What We Can Look Forward To In 2010

[counter_violent]

http://www.economicshelp.org/blog/economics/uk-economy-2010/

 

[zambuck]

....Looking at all charts....it can only improve.....after all if UK wants to remain as leading world economy then they will need to revalue the inflated pound....

...Policy of using Monetary means to rein in inflation does not help population and business at all...it only helps the rich....

....But it will sink below that of BRIC and even some third world economies in few years time.....

....After all UK can't just waffle on as leading world economy when it is running on nothing...!

 

[Atilla]

http://www.economicshelp.org/blog/economics/uk-economy-2010/

As in all previous recessions - UK will come out last and very slowly from this recession because she has no manufacturing industry. What is worrying is financial sector has taken a big knock and questionable if contributions to BoP likely to be same level as before.

I should add in the last big recession when in the 80s Mrs Thatcher took over PSBR rose to £50bn plus and subsequently with North Sea Oil we sold off all the nationalised industries - (treasures) to pay back. Even then we came out so much later than any other country in Europe.

Unfortunately with national debt at 180bn, with no oil and nothing else to sell as Zambuck states we are firing on empty cyclinders. Lot of noise with no substance.

It is all a big con and the we are well and trully stumped as to how we can repay our debt to the bankers.

Tax, tax and more tax looming on the horizons... I reckon we have another 3-5 years of toil before we see any light...

PS inflation will rise but will be deemed to be acceptable as we are likely to be in slow growth period etc etc on balance - blah blah blah... :cheesy:

Gold will continue to go up along with oil and the pound will become on par with Euro and eventually join for protection... All been said before.

I'm sorry for all these rants, doom and gloom guys but in all honesty - I see no way out of this extended depression... I don't know about Vs, Us or Ws but I see a 'long shovel' type recession.

I suspect we are more likely to dig our selves into a hole than out.

 

[Trader333]

As in all previous recessions - UK will come out last and very slowly from this recession because she has no manufacturing industry.

I completely agree.


Paul

 

[arabianights]

As in all previous recessions - UK will come out last and very slowly from this recession because all her capabilities lie in the now distant past

Fixed your post for you.

Sadly.

 

[Atilla]

Fixed your post for you.

Sadly.

One good news I heard on the radio 4 was that industry is reversing decision to locate help desks in India.

Makes sense not to export jobs even if costs are a little higher as in the long run we all lose out.

eg: Unemployment goes up, social security payments rise and tax returns fall.

Who gains? The company reduces costs - maximises profit for shareholders along with management who get more extortionate fees and dividends for exporting jobs.


What product have they produced?


Has productivity risen???


Good policy or bad policy???

 

[Trader333]

I have also read that 1 in 7 manufacturers who moved operations offshore are returning to the UK because they cannot get good enough quality abroad.


Paul

 

[zambuck]

I have also read that 1 in 7 manufacturers who moved operations offshore are returning to the UK because they cannot get good enough quality abroad.


Paul

...I did say in past that this is what will need to happen....!

...And it will happen because GBP will devalue eventually....Easter Economies will appreciate...and they are starting....real estate in parts of India are at par with London....and then it will be cheaper to make things here...!

...Quality is irrelevant - it is the right hand figure that always matter...!

 

[SAINT]

The UK economy was going nowhere and was saved by oil in the 1970s. We then rode that gravy train into the 'great moderation' with property and credit booms. 2009 was a recovery mirage. Oil companies have been working through old orders, while culling staff and financial services has imploded. The recovery pushed by the media has got us out doing what we do best- spending on goods and services, with our head in the sand.

 

[montmorencyt2w]

The UK economy was going nowhere and was saved by oil in the 1970s. We then rode that gravy train into the 'great moderation' with property and credit booms. 2009 was a recovery mirage. Oil companies have been working through old orders, while culling staff and financial services has imploded. The recovery pushed by the media has got us out doing what we do best- spending on goods and services, with our head in the sand.

"But apart from that Mrs Lincoln, how did you enjoy the play?"

 

[counter_violent]

Eeewwweee

http://news.bbc.co.uk/1/hi/business/8458689.stm

 

[Splitlink]

As in all previous recessions - UK will come out last and very slowly from this recession because she has no manufacturing industry. What is worrying is financial sector has taken a big knock and questionable if contributions to BoP likely to be same level as before.

I should add in the last big recession when in the 80s Mrs Thatcher took over PSBR rose to £50bn plus and subsequently with North Sea Oil we sold off all the nationalised industries - (treasures) to pay back. Even then we came out so much later than any other country in Europe.

