Another of king's mansion house predictions from 2010 continues to come true..
http://www.telegraph.co.uk/finance/economics/9627688/Living-standards-down-over-13pc-since-start-of-recession.html
UK ECONOMY
(266 posts) (11 voices)-
Post King expect helicopter GB to really fire up..
"If global economic stagnation continues, public patience with conventional responses will run out – and ideas that now seem revolutionary may become conventional wisdom".
http://blogs.reuters.com/anatole-kaletsky/2012/10/25/is-a-revolution-in-economic-thinking-under-way/
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Rejoice, the recession is over again.
http://www.bloomberg.com/news/2012-10-25/u-k-economy-surges-1-as-britain-exits-double-dip-recession.html -
Afternoon all
Thanks for posting those links up Rich....they, as usual, make fairly disturbing reading but are full of precisely zero suprises!...same names cropping up time and again.
"Let me control a countries monetary supply and I care not who makes the laws"
BTW there is a new zeitgeist out....nearly finished it.....last instalment and a bit of a "round up" of the previous installments and presents the answer to some criticism aimed at the previous 2 parts.
http://www.youtube.com/watch?v=4Z9WVZddH9w
"It is no measure of health to be well adjusted to a profoundly sick society"....the current episode involving the BBC would seem to underline that particular quote!
Luck all
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Here is a signal for you.
http://www.telegraph.co.uk/finance/economics/9623251/GDP-figures-to-show-Britains-double-dip-recession-is-over.html
dyor -
http://www.bankofengland.co.uk/statistics/PublishingImages/li/2012/mar/CHART6.gif
http://www.stevebaker.info/wp-content/uploads/2011/06/M4-17.00.06.png
http://www.capitalsynthesis.com/wp-content/uploads/2012/10/uk-consumer-debt.jpg
http://www.capitalsynthesis.com/wp-content/uploads/2012/10/uk-mort-lending.jpg
http://www.capitalsynthesis.com/wp-content/uploads/2012/10/gilts.jpg
ON this gilts one for a moment.. Note as the BOE increases her balancesheet ever upwards she also is rapidly replacing the private sector in the gilts market. The uk's central bank now owns nearly 30% of the uk government's debt. The UK government is paying interest on her debt to the BOE to the tune of 11.2bn or so p.a at present. Or put another way around, every household in the uk is giving over 500 pounds per annum to the BOE. Surely an interesting dilemma this one.
http://www.ft.com/intl/cms/s/0/28b283f2-abe3-11e1-a8da-00144feabdc0.html#axzz29vlb7ayfWho owns the BOE? (taken from another website..)
In 1977, the Bank set up a wholly owned subsidiary called Bank of England Nominees Limited, (BOEN), a private limited company, with 2 of its 100 £1 shares issued. According to its Memorandum & Articles of Association, its objectives are:- “To act as Nominee or agent or attorney either solely or jointly with others, for any person or persons, partnership, company, corporation, government, state, organisation, sovereign, province, authority, or public body, or any group or association of them….â€
Bank of England Nominees Limited was granted an exemption by Edmund Dell, Secretary of State for Trade, from the disclosure requirements under Section 27(9) of the Companies Act 1976 , because, “it was considered undesirable that the disclosure requirements should apply to certain categories of shareholders.†The Bank of England is also protected by its Royal Charter status, and the Official Secrets Act.
In other words, you and I are not allowed to know who the shareholders are who own the company which carries out Central Banking in the UK. The information is secret. We are not allowed to know
http://projectavalon.net/forum4/showthread.php?18935-Bank-of-England-who-takes-the-profits
"After the appointed day, no dividends on Bank stock shall be declared but in lieu of any such dividends the Bank shall pay to the Treasury, on every fifth day of April and of October, [F1a sum equal to 25 per cent. of the Bank’s net profits for its previous financial year, or such other sum as the Treasury and the Bank may agree."
It seems to be, at the very least, the uk has thus far got debt relief on 25% x 30% ie 7.5% of her national debt or 112bn pounds thus far. This is a fantastic was of reducing your debt burden. Whilst they can get away with this policy i would monetize the entire debt mountain and then cancel the lot. The UK would be a global power house again if they can get away with this policy. Compare it to poor old europe who are so reluctant to monetize debt. Who is the fool here?
Also, finally, note due to solvency II for insurance cos and basel III etc etc their is an increasing regulatory driven requirement for finance cos to hold more public debt. Given the actions of the central banks monetizing this debt its easy to see that there will soon be insufficient public debt to meet demand and regulatory requirements. Either governments will need to 1) step up their issuance of more debt 2) central banks reducing their monetization progams 3) Central banks increasing the range of assets they can purchase as the fed has recently done. Rich
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Wow once again Im not sure what to make of this.....the dailymail really?????.....whats that all about?
