Of UK bank rate, Swervin' Mervyn and the future...

[montmorencyt2w]

Come on, I saw "Trainspotting". They're all junkies up there.

I won't post the link again, but anyone who has seen Stewart Lee's piece on "Identity" on YouTube will remember his riff on "deep-fried heroin".

 

[oiltanker]

Lol to the brink.

You think they would of let it get really far? The only reason Lehman wasn't bailed out over the weekend was because it was near election time in the US and they wanted to please main street not wall street.

At the end of the day Britain needs RBS and HBOS both of them. Yes there is ownership by the state of RBS etc but come on no one was complaining during the boom years. And people weren't forced to take out obscene mortgages they chose to , it was human greed that brought that latest down turn.

The idiot who took out 6,7,8 times there earning's loans caused the problem. Banks shouldn't of offered them, but people chose to take them.

so the people who take out loans should have moral hazards but not those who lent the money? that is just another way to say privatise the profit and socialise the loss.

there was a brink. at the time the plan was to close the banks for a week to stop a meltdown. the posters to put on the bank doors had been printed.

banks were trading without a stoploss and in trading terms blew up their account because they were 'asset' rich and cash poor.

 

[Lodian1019]

Thats such a bogus term moral hazard. The problem is on both sides no one says "I am responsible"

The people ask the banks for the loans. I don't accept that we spend the 1990's enjoying the boom getting what we want from the banks. Then when it goes boom we blame them.

Fair enough the banks should of been firmer and more robust in selection procedures. Then when it goes bust "BECAUSE PEOPLE DIDN'T PAY BACK WHAT THEY BORROWED" we blame the banks.

Its obscene, don't ask for what you can't afford to pay back. The banks where reckless but only because people allowed them to be.

Lodian

 

[breadman]

so the people who take out loans should have moral hazards but not those who lent the money? that is just another way to say privatise the profit and socialise the loss.

there was a brink. at the time the plan was to close the banks for a week to stop a meltdown. the posters to put on the bank doors had been printed.

banks were trading without a stoploss and in trading terms blew up their account because they were 'asset' rich and cash poor.

i still think the banks are close to point of no return, why else do we have the lowest interest rate ever, one year after the recession ended with inflation well above target for over a year and them forcasting it to go higher for at least another year. the Bank of England Fed and ECB are still handing out free money to the banks. (borrow short term 0.50% invest long term 3.5/4%). Countries in Europe who are being forced to borrow money at 5 6 7 8 9% will never be able to pay that money back.
When we get a election in Ireland some time in March expect the incoming party to run on the mandate of telling Europe to keep their 80 billion bale out money we have decided to default on the hole 80 billion unless we can borrow the money at closer to 4%.
then Greece will do the same. Their is also more debt in England Europe and America than their was in October 2008 when they nearly shut the doors.

 

[oiltanker]

..we blame the banks...

yes because their risk model was based on how much bonus can they make. the [secretive] fund managers who own bank shares also failed in their responsibility.

if moral hazard is bogus why do the banks need our money? its very real indeed.

you seem to be saying the general public are the market wizards and the banks were little red riding hoods who were 'brought down, not by their lack of risk model, but by the greed of the public? That the public forced the banks to put ads in the press saying 100% loans etc? The banks offered a product they couldn't deliver on as soon as liquidity vanished.

 

[oiltanker]

..i still think the banks are close to point of no return..

yes. zombies.

 

[Lodian1019]

..we blame the banks...

yes because their risk model was based on how much bonus can they make. the [secretive] fund managers who own bank shares also failed in their responsibility.

if moral hazard is bogus why do the banks need our money? its very real indeed.

you seem to be saying the general public are the market wizards and the banks were little red riding hoods who were 'brought down, not by their lack of risk model, but by the greed of the public? That the public forced the banks to put ads in the press saying 100% loans etc? The banks offered a product they couldn't deliver on as soon as liquidity vanished.

It takes 2 is all im saying. And this seems to be forgotton more often that not.

"The banks offered a product they couldn't deliver on as soon as liquidity vanished"

And people bought them. Because of there own ignorance at the state of there finances and lack of realism.

 

[Pazienza]

It takes 2 is all im saying. And this seems to be forgotton more often that not.

"The banks offered a product they couldn't deliver on as soon as liquidity vanished"

And people bought them. Because of there own ignorance at the state of there finances and lack of realism.

Takes 3 or 4 actually - don't forget the Government and the hopeless regulator, the FSA. Plenty of blame to go around, enough for everyone.

 

[oiltanker]

..Because of there own ignorance at the state of there finances and lack of realism..


the public were offered a santa product. of course they thought it was christmas.

as greenspan confessed the idea of self interest as the best and only regulator was 'flawed'.

 

[breadman]

i think we need to remember it was not mortgages that went belly up it was mortgage backed securities. the banks bundled together A, B and C grade mortgages went to the credit agencies and told them we need these to have a A rating so that we can give you your fee and sell this crap on.
no one knew the real value of these contracts even today they have no idea.

 

[scose-no-doubt]

I thought a credit shock caused the housing market to tumble.

 

[Lodian1019]

It was the housing crisis that lead to the financial crisis,

 

[breadman]

this all started in America. House prices topped sometime in 2005/2006 the sub prime, Alt A mortgage holders started missing payments, the banks that sold all this crap started making margin calls on the holders of these products, losses started to build up and by 2007/ 2008 the holders of these mortgage backed securities started to run out of money to make the margin calls.

 

[meanreversion]

Read "The Big Short" and "The Greatest Trade Ever", two excellent accounts of the credit crunch.

 

[scose-no-doubt]

This has nothing to do with Merv anymore.

On a related note it's Jan so I'm getting flooded with people's income from property stuff again. A lot of public sector types with 3/4/5 houses (yes, seriously - some on sub 40k top line too lol) who -usually have to plough money into their btl accounts are now making money due to the zirp.

Given all the cut backs and if they stop getting their wage increases @ x +inflation then it's hard to see how this lot continue to support their investments on a cash flow basis when rates normalise.

 

[new_trader]

i think we need to remember it was not mortgages that went belly up it was mortgage backed securities. the banks bundled together A, B and C grade mortgages went to the credit agencies and told them we need these to have a A rating so that we can give you your fee and sell this crap on.
no one knew the real value of these contracts even today they have no idea.

 

[mikmo]

Inflation soaring, GDP negative 0.5%, 2 members of MPC now voting for a rate hike...

Any updated views on how they're going to play this one?

The negative GDP has only confirmed my fears that the recovery simply couldn't sustain a rate hike.

 

[Martinghoul]

Inflation soaring, GDP negative 0.5%, 2 members of MPC now voting for a rate hike...

Any updated views on how they're going to play this one?

The negative GDP has only confirmed my fears that the recovery simply couldn't sustain a rate hike.

I think they stay the course, personally... Def until Mar/Apr, when they get to see the results of the wage negotiations. If that gets out of hand, I think even Merv will be convinced that some pre-emptive action is in order.

 

[meanreversion]

It has always amused me how it is necessary for two quarters of decline to enter a recession, yet only one to exit, i.e. there is an in-built bias.

It's all looking very sh*tty for the UK right now, but at least we still have the AAA thing going, unlike Japan, which lost it years ago.

 

[scose-no-doubt]

What are the likely implications of higher boj rates on the carry trade? My inexperienced mind sees some kind of unwind from the more highly geared. What do you seasoned old timers think?