Monday, November 30, 2009

Building societies struggling

Record fall in consumer borrowing says Bank of England

"Building societies and other deposit-takers are also facing heightened competition from institutions with a government guarantee, which is creating further distortions in the savings market."

Posted by cynicalsoothsayer @ 07:10 PM (1547 views)
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11 thoughts on “Building societies struggling

  • tyrellcorporation says:

    “There is little incentive for people to increase savings whilst the Bank rate remains at its current low level, and many may opt to repay debt instead,” said BSA director general Adrian Coles.

    A better explanation would be; pitiful returns on savings and falling real incomes means savings are being raided to pay for day-to-day living expenses, food, rent, utilities, transport, etc.

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  • A number of my friends are coin dealers. All have seen a remarkable upswing in people offering gold and silver items for sale or scrap. My old mum relied on income from savings to pay for small luxuries. Nationwide and Santander have dropped their interest rates to around BoE rates, unless you want to tie it up for years.

    It looks as if lots of people are getting stuffed. Just to keep house prices moving upward. All sorts of pressure is being applied to prevent repossessions and forced sales.

    When I was a kid I was told that Labour were for the “working man”, I guess betrayal came in as I grew up…most of the MPs seem to be uni lecturers or social workers that didn’t work on many cases.

    Trouble is, with all the unemployment and food inflation, few people are going to chance taking out a mortgage right now. Gravity will bring prices down to earth, make no mistake. Maybe before the election…!

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  • Labour for the property tycoon
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  • tyrellcorporation says:

    You’re spot on Alan. I was relying on interest to subsidise my rent and so over the last 18 months my discretionery spending has all but stopped to make up the shortfall. The BoEs actions have effectively bailed out speculators and debtors at the expense of savers but the net effect has been very limted in terms of renewed high street spending. Debtors have had their hides saved but are paying down their debt and savers aren’t spending because they too are significantly poorer.

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  • Debt rejection is deflationary. For all the hoo ha about inflation, I suppose we shall see.

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  • tyrellcorporation says:

    ‘Debt rejection is deflationary’

    Yep! the BoEs worst nightmare is unfolding. Japantastic!

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  • yes ST that is the point a contraction of spending and /or debt reduction is deflationary. As a few brave souls have managed to state for quite some time now.

    But hold on with rates at record lows shouldnt we all be borrowing as much as possible? That would be inflationary right?? The patient wont take the medicine even if laced with a pound of sacharin (its not rea sugar just virtual).

    This is probably one of the most important indicators as to the real feelings of the people in the economy. See stock markets start to fall in earnest in the new year and we will see big falls in most asset classes. The W is alive and well – it will soon be alive and kicking..

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  • @Tyrell,
    We may see a remedy sooner rather than later. Morgan Stanley said today:
    “No G10 country has seen its ability to provide emergency stimulus seriously constrained by outside forces since the credit crisis began. It is unclear how markets would respond if they began to question the efficacy of state power”. So….. we could be looking at a sovereign debt crisis before too long. The report coincided with news that Britain is now officially the only G20 country still to be in recession. Canada reported that its economy grew by 0.1pc in the third quarter. Britain, by contrast, shrank by 0.3pc, as we know.

    http://www.telegraph.co.uk/finance/economics/6693162/Morgan-Stanley-fears-UK-sovereign-debt-crisis-in-2010.html
    I can’t post it, someone else has already done it and forgotten their p/w.

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  • Closed off tag.

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  • tyrellcorporation says:

    ‘The report coincided with news that Britain is now officially the only G20 country still to be in recession. Canada reported that its economy grew by 0.1pc in the third quarter. Britain, by contrast, shrank by 0.3pc.’

    B, b, but, surely we’re better placed than most countries to weather this storm?

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