The Finance Thread

[eddie]

12 minutes ago, LesterRam said:

pesky brexiteers, what have they done

Cost an estimated quarter of a million jobs and put us on the road to both a recession and inflation.

[McRamFan]

1 hour ago, ketteringram said:

Yay! Even cheaper money. Just what's needed. 

Yeah, another 0.25% and they will charge you to have your wages paid in, charge for balances, charge for DD.

It may be cheap money, however they will find a way to make you pay, set up charges, early exit fees etc.

 

 

[LesterRam]

4 minutes ago, eddie said:

Cost an estimated quarter of a million jobs and put us on the road to both a recession and inflation.

and what would have happened if we decided to remain?

[Stive Pesley]

4 minutes ago, LesterRam said:

and what would have happened if we decided to remain?

We shall have to wait and see, but the next couple of years would have been a lot more economically stable for a start.

Maybe it will be worth it to get the pain out of the way now, than to be part of the EU when the whole thing goes titsup.

I certainly hope so anyway

[LesterRam]

2 minutes ago, StivePesley said:

We shall have to wait and see, but the next couple of years would have been a lot more economically stable for a start.

Maybe it will be worth it to get the pain out of the way now, than to be part of the EU when the whole thing goes titsup.

I certainly hope so anyway

We have problems that run extremely deep in Europe, we have all watched the news about Greece and its bailouts, what wasn't represented in our news was the deceit that was evident from the outset, Greece artificially misrepresented its 2009 15.4% deficit number to Eurostat in order to obtain more aid from the EU and IMF, we don't know the exact figures of its bailouts figures but a conservative guess is roughly 200bn euro.

On Greece's economic meltdown in 2011

"When it becomes serious, you have to lie"

Jean-Claude Junker

European Commission President  

 

 

[Stive Pesley]

13 minutes ago, LesterRam said:

We have problems that run extremely deep in Europe, we have all watched the news about Greece and its bailouts, what wasn't represented in our news was the deceit that was evident from the outset, Greece artificially misrepresented its 2009 15.4% deficit number to Eurostat in order to obtain more aid from the EU and IMF, we don't know the exact figures of its bailouts figures but a conservative guess is roughly 200bn euro.

 

Yeah I have no doubt that the EU has some big problems ahead. The Greece issue in particular keeps being kicked down the road but as a result they have been royally screwed by the EU

http://www.spiked-online.com/newsite/article/how-the-imf-and-the-eu-screwed-over-greece-troika-euro/18610#.V6NTA6KVRSA

[LesterRam]

1 minute ago, StivePesley said:

Yeah I have no doubt that the EU has some big problems ahead. The Greece issue in particular keeps being kicked down the road but as a result they have been royally screwed by the EU

http://www.spiked-online.com/newsite/article/how-the-imf-and-the-eu-screwed-over-greece-troika-euro/18610#.V6NTA6KVRSA

Greece will be leaving the EU, no doubt in my mind.

IOU for Germany

[ketteringram]

2 hours ago, eddie said:

But some of us don't want to - or need to - borrow money.

 

It was a sarcastic comment. 

[ketteringram]

2 hours ago, McRamFan said:

Yeah, another 0.25% and they will charge you to have your wages paid in, charge for balances, charge for DD.

It may be cheap money, however they will find a way to make you pay, set up charges, early exit fees etc.

 

 

It was sarcasm. I don't have any debt, and am not planning on any either. Their rate reductions will not tempt me to spend either. 

I'm well aware of the consequences of soft credit. 

[SillyBilly]

3 hours ago, McRamFan said:

Yeah, another 0.25% and they will charge you to have your wages paid in, charge for balances, charge for DD.

It may be cheap money, however they will find a way to make you pay, set up charges, early exit fees etc.

 

 

Doesn't work exactly like that. The base rate is the rate chargeable to banks for lending money off the Central Bank, it is also the savings rate the banks get when they place funds on deposit at the BoE. Nowhere in the world, even those in NIRP economies (a negative base rate) currently has negative rates for high street savers. Not to say it can't happen but we're not there yet. Remember we live in a world of fractional reserve banking, as a result banks still have to compete against one another to get your deposits so they can leverage up your money to supply loans where they make money. They do this by charging an interest rate on the loan greater than the base rate i.e. the rate at which they borrow large sums of money at.

The base rate obviously affects savings rates but it would IMO bring down the banking system (or an individual bank that went first) if they tried charging deposit holders.

 

[SillyBilly]

4 hours ago, eddie said:

Cost an estimated quarter of a million jobs and put us on the road to both a recession and inflation.

There has been only 1 month in the last 30 where we have hit the BoE's inflation target. Stoking inflation is actually the current policy objective for pretty much the entire Western world and has been for 2-3 years, decades for Japan. Deflation is the major danger to our economy hence this crazy monetary policy we have. When you have massive debts, as we do, you need inflation to erode the liabilities and **** on the lender. I can't see spiralling inflation on the short term horizon personally, a moderate rise would actually be a welcome development for the government and economy.

