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Britain - financial recovery....

including Budgets
Avarus
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Britain - financial recovery....

#54108

Postby Avarus » May 16th, 2017, 7:46 am

....just built on a pile of debt.....

Debt fears as county court judgments soar by more than a third

Year-on-year figures for first quarter follow warnings from Bank of England, MPs and charities over dangerous levels of debt


https://www.theguardian.com/money/2017/ ... d-mps-debt

...and should interest rates start to rise?

redsturgeon
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Re: Britain - financial recovery....

#54111

Postby redsturgeon » May 16th, 2017, 7:57 am

Avarus wrote:....just built on a pile of debt.....

Debt fears as county court judgments soar by more than a third

Year-on-year figures for first quarter follow warnings from Bank of England, MPs and charities over dangerous levels of debt


https://www.theguardian.com/money/2017/ ... d-mps-debt

...and should interest rates start to rise?



Is this news to anyone?

John

Ashfordian
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Re: Britain - financial recovery....

#54153

Postby Ashfordian » May 16th, 2017, 10:33 am

redsturgeon wrote:
Avarus wrote:....just built on a pile of debt.....

Debt fears as county court judgments soar by more than a third

Year-on-year figures for first quarter follow warnings from Bank of England, MPs and charities over dangerous levels of debt


https://www.theguardian.com/money/2017/ ... d-mps-debt

...and should interest rates start to rise?



Is this news to anyone?

John


Not to anyone with any sort of foresight in my opinion.

The question that I don't know the answer to is how to we move away from this?

- Interest rates cannot rise due to the amount of debt out there
- Low interest rates mean more people taking on more debt

Growth since the last crash has mostly been debt fuelled

Knowing how this is going to play out is where the money will be made :?:

Avarus
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Re: Britain - financial recovery....

#54223

Postby Avarus » May 16th, 2017, 1:30 pm

Not to anyone with any sort of foresight in my opinion.

The question that I don't know the answer to is how to we move away from this?

- Interest rates cannot rise due to the amount of debt out there
- Low interest rates mean more people taking on more debt


I can see some kind of protection from the government from mortgage repossessions, I think that there was something similar to this in USA in the 1930's.

There seems to be a big problem with cars and PCP deals:

Britain’s £40 billion car finance industry may be heading towards a mis-selling scandal amid concerns lenders are rushing buyers into deals they may not be able to pay back.


http://www.autoexpress.co.uk/car-news/c ... ng-scandal

More than a million US consumers have fallen at least two months behind on car loan repayments as the delinquency rate reaches its highest level since 2009, in the latest sign of stress in the $1.1tn market.


https://www.ft.com/content/0f17d002-f3c ... 76151821a6

Add to this the price drop that diesels are now seeing.

As for personal debt - it's still growing :

http://www.cardflash.com/news/2017/03/d ... debt-2017/

The problem with all of this debt is that is that the money it creates (debt is money) is being hoarded by big business/savers and is not being spent or reinvested in the economy (or not as much as it normally would be) - ie I read the other day that Apple had $250 bn in the bank. Result - growth is poor, wages do not rise, so people borrow more.

Very difficult to get out of! The banks/government may again look to bailouts by the taxpayer and possibly from people with mony. :o

dealtn
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Re: Britain - financial recovery....

#54250

Postby dealtn » May 16th, 2017, 2:33 pm

Avarus wrote:
The problem with all of this debt is that is that the money it creates (debt is money) is being hoarded by big business/savers and is not being spent or reinvested in the economy (or not as much as it normally would be) - ie I read the other day that Apple had $250 bn in the bank. Result - growth is poor, wages do not rise, so people borrow more.


Money "hoarded" whether by companies or individuals, may not be "reinvested in the economy" by them, but there certainly is a healthy transmission mechanism whereby that money does get reinvested, and that's the banking system. Bank's balance sheets are certainly healthier than since the "financial crisis" began, and they are recycling this "hoard" back into the economy.

Look at the annual growth in M4, last release at 6.6%. Barring a couple of months back when it touched 7%, this is the highest growth rate since 2010.

Yes I am sure many would feel this kind of uptick in economic activity would be more "balanced" were it to come from companies reinvesting themselves, but savings in itself (when the banking sector is healthy) isn't a macro-negative for growth.

(Apple, and many other US companies have their own reasons for having large cash balances, mainly driven by the tax that will be levied on repatriation of overseas earnings. It will be interesting to see what goes back "onshore", and when, once Donald allows some kind of tax "amnesty" so as to get a smaller slice than currently would be applied, but on a much larger repatriation than is existing at present. But that's a different story)

Avarus
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Re: Britain - financial recovery....

