The Finance Thread

[SillyBilly]

4 hours ago, LesterRam said:

Did we leave the last recession, I think clever accountancy it was (sorry Yoda mode)

Not for the average person, GDP/Capita only just scrapes above what it was before the bust. QE has lined the pockets of the super rich. QE is like an ATM for the super rich.

[Stive Pesley]

15 hours ago, SillyBilly said:

Fractional reserve lending means they don't have a mere fraction of what the depositors think they have on deposit - why should we let them get away with this by withdrawing our only protest vote, cash? I think we all saw the powers-that-be panic in Greece and Cyprus (and here with Northern Rock) when people vote with their feet. All we do without cash is give them absolutely no fear of their reckless behavior as there is no consequence. They can take whatever haircut they want from your digital accounts when the next crisis comes (legislation already in place) and kissing goodbye to cash means you can't do a thing about it. If I had a tenner in my account and the bank had a tenner on deposit and I could spend that tenner with a card then that'd be something!

Which is why you'd have to be mad to have more on deposit with a bank than the government protected limit of £70,000 or whatever they just lowered it too.

If there was a bank run and some went under, then the government would have to cover up to £70k per person. I wonder where that money would come from?

[LesterRam]

1 hour ago, StivePesley said:

Which is why you'd have to be mad to have more on deposit with a bank than the government protected limit of £70,000 or whatever they just lowered it too.

If there was a bank run and some went under, then the government would have to cover up to £70k per person. I wonder where that money would come from?

Oh that would be our huge stock pile of gold, oh **** Gordon Brown sold all that, the EU would bail us out then 

[Zag zig]

9 hours ago, StivePesley said:

Which is why you'd have to be mad to have more on deposit with a bank than the government protected limit of £70,000 or whatever they just lowered it too.

If there was a bank run and some went under, then the government would have to cover up to £70k per person. I wonder where that money would come from?

That's easy, savings on deposit. If ever there was a true bank run, every saver would get pennies in the pound as the swindling banksters have their arses wiped by the politicians. Don't worry it will be painless, everyone will face a sterling mark down together of course.

[SillyBilly]

9 hours ago, StivePesley said:

Which is why you'd have to be mad to have more on deposit with a bank than the government protected limit of £70,000 or whatever they just lowered it too.

If there was a bank run and some went under, then the government would have to cover up to £70k per person. I wonder where that money would come from?

I wouldn't believe that £70,000 figure. The government doesn't have any money, just a £1.5T debt, a £75bn deficit and a printing press. The government also underwrites mortgages now. Apparently the government is awash with enough dough to underwrite our bank deposits and our houses?! The consequences of printing that much money (and it would have to be printed) would be so severe IMO that the value of that currency is anyone's guess (not to mention the direction of the economy in these circumstances). A major bank going down now is effectively the entire banking system down such is the derivatives web between them.

[LesterRam]

http://www.bbc.co.uk/news/business-36256358

The UK's trade deficit for the first quarter is at its biggest since 2008.

The gap for the first three months of 2016 stands at £13.3bn, up from £12.2bn in the fourth quarter of 2015, according to the Office for National Statistics (ONS).

Analysts said this was more evidence of the weight of global economic weakness on the UK. One described the figures as "truly horrible".

Economic growth has already slowed to 0.4% in the first quarter.

The ONS said the UK trade gap widened over the quarter because of a £1.9bn rise in imports in such as mechanical machinery, cars, clothing, jewellery and footwear.

Meanwhile, exports increased by just £500m, led by chemical products.

"A truly horrible first-quarter trade performance that clearly weighed down on GDP growth," said Howard Archer from IHS Global Insight.

He added that UK exports had been hampered by moderate global demand as well as sterling's strength in 2015, particularly against the euro.

"The hope has to be that UK exporters will increasingly be helped by the overall marked weakening of the pound in 2016, although the pound has climbed off its April lows," he continued.

'Unacceptably large'

There was a slight improvement in March's numbers, with the deficit in the trade in goods narrowing a bit to £11.2bn from £11.4bn in February.

But the British Chambers of Commerce, a business group, said this was little cause for comfort.

"In spite of the small improvement seen in March, the UK's trade deficit worsened over the quarter and remains unacceptably large," the group said.

[jono]

Couldn't you argue that the system would work if we didn't build in artificial protections ? So a pension bail out fund and a govt bank guarantee on deposits. Limited liability companies and all the rest of the issues that cloud and hide debt. If businesses, banks and people really failed then wouldn't that make the market more honest as an entity ? Imagine if Phillip Green had had to pay someone to take BHS off his hands ? Wouldn't we then have a fairer world .. Even though a lot of small and medium sized fish got burned from time to time ? 

