Carney wants much more credit and much bigger bubbles. He is a man on a mission. TI&B..
UK ECONOMY
(266 posts) (11 voices)-
60 is a strong reading and well beyond any margin of stat error. The uk expansion continues. Ok its fallen back a fraction from the 62 stellar reading a month ago but this matters not. The trend is up and the expansion at 60 is impressive. This is the take away point not the marginal fall from a month ago.
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Didnt think anyone had savings anymore but apparently 23 bill pulled out of savings type accounts in last year.
Luck all
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Boom time.
Rich
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Johnny Mk
MCX fTSE 250
http://www.iii.co.uk/investment/detail?code=cotn:MCX.L&it=li -
Just as i suspected on a post a few days ago the uk domestic boom is underway. It matters not that exports collapsed. This is monetary, credit and policy fueled domestic cocktail. It can exist in its own vacum independently of world issues.
Good GDP news.
Ftse250 out performance guaranteed, as much as any allocation can ever be guaranteed!
If i'm trading quiet is as i'm already allocated annd running things and cant expand leverage beyond current levels. 2013 will go down as a record year i suspect but still a month to go.
Rich
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British government recovers 1 or 2 pence in each student loan pound lent. Including costs a 100% plus loss. It would have cheaper to simply give the money away. Much less administration. But i guess administration is job creation in the neo keynesian camp. IN the sustrain camp its actually wealth destruction as the people employed in admin around these loans were wasted unproductive labor that could have been employed elsewhere more productively.
http://uk.reuters.com/article/2013/11/24/uk-britain-loans-selloff-idUKBRE9AN0HX20131124
And here an excellent article illustrating to me the reliance of the uk public finances on property related taxes.
The more often you create these bubbles and extend these bubbles to sustain consumption and positive gdp growth the more you skew your entire system to rely on these bubbles with each that you employ these tactics. When you eventually have to go cold turkey on these bubbles due to multiple to incomes or interest rates or whatever = hangover on an unimaginable scale. The structural change required is devastating and the uk will have to attempt these structural changes when the pound is under pressure. Its far better to get ahead of your problems than attempt to sustain another wave of capital appreciation. The uk is a road to no ruin in the medium and longer term. In the short buy! Rich
Rich -
You know rsj, one of the great advantages of modern service consumption based western economies, (dependent on asset price gains and money supply increases via their banking and off balance sheet government games) is that they are not dependent on world demand to sustain domestic consumption. Their artificially induced booms are monetary driven and so it almost matters not what the ROW does. What it does do is make very plain to all how their domestic booms are "engineered" by bringing forward future demand. The practice of perpetually bringing forward future demand is unsustainable for obvious reasons as well as the structural damage you do by gearing your economy and taxation system to rely on these artificial systems of demand.
To answer your question these sort of booms can last for a surprisingly long time before they end in a total wipe out scenario. I think the uk will sustain this model for at least another 6 to 24 months before she sees a total "wipe out". Whether its 6 or 24 months does depend on global interest rates inflation etc etc.
https://mninews.marketnews.com/content/update-uk-industry-orders-output-highest-1995-cbi
Let see but for now i remain a near term uk bull but a huge uk bear further out.
All the best
Rich
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The UK is booming vs the world. Tax receipts are strong. Unsurprisingly perhaps as so many projects are guaranteed by the government. Her central bank continues her qe and also loosens liquidity standards and accepts lower collateral as tier one etc etc. Tax receipts from cap gains and stamp duty etc etc are doing very nicely.
Things are doing so well that the government will run a deficit of a mere 7.5% of gdp this year. Ie it will add to borrowings by an additional 7.5% as it spends more than it makes, even in these boom like conditions.
Good news here:
We are 5 yrs in to this recovery in asset prices. World growth is slowing as provided by the oecd and deflation is approaching fast.
Just as a game consider this. What would happen to the UK public finances, gilt prices and sterling and her asset prices if the 5 yr strong asset recovery took a breather or even a down turn occurred. Not a crash but a normal recession that regularly occurs every 5 yrs or so.
I would guess that all those various guarantees and lose liquidity and capital ratios and weak banking collateral, would suddenly look very unwise. That the 400% of gdp banking balance sheet exposures might also suddenly appear a tad unwise. That the public off balance sheet pfi side deals might be rather unfortunate. Yes? And that the UK's 7.5% deficit would rapidly go double digit again. That the uk would turn from price to pauper in a matter of months.
