CRASH2: In wake of RBS paper, Domesday predictions grow


One swallow doesn’t make for a Summers wake-up call

Larry Summers told Americans on a live TV interview this morning, “It’s sort of OK to say in twenty-ten or twenty-eleven that the world’s had a nasty shock, but when things are still giving off all the wrong signals in twenty-sixteen, well….it’s not just a transient thing….For me, it feels like we’re going to pay for things we really should’ve done at least a decade ago”.

Asked if he thought the US Fed would have to volte-face on its rate hike, he answered “Of course it will….people too often talk about the US being immune to the rest of the world, but we aren’t…..”

On commodities, he was equally forthright: “You know, you can talk around all the contributory factors, but it’s pretty obviously a lack of demand.”

Across the Pond, a successful and very highly regarded UK futures trader told me, “I agree with Summers about the US, but there are plenty of us who see just as big a pantechnicon heading for Osborne….the latest figures for UK industrial output were bad, bad, bad – Sterling is down everywhere….that can be a bonus for exports, but not when there just isn’t the money or confidence to buy in the first place. Osborne has flunked the test”.

Citing Brexit as a further element in Sterling’s wobble, the FT yesterday bluntly headlined ‘Britain’s industrial base is in recession’.

After the Summers interview, Bloomberg Go had an asset management big wheel on the show, who told them “It’s going to be bloody until at least the Autumn, that’s our view”. Asked what he thought of Monday’s RBS paper, he said “They’re right – sell everything, at least for the time being.”

The recent decision by prominent London hedgie Nevsky to close down was accompanied by a typically frank statement from its owners: “With our focus being largely on the emerging markets, we do not see any way we can offer clients reasonable returns on their money. This isn’t about lost money, is about giving it back to our clients before they lose it”. In no sense is Nevsky anywhere near insolvent: it was a straightforward case of watching the weather and deciding to up sticks to somewhere else.

Three days ago, Summers wrote a piece in The Washington Post (not his favourite newspaper) effectively telling the Fed it should accept the insanity of rate hikes and get radical while there’s still time. Although he often sounds like it, he is not a GOPher damning the Democrats in an election year: his low rating of Janet Yellen in private is well known, but this isn’t sour grapes about not getting the job: of late he sounds genuinely concerned about the state of the Union, and has already publicly endorsed Bernie Sanders appeal for “root and branch reform” at the Fed. This is a horse Larry Summers has been riding for the lest few months, but I would rate the Bloomberg session his most outspoken statement yet.

There is other news too suggesting people being cautious in sight of the end game. A feisty London estate agency specialising in rich City and overseas multinational clients told The Slog yesterday evening that “All sectors of our niche are dead. Nobody is even looking”. A similar operation has said the same about Paris.


We’ve heard it all a hundred times before, although my view remains that had we harkened a hundred times ago, we wouldn’t be in an almighty mess now. But this start to the year in terms of both market nerves and Establishment opinion is different. Twelve months ago, some major players were offering up bromides about ‘lost value’ and ‘false hopes’ here and there. What we’ve got now is serious warnings from those who have clearly decided, “Enough with the up is down and blue is Tuesday bollocks – if it lands, flaps, wobbles and sinks like a dead duck, chances are it’s a dead duck”.

Notably absent from Cameron’s PMQ exchanges this lunchtime were the words ‘strong economy’ and ‘further proof that our long-term economic plan is working’. Mind you, for the second week running, also absent was a single answer to any of the questions put to him by the Opposition Leader Jeremy Corbyn. It was also a rerun of last week’s bunfight in that Cameron tried to recover his position with puerile gags. Perhaps the BBC is now even running repeats of Prime Minister’s Question Time: either way, one increasingly feels that Dave’s toffee-nosed cracks are misjudging the mood of the country.

Unusually for me, I have two predictions for you. Observe closely as, over the next three weeks, the Osborne-Cameron-May machine turns the bad news to advantage by stressing that a falling Pound and lousy exports are down to Brexit fears…..and this isn’t the time to be out in the cold blah blah blah. Hat-tip to Camerlottery for that one.

Second, read some class-act Indian newspapers and websites. India doesn’t have the same problems as China, it just has different ones that are more urgent. I think we are going to see India on the ER radar before too long.

Earlier at The Slog: Hoooo let de bomb off?