Unfortunately with national debt at 180bn, with no oil and nothing else to sell as Zambuck states we are firing on empty cyclinders. Lot of noise with no substance.

It is all a big con and the we are well and trully stumped as to how we can repay our debt to the bankers.

Tax, tax and more tax looming on the horizons... I reckon we have another 3-5 years of toil before we see any light...

PS inflation will rise but will be deemed to be acceptable as we are likely to be in slow growth period etc etc on balance - blah blah blah... :cheesy:

Gold will continue to go up along with oil and the pound will become on par with Euro and eventually join for protection... All been said before.

I'm sorry for all these rants, doom and gloom guys but in all honesty - I see no way out of this extended depression... I don't know about Vs, Us or Ws but I see a 'long shovel' type recession.

I suspect we are more likely to dig our selves into a hole than out.

Last but one----Spain will be last. There are 1,000,000 empty flats here, waiting to be sold.

 

[Atilla]

Last but one----Spain will be last. There are 1,000,000 empty flats here, waiting to be sold.

Hi Split,

My take on this is that wealth is generated when money circulates.

In building these properties that money has changed hands and many builders and developers, architects etc etc and bankers with interest got paid good money.

Thus the end result is that who ever is left holding the last asset may have lost out a little.

I'm sure as we all our they are no doubt in a position to be able to maintain some level of losses.


Best part of the deal would be if banks and owners took a realistic view and halved the prices such that they start a new boom with people running to to buy them like sweets. :cheesy:

Will they be able to manage this? I don't know but if Banks own these and they sell them instead of sitting on paper valuations it would speed up tourism ones again and all the English, Germans and Scandinavians from the cold North would be travelling down to spend their summer hols down there and be good for everyone.

Will common sense prevail - I'd doubt it. :whistling

I think Spain has a big agricultural industry and with demand on the increase for farm produce from the East they can complement their tourism with food stuff exports.


Here in the UK, I reckon what we need to do is kick the bankers and politicians and lawyers and estate agents in the balls and setup apprenticeships up and down the country for manufacturing, football acedemies for youngsters and make education and university places free again with grants to all.


I am absolutely sick to the teeth with all the rich snobish class infested *******s stuck up on their ****ing merit as to how they have earnt all their own money and they don't want to give it to the tax man.


I've said it before I'll say it again. The only way out of this mess and same applies to US is low interest rates and high taxation to eat up excess demand whilst stimulating production and investment.


Will politicians do as such. No chance in hell. BoE will raise interest rates to stave off inflation eventually and politicians will cut taxes as the Conservatives like to tell us they will. A whole generation of good people will be sent to the gutters and we'll just learn to laugh at their stupidity as we always do in our righteous ways...


Things can only get worse as there are no brave hearts left to do the right thing. I'm alright Jack you mind your own bloody ****...


Call me old fashioned trade unionist if you must, but I'm not happy guys...

Just dreadfully pissed off with the so called elite that's all.

 

[SAINT]

Eeewwweee

http://news.bbc.co.uk/1/hi/business/8458689.stm

Obama's campaign was pretty much paid for by Wall St and he has bent over backwards to favour them over main st. The big banks are creaming it on a record scale, while many citizens are drawing food stamps and experiencing foreclosures on a record scale.

Nothing but empty rhetoric. "We want our money back!" Well, you shouldn't have given it to them in the first place then.

 

[Ambrose Ackroyd]

New Year's Eve

 

[Mr. Charts]

Eve who?

 

[Splitlink]

Hi Split,

My take on this is that wealth is generated when money circulates.

In building these properties that money has changed hands and many builders and developers, architects etc etc and bankers with interest got paid good money.

Thus the end result is that who ever is left holding the last asset may have lost out a little.

I'm sure as we all our they are no doubt in a position to be able to maintain some level of losses.


Best part of the deal would be if banks and owners took a realistic view and halved the prices such that they start a new boom with people running to to buy them like sweets. :cheesy:

Will they be able to manage this? I don't know but if Banks own these and they sell them instead of sitting on paper valuations it would speed up tourism ones again and all the English, Germans and Scandinavians from the cold North would be travelling down to spend their summer hols down there and be good for everyone.

Will common sense prevail - I'd doubt it. :whistling

I think Spain has a big agricultural industry and with demand on the increase for farm produce from the East they can complement their tourism with food stuff exports.


Here in the UK, I reckon what we need to do is kick the bankers and politicians and lawyers and estate agents in the balls and setup apprenticeships up and down the country for manufacturing, football acedemies for youngsters and make education and university places free again with grants to all.


