Wednesday, December 3, 2014

Wonder if the assets include inflated UK [junk] mortgages

French bank dumps British assets, contrasts UK sclerosis with Francois Hollande miracle

''...it is ominous that the sterling crash in 2008-2009 has done so little to boost to exports, or drive import substitution. Five years later, Britain is running a current account deficit of 5.2pc of GDP. This is the worst of any major country in the world, and arguably the worst in Britain's modern peacetime history, despite reassuring words from the Bank of England....''

Posted by hpwatcher @ 07:55 AM (2459 views)
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21 thoughts on “Wonder if the assets include inflated UK [junk] mortgages

  • Not so good:-

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  • The surrender monkies are becoming increasingly bitter and jealous. I think it’s enraging them that so many of their brightest youths are coming here.

    I going to give a brief explanation ( in part from someone else) of why people who matter are not concerned by this (unless they work for the opposition or are writing an hysterical article for the papers).

    At the moment the current account deficit reflects an erosion of the U.K.’s net income position. This is because the income Britons earn on foreign assets has shrunk relative to the income paid out on those held by foreigners in the U.K. This is the important bit… HOWEVER the decline in net foreign income has been more than offset by a rise in net capital gains. On balance Britons hold slightly riskier assets abroad than foreigners own in the U.K. and because these riskier assets have performed relatively better, the U.K.’s capital gains position has improved. Which in turn reduces the significance of the current account deficit. The current composition of this defecit means that it will quickly reverse down the road a bit. There is a reason that the biggest market participants think we’re a good bet.

    Now I realise that me posting this information will inflame some people so let me get the objections in first…I’m only posting this information because I own the site, work for the Labour party and am in fact the same person as Rab C Nesbitt.

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  • “Societe Generale said much of Britain’s growth is driven by excess leverage and a housing bubble”.

    I post the above comment from the article because it fits so well with the site’s key topic – HPC.

    As for the rest – I don’t really agree with SocGen’s pandering to Hollande. This socialist is trying to U turn towards a Thatcherite model due to his deep unpopularity. My mate in Versailles is often ranting about him! Hollande seems to be out of touch with many of the population. The only thing that amuses the French is his love life. SocGen plays to Peugeot man’s sense of competitiveness towards all things British.

    Many believe Hollande is on his way out, and has allowed Marine Le Pen to grow large in national politics – a party of protest. Nigel Farage said he would have no truck with her as she holds “extremist views”. 🙂

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  • I going to give a brief explanation

    You can include as many accounting tricks as you like, the fact is that the economy is deteriorating for the vast majority of people in the UK.

    The reported ”prosperity” is empty propaganda spouted by Tory government and believed only by business leaders, enjoying cheap / free labour to maximise their profits.

    The ”real” economy is doing very badly – hence the lack of tax receipts – and the worsening deficit.

    .

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  • According to Peston, the reason why the current account deficit is so high is because our major trading partner is the EU and the EZ is still in a world of trouble. I suspect the French make up more of our trade than anyone else in the EZ.

    Everywhere is still precarious. Everywhere still has too much debt. Our economy is growing and has been for some time. The same cannot be said of the French. Their budget deficit may be 4% whereas ours is 6%, but their (official) national debt is a good 10% larger.

    The only thing they say that makes sense is that the political situation is very unstable going into the next election.

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  • “Societe Generale said much of Britain’s growth is driven by excess leverage and a housing bubble”.

    The UK economy is nothing other than a housing bubble.

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  • What’s funny about the lack of tax receipts is that that’s what caused the deficit in the first place, but no one wants to admit it. Osborne wouldn’t, because it would involve admitting that Labour didn’t overspend. Labour wouldn’t because it would imply that they wanted to raise more tax revenue.

    Not sure where the money went or why (stamp duty was obviously a good £5bn gone but has since picked up).

    Given that the real boom sector throughout the recession has been professional services, it seems likely wealthy people and accountants have responded to the recession by stepping up tax avoidance. When you own 10 businesses and 2 of them are failing, I imagine there’s a lot of ways to mitigate your tax liability on the profitable ones.

    But, of course, I don’t really have a clue… One thing’s for sure, now that the economy has picked up, the tax receipts have not recovered the way Osborne was probably expecting.

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  • What’s funny about the lack of tax receipts is that that’s what caused the deficit in the first place,

    As you stated, the problem is a combination of lower UK wages and companies moving their bases offshore to avoid UK tax.

    now that the economy has picked up

    That’s myth, hence the deficit. UK debt now larger than ever.

    The governing parts of the UK i.e. business leaders and government are living in a fools paradise.

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  • reticent, tax receipts usually lag a recovery because employers don’t feel the need to put up wages for a few years and companies carry forward any losses they made in the recession. However, private sector real wages are finally picking up and companies don’t have as much to carry forward. No one should listen to a politicians promises. Anyone sensible would realise that things couldn’t be completely fixed in a term. In a way that’s why the market hasn’t reacted adversely. They thought ‘yeah right’ in the first place and the real pace of improvement is pretty much as expected.

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  • employers don’t feel the need to put up wages for a few years

    But will they ever, given both immigration and foreign markets? I doubt it, as the expansion demands of the EU looks like the current situation is set to continue for a long time.

