UK LENDING POLICY: Cable, Osborne and Carney lay groundwork for stimulation splurge

The 2015 Election starts here

You know things are desperate when the Financial Times runs a piece headed “Will the Royal baby buoy the economy?” Look Pink ‘un, it was a boy, not a buoy. The poor little beggar’s only 48 hours old and already he’s more influential than the Chancellor. Mind you, put that way well, yes, perhaps it does make sense.

Overnight, UK Business Minister Vince Cable has broken ranks again, this time with the Bank of England”s stricter monetarists. Vinny Livewire thinks the Old Lady has held back SME lendingby demanding that the banks hold ‘onerous levels of capital as a cushion against further shocks’.  Draper Osborne allegedly shares this view. Usually, I find myself nodding in agreement when Cable goes off-message, but this outburst seems oddly naive: has he not been following the thousands of SME fraud cases against RBS and other banks? Doesn’t he realise that no matter how lax you allowed these reptiles to be in terms of ‘cushion’, they’d still use the money selfishly for the own ends? Hasn’t he heard that Crash 2 is almost here?

Except it’s not quite as simple as that. There is an agenda here, and it isn’t that well hidden. This is about winning in 2015, and creating the right environment for QE-man Mark Carney to get down to the important business of chucking our money at the economy in order to make it look other than it is: a sort of narrow strip of quicksand, into which things are thrown, and then disappear.

Friction between the BoE and the Government became near-tectonic during June,  when the Chancellor’s hopes of a revival in the housing market were threatened by prospective capital demands on Nationwide, Britain’s biggest building society. It fell short of new requirements compelling lenders to hold top tier capital equal to 3% of all loans, and was told by the BoE to buy some more sandbags. But this could have torpedoed George Osborne’s Help to Buy inflationary housing-bubble vote-winning lunacy. Nationwide’s CEO Graham Beale, the group’s chief executive, immediately warned that the BoE assessment was “crude”, and would constrain its ability to lend. Funny how people find doing the correct thing crude, and doing the wrong thing bold.

Anyway, the clincher for this analysis is that the new BoE Governor Carney the Canuck arrived, and pretty much on Day 1 granted the Nationwide until 2015 to meet the requirements. It’s clear what’s coming, and it fits exactly with what reliable sources told me in March about The Carney Plan: it is to loosen up credit and bash in disguised QE bigtime, on the assumption that this will lower the Pound’s value, make exports boom, stimulate more entrepreneurial confidence, and see Blighty arising tumescent from the Ashes.

There are five flaws in the scheme. One, more QE and a plunging Pound will put our borrowing costs up. Two, our main export market is flatlining, China is slowing down, and India is is a muddle. Three, we don’t have a manufacturing sector to speak of. Four, all Britain’s banks are in a parlous state caused by madness in the past. And five, Japan has done the same thing, and appears to be getting nowhere.

So thinking again, it really is down to the new Windsor arrival to sort it all out. It’s a big Ask, but we Royalists know that the Firm has the necessary grit to see us through.

Connected at The Slog: How neoliberalist fanatics screwed the Coop Bank

29 thoughts on “UK LENDING POLICY: Cable, Osborne and Carney lay groundwork for stimulation splurge

  1. Pingback: John Ward – UK Lending Policy – Cable, Osborne And Carney Lay Groundwork For Stimulation Splurge – 24 July 2013 | Lucas 2012 Infos

  2. “the Old Lady has held back SME lendingby demanding that the banks hold ‘onerous levels of capital as a cushion against further shocks’”

    And that is wrong. What is holding back bank lending to the SMEs is that banks are allowed to hold much lower levels of capital when lending to the sovereign or the AAAristocracy than when lending to SMEs, and thereby be able to earn a much higher expected risk-adjusted return on equity when lending to “The Infallible” than when lending to “The Risky”

    http://teawithft.blogspot.se/2013/07/more-than-overzealous-bank-regulators.html

  3. Shame !…I’d been quite keen to recommend to my Daughter and her Partner, going to a Mutual like Nationwide rather than a Bank, to get themselves onto the housing ladder.

    If Nationwide made profits of £210M last year…and needs to raise £2B by 2015…in 2 years time… (my maths says that could take nearer 9-10 years)…..and as a Mutual, cannot raise capitol money the way that Banks do…..