I am absolutely sick to the teeth with all the rich snobish class infested *******s stuck up on their ****ing merit as to how they have earnt all their own money and they don't want to give it to the tax man.


I've said it before I'll say it again. The only way out of this mess and same applies to US is low interest rates and high taxation to eat up excess demand whilst stimulating production and investment.


Will politicians do as such. No chance in hell. BoE will raise interest rates to stave off inflation eventually and politicians will cut taxes as the Conservatives like to tell us they will. A whole generation of good people will be sent to the gutters and we'll just learn to laugh at their stupidity as we always do in our righteous ways...


Things can only get worse as there are no brave hearts left to do the right thing. I'm alright Jack you mind your own bloody ****...


Call me old fashioned trade unionist if you must, but I'm not happy guys...

Just dreadfully pissed off with the so called elite that's all.

Spain has an important agricultural industry, it is true, but it does not compensate for the loss of its construction industry and we are not sure what is going to happen with tourism.
We have unemployment heading for 20%. How are they going to buy up these unoccupied flats?

Of course, we'll get out of it, the same as you, but it will take time

 

[Benton D Struckcheon]

Obama's campaign was pretty much paid for by Wall St and he has bent over backwards to favour them over main st. The big banks are creaming it on a record scale, while many citizens are drawing food stamps and experiencing foreclosures on a record scale.

Nothing but empty rhetoric. "We want our money back!" Well, you shouldn't have given it to them in the first place then.

That would have been Treasury Sec'y Paulson, under the previous Admin.
The sequence was as follows:

1 - In the first half of 2008, after the Bear Stearns weekend, it became increasingly apparent that Fannie and Freddie, the two big GSEs, were going under. Paulson crammed preferred shares in these two down the throats of the country's banks. John Dizard of the FT figured they'd have to save those preferreds to keep the banking system afloat at a more or less reasonable price.
Note this quote:

I called up Andrew Senchak, the vice-chairman and co-director of investment banking at Keefe Bruyette & Woods, which specialises in bank securities. KBW is in most bank stock syndicates; think-tank talk about recapitalising the banking system comes down to someone there making a pitch to a nervous investor about preferred stock for some regional bank half a continent away.
As he says: “It is true that there is no direct link between the GSE preferred issues and that of the banks, but they are in the same galaxy.
“Given that, there is almost no incentive not to keep the GSE preferreds in good shape. If there is a recapitalisation of the GSEs [by the Treasury], you can achieve the public policy end [of limiting ‘moral hazard’ by wiping out the value of the common].
“I am not sure how much new bank equity has to be issued ... it could be anywhere from $200bn to $400bn.”
That sounds like a lot of money, but keep in mind all those money market accounts and pension fund cash positions. It’s hard to maintain the rentier lifestyle with the money market rates on offer, and the pension funds know they will have a hard time making their nut on their actuarial assumptions of investment returns. If preferreds are protected, whatever the real value of the GSE portfolios, then $400bn in new equity raises would be a snap.
And yes, I agree that it is likely, if not certain, that if the GSE books were marked to market, the asset value would not be there to support the preferred issues. There is, though, a real value to clapping to keep Tinkerbell alive here: you get a banking system that can finance a recovery.
As a reality check I called Jim Grant, of Grant’s Interest Rate Observer, and the author of the forthcoming “Mr Market Miscalculates”. He comments: “The alternative to preserving the value of the GSE preferreds? Prayer? Remember that a lot of that paper is held by the same banks the authorities would love not to fail.”

Take careful note of the fact this was written on August 31, before Lehman and before the TARP.

2 - As the cited article noted, saving the preferred shares would keep everything from going down the tubes. So, did Paulson save the preferreds? Of course not. Dizard's next examines why:

In his statement on the Fannie and Freddie actions, he said: “Preferred stock investors should recognise that GSEs [government-sponsored enterprises] are unlike any other financial institutions, and consequently GSE preferred stocks are not a good proxy for financial institution stock more broadly ... the broader market for preferred stock issuance should continue to remain available for well-capitalised institutions.”
Not true, Mr Paulson. The market for bank preferred stock is effectively closed. It is not immediately obvious now how the banks can raise the Tier One capital they need to finance a recovery ... scratch that, not a recovery, just the present level of economic activity.
I called a senior person in the housing finance sector to find out what the people inside the room had been thinking. Not much, it turned out.
“Their horizon is in the extreme short term,” he said. “By sucking the incentives out of these alternative instruments [such as preferred stock], they have created a materially serious long-term problem.
“They are incapable of rational long-term planning; for them every issue is a one-off event. As the rest of us know, though, that is not true.”
Even though the administration had very broad discretion over how to structure the Fannie and Freddie deal, they were reluctant to do anything that could give anyone in Congress, and in particular anyone in the Democratic party, a sound bite or campaign issue.
Bailing out the preferred – and that is what it would have been – might have been one such bite before the election.
Whether or not it would have made it possible to shorten the credit crisis by months or years was, it seems, a secondary concern.