[SillyBilly]

4 hours ago, StivePesley said:

We shall have to wait and see, but the next couple of years would have been a lot more economically stable for a start.

Maybe it will be worth it to get the pain out of the way now, than to be part of the EU when the whole thing goes titsup.

I certainly hope so anyway

Today was a demonstration of weakness in our domestic economy but we should also remember the Union being left behind is on even greater life support than our own sorry mess (the ECB have a 0% base rate). Should exercise caution on Brexit analysis, anyone would think we're leaving behind an economically strong unit when the reality is the EU is a basket case economy.

The stimulus on offer here is about equivalent to a single month of the ECB's antics (80b euros/month). The ECB are also heavily dipping into the corporate bond market which whiffs of panic (incidentally I do not welcome todays announcement of the BoE putting £10b in corporate bonds - not sure if this is unprecedented for us).

I am pretty pessimistic on Britain in the short term though and have been for a while, we have major issues to deal with, it is not going to be easy to put right the last decade's failings (and it looks like we are electing for "more of the same" given the policy response today). Won't be boring for sure, we'll have a lot to talk about I am sure over the next year or so.

[jono]

30 minutes ago, SillyBilly said:

Doesn't work exactly like that. The base rate is the rate chargeable to banks for lending money off the Central Bank, it is also the savings rate the banks get when they place funds on deposit at the BoE. Nowhere in the world, even those in NIRP economies (a negative base rate) currently has negative rates for high street savers. Not to say it can't happen but we're not there yet. Remember we live in a world of fractional reserve banking, as a result banks still have to compete against one another to get your deposits so they can leverage up your money to supply loans where they make money. They do this by charging an interest rate on the loan greater than the base rate i.e. the rate at which they borrow large sums of money at.

The base rate obviously affects savings rates but it would IMO bring down the banking system (or an individual bank that went first) if they tried charging deposit holders.

 

They need a profit margin obviously. We actually need banks to make money. It isn't a sin. But McRamFan says what a lot of us think and illustrates why so many of us are angry about financial institutions as a whole. It is the lack of clarity, honesty and basic ethics. There is something ever present in many of our large near monopoly businesses. Devious small print.

the dressing up of prices for simple products like energy or money designed to blind the buyer to the true cost. 

Its fine for a car or a football team where there is a different perception of features and benefits but I rage at the complexity that is deliberately built in to commodity products. Money, energy, water etc etc 

These products should primarily offer low but secure margin for the investor. Somewhere along the line they manage to sell a nothing product as if it is a fashion item with a unique desirability factor. They get a high margin from the general public for a low risk product. This is the fundamental flaw that has destroyed European business. Build a steel works and make a profit .. No chance. .... Borrow money from someone and lend it to someone else with multiple security and you make a profit with little risk, easy peasy. ...The balance of what we perceive to be "worth" something is wrong. 

Oh dear another Jono philosophical ramble .. For crying out loud Saturday ..hurry up ! 

[eddie]

50 minutes ago, SillyBilly said:

There has been only 1 month in the last 30 where we have hit the BoE's inflation target. Stoking inflation is actually the current policy objective for pretty much the entire Western world and has been for 2-3 years, decades for Japan. Deflation is the major danger to our economy hence this crazy monetary policy we have. When you have massive debts, as we do, you need inflation to erode the liabilities and **** on the lender. I can't see spiralling inflation on the short term horizon personally, a moderate rise would actually be a welcome development for the government and economy.

Answer me one simple question please.

Why is economic growth supposed to be a good thing, when at its basest level, it simply boils down to utilising more resources this year than last year?

[SillyBilly]

37 minutes ago, jono said:

They need a profit margin obviously. We actually need banks to make money. It isn't a sin. But McRamFan says what a lot of us think and illustrates why so many of us are angry about financial institutions as a whole. It is the lack of clarity, honesty and basic ethics. There is something ever present in many of our large near monopoly businesses. Devious small print.

the dressing up of prices for simple products like energy or money designed to blind the buyer to the true cost. 

Its fine for a car or a football team where there is a different perception of features and benefits but I rage at the complexity that is deliberately built in to commodity products. Money, energy, water etc etc 

These products should primarily offer low but secure margin for the investor. Somewhere along the line they manage to sell a nothing product as if it is a fashion item with a unique desirability factor. They get a high margin from the general public for a low risk product. This is the fundamental flaw that has destroyed European business. Build a steel works and make a profit .. No chance. .... Borrow money from someone and lend it to someone else with multiple security and you make a profit with little risk, easy peasy. ...The balance of what we perceive to be "worth" something is wrong. 

Oh dear another Jono philosophical ramble .. For crying out loud Saturday ..hurry up ! 