#54262

Postby Avarus » May 16th, 2017, 2:53 pm

Hi dealtn

I think that this lending by the banks is the problem. They aren't lending so much for investment that will produce future growth here, but spending on comsumption that doesn't create a lot of wealth (not here anyway):

“The figures fit with the idea that people will borrow to maintain their spending,” Clarke said. “People have to rely more now on credit cards because it’s so easy to get hold of that debt and more difficult to withdraw equity from mortgages.”

Earlier this week, the Bank said rapid growth in consumer credit – underpinned by debt and particularly credit cards – was one of the main threats to the UK banking system.

“Concerns have been raised about the recent rapid growth in consumer credit and February’s numbers are unlikely to do much to allay them,” said Martin Beck, senior economic adviser to the EY Item Club forecasting group.


https://www.theguardian.com/business/20 ... p-spending

It's just the same old pattern that led us to 2008.

I'm looking to ways of damage limitation (for me) when the credit ride hits the wall again.

UncleEbenezer
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Re: Britain - financial recovery....

#55575

Postby UncleEbenezer » May 23rd, 2017, 1:57 pm

dealtn wrote:Look at the annual growth in M4, last release at 6.6%. Barring a couple of months back when it touched 7%, this is the highest growth rate since 2010.

That's a much better measure of inflation than any nebulous [CR]PI. In the 2000s it created the illusion of being much richer than we were, while real inflation was masked by the growth of cheap imports in an official inflation measure that was probably better-correlated to the Chinese economy than to ours.

Now we have it again. Just like 2005's Ballsian stimulus, we have emergency measures while the economy overheats.

Of course, it all manifests in inflation. Except, with an excess of production over demand, that no longer manifests in prices of most things in the shops. Instead it's asset prices that have gone Weimar. Big transfer of wealth from the productive to the (already-)rich.

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Re: Britain - financial recovery....

#58583

Postby dealtn » June 8th, 2017, 10:52 am

FredBloggs wrote:To my simple mind, the British economy will never be sound until we actually start making and exporting things again.


Ok, I appreciate you are trying to be "simple" about things, but this suggests the UK no longer manufactures, or exports "things". The reality is the UK is still in the top 10 global manufacturers. The trend is perhaps more of a worry, but even so at about 11% of national output UK manufacturing isn't out of line with say the US on 12%, or France at 11% for instance (admittedly behind Germany 23%).

Looking at the other parts of the economy as to what we are good at suggests we should be ensuring the export of services (especially Financial Services) isn't hindered. Hard to find politicians willing to expose themselves to their electorate and promote the City, Banks, etc. yet they are the foundation stone on what our economy provides to the world, and incidentally the tax base that has allowed the infrastructure, the schools, the hospitals etc. to be built here over the last 20-30 years.

I have seen first hand management, guided by politicians, close down profitable businesses within companies working in the Financial Services sector, for various dubious short term motives. The corporation tax lost on this profitable activity, and the loss of income (and other) taxes from the personnel now no longer employed doing it, worries me more.

The UK is good at top-end manufacturing.

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Re: Britain - financial recovery....

#58686

Postby DiamondEcho » June 8th, 2017, 6:45 pm

FredBloggs wrote:To my simple mind, the British economy will never be sound until we actually start making and exporting things again. Making stuff and selling it at a profit, to me, is the only way I know of to create true wealth.


Apart from the high-end engineering, we're especially good at exporting financial services, a world-beater no less. It earns the country a huge income. It's strange how some overlook it or threaten to prejudice it when it benefits all of us so much.

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Re: Britain - financial recovery....

#59298

Postby ADrunkenMarcus » June 11th, 2017, 11:32 am

DiamondEcho wrote:we're especially good at exporting financial services, a world-beater no less. It earns the country a huge income. It's strange how some overlook it or threaten to prejudice it when it benefits all of us so much.


Perhaps people threaten it because of prejudice?

Best wishes

Mark.

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Re: Britain - financial recovery....

#59465

Postby youfoolishboy » June 12th, 2017, 11:49 am

1mv35t
why are you getting so worked up about the banking sector and how much it cost to bail out? 3 of the 4 banks bailed out have returned the money with interest and capital appreciation the fact UK debt has not gone down is nothing to do with them more to the previous Labour government running up a massive budget deficit which adds to the National debt every year. Don't fall for the politicians old trick of using any crisis to blame all their bad decisions on others

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Re: Britain - financial recovery....

#59471

Postby Dod1010 » June 12th, 2017, 12:07 pm

Plus the fact that banks are having to ring fence retail depositers, see the new HSBC bank being set up in Birmingham at considerable cost.