    Anyone sensible would realise that things couldn’t be completely fixed in a term. In a way

    So why did Darling enshrine tacking the deficit in law? This was immediately repealed by Osborne in 2010, who is going to re-introduce it for the next government. It’s an absolute farce, a political game, nothing more.

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  • The price of labour is controlled by supply and demand, not what the employer wished to pay for it.

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  • mountain goat says:

    If dumping British assets becomes a trend then something might be amiss but this doesn’t seem very credible? I thought Francois Hollande’s government was presiding over an economic slump not miracle? This is France after all the traditional English enemy (prior to the WW’s that is) so who knows what is behind this isolated move.

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  • “I going to give a brief explanation ( in part from someone else) of why people who matter are not concerned by this (unless they work for the opposition or are writing an hysterical article for the papers).

    At the moment the current account deficit reflects an erosion of the U.K.’s net income position….This is the important bit… HOWEVER the decline in net foreign income has been more than offset by a rise in net capital gains.”

    That’s tenous even for you Flashman, and you’re pitching it to the wrong crowd, I think everyone on here has probaby heard the old line with regard to a massive mortgage never being a problem because the value of the underlying asset will always increase, and which uses exactly the same logic as the argument you’ve posted.

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  • By the way Flashman, I see no difference between any of the parties vying for power in Westminster, they all see ever more dishonest fiscal and monetary policy as a way to get re-elected.

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  • 11. khards said…
    “The price of labour is controlled by supply and demand, not what the employer wished to pay for it”

    Quite. Like I said, we didn’t feel the need for a few years and now we feel the need. This always happens once unemployment sinks below a certain level

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  • hpwatcher, I’m not sure you read or perhaps understand most of what you post. Your link is talking about M&A activity only. Do you know what that is? With almost comic timing you’ve picked on something that has the city particularly excited at the moment.

    In the meantime both the service and manufacturing sectors did well in November.

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  • stillthinking says:

    I am not so sure unemployment is shrinking below a certain level. I think a lot of people are beginning to shift out of full time work to contracts, because once you go past 40K the tax rate and your living expenses becomes horrific.

    If you earn 60K in London, the supposed top 10% of earners, for the last 4 months of the year you are in the 50% tax band. 40% income + 10 NI, that gets you 2500 from your 5 ignoring pension contributions. Then you have to pay 1500 on housing costs, 250 on travel. This is less than unemployment if you are married and have a kid…

    When people make this switch they stop working 12 months and start working less…. also the skilled Polish are going home, because the take home is so horrific here. I heard of 2 now, it is because it is happening a lot. If a lot of foreign workers decide its time to cash out and leave us with the stimulus debt what then? Disaster scenario.

    BoE cannot raise rates because of our import problem. So as I said before, housing is the least of our worries, we should be concerned about how the pound can hold value.

    Flashman, if this -isn’t bad, then maybe we should hope our twin deficits continue.. but nobody would suggest that, and for all the talk of expansion, clearly in the areas of worker shortage we are hitting capacity constraints. So. The bank make a great case. The pound is still below even the yen with Abenomics from 2007, the pound is not the great strong hope we are led to believe.

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  • stillthinking, I’m looking at the brand new November 2014 CBI Labour Report and it’s as if you read it and decided to contradict every fact and conclusion in it for comic effect. You quite literally couldn’t be more wrong about employment/unemployment. Read it, you’ll be surprised by the reality of the situation.

    “Flashman, if this -isn’t bad, then maybe we should hope our twin deficits continue”

    The (lack of) logic in that makes my head hurt. Why would we hope they continue just because the problem is not perceived to be as bad as it seems without the benefit of educated evaluation? It’s like this … the people who matter and are educated enough to evaluate it, see this as a, say, five out of ten problem. They expect that it’ll be a two or three out of ten problem in roughly four years time. A two out of ten problem is better than a five out of ten problem. Understand?

    Regarding currency: as I’ve told you before, you have to look at longer time frames to get a better perspective of the value of the pound. Against the dollar the current value is pretty middling when looked at with proper perspective. reading between the lines, you got your fingers burnt (currency wise) when you moved to and from Japan. That’s just bad luck and it could happen to anyone (happened to me once when I moved to the states). It’s best not to let it rob you of objectivity. I think a lot of the opinions here are clouded by unfortunate personal experience.

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  • There’s a few ‘first time posters’ here recently who curiously talk to me like they’ve talked to me many times before. They all make similar comments to the one above “That’s tenous even for you Flashman” but they never say why its tenuous or provide any alternatives, data or information of their own. They also don’t explain why they’ve apparently read my comments for some time but never posted before and i also wonder why they all sound the same and all appeared at the same time. I don’t notice their comments for a while because none of them have accounts. “Idontbuyit”, you’re going to have to up your game quite a bit before I bother to engage with you properly. I talk to some people here because they’re interesting and others because doing so helps me to make a point. You on the other hand have provided nothing of value yet to either me or this site. The blog world is no different to the real world. You have to be of some value to be taken seriously. Quite frankly your lack of common protocol made your initial approach seem a little insolent. What are your credentials? What do you have to offer? If you’ve got anything interesting to say, let’s hear it.

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  • What are your credentials? What do you have to offer? If you’ve got anything interesting to say, let’s hear it.

    & u?

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