Luck all
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Ummmmm not sure where to start with this one!
Luck all
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Yet another brilliant scheme from the UK. Should be good, in the short term for GDP, house prices, banks, etc. A brilliant scheme like PFI, equity release, student loans, gov bank, blt before it. On it will go until a complete devastating total collapse occurs
http://uk.news.yahoo.com/uk-considers-tapping-pensions-help-home-buyers-183130871--finance.html -
To steal Cameron's line "lets build our way out of recession". Here the telegraph adding their voice and beating the construction drum.
http://www.telegraph.co.uk/finance/good-news/9546406/Good-News-A-good-start-but-more-is-needed-to-support-UK-jobs-and-growth.html -
Better nos but we must remember they follow disastrous july nos so the bounce is greatly in part to this. Still better is better.
http://www.bloomberg.com/news/2012-09-11/u-k-july-trade-gap-narrows-as-exports-of-oil-chemicals-rise.html
http://www.tradingeconomics.com/united-kingdom/balance-of-trade -
"Output gap at the heart of UK fiscal policy". Well, i wonder how that went for Zimbabwe? Output gaps have a disastrous record of being useful to determine fiscal and monetary policy. Surely everyone knows this.. I can only think, therefore, its a smoke screen cover. https://mninews.deutsche-boerse.com/content/uk-govt-defends-putting-output-gap-fiscal-policy-heart
Also of interest the metrics here on what QE does for GDP..
QE1 UK style provided 200bn pounds of new money in the space of a year. This is nearly 15% of gdp. It was spent on buying bonds from the banks. It allowed the banks liquidity and the ability to buy more government debt. The UK government deficit is running at around 120bn a year. 80bn or so can be used to reduce the balance sheet size of the uk banks but allow them also to maintain capital losses from the private sector as well as hopefully lend to the private sector using a multiple of the freed up capital. According to the BOE this 200bn qe part1 raised gdp by between 1.5% to 2%. With fiscal tigthening of government as well as the private sector over the next decade its clear that much more qe will be needed to hold up gdp. If 15% is need every year - which only generates between 1.5 to 2% of gdp then its clear than around 150% of gdp may need to be printed off in the coming decade.Its a very interesting scenario.. You can only suppose the leakage from the uk system is immense. How much of this leakage is investment vs consumption is another matter of some importance and then how much of this new issuance will return is yet another matter.
Rich
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Not a bad site.. Interesting to compare Uk and Spain. The two structural dogs, imo. (UK a better area to purchase assets with borrowed gbps of course due to the boe ability to print and will). http://www.datosmacro.com/en/countries/compare/spain/uk?sector=Government-debt.-Percentage-of-GDP&sc=XE02#tbl
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More disastrous news today from the uk.. It just is dismal stuff i'm afraid.
First up manufacturing data which, to be fair, is to be expected given the euro zone issues and not confined to the uk.
https://mninews.deutsche-boerse.com/content/cbi-uk-manufacturing-sees-orders-slump-august
Much much worse is the July deficit.. To be clear the 2012 Uk deficits in current account have been growing not contracting. In july over 5% increase in gov spending for the year a 3.5% increase on the prior year in gov spending and this is in real terms. Whats worse this is on top of an already huge deficit of 7 or 8% of gdp. Its diabolical stuff i kid you not. And we have already seen that the trade account have been growing alarmingly at a time when they should be contracting.Its horridly alarming that personal tax receipts only rose by 1% and corporate tax receipts fell by over 10%. Amazing.
The Home office confirmed today that the deficit for 2011/12 ending march was 125bn on an economy of 1.4trn. ie Over 8% of gdp or put another way higher than any PIIGS government inc Greece.
Significant leakage of gbps is occurring must be the only conclusion. Its dire stuff im afraid. GBP vs NOK fell again today having bounced a bit recently. I would be looking for pairs to lose any remaining gbps you have to borrow pounds a carry trade currency for uk assets as it must be printed to infinity soon.
The data continues to demonstrate and re demonstrate serious structural issues in the uk that money printing is not assisting that much. This is very worrying and will "bite" hard at some point soon hopefully purely from a debasement of currency perspective.
Today the gbp appears to have scored a breakout vs the usd though its hard to believe it can sustain for long given the data. It is not a trade i am taking due to the data. On the short term its a valid trade but fundamental picture is so bleak im not taking that short term trade. The risk return is out of step. imo!
