Liam Halligan gets all doomy in the Torygraph

StevieJ

mbga9pgf wrote: »

We will see who the cowboys were in 10 years from now. Bitter pill now will avoid a lot of pain down the road.

So you think we should have increased interest rates with recession beckoning and deflation a real possibility :eek:

mbga9pgf

No. I think we should have taken the free market fix as closely as possible. They shouldnt have been slashed as quickly. I also believe QE should have been done with and IR penalty to go with it, say 0.5% per 100 Bill QE. This effectively caps the max amount of QE.

Which doesnt include propping up asset prices unneccesarily. I also think the market could have done with one or two of the bigger banks going bust.

The Abandonment of moral hazard is something that is going to come and bite us all in the !!!! one day.

DiggerUK

mbga9pgf wrote: »

We will see who the cowboys were in 10 years from now. Bitter pill now will avoid a lot of pain down the road.

I can't see what pill there is on the market that will deal with the problem that is faced.

Raising interest rates to halt an inflation that doesn't exist is pointless.
Lowering interest rates can't be done.

Credit wont be available until the banks have eliminated toxic debt (TD) The money they have is to keep them solvent for when the TD's need to be written off. The banks know were these dead bodies are hidden, we haven't a clue at the moment.
We don't know how much the government do either.
As LH says in his article "the banks need to be made to 'fess up to their debts"

Unless the masters of the universe come up with a new solution they will be left with QE.
As the Bond Vigilantes won't stump up unless they get their pound of flesh what point is QE.
QE is not deflationary.

Edale

I have never been sure how you get the banks to fess up to their debts, is this their current potential exposure to bad debts or with further potential property price declines factored in? A mortgage at 90% ltv a year ago would be in negative equity now. Many forecasters are still looking at further drops in property prices and if the banks factored this in when working out their bad debts it could lead to a vicious downward spiral. As prices declined banks would have to 'refess' up to their debts and the decline would continue.

DiggerUK

Edale,
I think the main problem with forcing the banks to 'fess up, is that they don't know how to find out the real state they are in.

I think it would be like those situations we found ourselves in as kids when our parents turned round and said "why did you do that" and we replied by saying "don't know" and we really didn't know

I think the simple truth is that they really don't know what has been going on. The profits kept coming in and nobody bothered to ask the what's and whys.

C0ck up theory beats conspiracy theory every time, and here's the proof.