    Then I cannot see them having much (any) cash to lend to First Time Buyers in the foreseeable future, government guarantees or not. ……Methinks that they will have to look elsewhere for a mortgage !

    • Hopefully they discounted everything you said because you used the phrase “housing ladder”. It’s only a ladder when prices rise above wages inexorably. Which cannot occur.

  4. The idea that our once fair nation could thus rise tumescent from the ashes, sporting victories aside, is utter cock. Not so much Quantitative Easing as Premature Ejaculation.

    • Precisely..
      What really gets my goat is that Osborne stands there spouting platitudes when he absolutely must know and understand that this system cannot continue as it stands, the debt based fiat system has been debased and left to burn like an abandoned car.
      Meanwhile China is stacking gold like a manic dung beetle on amphetamines, when they have enough it would be an easy next step to launch a gold backed Yuan – end of dollar, then what?

    • Equally O/T, but Sloggers might also be amused to know that the front guns of HMS Belfast are trained on “London Gateway” motorway services (formally Scratchwood) some 22 miles away on the M1 motorway.

      Reputedly a senior member of the Belfast’s Curatorial team once got food poisoning there, and that was how they decided to exact their revenge!

  5. Two very interesting comments from the DT today. I feel I should share them.
    From Kevinbech:
    Britain is at the end of 500 yeas of Empire, slave labour, cheap labour and exploitation. There’s a financial hurricane approaching. All we have seen so far are stiff breezes.

    The second half of the 20th century saw money turned into a High Street commodity, treated as though it had its own consumer value. Everybody forgot that money has no value at all apart from what it can buy. Yet reliance on real industry was replaced by the delusion that wealth can be created by playing with money. A huge “money industry” has been encouraged to grow like a melanoma on Society’s skin.

    Too much money is required for housing. Property prices will have to fall to less than a quarter of their June 2007 levels before there can be anything like long-term financial stability. The lenders who made so much money out of the boom will have to take the hit on negative equity. If that means that a lot of banks fail, then so be it.
    From Didwellwilson:

    The Eton & Oxbridge Mafia are running rings round the UK electorate……I have to say that Cameron, Osborne and their chums have rightly calculated that 90% of the British public are either

    a) Interested in politics but switched off from active participation

    b) Disinterested in politics

    c) Lack the intelligence to understand the issues

    Consequently the UK taxpayer is being ripped off left, right and centre by the establishment. From the taxpayer funded ” sub prime” scam to entice first time buyers to purchase overpriced property, to the cartels controlling petrol and utility pricing, to CCTV cameras watching everything we do, to selling our best companies to foreign multinationals, to conning our young people into a totally inappropriate university education when there are no jobs available at the end of it, to deskilling the workforce into some sort of banana republic sweatshop working for foreign companies……..to lying about the immigration figures, to lying about the inflation rate…..add your own pet theme as well.

    UK plc 2013….a shambles, in awe to smoke and mirrors finance and a Ponzi scheme housing market.

    • To be honest I must admit that it took me until about 2005/2006 to realise that the system was broken, I have made many radical changes to my lifestyle since then but the worst thing is that so many cannot see how things have changed and how much more change is ahead.

    • KFC1404 – They really have run out of road not just here everywhere. The only thing they can do now is create money to try to keep it all going.

      A point not mentioned, paying people benefits while in work because they cannot earn enough in work to pay bills. Or the means testing of pensions because pensioners do not have enough left to live on.

  6. “It’s a big Ask, but we Royalists know that the Firm has the necessary grit to see us through.”

    I’ve been thinking about that and I’m not so sure, They seem to have a problem even deciding upon a name for the newest member of the firm, which does not bode well, so I thought I would help out by suggesting appropriate name(s) for a 21st C. monarch in waiting of a modern, multi-cultural non sexist democracy. I have to admit I offered this suggestion to ‘The Times’ first, (no offence) but they have not seem fit to publish my letter. Yet. Anyway, All Hail:

    Jayron Mandela Mohammed Sharon Dudley Windsor.

    I think I’ve covered all bases including the aspirations of the Middletons and Grandpa. One does one’s best.

      • @highfy – excellent post and very funny.

