More "We might do something, maybe" from the BOE

wotsthat

mwpt wrote: »

I love how we can just quote a blurb piece by some blogger from a paper and this is evidence. The article is nice and all, but who really knows anything...

The Telegraph are no better. They've taken an interesting speech and picked the bits that might make decent click bait.

http://www.bankofengland.co.uk/publications/Pages/speeches/2016/880.aspx

Here's the bit that's caused the excitement. No wonder they're just keeping an eye on it - it's full of ifs, coulds & maybes.

Credit is growing broadly in line with GDP. If it were to resume growing more than twice as fast as GDP, it could take a number of years for debt to income to retain its pre-crisis peak. But just as financial cycles build up over a number of years, the risks they pose are perhaps best managed over time. Given the vulnerability that already exists and the powerful drivers in the UK, particularly the housing market, if credit began again to grow faster than GDP, I would want to think about action to manage the financial stability risks sooner rather than later.

Thrugelmir

wotsthat wrote: »

Here's the bit that's caused the excitement. No wonder they're just keeping an eye on it - it's full of ifs, coulds & maybes.

Linkage of GDP to debt. There's a new one. :eek:

The wider issue is the increase in global debt. $57 billion in the last 7 years.No wonder everything is overpriced.

michaels

Thrugelmir wrote: »

Tackle the unsecured lending market in the same way as mortgages with MMR. Impose more regulation and discipline on the finance houses. Ban 0% transfer deals and purchase credit cards for example. Buy now pay later is the first step for many towards financial distress. As redundancy, sickness, relationship break up, etc all contribute to a fall in income. Being one pay check away from the edge is not a good culture to endorse. Not suggesting credit per se is bad. Just needs to be managed better.

I just knew it would involve taking income away from me, in this case stoozing profits

Thrugelmir

michaels wrote: »

I just knew it would involve taking income away from me, in this case stoozing profits

How much do you make a year though from stoozing? More of a sideline surely.

wotsthat

Thrugelmir wrote: »

How much do you make a year though from stoozing? More of a sideline surely.

I used to make c£1500/ year when my mortgage was over 5% and balance transfers were fee free.

A sideline but one that paid about £250/ hour.

cells

Thrugelmir wrote: »

Tackle the unsecured lending market in the same way as mortgages with MMR. Impose more regulation and discipline on the finance houses. Ban 0% transfer deals and purchase credit cards for example. Buy now pay later is the first step for many towards financial distress. As redundancy, sickness, relationship break up, etc all contribute to a fall in income. Being one pay check away from the edge is not a good culture to endorse. Not suggesting credit per se is bad. Just needs to be managed better.

why do you think the BOE can manage 100 banks lending books better than the 100 banks themselves can?

sure we had a credit crunch thanks to the Americans but credit is a vital part of an advanced economy and over regulating it has a real cost to all of us just like over regulating any industry


If the aim is to reduce risk to depositors and the state the system needs to go towards more securitisation and large companies issuing their own paper.

Thrugelmir

Banks have to be regulated. Like kids they'll push the boundaries to the limit.

Brown & Balls were disciples of Greenspan. The UK created it's own problems. Albeit not on the same scale as in the USA. RBS may yet find itself with a billion $ fine for it's part in the US mortgage market. So the UK taxpayer isn't getting off scott free.

The aim of Basle III is to reduce the leverage banks use on their balance sheets. In 1970 it was around 1.06. Barclays at the peak of the GFC was around 72. Basle III reduces leverage to a maximum of nearer 33. For clarity that's the amount lent against £1 of capital held.

TheeMaskedTurnip

In not entirely sure why you felt the need for creating this thread. Is the BOE not in control of the economy and free to do as the see best?

mwpt

BOE. In control. Economy. Ho ho.

Devaluation wars and Keynesian policies have kicked us lurching down the road this far, but at some point all the distortions it has created are going to unwind.

padington

mwpt wrote: »

BOE. In control. Economy. Ho ho.

Devaluation wars and Keynesian policies have kicked us lurching down the road this far, but at some point all the distortions it has created are going to unwind.

The unwinding is happening already. House price inflation is going through the roof. It's only going to get worse.