34 thoughts on “CRASH2: In wake of RBS paper, Domesday predictions grow

  1. If this is so bad, why are we not seeing panic now? All the signals are saying ‘Sell, get out if here’ but, doesn’t seem to be occurring…you’d think that there would be more movement in the markets?


  2. “that can be a bonus for exports, but not when there just isn’t the money or confidence to buy in the first place”

    With UK running a £10B import deficit in “Goods” is there readily any significant quantity of any “Goods” from UK manufacturing for consumption either home or overseas except certain very high value (£10K plus) “luxury” items?


  3. Facinating blog today on Armstrong Economics.

    Marty says Camoron is a morally corrupt politician. Now we all know that but this is the first time I have seen an international writer talk that way.

    He also says Goldman Sachs could lose the Presidential elections for the first time in 30 yearswere it to be Sanders vs Trump. Nice thought but it wont happen, of course.

    Finally, he thinks the security services are behind Le Pen in next years French elections comparing them to the situation under Mollett in 1956 when they greased the wheels for De Gaulle’s return.

    All good fun.


  4. If shipping is collapsing, rail traffic collapsing, transportation products down, car sales down, the gadgetry fads, the markets down…. and, credit is becoming very costly for private investment, oil price collapse is causing bankruptcies across the oil sector (and everyone that bet on them). Many companies make their money betting on the currency markets, not their own product. Lots of people and companies are only making the minimum payment on their collective credit cards.
    And the 6 media outlets continue to tell me my eyes are lying and my ears don’t work.


  5. When quoting Larry Summers’ views on the future course of US interest rates, don’t forget his track record. The last time he held such a clear view on this subject he was President of Harvard, and decided to place a huge bet for the account of their endowment fund, which cost them over $1bn.


  6. Our manufacturing base was destroyed during the Maggie Thatcher phase and it is not coming back .So a devalued pound is not going to make an iota of difference to exports. We are now, as Napoleon stated, a nation of shopkeepers and kebab kiosks.Get used to our glorious future.


  7. Agreed, SL. There have been many delusional politicians but she did the most damage. One could attempt to be philosophical and say that she was ‘of her time’ but I can’t help but think of her as not just misguided but downright spiteful.


  8. Salford I think our manufacturing industrial relations destroyed manufacturing. I think then tried to put it right but lacked the imagination and skill to do so . She had the benifit of North Sea oil revenues to bully and defeat but not rebuild.


  9. Nothing wrong with making all immigrants pay to be in eu – same as the existing prisoners do already.
    Bring on the referendum to exit the circus of continental twerps.
    The world is our oyster when we can shake off the shackles of Brussels ignorant beuarocrats.


  10. @NWF spot on .. like Lagarde criticising the French once she was at the IMF , having previously been Finance Minister in France . Uk not the only country to be de-industrialised . France has lost around 2 mn industrial jobs over past 30 years and gained 2 mn€ civil servants ……not hard to work out what that does to the finances .


  11. OAH
    Here it is… a tale of traitors whichever way you look at it.

    Cameron is just an example of how morally corrupt politicians are no matter what country we talk about. Cameron promised a referendum on exiting the EU because he never in his wildest imagination contemplated that the British would leave the EU. So what does a corrupt politician do when he fears losing an election? He rigs the game. Cameron is now looking to postpone the referendum because the British people want out as a majority. The sexual assaults by refugees in Germany are just the tip of it. With another 3 million coming in 2016, Merkel is destroying the very fabric of Europe. Cameron is trying to postpone any referendum until 2017 in hopes that something will happen so he can just forget about the whole thing.

    The bankers, who are also corrupt, have tried to scare the British people by saying that if the Brits exit the EU, nobody will do business with them. Toyota, on the other hand, came out and bluntly stated the truth — they will, of course, continue to work with the UK. The British banks are in league with Cameron and are full of SHIT. This is the same scare tactic the banks played on the Scottish exit, and we saw similar nonsense in Greece when they told the people they would “starve” because most food is imported from Europe.

    Cameron has revealed his untrustworthy character by trying to postpone any exit vote. This is exactly the same corruption that sparked the civil war in Rome and compelled Julius Caesar to cross the Rubicon. Why? Because politicians of the time manipulated the calendar to postpone elections if they knew they would lose. They took advantage of the fact that the high priest, Pontifex Maximus, would arbitrarily adjust the calendar by inserting the leap days at his discretion. Solution? Bribe the high priest. The Senate fled and Caesar assumed the position of Pontifex Maximus and created the fixed Julian calendar to end the arbitrary manipulation by priests thereafter. Cameron is following the same pattern by postponing a vote he knows he will lose.