 

 

[GboroRam]

I think because greed is the name of the game, artificial protection is built in to protect the vulnerable - take pensions as per your example. The people who suffer are the innocents. Removing the protection stops the greedy shafting the vulnerable. Instead we all get hit in a smaller fashion. 

[jono]

Oh I agree Gboro but I was really speculating on what balancing factors you could in theory have to make a market  "real" and if it was real then it wouldn't artificially expand or need to artificially expand. just musing on the mechanics of it all rather than advancing a new world order ! 

 

[GboroRam]

6 minutes ago, jono said:

Oh I agree Gboro but I was really speculating on what balancing factors you could in theory have to make a market  "real" and if it was real then it wouldn't artificially expand or need to artificially expand. just musing on the mechanics of it all rather than advancing a new world order ! 

 

Mechanics of it would be very gruesome. Red in tooth and claw.

[jono]

The result of the mechanics certainly would .. What I was speculating about was more along the lines of what the mechanism would or could be to make a workable economy after it has crashed and re booted and I don't mean a state system which has as many flaws as the current managed mixed economy. 

[LesterRam]

http://www.bbc.co.uk/news/business-36268324

UK banks close more than 600 branches over the last year?

I cant help think that we are surely walking into another disaster here, the people that trot down to the local bank to pay bills are the same people that are at risk from fraudulent telephone calls and phishing attacks and they are being forced into telephone/internet banking due to lack of local banks, we offer no protection, come on banks show some morals.

[jono]

On 6 May 2016 at 19:44, SillyBilly said:

I wouldn't believe that £70,000 figure. The government doesn't have any money, just a £1.5T debt, a £75bn deficit and a printing press. The government also underwrites mortgages now. Apparently the government is awash with enough dough to underwrite our bank deposits and our houses?! The consequences of printing that much money (and it would have to be printed) would be so severe IMO that the value of that currency is anyone's guess (not to mention the direction of the economy in these circumstances). A major bank going down now is effectively the entire banking system down such is the derivatives web between them.

I know this wouldn't really work because the initial damage would be catastrophic and the time taken to recover would be too long but in true market economics isn't this supposed to happen to rebalance things ..? . Economy crashes .. Currency devalued thus our prices on the export market become competitive so we then grow. ... Of course I know this won't work because we don't manufacture or export goods in volumes significant enough to turn it round.. Our manufacturing base has gone .. We assemble imported goods and sometimes re export .. Our lack of primary industries to support a manufacturing base is our weakness and the reason we have few well paid technical / skilled jobs outside the state sector. Mind you that is a similar situation in all the "old" developed countries. 

[LesterRam]

On ‎14‎/‎04‎/‎2016 at 10:51, Ramarena said:

Look's like China is introducing a gold benchmark next week. 

http://www.reuters.com/article/china-gold-fix-idUSL3N17G2W4

I wonder what implications this could have on the currency market? Could this eventually lead to the accelerated devaluation of western currencies, primarily the Dollar, Euro and Pound?

Also heard about Obama, Biden and the FED having two emergency "behind closed doors", meetings this week, in relation to the banking sector. There's a G20 meeting next week as well, where there will be a huge amount of problems to "discuss".

I've got a bad feeling things are starting to move behind the scenes.

http://www.bbc.co.uk/news/business-36309062

ICBC to be first Chinese lender to own London vault

[Ramarena]

2 hours ago, LesterRam said:

http://www.bbc.co.uk/news/business-36309062

ICBC to be first Chinese lender to own London vault

Hmmmmmm, China's tentacles are spreading throughout the U.K. 

[SillyBilly]

On 13/05/2016 at 15:15, jono said:

I know this wouldn't really work because the initial damage would be catastrophic and the time taken to recover would be too long but in true market economics isn't this supposed to happen to rebalance things ..? . Economy crashes .. Currency devalued thus our prices on the export market become competitive so we then grow. ... Of course I know this won't work because we don't manufacture or export goods in volumes significant enough to turn it round.. Our manufacturing base has gone .. We assemble imported goods and sometimes re export .. Our lack of primary industries to support a manufacturing base is our weakness and the reason we have few well paid technical / skilled jobs outside the state sector. Mind you that is a similar situation in all the "old" developed countries. 

Re-balancing i.e. a necessary contraction (killing off excesses) after an economic expansion, is a fundamental characteristic of a market economy. As you say, that will effect the value of a currency but it can't be viewed in the same way as a collapse of the monetary system itself. One is a typical market economy contraction (once every 2-9 years), the other is a far more severe event that happens when the problem is not just the economy, but also "money" itself. The two are naturally intrinsically linked. Abuses of money to achieve smaller and smaller gains in the economy is something which has been repeated over and over again...and it always ends in a reset. Most people notice the economy but they don't notice what happens to money. These are events which play out over decades, not your usual business cycles.