        Given what the UK’s demographic make up will be in about 60 years time when this baby would likely inherit the throne the name of Mohammed would not be such a bad idea. Instead of being the Prince of Wales he could be given the title Prince Mohammed of Leicester in order to be far more representative of the wonderful vibrant multi cultural community created by our splendid political class. He then could truly become the “Defender of the faiths”

  7. Us anti royalists couldn`t give a shit what they call it. Though one could hope a modern 21st century monarch would have the honesty to include lathraea clandestina in the family crest.
    A long living parasite that grows well in Cambridgeshire seems very appropriate dontcha think?

  8. Vince Cable comes into a lot of flak from the MSM, because he is the only trained and experienced economist in the Coalition. His idea of turning RBS into an Industrial Investment bank , while wholly correct, was lambasted by the MSM at the behest of the City powers that be.
    He understands that the 400 billion pound QE is welfare for the banks,which was exchanged for their pig in a poke toxic assets has only fueled more financial speculation and a false Stock Market rise.
    The City of London does very little investment in productive wealth creating, job creating industry, they are risk averse. They create money ,without asset backing. This is casino chips that cannot be cashed in. The casino teller has left the building, along with Elvis.
    What we need is QE for productive manufacturing industry, to create real wealth and jobs.
    Productive industry creates real Wealth and jobs that pay taxes and circulate money in the local economies. Corporations that are profitable,pay taxes which assist in supporting the social infrastructure. This is a virtuos cycle.
    The opportunities are there for the taking. Our trains are built by Germans and Italians, our buses by Swedes, our cars by Japan, our Policemens BMW motorbikes by Germans, Our North Sea ,oil platforms are built by Norwegians,Koreans, Germans Poles and Yanks.
    Our wealth is flowing out of the country and there are a million youngsters out of work and will never find work. It is not rocket science to suggest we need to invest in our own Industry and create jobs.We need QE for industry,factories,agriculture,fisheries,manufacturing.
    The Bank of England can create 400 billion pounds for their friends at the banks, at the press of a computer button, without any permission from Parliament.
    Why not hit that same button and create money to invest in REAL wealth creating,job creating industry. This money will be repaid and CANCELLED on the taxes levied on workers and corporations.
    Money is not wealth ,it is a means of exchange ,a token, a tool to enable industry.
    Pumping up house prices by Osborne is cynical electioneering, to give a bubble’ feel good’ economy before the next election in 2015.
    He has his Directors job waiting for him ,when he slithers out the door of #11 into a sinecure in the City,while we wallow in our misery of debt and unemployment and a Mad Max society ,such as has happened in Detroit.
    Wake up People , you are being screwed royally.

  9. Actually, I did suggest that this should have been done with the QE monies, instead of propping up busted banks and giving further bonuses to the London Leeches.

    But what to do with this new investment? Infrastructure, for sure, but this does not always give a return on investment. What we need is speculative R&D investment, that gives a decent return and keeps us at the forefront of technology. I am thinking in terms of:

    Reaction Engines – a new form of rocket motor:

    http://www.reactionengines.co.uk

    Bladon Jets – a new type of micro jet engine:

    http://www.bladonjets.com

    Thorium reactors – 2,000 years of energy for the whole world:

    http://www.hud.ac.uk/research/researchcentres/iiaa/impact/thoriumpower/

    New railways will not keep our children in the luxuries to which they have become accustomed, but projects like the above just might….

    .

  10. >>Everybody forgot that money has no value at all apart
    >>from what it can buy. Yet reliance on real industry was
    >>replaced by the delusion that wealth can be created by
    >>playing with money.

    Agreed, agreed and agreed.

    I said this to David Smith of the Sunday Times, back in 2005, and predicted a huge financial crash. Being a renowned ‘economist’, he said that I was delusional and had no idea what I was talking about.

    After the crash, he was talking about a top-level lecture on the reasons for the crash. I reminded him that if he had taken my advice he could have been giving that lecture, instead of taking notes (as a hack) at the back. For some reason, he saw red, and got rather abusive…

    Such is the calibre of the people that lead and govern us.

  11. Pingback: UK LENDING POLICY: Cable, Osborne and Carney lay groundwork for stimulation splurge [24Jul13] |

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