    God help Britain. Their choice is between a communist (Corbyn) who thinks implementing a maximum wage solves something, or Cameron who sees himself as a European before being British.


  12. Frankly, what do you expect from a man who probably shouldn’t even be prime minister.
    I don’t believe Cameron won the general election in May. The polls weren’t wrong; the result was faked by his shadowy establishment buddies.
    Few want to contemplate this possibility, because few want to contemplate that much of what they have been told about our ‘democracy’ since childhood is propaganda, and that they have been thoroughly deceived.
    It makes no difference whether we leave the EU or not, given the rotten state of our own politics..


  13. No doubt the energy companies will be in the news shortly.

    High profits, high energy prices where wholesale price is not being passed on. Couple that with old people dying because they can’t pay the bills.

    Its the annual couch potatoe whinge and do nothing about it. Pick one and move on mass and watch them run scared. MLK would be proud. Looking forward to revisit this again next winter.


  14. @Lampitt,
    That old chestnut that industrial relations/trade union disputes destroyed our Industrial base is rolled out again. Dig deeper and find the root cause.
    In 1971, the US exited the Gold Standard , thus desroying the Bretton Woods agreement. This removed the brakes on the private banks creation of credit and money was created at an accelerating rate. This created high inflation in the UK in the region of 18% and of course high house prices.
    The trade unions were trying to protect their wage packets and of course industrial unrest was a result in the late ’70’s and ”80’s.
    The root cause of inflation and industrial unrest was never brought to the surface.This was the unalloyed greed of the bankers.
    The MSM is not there to educate the citizen,it is there to lie and obfuscate the issues in the interests of the elites. One has to go beyond the news/views from the daily papers to find truth.


  15. 2> Salford Lad A concise reply extremely heavy with substance, IMO. Thank you.

    Add to that the total US Cold War paranoia of any politic to the left of Uncle Sam’s own, everything else in other words. You begin to see the truth in the alleged CIA “Finger & Pie” work in UK politics during the Wilson era. A Very British Coup, confirmed to my eyes.
    I used to think antithetical thinking was overly simplistic. Seems the US have made it simpler by not thinking at all. Fits in wonderfully in my own personnel assent of power narrative. Touch of the Romans about it. We all know what happened there.


  16. Salford Lad,

    one can put the strength of the trade unions to one fact: weak management.

    Britain still suffers from this today, indeed it is worse because the politicians are now weak – and corporations filled to the gunwales with weak-minded managers can force their will on them. Weak-mindedness usually exhibitis itself in the use of muscle: brute force.

    The tale of David and Goliath has never been more appropriate. Our problem is that we don’t have any canny young lads ready to risk everything on one pebble.


  17. @Gemma: A simple and cheap way to get free press advertising? Should enough people in Halle dig out their old DM notes and coins, then Kaufland can easily change them to Euros, with a trip to FFM where the BuBa still accepts DM.


  18. Lampitt

    That is why Germany still has industries, and Britain doesn’t. Unless the British ones are owned by foreigners… like the Germans and the Japanese.

    What did the British fight a war for? To be overrun by their enemies during times of peace ;)


  19. Gemma
    You do still talk a big lot of nonsense. Are you still dating the kommandant? You seem to speak his book every day.


  20. Asset stripping seemed to start in the 1970s too. Viable businesses being bought and then closed down and everything sold on for profit. I’ve seen many businesses shut down so the land could be used to build housing: cinemas, clubs, shops and every time a loss of diversity and a resource.


  21. “That is why Germany still has industries, and Britain doesn’t. Unless the British ones are owned by foreigners… like the Germans and the Japanese.

    What did the British fight a war for? To be overrun by their enemies during times of peace ;)”

    Tit for tat crap again… What happened in both cases was identical. The majority of the populous got stuffed. In D you got to work at much reduced wages & business took the money. In the UK the government changed the working profile by closing down areas of the job market & people had to take different, lower paid jobs. Different route, same result.

    Just bloody exchange phone numbers & get it out of your integrated system. (If permissible)The pair off you are ruining myr “Doom & Gloom”. 8^)

    (Coat in hand JW)


  22. Ricoh, there are clear rules stated by Mr Ward about personal comments.

    He has said himself that he does not like them, and I see it now as his duty to do something about your conduct.


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