Wednesday, June 10, 2009
The banks are being more sensible about risk
Bank of England's Tucker warns banks threatening recovery by not lending
Just about all of the people stamping their feet saying that lending has to "return to normal levels" (including all of the policymakers I've seen wheeled out) are middle aged or older baby boomers with personal property portfolios, desperate to see house prices high and rising again "for the good of the country". Financial sustainability be damned, financial risk management be damned, affordability be damned, fiscal prudence be damned, inflation upside risk be damned, get my pension pot rising in value damnit!
Posted by paul @ 08:40 AM (1219 views)
12 thoughts on “The banks are being more sensible about risk”
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Daniel says:
I have to say, I didnt make any money on the way up. :0(
All these speculators are minted, anyone who bought a house around 2000.
And these same people are still in paid employment, making money on the way down. :0(
Ive wasted tens of thousands in rent. And now my small business has completely dried up. Im living off meagre savings.
QE sucks. The pound in my pocket is worth 30% less than it was.
The main culprits are Labour. They have truly been a nightmare for me, just because didnt buy a house in the years 1999/2000
And I can only see it getting worse.
Labour are pure EVIL
God I hate them.
george monsoon says:
Although I have contempt for the government (Tory, Labour or otherwise) because they seem to be ever further out of touch with reality and only concerned with self image and self gain, there is one other group of people for which my blood boils so much it turns to steam.
This group of people are my fathers generation. Those that wer LUCKY to buy a house back in the 60’s 70’s and 80’s are now sitting pretty with no mortgage, a guaranteed pension and all the benefits that come with their generation. Whenever I see their lavish lifestyle of holidaying abroad, brand new 09 registration vehicles on their driveway.
I seethe in frustration, watching the last vestiges of a stable economy being frittered away by my parents generation. While they enjoy the good life, I know that given the current economic climate, my retirement years will be a much different story. I have a pittance of a pension to look forward to, no state handouts, an insolvent health service and no home of my own.
Did I do something wrong to deserve this? I don’t think I work any less hard than my parents, in fact I put in more hours per week than my father ever did. The pressures to do more, with less resources in less time, for lower wages has never been stronger. So why am I in this situation?
uncle tom says:
No-one wants to cut to the chase; everyone wants to tiptoe round the crater of reality.
Fact: Economic growth (on a per capita basis) will only grow if more people are working, or working longer hours, or the emergence of technologies enables more to be achieved for less effort.
Reality: The drive to increase employment under New Labour resulted in countless women delaying their child-bearing years, and rampant immigration by young adults. Neither factor is sustainable. Meanwhile, people are spending longer and longer in retirement.
Reality: An unsustainable debt fuelled boom lowered unemployment, while an equally unsustainable balance of payments deficit kept the cost of goods low. Unemployment is now rising, and inflation will follow.
Reality: Since the internet revolution, there have been very few new technologies emerging that allow more to be done for less effort; at best, the sustainable level of growth due to technological advance is 1% p.a, and slowing.
Smell the coffee: Most of UK GDP growth since the turn of the Millennium is a product of unsustainable factors. Government must not pretend that UK GDP will recover and grow strongly – it can’t.
Government must work towards a sustainable economy on the basis of a national GDP that is no more than 10% above the 2000 level, with minimal growth thereafter. There is no easy way to achieve this; there has to be a substantial contraction of the state sector, especially among those doing unproductive administration.
If they don’t grasp the nettle, inflation will get out of control.
happy mondays says:
@ 1 & 2 Be patient, a vast amount of changes are coming ! Then make your own luck..
icarus says:
What would the banks lend the money FOR? Building and buying property? More speculation? Asset stripping?
Nobody is saying “there is a shortfall in the kind of productive investment that will provide real jobs and raise living standards and there are companies which say there is a demand for the goods and services they could produce if only they could obtain the funds for such investment”.
tudorian says:
@3 UT
The realities that you outline are painfully evident to many working men and women.
The delay in child bearing has resulted in us having to import our young men (whether for better or worse, I haven’t decided), but for the last ten years, immigration has partly been the fuel for the credit / btl / property bubbles)
The solution that you identify …. sustainablity, requires an acceptance that our future incomes and possibly standards of living are going to be be noticeably lower than those for the last 10 years. Are people going to accept this without a fight ? and how are they going to be prepared to fight?
We need a movement that will gear our purchases and service choices towards our local economies. Grow / sell /buy locally produced food, employ local tradesmen, shop at the local markets most of all be productive
Noodlebike says:
Very little has been mentioned so far of the “baby boomer” pensions/retirement time bomb, on top of all the other dire economic news we are so far subject to. It makes any economic recovery unlikely until 2023-if we are lucky.
Hyrax says:
Daniel
I agree with your analysis. Myself, 30 years experience in Hitech, patents assigned to US fortune 200s, never made a penny from products
making 100s millions a year, apart from under 3 years employment and no pension. Not working now, but not unemployed
either (not a penny, pay my taxes my savings are going on 30% depreciation and a 1% saving rate), cannot even get an interview at a UK FE college when I used to teach at a US Ivy league.. something
is really very stinky wrong with the UK, a ‘can do’ attitude is certainly not one attribute, but feathernesting a big fat retirement on never never public teat.
Currently without fixed address…be living in a hedge next.
uncle tom says:
tudorian,
I don’t think there will be much of a fight, people are already getting pretty resigned to it – the key to softening the blow is to make more work more productive, by getting rid of stupid and nannying regulation, and all the back covering that attends the compensation culture.
Imagine how much the state run schools and hospitals could save if they became lawyer-free zones, maintaining investigations of serious issues, but taking the cash windfalls out of the equation – “If you want to sue – go private” – is an easy mantra..
paul says:
“Reality: Since the internet revolution, there have been very few new technologies emerging that allow more to be done for less effort; at best, the sustainable level of growth due to technological advance is 1% p.a, and slowing.”
Not sure about that though UT.
If you work near the technology leading edge, an awful lot of work has been outsourced or simply made obselete. Just for a simple example, look at the newspaper printers and typesetters in Wapping – striking to keep their jobs one decade, the next their whole industry being rendered obselete for the most part.
Look at what the Internet is doing to the creative industries – you can publish music from your bedroom now and become a grass roots success via MySpace or wherever.
And we haven’t even started with what the commercial R&D industry is about to wreak with crowdsouring challenges.
The gains have been at the expense of a small army of middle managers and administrators for various tasks.
If the Internet had its way, it would render an awful
George Monsoon says:
happy mondays said…
@ 1 & 2 Be patient, a vast amount of changes are coming ! Then make your own luck..
I have been very patient for the last 8 years…. How much longer should I wait?
What changes are coming? The housing market appearst to be in a very slow downward spiral, but the lenders aren’t giving out mortgages unless you have 20% to put down and a shining credit rating (who has both of those nowadays??)
With the increasing threat of unemployment hanging over our heads, I fail to see any light at the end of this tunnel. If there is a light, its just some other lost soul coming the other way with a torch.
uncle tom says:
Paul,
You mis-read me – since the internet revolution i.e. after it, not including it