Of course this could not happen. Onwards and upwards but it does seem to me that 5 yrs in to this recovery public finances should not be so weak. Running a 7.5% deficit in a strong year shows immense structural and sustained problems that are not getting better.
That's what i see in this good news data!
Best regards
Rich
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It is the big boys that run the drugs business for sure Washington,New York etc
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Faber produced a report a year or two ago on the drugs business. The illegal drugs business that is. He basically made the case that it was impossible to think that government agencies were non involved or turned a blind eye due to corruption or something worse.
What was refreshing from his take was that he, basically, approached the issue from a maths perspective. Ie how many tons of coke and pills and K and who knows what else was being moved at every minute of the day.
His point was that it was impossible to move this volume of supply via planes boats and cars and people into major developed nations without authorities knowing. Especially in today's anti freedom, oops sorry meant, anti terrorism world. And then he turned to the cash element and the sheer volume of funds and capital being moved around the planet for these huge volumes of illicit drugs.
Then he turned to the surveillance on tax avoidance and cash movements for other trades and pretty much made the point that any reasonable person can only draw the conclusion that the governments or government agencies are involved.
Historically recall the Regan scandal whereby the contra rebels were being funded by the CIA shipping cocaine out of central America and using the proceeds to arm the contra rebels. Of course the drugs business is government backed to some extent or another. It sounds too conspiratorial for me to believe this. But given what we know of modern surveillance methods and banking surveillance methods its impossible to believe otherwise as shocking as this sounds.
I dont quite know what this means and what this says about our political system and system of democracy and government. For now, in my mind, it is what it is. Its a part of big government i would suppose. Looking at the history books of the East India company and other pseudo gov operations there is nothing new here and perhaps we shouldn't be too shocked by all this. Its yet another issue we park and we move on.
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Hey Guys
Yes more breathtaking "do as I say not as I do" from the usual establishment movers and shakers. Cant remember how much COOP gave to Labour in donations but a fair whack, didnt he serve on the board of a well respected anti-drug charity amongst other things?
As an aside on the drug issue, to see chrystal meth mentioned alongside more mainstream "recreational" drugs is a worry for me, you dont just happen upon soomething that harmfull. Its worth looking up "krokodil" on the net too see where these things are heading....its not pretty.
Luck all
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Excellent Wild13 thanks! Apologies RSJ.
As Flowers says toward the end of the clip "confirmed that I was an appropriate person....".
Doubtless there will be no charges and they will all walk away leaving a huge mess without any censure, perhaps a little slap on the wrist.
Quite unacceptable in my view.
JMK
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Second video down where Flowers is getting grilled by Treasury Select Committee.
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Which video RSJ?
I read about Flowers at the weekend. Unpleasant!
The only thing that interested me was the choice of drugs he was alleged to have bought.
I hope you will find this interesting.
The drug of choice within the gay community used to be poppers (amyl nitrate). Invented a 100 years ago and used for heart patients, it was harmless, legal, on sale in most sex shops for £2.00 a bottle and a gave a brief rush. It wasn't exclusive to the gay community. Far from it, as it was used by partygoers during the 50s and 60s and so on.
About 10 years ago the Ministry of Killjoys in Brussels issued an edict that poppers were dangerous and that the formula should be changed. Sorry, can't tell you the revised formula. Suffice to say it is now lethal. Spill it on your skin and it burns. Nor does it give users the rush desired.
When I first read this I googled something like "new poppers" and up popped links to drug forums and discussions where I first learnt of ketamine. This was a drug used to sedate horses and not available for the public to buy. As the article on Flowers alleges, he was also looking for cocaine and crystal meth.
My point here is that sometimes it's better to sit back and take a view on these things. Banning one thing might lead to unintended consequences.
JMK
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scary video
http://www.bbc.co.uk/news/uk-24998955
rsj -
Fascinating stuff this data.. Google FT "graduate data reveal England's lost"
The latest set of UK graduates "class is earning 12 per cent less than their pre-crash counterparts at the same stage in their careers. They also owe about 60 per cent more in student debt".
No problem..
"there is so much demand for houses, house prices will keep rising to infinity and rents also".
The spread between incomes and asset prices and expenses grows ever wider. A pressure cooker.