Ofcourse responsible lenders should make money. The key point here is retail banking benefits from higher rates which is obviously not possible with current debt load and low growth. This environment therefore lends itself to more reckless activity in investment banking divisions as they hunt for yield in a market devoid of it. We have been corrupted by the arrogance of Keynesian policy; not allowing the system to purge itself (and reset in 2008/09). The banks have been allowed to survive as a result but they are effectively "zombies", as insolvent now as they were then and bailed out by even more insolvent governments.

Capitalism is a scarcity driven system. Your steel works example applies only if we hadn't stolen so much demand from the future already, that catches up with you after a 40 year run. There is a limit to how much stuff the world needs believe it or not. We have an abundance of "stuff" globally and a market of consumers with record private debt running out of dollar to consume it. We have completely destroyed the capitalist model by removing risk from the table, debts are securitised by taxpayers for too big to fail entities and the cost of money has never been lower. The system has to increase in complexity simply because it gets harder to keep a ponzi scheme going. I am impressed with how it is achieved I have to say.

[SillyBilly]

37 minutes ago, eddie said:

Answer me one simple question please.

Why is economic growth supposed to be a good thing, when at its basest level, it simply boils down to utilising more resources this year than last year?

Growth works for those at the top and they throw the crumbs down to those at the bottom. If we don't have growth they make the poor suffer. Nothing you or I don't already know. The difference this time is the middle class are also suffering and that is dangerous, politically if nothing else (explains Brexit, Trump, European far left/right movements ). Not sure if your question seemed to infer that I take a contrary position, if you have not worked out yet, I am in favour of turning the whole system on its head and forging a new solution.  What that solution is I dont know, I currently play the hand that is dealt us, which is all you can do in the circumstances.

[eddie]

9 minutes ago, SillyBilly said:

Growth works for those at the top and they throw the crumbs down to those at the bottom. If we don't have growth they make the poor suffer. Nothing you or I don't already know. The difference this time is the middle class are also suffering and that is dangerous, politically if nothing else (explains Brexit, Trump, European far left/right movements ). Not sure if your question seemed to infer that I take a contrary position, if you have not worked out yet, I am in favour of turning the whole system on its head and forging a new solution.  What that solution is I dont know, I currently play the hand that is dealt us, which is all you can do in the circumstances.

No, I was just interested in determining if I was mental or not. I have always thought that from a socio-economic sense, growth can only ever be a short-term solution, because it is impractical to take more and use more year after year. Sooner or later, you run out of things and stuff. Two hundred and fifty years on from the start of the Industrial Revolution, we have, to all intents and purposes, hit the end of that road (or at least we are perilously close to it).

[SillyBilly]

19 minutes ago, eddie said:

No, I was just interested in determining if I was mental or not. I have always thought that from a socio-economic sense, growth can only ever be a short-term solution, because it is impractical to take more and use more year after year. Sooner or later, you run out of things and stuff. Two hundred and fifty years on from the start of the Industrial Revolution, we have, to all intents and purposes, hit the end of that road (or at least we are perilously close to it).

Yes, we are quickly moving into a "post scarcity" world IMO where suddenly stuff is abundant and human labour is trending toward zero value. This is a check-mate scenario for capitalism. There is a limit to the invention of "work", automation is continually changing the concept of work. We are finding our basic needs are increasingly met with less work. That creates a problem for capitalism. Already "workers" are getting less and less of the economic pie because they are less and less valuable to it. This is in itself destuctive for capitalism as the workers are also the consumers.

I do believe there is some truth to the idea that a lot of "work" exists to keep the ordinary man in chains and therefore too preoccupied to revolt. With technological advancement I think it is inevitable that fairer distribution of increasingly automated production HAS to come about to avoid total breakdown. Can you really see people who own the means of production i.e. the 1% giving this up easily though? They are slowly strangling the world with their greed.

Debate this quite a lot but I personally think that "economic systems" have lifespans. Monetary history suggests we go from one failed system to another to find an order that works. Usually ending in revolution when the poor literally have nothing to lose by revolt. And ours (capitalism) is a very old man. This isn't about looking at what happened post industrial revolution and believing it will happen again, our system is designed to transfer as much wealth from the poor and middle class to the rich, it does so gradually over centuries, that has to change at some point though.

 

[SillyBilly]

By abundancy in stuff I ofcourse mean stuff that nobody needs. Ofcourse extrapolating out with continual growth would deplete the planet's resources!

[LesterRam]

3 hours ago, eddie said:

No, I was just interested in determining if I was mental or not. I have always thought that from a socio-economic sense, growth can only ever be a short-term solution, because it is impractical to take more and use more year after year. Sooner or later, you run out of things and stuff. Two hundred and fifty years on from the start of the Industrial Revolution, we have, to all intents and purposes, hit the end of that road (or at least we are perilously close to it).

So what would be achieved from kicking ones can further down ones road, #voteleave