3 - So now what happened? This:

Sept. 10 (Bloomberg) -- Treasury Secretary Henry Paulson's takeover of Fannie Mae and Freddie Mac is roiling the market for preferred securities.
Prices of fixed-rate preferred stock fell an average of 11 cents to 69.8 cents on the dollar this week, including the biggest one-day drop in a decade on Sept. 8, according to Merrill Lynch & Co. index data. The 13 percent decline compares with a 0.8 percent drop in the Standard & Poor's 500 index in the same time...
Paulson's ``actions have damaged the preferred market,'' said Thomas Hayden, the investment strategist for Liberty Bankers Life Insurance in Dallas. ``Somebody is going to be looking at an issue of Fannie or Freddie preferred shares that were rated AA up until a few months ago. If that's not money good then what about the small regional bank in some part of the country?''
Hayden, whose $1.5 billion fixed-income portfolio contains preferred shares of Fannie and Freddie, said he's ``not interested'' in buying any more preferred securities.

Rising Costs

The market's tumble is making it more expensive for banks and brokers trying to raise fresh capital after taking $506 billion of writedowns and losses on the collapse of the subprime-mortgage market...
Lehman Brothers Holdings Inc. is down 42 percent, while Merrill has tumbled 16 percent.
``In the primary market it's going to be much more difficult for financials across the board,'' Hayden said. ``If Lehman Brothers thought they needed to go to the market and had any chance at all of issuing preferred stock to raise capital, it is now three times more difficult than it was last Friday.''

`Gun-Shy'

Mark Lane, a spokesman for Lehman, and Danielle Robinson, a spokeswoman for Merrill, declined to comment. Lehman and Merrill are both based in New York.

4 - Next, Fitch downgraded Lehman after BofA began making noises about buying them. The original link I used to have for this no longer works, unfortunately, but I did find this contemporaneous mention in a blog:

Lehman Brothers (LEH) again dragged down the entire market for the great majority of the day...But in the last half hour of today’s trading, Bank of America stepped in to stop the hemorrhage. This large bank, who earlier in the year bought Countrywide, announced a possible purchase of Lehman Brothers...But then a few minutes later, Fitch Ratings threw a wrench in the works, as they seem to enjoy doing, and “downgraded” the company.

The original link, which quoted the entire downgrade in its entirety, noted that the downgrade was happening not because Lehman was insolvent - one of the interesting things about Lehman's demise was that it had oodles of cash on hand right to the end - but because they doubted its ability to raise capital, just as the Bloomberg article said would happen, and just as Dizard predicted would occur as a direct consequence of not bailing out the preferreds of Fannie and Freddie.

5 - Next, Lehman's bankruptcy began a huge chain reaction, starting with panic in the money markets caused by a fund heavily invested in Lehman breaking the buck.

6 - Next, Paulson panics, produces the TARP. The cost? 750 billion dollars, or double what Dizard predicted if the preferreds of Fannie and Freddie weren't saved. At first, if you recall, the TARP was supposed to buy up the bad debts held by the failing banks. Dizard predicted they'd use it instead to issue preferreds on the failing banks, and within a couple of weeks Paulson did exactly that.

What changed Paulson's mind? Nothing, I'm sure. He had it in mind all along, but just wanted some distance in time between his mistake in not bailing out the preferreds of Fannie and Freddie for 5% of what the TARP cost, so that as few people as possible would remember that mistake and connect the dots.
He was right. No one remembers, as this thread illustrates perfectly.
Machiavelli had him and his character pegged. See my sig.
The huge cost of the bailout is a direct consequence of the simple fact Paulson was a fool. Obama had nothing to do with it.

 

[SAINT]

Obama is run by Wall St and the global banking/political elites, not the other way round. It matters not who holds the President gig.

 

[Benton D Struckcheon]

Obama is run by Wall St and the global banking/political elites, not the other way round. It matters not who holds the President gig.

That's all you've got?
Not even worth the trouble...