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Building Society Lending Down over 90%!
Generali
Posts: 36,411 Forumite
Hi stats fans.
Building society net lending is down by 90% year-on-year from May 2007-May 2008.
May 2007: Net lending = £1,262,000,000
May 2008: Net lending = £125,000,000
Approvals halved over the period.
Seasonally adjusted net lending was a negative figure, that is to say building societies took in more in mortgage payments than they lent out on a seasonally adjusted basis. That has never been recorded since they started producing figures in April 1993.
It strengthens the case for a deflationary end to all this.
Link
Building society net lending is down by 90% year-on-year from May 2007-May 2008.
May 2007: Net lending = £1,262,000,000
May 2008: Net lending = £125,000,000
Approvals halved over the period.
Seasonally adjusted net lending was a negative figure, that is to say building societies took in more in mortgage payments than they lent out on a seasonally adjusted basis. That has never been recorded since they started producing figures in April 1993.
It strengthens the case for a deflationary end to all this.
Link
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Comments
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Hi stats fans.
Building society net lending is down by 90% year-on-year from May 2007-May 2008.
May 2007: Net lending = £1,262,000,000
May 2008: Net lending = £125,000,000
Approvals halved over the period.
Seasonally adjusted net lending was a negative figure, that is to say building societies took in more in mortgage payments than they lent out on a seasonally adjusted basis. That has never been recorded since they started producing figures in April 1993.
It strengthens the case for a deflationary end to all this.
Link
Unfortunately, as long as the central banks keep dishing out the 'emergency liquidity measures' (aka funny money) to the financial institutions we are going to see inflationary bubbles in things like oil and food though ... the worst of both worlds: Biflation.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
Unfortunately, as long as the central banks keep dishing out the 'emergency liquidity measures' (aka funny money) to the financial institutions we are going to see inflationary bubbles in things like oil and food though ... the worst of both worlds: Biflation.
I can't agree with this. The measures are intended to try to stop things getting worse. However, it seems like a case of a sticking plaster to treat an accidental amputation.
In any case, increasing oil prices have a negative wealth effect, whereas HPI has a positive wealth effect.Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable. J. K. Galbraith0 -
Sir_Humphrey wrote: »I can't agree with this. The measures are intended to try to stop things getting worse. However, it seems like a case of a sticking plaster to treat an accidental amputation.
In any case, increasing oil prices have a negative wealth effect, whereas HPI has a positive wealth effect.
Central banks give out short term loans to technically insolvent financial institutions.
Money is punted onto the futures market into a speculative bubble - food or oil.
Big profit made, loan paid pack with interest, difference put onto books.
Repeat until banks are recapitalised.
It's all about bailing out the banks (private businesses) with public money. We can either pay through increased taxes or increases in the cost of living. The governments have chosen the latter, unsurprisingly. They can just blame it all on 'global economic factors'.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
Central banks give out short term loans to technically insolvent financial institutions.
Money is punted onto the futures market into a speculative bubble - food or oil.
Big profit made, loan paid pack with interest, difference put onto books.
Repeat until banks are recapitalised.
Perhaps you could provide evidence for that assertion? There are a lot of factors influencing oil prices, not least of which is the fall of the dollar.It's all about bailing out the banks (private businesses) with public money. We can either pay through increased taxes or increases in the cost of living. The governments have chosen the latter, unsurprisingly. They can just blame it all on 'global economic factors'.
Indeed. The governments are stopping things getting worse by stopping them from going bust. If you want a Capitalist system this had to be done. If lots of major banks started to fail, then bye bye Capitalism.
The quid pro quo has to be tight regulation of the banks in future.Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable. J. K. Galbraith0 -
Sir_Humphrey wrote: »Perhaps you could provide evidence for that assertion? There are a lot of factors influencing oil prices, not least of which is the fall of the dollar.
It's no secret at all that the central banks have pursued a policy of inflating the economy out of trouble resulting in a series of bubbles. Didn't Greenspan himself admit that his response to the bursting of the dotcom bubble was to create more bubbles through inflation? And we've seen Eddie George admit that the BoE deliberately stoked the boom because they wanted to avoid recession after the dotcom crash.
The continued policy of lower than sensible interest rates and easy money to the banks is just another attempt at bubble economics, this time with the express mission of saving the banks from their mistakes.Indeed. The governments are stopping things getting worse by stopping them from going bust. If you want a Capitalist system this had to be done. If lots of major banks started to fail, then bye bye Capitalism.
The quid pro quo has to be tight regulation of the banks in future.
