Deflation Watch pt 152

purch

If you managed to push 10 year money down from 3% to 2% would business really decide to invest more?

I doubt it.

It's not the cost of the money that is a negative factor.

Generali

The Bank of England released their trends in lending today.

Lending to business down 5.7% year-on-year, ie lending to business falling at a declining rate. That spells trouble potentially for GDP figures both now and in the future.

Net mortgage lending up 1% over the past 12 months. Up £100,000,000 on the month.

Consumer credit up 0.2% on the year.

michaels

Sorry - is net lending to business falling more or less quickly than it was?

Generali wrote: »

Lending to business down 5.7% year-on-year, ie lending to business falling at a declining rate.

Generali

michaels wrote: »

Sorry - is net lending to business falling more or less quickly than it was?

To clarify, lending to businesses fell by 7.9% between 1/7/2009 and 30/6/2010.

Between 1/8/2009 and 31/7/2010 it fell by 5.7%.

Net business lending is still falling but the first derivative is a smaller negative figure.

Generali

A graph which isn't looking very promising for the economy.




Consumption has collapsed vs wages. It's what needs to happen in the end but it'll be painful for a while as people pay down debt.

Batchy

just to confirm my contrary status

saved over the years, over last 18months brought house, done it up, brought two cars, and spent a fortune on holidays and in general.

I think the time for saving, is here, but there are so many bargains out there, take advantage while you can, especially if you need/desire it.

Road_Hog

Generali wrote: »

A graph which isn't looking very promising for the economy.

And with unemployment rising, it isn't going to get better any time soon. Perhaps a title change to stagflation would be in order.

purch

346,000,000,000 EUR was deposited with the ECB this week alone by commercial Banks :eek: rather than "invested" in other assets.

Generali

purch wrote: »

346,000,000,000 EUR was deposited with the ECB this week alone by commercial Banks :eek: rather than "invested" in other assets.

That says it all really. These banks feel this money is better serving them making €5,000,000,000 a year in interest on deposit rather than €100,000,000,000 (less defaults) in interest being used for credit card lending.

The cost cutting in banks is amazing as someone who's worked through 3 bill markets and 3 bear markets. Soc Gen (no relation) have banned colour printing except for client presentations. When I worked there they were happy to pay me £1500/wk for surfing the 'net and chatting about cricket.

sabretoothtigger

Price of ink is going up like everything else, bad news then for money printing


Robert Prechter on the bear market. It is a bear market but he closes out stating he is in safety only holding cash. Not real safe Bob

He points out low yields in the market but does not acknowledge why a company would hold back cash, same reason he is. Market volatility and price instability but for deflation we need an actual loss to register by vast amounts to counter all the newly produced stuff.
A vast market would mean a big bond price drop not shares or possibly even cash, which is what he trusts most ?
http://www.youtube.com/watch?v=ImQ02RgoKc8&feature=uploademail