[SillyBilly]

Gone a little quiet here.

America seems to be setting up for turbulence for the new president. Incidentally, I think Trump was spot on about America's debt, it was very refreshing to hear it being called for what it is. America in theory should never default on its debt, nor should any nation with a printing press for that matter (they can just print the money), Trump at least recognizes austerity cannot end and real growth cannot return without managed default . Somebody who has been bankrupt a few times might actually be an advantage here because America is insolvent (the only difference between an insolvent state and an insolvent company is the former can print away its liabilities and the latter can't). The promises are simply too vast. The majority of debt is accumulated interest therefore as each year goes by it sucks more and more wealth out of the real economy (and into the hands of the the few).

https://next.ft.com/content/7836a30e-2772-11e6-8ba3-cdd781d02d89

The concern I have is that we're the ones loading up on American debt we know cannot be repaid at face value while the likes of Saudi, China and Russia deleverage. There was the headline story a couple of months back of Saudi threatening to dump all US treasury assets (rumored to be in the order of $750 bn). They are protesting against legislation being passed through Congress which would allow U.S. citizens to sue foreign governments (alleged Saudi involvement in the 9-11 attacks). The Japanese were involved in heavy selling in 1987, whether that was linked to the stock market crash at the time, I don't know?

Nasty economic data came out for May for America, the jobs data has literally killed off any prospect for the rate hike now, no-one was expecting a number so weak. 38,000 jobs created for a country of America's size is a net increase in people out of work (labour force participation rate at a year low and overall downward trajectory looks set to continue).

[Zag zig]

On 5 June 2016 at 11:24, SillyBilly said:

Gone a little quiet here.

America seems to be setting up for turbulence for the new president. Incidentally, I think Trump was spot on about America's debt, it was very refreshing to hear it being called for what it is. America in theory should never default on its debt, nor should any nation with a printing press for that matter (they can just print the money), Trump at least recognizes austerity cannot end and real growth cannot return without managed default . Somebody who has been bankrupt a few times might actually be an advantage here because America is insolvent (the only difference between an insolvent state and an insolvent company is the former can print away its liabilities and the latter can't). The promises are simply too vast. The majority of debt is accumulated interest therefore as each year goes by it sucks more and more wealth out of the real economy (and into the hands of the the few).

https://next.ft.com/content/7836a30e-2772-11e6-8ba3-cdd781d02d89

The concern I have is that we're the ones loading up on American debt we know cannot be repaid at face value while the likes of Saudi, China and Russia deleverage. There was the headline story a couple of months back of Saudi threatening to dump all US treasury assets (rumored to be in the order of $750 bn). They are protesting against legislation being passed through Congress which would allow U.S. citizens to sue foreign governments (alleged Saudi involvement in the 9-11 attacks). The Japanese were involved in heavy selling in 1987, whether that was linked to the stock market crash at the time, I don't know?

Nasty economic data came out for May for America, the jobs data has literally killed off any prospect for the rate hike now, no-one was expecting a number so weak. 38,000 jobs created for a country of America's size is a net increase in people out of work (labour force participation rate at a year low and overall downward trajectory looks set to continue).

Don't worry everyone (well at least in the U.S) is bracing themselves for the next rate rise, because despite the jobs data Yellen has said they are preparing for it. Fantastic wheeze this fear mongering, even weighed in with her virtues against Brexit but just can't be bothered to post it up on the E.U thread.

Just pisses me off such clowns think they have a right to interfere in our debate, when the titanic they are on is heading full steam ahead for the iceberg; don't worry though, the music still playing and they are telling us it's all going to be alright.

[jono]

Not sure I buy the deleverage thing. Selling US bonds will just devalue the bonds they themselves hold and what are they selling them for ? Dollars ?

the value of anything, including a liability is only what people think it is worth (or not worth) in a sense the only things that hold their value are the sort of tangible assets that you can use. The land you live on, the crops you grow and the functional goods you manufacture from raw resources under the ground. Everything else is about wider trading and barter.

I think we are still on the road for a monsterous re adjustment but it hasnt happened yet. Wouldn't it be interesting if we cancelled all debt and all credit. Billy, you are more than a sage on these things what would happen ? Would we have to invent money again to decide a suitable exchange mechanism for goods ? Oh ! I know lets make it gold and silver. 

[Stive Pesley]

Interesting

http://www.bbc.co.uk/news/business-36477979

Quote

The Royal Mint is to offer savers the chance to own gold bars within their pension funds for the first time.

I wonder how much they have, or will this be another fractional reserve scam if demand outstrips supply?