July 23, 2018 - Latest: What has happened to markets this year? by Darius McDermott
8th March 2012
create all zero contract hour jobs – bonus please !
Looks like a good idea to me, of course it would need tinkering – definition of “employment” defined as “employment of at least 30 hours per week for an individual” – basic wage rates to continue to apply and Central and Local Government banned from increasing their headcount of staff and all Government owned companies to be counted as Government staff (so that’s Lloyds banking group and RBS included in head count for starters) and let’s see the Cabinetsters and banksters fiddle that one.
If the bankers don’t like it they can always leave. I’ll happily hold the exit door for them.
Its a “set it and tell them to eff off and get on with it”. None of this Project Merlyn ‘negotiations’.
What were the banks negotiating against? – The national interest. Coalition are weak or bribed.
‘But as we move to other policy a lot of cheap cash has been pumped into
the UK banking sector for what reward? A housing boom/bubble? Lower
savings and deposit interest-rates?’
Bang on.All lower interest rates seem to do to my untrained eye,is drive the velocity of money down.Coincidence?
One question though Shaun,if you have time,is there any way we can find out who’s borrowing how much at the base rate off the BoE and with what collateral?.I’d be intrigued to know.
Unlike a scientific experiment we do not have a control sample to examine but yes the experience so far is that lower interest rates do lead to a lower velocity of money. The modern liquidity trap if you like…
The numbers for FLS lending per bank are to be found on the page linked too below.
This is to me the intriguing element of the modern central bankers dilemma.
As you rightly say,it’s hard to back test,let alone predict the effect of interet rates on velocity.
However,given that all Western central banks have seemed to want to do over the last five years is increase the money supply,you’d have thought they’d have run some sort of data collection alongside their experiements.
Thanks for the FLS figures, but I was actually wondering about the amount that’s getting lent at 0.5%.Someone told me these figures don’t get released.
Yes. I can’t understand how £B375 was created in untraceable cash.
You’d think the BoE would be really interested in where it has gone
PS I wouldn’t place too much emphasis on Nationwide’s lending.The mutuality is in the self harm.
back of fag packet calculations
Lending secured on dwellings – 9846 more gives 142 thousand per new dwelling average
more MEW than purchases?
Or just extensions
PS: what could go wrong ?
We have a breakdown of the approvals numbers which were as follows.
“The number of loan approvals for house purchase was 76,947 in January, compared to the average of 67,461 over the previous
six months. The number of approvals for remortgaging was 36,398, compared to the average monthly increase of 35,248 over
the previous six months. The number of approvals for other purposes was 13,050, broadly in line with the average monthly increase over the previous six months.”
They do not say it but the other category would be mostly Mortgage Equity Withdrawals or MEWing.
If we move to actual borrowing then house purchase borrowing was up by 46% on January 2013 but MEWing was only up by 15%.
“The effective rate paid on households’ outstanding time deposits increased by 4bps to 2.36% in January.” seems not completely implausible because they’re *time* deposits and some will date from before the start of funding-for-lending; if people have not bothered to reinvest expiring one-year bonds but still have four-year bonds that they took out in 2011, the average rate will go up slightly.
The two-year bond I have maturing in April is paying 3.7% per year; OK, I would have done better (13% counting dividends) had I stuck it all in FTSE trackers, but I didn’t want to go for 100% equities.
Hi Tom and welcome to my part of the blogosphere.
Good point and thanks for that. I had let the legacy bonds (at much higher interest-rates than now) slip my mind. Mind you like yours many of them must be on their way to maturity…
Somewhat incredulous at BOE statement “The effective rate on the stock of outstanding secured loans (mortgages)
decreased by 1bp to 3.26% in January and the new secured loan rate fell
to 3.01%, a decrease of 5bps on the month.”
I thought it was substantially higher than that so I quickly checked the Halifax web site and it’s 3.99% variable, whilst a short term fix with less than 25% deposit gets you 2.74% – 5.19% depending on the size of the loan escalating to 4% – 4.4% thereafter. The higher/lower rates depend upon the size of your deposit.
Soooo what are the BOE talking about!!? Do they ever come out of their Ivory tower? Do they have any information sources they quote to back up these cloud cuckoo land numbers?
Here are the definitions used by the Bank of England and the way the data is collected.
The effective interest rate is the weighted average of all the interest rates across each type of deposit or loan account held by all the clients within an economic sector. The Bank of England (Bank) calculates average effective rates as weighted averages of the effective interest rates supplied by each of the institutions.
These data are sourced from the Bank’s effective interest rates return, Form ER, completed by 23 monetary financial institutions (MFIs). The sample is reviewed regularly to ensure that it remains representative of MFIs’ lending to and deposits from UK-resident individuals and organisations, and that it provides coverage of at least 75% for MFIs’ business within each of the main sectors of the economy.
Separately they do a quoted mortgage rate which at the end of January was 2.76% for a 2 year 25% equity mortgage and even lower than the one above. So I will take the advice of the old nuclear war adverts and duck and cover……
All I see here is a continued broken monetary transmission system in respect of banks/business, although it’s working fine in the domestic sector. Perhaps the BOE is making the age old gamble that a booming housing market will lead to increased demand in the economy as new purchases redecorate/remodel etc?
The other thing is remember Basel III? The shortfall in lending vs funding obtained plus all those lovely new mortgages on the balance sheet will do wonders for their balance sheet repairs. While ever these balance sheet repairs go on we can expect a broken monetary transmission system.
There was an interesting sober look piece on the changing asset mix of commercial US banks.
While the MPC consists of the same bunch of overpaid ,overstuffed morons who have no concept whatever of the real world of the people they have hurt through their penalisation of savers nothing will change
The refusal to appoint Ros Altmann to the MPC is all the proof needed that every action of the last 5 years has been solely to benefit the rich and all the feckless debtors and buy to let merchants
Not a single thought has gone for the 26 million savers and pensioners who rely totally on saving income and the fact they simply cannot spend either now or in the future because their incomes have dropped so far below even the basic Personal Tax Allowance never mind paltry Age Allowance
Let’s not forget the young. I don’t like anyone picking up only their own group who might have lost out. Many older people bought houses for bargain prices. Those who are 25-40 with good jobs in London have no chance of a decent home if they don’t already own one, and it’s almost impossible to trade up unless you are a banker and lucky gambler or inheriting wealth.
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