Rich
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Same old same old.. Real falling incomes vs ever soaring upward real rising prices of rents and food and house prices.. Onwards and upwards. The spread grows ever great every day.. like a giant pressure cooker! The solution to the widening spread is? Either price controls, higher taxes on the fat cats ie land lords, super markets price fixing, utility fat cats etc etc. Once you start meddling with prices (and interest rates are the key price) the knock on effects are immense and you have to soon start meddling in all prices! This is inevitable and has perfect historic precedents.
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BOE Paper Signals Worrisome Outlook for Equities Post QE
By Adam Butler, Mike Philbrick and Rodrigo Gordillo
November 15, 2013“The motivation for this article comes from a Bank of England "Quarterly Bulletin" entitled, "The United Kingdom's quantitative easing policy: design, operation and impact" (http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb110301.pdf). We feel this bulletin has profound implications for investors, as it speaks to central banks' goal of stimulating demand and inflation expectations primarily through the channel of 'portfolio balance effects': that is, inflating prices of stocks and bonds.”
“Specifically, the BOE believes that the primary impact of QE in the short term is to cause holders of QE eligible securities – primarily non-bank financial institutions such as insurance companies and pensions – to surrender these securities to central banks in exchange for newly printed money. The BOE then expects this cash to be redeployed toward higher yielding securities, such as credit and equities. This dynamic, compounded by effects from policy signalling (central bank jaw-boning) and liquidity enhancements, would serve to drive the real prices of these assets materially higher in the short term. The ultimate goal is to engender a 'wealth effect' whereby asset holders feel more confident and ratchet up spending commensurately, increasing end demand and inflation.”
http://advisorperspectives.com/dshort/guest/BP-131115-Post-QE-Worries.php
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Deflationary risks rising in the Eurozone; time for LTRO redux?
Posted: 15 Nov 2013 10:33 AM PST“Putting together the data discussed above would suggest that the ECB will be moving toward another non-traditional monetary policy action. With the overnight rate near zero (25bp), there is little room for lowering rates further. Setting the rate on excess reserves to negative could be one option. But a more likely outcome is another longer dated LTRO program (see discussion) or even a new securities purchases initiative (Fed-style QE). While the effectiveness of another nontraditional monetary easing program could be debated, the ECB may soon be running out of options.”
http://soberlook.com/2013/11/deflationary-risks-rising-in-eurozone.html
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Pound too strong. Any ideas ?
rsj -
Remember, print pump dump..
https://mninews.marketnews.com/content/boe-data-fixed-mortgage-rates-hit-new-low-95-ltv-back
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UK Inflation data wednesday.
http://uk.reuters.com/article/2013/10/24/uk-britain-inflation-yougov-idUKBRE99N0PM20131024
http://uk.reuters.com/article/2013/10/24/uk-britain-inflation-yougov-idUKBRE99N0PM20131024
This domestic boom will eventually result in the gbp being smashed. Inflation will rise resulting in the need for higher interest rates. As the housing market is so important to the uk economy and people they will keep them artificially low for as long as is humanly possible even if it results in much higher inflation. This will result in a significant negative real interest rates in the uk. The result will be no one wants to hold gbps for fixed income. Its ok the boe will be the buyer via qe etc. But the capital outflows will gather pace and the pound will be used as a carry trade funding currency. Something, btw mr carney seems to desire. "UK financial services" are open for business moving to '900%' of gdp as banking balancesheet exposures. Sustain qe alongside crashing the pound and this could well happen as for sure the pound would be borrowed en mass, globally!
Everyone wants to borrow the weakest currency. Negative real interest rates are a boom for paper pushers!
rich
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The pmi data is due to residential construction.
A survey showed construction activity grew at its fastest
rate in six years in October, adding to recent evidence that the
UK economic recovery may be gaining momentum. [ID:nL9N0GZ01P]
Analysts saw more scope for the pound to rise against the
euro before an ECB meeting on Thursday. Sterling gains against the dollar.Yes, a giant super sized domestic boom which, for the moment is generating nominal and real gains in wealth as the currency and performance nos show strength.
Its beautiful, for as long as it lasts. The uk is the world wide alpha and so the market is absorbing the 150 basis point negative interest spread to French credit, as one example. (Also 150 basis point real spread to UST10yrs). And a strengthening pound. The uk is showing the alpha in everything. FOR NOW!
Not many times this century the uk has been the alpha!
Rich
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