed up with no-where to go’

    Britain’s problem today is borne of excess consumption and ‘living on air’ – quite the reverse of Japan. Unlike Japan, where workers seemed willing to accept wage cuts when the going got tough, the British mentality has always favoured redundancies to pay cuts – I can’t see us moving into a ‘lower pay – lower prices’ deflation spiral – especially when the price of virtually every commodity is firmly on the rise.

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  • My 2p. If UK banks borrow more in Europe or US than in the UK, then the last thing they need is a falling pound. The big banks may now be actually against stupid cuts.

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  • sold 2 rent 1 says:

    The “road to debt” was different for the UK now and Japan 1990.
    The journey may have been different but the outcome is similar.

    The journey to deflation will probably be different too.

    I worked for a company in 2002 which implemented a 10pc cut across the whole workforce.
    The unions don’t have the power that they had in the 1970s

    Whether bosses choose unemployment over pay cuts is irrelevant as the deflationary effect is still the same.

    You can guarantee that GB is not going to let his bloated state sector get above inflation pay rises.
    With the inflation stats massaged downwards, real incomes will continue to fall.

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  • UT, our situation is more similar to Japan’s than first appears. Japanese banks securitized their loans based on property prices and made some bad loans (to nearly bankrupt businesses as it happens). The fallout of this was the creation of “zombie” banks that the government would prop up month on month to prevent a run on the financial system by nervous savers (sound familiar?).

    The result was that the property-based loans were so massive that they robbed the economy of any spare cash and for a good number of years, money was too tight to mention in Japan for many (particularly between around 1991 and around 2004/5) in fact, Japan still hasn’t fully recovered from that.

    As deflation bites, shedding workers isn’t usually an option – because demand stays more or less constant!!!!!

    Yes, you read that correctly. Demand doesn’t go down very much but the ability of people to pay the asking prices reduces, so suppliers have to let prices follow downwards, or have their order volumes plummet.

    Like I said before, very few people outside Japan understand what deflation means because it’s never really been experienced in the UK. I admit that I don’t fully understand it, but I’m sure JU will if he’s old enough to have been part of their “lost generation”.

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  • Paul said:

    ‘shedding workers isn’t usually an option – because demand stays more or less constant!!!!!’

    Err… No.

    The UK economy has become a demand junkie that has developed an addiction and dependency for consuming substantially more than it produces. It can’t go on much longer now. The cold turkey that the downturn produces will be vicious. There will be a lot of unemployment, and (probably) a significant exodus of recent economic migrants. There will be a steep rise in benefit claimants, and a steeper fall in tax revenues – the public finances will descend into deep crisis, encouraging the government to stop resisting inflation, and allow the national debt to devalue.

    Demand for goods and services will probably fall by more than 20%

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  • David Smith's Sub Prime. . . says:

    Mr Congdon called for a half-point cut to the interest rate to 5.25pc when the Monetary Policy Committee meets this week, warning that the M4 money supply is slowing fast and might contract over the next six months.

    Well now. I thought that this was what was actually necessary.

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  • The central banks of the West are already fighting deflation by pumping massive amounts of money in to the banking system with little success. It’s like pushing a rock up a hill, the housing market in the US is deflating the housing market in the UK is next to deflate then equities will be the next one to go, deflation, deflation,deflation. Remember money can only get in to the economy through loan creation, if banks start refusing to lend money or tightening their lending rules which is whats happening then the money supply will shrink and deflation will ensue.

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  • sold 2 rent 1 says:

    Money supply, or as I like to call it, debt supply, is the key here

    I think UK M4 growth has gone from 14pc to 10pc (but don’t quote me).

    If we get a few IR cuts, like in the US, it will bounce back sharply
    US M3 reconstructed is now 18pc

    In the US from 1929 to 1933 debt levels surged.
    I think we will see the same here.

    It is all set for a massive debt implosion around 2010-2012.

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