RBS brace for a “cataclysmic year”

DiggerUK

Alex Brummer from The Daily Mail has a far reaching piece reacting to the RBS doomsday warning.

"The calamitous decline in the oil price over the past 18 months, by more than 75 per cent, ought to be good for oil-importing nations such as Britain because it now amounts to a tax cut worth an astonishing £5.5 billion a day worldwide, putting money into the pockets of consumers and firms alike.
If history were to be the guide, it should trigger a boom rather than a bust."


Read more: http://www.dailymail.co.uk/debate/article-3398610/ALEX-BRUMMER-RBS-warns-clients-sell-really-brink-financial-meltdown.html#ixzz3xDQEoV3j

michaels

DiggerUK wrote: »

Alex Brummer from The Daily Mail has a far reaching piece reacting to the RBS doomsday warning.

"The calamitous decline in the oil price over the past 18 months, by more than 75 per cent, ought to be good for oil-importing nations such as Britain because it now amounts to a tax cut worth an astonishing £5.5 billion a day worldwide, putting money into the pockets of consumers and firms alike.
If history were to be the guide, it should trigger a boom rather than a bust."


Read more: http://www.dailymail.co.uk/debate/article-3398610/ALEX-BRUMMER-RBS-warns-clients-sell-really-brink-financial-meltdown.html#ixzz3xDQEoV3j

I wonder what falling oil prices do for tax revenue - I can't halp thinking the lost tax on oil probably exceeds the extra revenue from the money being spent elsewhere.

michaels

If we do end up with a recession in the next 18 months is it going to be a standard mild cyclical downturn or is it going to be the 'financial contagion' disaster scenario seen in 2007?

Obviously in 2007 there was a lot more scope for monetary and fiscal containment than there is now. In a financial disaster scenario, I don't see the the EU and the IMF being able to rescue GBP gilts even if they wanted to - perhaps a shotgun wedding entry into the Euro would be the Germans price for doing so - no doubt there are probably European integrationists who see such a crisis as being an opportunity.

Graham_Devon

DiggerUK wrote: »

Alex Brummer from The Daily Mail has a far reaching piece reacting to the RBS doomsday warning.

"The calamitous decline in the oil price over the past 18 months, by more than 75 per cent, ought to be good for oil-importing nations such as Britain because it now amounts to a tax cut worth an astonishing £5.5 billion a day worldwide, putting money into the pockets of consumers and firms alike.
If history were to be the guide, it should trigger a boom rather than a bust."


Read more: http://www.dailymail.co.uk/debate/article-3398610/ALEX-BRUMMER-RBS-warns-clients-sell-really-brink-financial-meltdown.html#ixzz3xDQEoV3j

This was discussed on Newsnight last night.

Gillian Tett from the financial times suggested that simplistic sums suggesting that anyone who saves any money goes and spends all the savings on new stuff, is, well, basically.... simple.

She suggested that's not what happens, especially in today's times where people are still cautious.

She suggested people may spend some of the savings from savings across the spectrum generally, but they certainly won't spend all the savings, so we need to be cautious about assuming that simple theories don't overtake reality.

The analysis part of Newsnight suggested things are ok for the next 6 months or so as sales are still going through at prices agreed 6 months previous. However, bonds look extremely risky right now and he fears the fall out for bonds will likely spill over to the financial system itself unless oil regains ground to around $60 a barrel. Second point is that we have no idea of the extent to which banks have exposure to oil prices. But it was believe to be "large sums".

DiggerUK

DiggerMansions has been trying to calculate how much a month we are better off. Both diesel, and can't remember if it had been £1.60 or £1.80 a while back. Back of a fag packet tells us £50-£80 a month. Not a lot to get excited about.

The DM article talks of US, UK, Japanese and Euro QE/ easing......but never includes the simple fact that China is doing much the same. One way or another is there any country that is not expanding money supply, either by government spending, tax reductions etc..

Other myth in the article is that only Saudi Arabia is pumping like mad. Russian figures are up, the US is about to export, and I'd imagine that [STRIKE]Sturgeon, Aberdeen[/STRIKE] North Sea production is going the same way. Haven't checked other producers, but will be surprised if it is different.

Once again, a hint of a liquidity crisis in the offing from the article. I still suspect that liquidity problems are the gorilla in the room.
"In the U.S. alone, some 15 per cent of the quarter of a trillion dollars of loans made to energy firms are now in default."

Some room for further rate rises, I don't think..._

DiggerUK

michaels wrote: »

I wonder what falling oil prices do for tax revenue - I can't halp thinking the lost tax on oil probably exceeds the extra revenue from the money being spent elsewhere.

Fuel duty is fixed, 20% vat will vary..._
https://www.gov.uk/tax-on-shopping/fuel-duty

westernpromise

Graham_Devon wrote: »

Second point is that we have no idea of the extent to which banks have exposure to oil prices. But it was believe to be "large sums".

I doubt that. Banks have been divesting their oil trading businesses. Morgan Stanley have sold theirs to Hetco and JP Morgan have sold theirs to Mercuria. Of what's left the majority is just risk management packages sold to airlines and the like, so net exposure to oil prices among banks would now be pretty low.

Other than oil companies themselves the players most at risk would tend to be hedgies but they've been bailing out of oil for at least 18 months.

Graham_Devon

DiggerUK wrote: »

DiggerMansions has been trying to calculate how much a month we are better off. Both diesel, and can't remember if it had been £1.60 or £1.80 a while back. Back of a fag packet tells us £50-£80 a month. Not a lot to get excited about.

Was averaging around £1.38 a litre this time last year. Never seen it as high as £1.80 and never paid over £1.50 as far as I'm aware? Seen it around £1.58 on the services though.

DiggerUK

At least we can eat out at our local Italian.......whoopey doo ..._

purch

Graham_Devon wrote: »

Was averaging around £1.38 a litre this time last year. Never seen it as high as £1.80 and never paid over £1.50 as far as I'm aware? Seen it around £1.58 on the services though.

Never ever get into a debate with Dev over fuel prices.

If he went on Mastermind it would be his specialist subject, and he'd get 50 points easy.