Rich
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Just more of the same.. Today announcement to encourage more debt for low equity buy to let investors. "Only 1% capital don't worry the government will guarantee the loans. You banks just lend". Its the same old same old.. doesn't matter whether left or right they just know one game in this fiat monetary world.
http://www.cml.org.uk/cml/policy/issues/6503
This comes after the news in july of this:
http://uk.reuters.com/article/2012/07/13/uk-britain-lending-idUKBRE86B0HG20120713?feedType=RSS&feedName=domesticNewsJust look at other states that adopted the same strategies in the past to see the results.
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you can tell i am just chilling out on the comp today something Ive not done i a while,
i have been thinking about the markets of late and more so on how growth will come in the uk , first one thing that has been nagging me for sometime now if the bear market has ended we never got capitulation most bear markets end in some form of capitulation or maybe now with electronic trading times have changed , or on the other hand the break up of say the eu will bring it, lets face it nobody in the eu has any trust left in the partners anymore in fact some member states positively hate each other that is no way for any partnership to work , i saw Cameron at the end of the games with team GB having a right old go at the french ,best he remember who he has to turn to if britain should ever need an aircraft carrier in the next few years,
so growth in the uk looking around i can honestly say i just cant see any positive signs , the private sector has not picked up the baton , house building is going down year on year , for one example , people spending money ,well what with no pay rises of any note and what there is is being totally striped out by inflation , higher energy cost,s to come ie the green deal by the con/dem pact guarantees 30% price hikes in the next 5 years, food will not get any cheaper [even though looking at the ad,s for supermarkets you would think they are giving it away] then the tax hikes , petrol wont get cheaper, the welfare state is being dismantled ,pensioners capital being eroded, job security , employment rights , in fact now with the zero hrs cr*p that has come to the forefront it is not going to make people want to spend as they wont know when the next or what the next pay check will be, so all in all not looking to good ,that all said it will come to an end but not in the short to mid tern i would think,
one good thing is poss china , employment costs are increasing , as are transport and shipping cost,s they appear to have a housing bubble also so there could well be some gain back for the west along the way,
but what is worrying me more then anything we can not and should not let the next expansion be brought about like the last one solely by an expansion of debt and that is what it looks like our leaders would let happen again , it will be a total disaster imho .
life like the markets is run in cycles lets hope we have learnt from this ride , time will tell.
the sun,s out of into the garden for a beer.
good luck
busmaster. -
Inflation fell in china, us and europe on the last data points. But in the uk it rises. It appears the money printing isnt working. The printing is debasing the currency more quickly than it is achieving growth even using the "massaged" inflaion figures. If uk inflation is officially 2.6% the real figure must be closer to 4%. Therefore the uk real gdp nos are showing a dibolical contraction. This would seem a reasonable conclusion to me.
On the plus side asset prices are not collapsing nominally. The BOE strategy is working in that asset prices are holding up. If these sorts of nos continue forward for the next decade or so UK gdp as a share of world gdp will continue her long decline from the time of empire but importantly she will not collapse. No S.American or African style fall off a cliff decline for the uk which is something to be thankful for, imo.
On the other hand what a wasted opportunity. The UK legal framework is second to none. Her international trade relationships are second to none. If the uk can turn away from her strategy of the last four decades of boom bust centered on housing cycles and balancesheet ponzi weath who knows what she can achieve. First she will have to turn away from the housing shell game. If she does this investment would instead flow into business and true wealth creation. This would be the very best thing that could possibly occur.
Its inevitable that soon this does occur though to what extent and the exact timing, who knows. Don't get left holding the UK housing baby as relatively it will be a disasterous asset allocation. Take at least some profit and reallocate. Imo.. Rich
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In the middle of a double dip and what do we see..?
https://mninews.deutsche-boerse.com/content/uk-data-jun-trade-deficit-surges-record-high
Yep a new all time record high for the month in the trade deficit for the uk.. And a new all time record high for the quarter's trade deficit. This is mind blowing.. simply disasterous.
Ok 2 days were lost due to the Queen's jubilee but even including the extra production for these two days it would still produce a record quarter's deficit. To me, this again, spells out in huge bold letters for all to see that the uk economy has deep structural problems. Deeper indeed than any other major economy with only Spain competing for this sour prize. Imo.. The UK needs to debase her currency urgently. The BOE is intent on making this happen of course via progressive QE measures. Much more will be forthcoming. Rich
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Its no getting any prettier.. All eyes to the fed, boe, ecb.
http://www.bloomberg.com/news/uk-ireland/ -
Solid as a rock? more like Brighton rock, imo.. Lets look at this AAA strength..