Yeah, right, there will be tighter regulation. :rotfl:
We'll keep suffering until the banks are alright again, then the next boom can start and another generation of financiers can make their one-way bets. That's how it works. It's just that last time they got greedy to an unprecedented extent. I'm sure they can top that in the decades to come though.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
It's no secret at all that the central banks have pursued a policy of inflating the economy out of trouble resulting in a series of bubbles. Didn't Greenspan himself admit that his response to the bursting of the dotcom bubble was to create more bubbles through inflation? And we've seen Eddie George admit that the BoE deliberately stoked the boom because they wanted to avoid recession after the dotcom crash.
It will not happen this time because this time we face a Keynesian liquidity trap. You only have to look at the disconnect between IRs and LIBOR in the UK to see what is happening. The money from the BoE will almost certainly be going straight on to bank balance sheets, not being used for speculation. American IR cuts have only succeeded in trashing the dollar.
If the banks were being simply bailed by the BoE, then why the f**k are they doing rights issues and raising IRs?The continued policy of lower than sensible interest rates and easy money to the banks is just another attempt at bubble economics, this time with the express mission of saving the banks from their mistakes...
Yeah, right, there will be tighter regulation. :rotfl:.
It depends on how bad it gets. There may end up being no choice in the matter. You also need to bear in mind that not all countries are as feeble at regulating as the UK. What the UK government decides may end up being irrelevent if the global tide switched away from deregulation.We'll keep suffering until the banks are alright again, then the next boom can start and another generation of financiers can make their one-way bets. That's how it works. It's just that last time they got greedy to an unprecedented extent. I'm sure they can top that in the decades to come though.
It is obvious that this is a far more serious situation than the dot com bust. It depends on whether deregulation continues. Regulation has happened in the past and it could happen in future. Most probably when all the wrong answers have been exhausted (A process we are partway through).Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable. J. K. Galbraith0 -
Sir_Humphrey wrote: »It is obvious that this is a far more serious situation than the dot com bust.
Actually this is a major part of the dot.com bust. Alan Greenspans actions to stave off the dot.com bubble was to massively cut interest rates, keep them low and flood the world with cheap credit hence staving off an almighty international recession. However he just delayed it resulting in a series of huge bubbles most notably the housing one.
One day people will realise that lots of smaller recessions are good for economies as it clears out all the rubbish and promotes stronger business. Now we are going to have an almighty recession which is going to take out businesses that would of survived otherwise.
Here is a BBC video on the this topics subject.
http://news.bbc.co.uk/1/hi/business/7481584.stm:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
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Sir_Humphrey wrote: »It will not happen this time because this time we face a Keynesian liquidity trap. You only have to look at the disconnect between IRs and LIBOR in the UK to see what is happening. The money from the BoE will almost certainly be going straight on to bank balance sheets, not being used for speculation. American IR cuts have only succeeded in trashing the dollar.
The monies given out by the BoE are limited term loans - simply putting the cash onto the balance sheet is pointless as you are dependant on getting another short term loan when it is paid back. Instead, it is invested into profitable ventures which will return an appreciable profit over the period of the loan which add permanently to the bottom line.
There must be tens, maybe hundreds of billions of dollars worth of 'emergency liquidity' originated credit out there at any given time looking for a profitable home. Perfect conditions for creation of asset bubbles.
This isn't at all unexpected, it has long been predicted that no matter how much cash the central banks loan out to bail out the commercial banks, they can't control where it ends up. The banks will of course invest it into areas which give them the greatest returns in the shortest amount of time. They certainly aren't going to put it into providing cheap mortgages or loans.
Hence, cash is sucked from people's pockets to shore up the banks' bottom lines. All stoked up from public money in the first place.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
The monies given out by the BoE are limited term loans - simply putting the cash onto the balance sheet is pointless as you are dependant on getting another short term loan when it is paid back. Instead, it is invested into profitable ventures which will return an appreciable profit over the period of the loan which add permanently to the bottom line....
Hence, cash is sucked from people's pockets to shore up the banks' bottom lines. All stoked up from public money in the first place.
So you have no evidence that it is causing the oil price rises I presume.
Of course, an alternative point of view is that the rights issues, raising mortgage rates etc are designed to plug the gaps that will be created when the BoE money is paid back.
If the BoE were simply letting the banks off, then why are their share prices trashed, and their shareholders being pumped for cash?
If you want to see banks being bailed out to the detriment of the public, look to the USA.Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable. J. K. Galbraith0
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