And on the subject of financial services we have a large and very international insurance industry which contributes considerably to our invisible exports.

Dod

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Re: Britain - financial recovery....

#59505

Postby dealtn » June 12th, 2017, 1:34 pm

You really come across as someone who has very little idea what banks do (whether before or after the financial crisis). The vast majority of a bank's business doesn't even vaguely come under the term "speculate". Happy to have a proper debate about banking and how it works, then and now, but would rather it was undertaken in a mature sensible fashion. Indeed some of your ideas, such as ending fractional banking, statutory guarantees for depositors, custodian banks etc. deserve considered thought, yet you debase your own intelligence in raising them when they are combined in the same post with some of the other content.

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Re: Britain - financial recovery....

#59633

Postby Dod1010 » June 12th, 2017, 8:36 pm

dealtn

It is usually helpful to quote the post to which you are replying. Who is the 'you' you refer to in your post of today at 1.34 pm?

Dod

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Re: Britain - financial recovery....

#59742

Postby dealtn » June 13th, 2017, 10:28 am

Dod1010 wrote:
It is usually helpful to quote the post to which you are replying. Who is the 'you' you refer to in your post of today at 1.34 pm?

Dod

Sorry if it was too cryptic to work out, it was to 1nv35t, although I thought by reading the post where I refer to points raised in that post it would have been simple to work that out. Maybe I should "quote" more often but quoting an entire post to make a general point in reply to it is a bit tedious I think sometimes.

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Re: Britain - financial recovery....

#59801

Postby Dod1010 » June 13th, 2017, 12:17 pm

dealtn wrote:
Dod1010 wrote:
It is usually helpful to quote the post to which you are replying. Who is the 'you' you refer to in your post of today at 1.34 pm?

Dod

Sorry if it was too cryptic to work out, it was to 1nv35t, although I thought by reading the post where I refer to points raised in that post it would have been simple to work that out. Maybe I should "quote" more often but quoting an entire post to make a general point in reply to it is a bit tedious I think sometimes.


Thanks dealtn. One click and you're there!

Anyway1nv35t presumably does not invest in banks although I have seen fairly strong views on other topics as well. If the piece in the Times this morning is correct, Mrs May seems to have taken it upon herself to call an end to austerity. That and the continuing loose money policy is almost bound to accelerate inflation I would have thought but should help exports in t6he short run at least.

Ours is an economy which needs to have a lot of issues addressed and I am afraid with the current political situation and the Brexit talks looming, we are not going to get the public finances sorted out for a long while yet. From my perspective, continuing care costs has got to be addressed and I am quite sympathetic to the presumably now trashed Conservative manifesto idea of using the capital tied up in housing stock for that purpose.

Dod

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Re: Britain - financial recovery....

#59817

Postby DiamondEcho » June 13th, 2017, 1:01 pm

FredBloggs wrote:So, in a nutshell. Mrs May has decided that it is a jolly good thing to keep inflating the huge asset price bubble that has been blowing up and up for the last 8 or 9 years by borrowing/printing even more money. And trying to inflate away all our debts. This is not going to end well. When it eventually does end, of course. I am not one who believes bubbles can be inflated infinitely. When will it end? Just after the bell rings, naturally.


Do you have a source for this? I've been following the news quite closely today but haven't seen mention of any such policy, or change of policy.

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Re: Britain - financial recovery....

#59891

Postby kiloran » June 13th, 2017, 4:46 pm

dealtn wrote:Maybe I should "quote" more often but quoting an entire post to make a general point in reply to it is a bit tedious I think sometimes.

Just delete the bits of the quoted post which are superfluous.

--kiloran

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Re: Britain - financial recovery....

#60379

Postby CommissarJones » June 15th, 2017, 5:30 pm

Dod1010 wrote:That and the continuing loose money policy is almost bound to accelerate inflation I would have thought but should help exports in t6he short run at least.


There were three votes to raise Bank Rate at the MPC's latest meeting, according to today's statement.

http://www.bankofengland.co.uk/publicat ... 7/004.aspx

Bank of England wrote:Three members considered it appropriate to increase Bank Rate by 25 basis points.

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Re: Britain - financial recovery....

#61178

Postby stewamax » June 19th, 2017, 3:48 pm

depositors will be attracted to safer alternatives

And how, pray, does the average domestic saver/investor decide that a financial institution is 'safe'?
- Northern Rock - safe as houses
- RBS - established in 1724
- BOS - as old established as the Bank of England
- Barings - an epitome of probity. Had been trading profitably since 1762, until...


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