Imagine a country whose fiscal deficit is larger than Greece's at around 8% for 2012. Who has pumped 33% of gdp as money printing or 375bn and counting in the last 3 yrs. Who has off balance sheet gaurantees for her banking system at around an additional 100% of gdp. And surely after all this growth must stella indeed? But no, alas not.. Yes, inspite of the huge deficits and money printing the UK economy still declines by 0.7% in the last quarter. Worse than Spain, as one example. A country whose off balancesheet pfi commitments could add another 20% to her total debt. http://www.if.org.uk/wp-content/uploads/2012/02/PFI-debt-passes-%C2%A313k-per-household-release.pdf
A country whose consumer's owe over 100% of gdp. Does this sound like a AAA state to you? https://www.marketwatch.com/story/sp-affirms-united-kingdoms-triple-a-rating-2012-07-27-17914833?link=MW_home_latest_news
An interesting Chart on UK debt here below care of MorganStanley:
http://www.capitalsynthesis.com/wp-content/uploads/2012/07/MS-debt.jpg
Here FT from the Hinde capital report: http://ftalphaville.ft.com/blog/2012/06/19/1050451/britain-doomed-apparently/
Here the MS report on g10 debt and fx moves:
http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CGIQFjAC&url=http%3A%2F%2Flinkback.morganstanley.com%2Fweb%2Fsendlink%2Fwebapp%2FBMServlet%3Ffile%3D5h6qulfe-3o8p-g000-8b84-001a64f36000%26store%3D0%26d%3DUwBSZXNlYXJjaABNVEI3NjMyNg%253D%253D%26user%3Dkbzdjj9emacl-9729%26__gda__%3D1448565376_7b5febfafb6c3fabb3f5c666e7762e06&ei=ihYTUPCTN8jJ0QX1-YHQDA&usg=AFQjCNGBl_8C-QFnu4vnVh4nLCkgwlDlSg&sig2=sZ5iLgXCpw8MFAjCaMpf2g -
This is an enormous monetary boost to the economy and saving for government as the expensive is no longer theirs. (Also steals a leaf from the US playbook for student loan growth which succeeded in boosting money supply).
Bottom line, its a transferance of cost from state to a system of credit expansion.
http://www.telegraph.co.uk/education/universityeducation/9427855/Students-to-face-huge-debts-over-9000-fees.html
Ie prior to the introduction of tuition fees the government had to meet all costs. Gradually this has risen now to an average of 8000 pounds per student per year. But this fee is not met by savings. It is met by loans/credit which expands the money supply in the current fiscal year. The higher the fees the greater the expansion of money supply. University costs (just like the US) are much higher under a system funded by credit. Its a highly expansionary policy. Teachers are hired, Universities built assets improved, admin staff added etc. Overall costs increase but these costs are not born by anyone. They are born by an increase in credit which is a very different thing. Note everyone is a winner in the early days. Universities are happy as they expand and invest. Students are happy as they get the easy credit and good facilities. Government is happy as they bear none of the cost. The economy grows as the new money gets to work. Its literally a system of alchemy at this point in the cycle which is why left and right governments love these policies.If only all government expenditures could be replaced by credit.. Perhaps instead of the nhs being funded by the state it could be funded by a system of credits that you call off. They are loans but you are given an allowance of loans. The interest on the loan will be paid by a contribution from your taxes and step up over the decades. Just as an example. You see how this system works. Another version of PFI in a way. The current uk system engineered to transfer all public assets and marginal expenditures to a credit. The money supply expands and gdp grows. The problem is when and if money supply stops growing. This is disaster as the balancesheet obligations become worthless and your banks implode. This is why if this occurs your central bank must monetize credit to ensure that your money supply keep growing. Money supply must always grow in a high credit system or else that system will end very quickly as Greece and Spain are demonstrating for us perfectly.
The issue that eventually ends a all credit growth or money supply growth systems is when faith is lost in the said fiat currency. This loss of 'faith' renders central bank monetization policies in effectual as the ratio of cash or near cash to the new money supply created becomes too low. Repressive measures to stop citizens transfering assets to other currencies becomes necessary to preserve the ratio but this as soon as these policies are adopted or even threatened you have stepped into the end game, in effect.
When this ratio gets out of step, this is the point at which inflation spirals out of control. The years prior to this end game are typically booms at least nominally but this nominal growth is a prelude to a total systemic collapse driven by the ratio becoming unsustainable.
Its all good stuff so long as you know where about you are along the curve. FX becomes all important in this game of nominal vs relative gains.
Luck to all Rich
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The BOE get it thats for sure..
http://www.bloomberg.com/news/2012-07-13/boe-lending-plan-may-boost-credit-by-at-least-124-billion-1-.html
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