Friday, August 22, 2008

Alice's bubble wrap

In quotes: UK economic growth stalls

They never seem to ask me for a quote! Anyway, here is my favourite:

"We've entered a period of quite acute weakness that's unlikely to be short-lived. There's a good chance we're facing at least two consecutive quarters of negative growth." Johathan Loynes, Capital Economics

How did we get into this debt black hole

"The British people now owe more money than our entire country generates in a year. "

British Families, Drowning in Debt

The Americans have just discovered our debt problems.

"It's 4:30 p.m., and the television in a government-subsidized apartment in Gravesend, south of London in Kent, is showing an advertisement for hair dye. Nearby, a baby is sleeping in a stroller. The TV and the stroller are among the few things that still belong to Maxine King, aside from a mountain of debt."

B&B underwriters left with ‘rump’ stock

So, we won't be seeing anymore troubled banks hawking around a rights issues for a while.

House buyers are demanding 20% discounts on homes as market continues to sink

"Buyers are demanding discounts of as much as 20 per cent on houses, according to the Bank of England. The huge reductions underline the dire state of the property market as the credit crunch shows no sign of abating. In a worrying report, the Bank warned that the dearth of mortgage lending is driving buyers and sellers even further apart when they haggle over prices.
'Uncertainty regarding valuations was discouraging potential buyers, some of whom were reported to require discounts of at least ten to 20 per cent off the asking price,' said the Bank"

Bernanke warning on US inflation

It looks like there will be more of it.

The Final Fate of Fannie and Freddie

Will the two failed GSEs be nationalized this weekend?

Investors quit Russia after Georgia war

"Investors pulled their money out of Russia in the wake of the Georgia conflict at the fastest rate since the 1998 rouble crisis, new figures showed on Thursday. Russian debt and equity markets have also suffered sharp falls since the conflict began on August 8, with yields on domestic rouble bonds increasing by up to 150 basis points in the last month."

The Russians still have a huge pile of reserves; we are a long way from a crisis.

Looking for a bright spot in the housing crisis

Frankly, I didn't feel any more optimistic after reading this post.

Ten Financial Entities On The Brink

Some familiar old names....

If Only Central Bankers Would Hit Bottom

"The credit crisis has been a massive indictment of financial deregulation. Yet the Fed remains a hostage of free market ideology and what Willlem Buiter calls "cognitive regulatory capture." The Fed is too close to banks and industry, and almost seems to lack belief in the importance of oversight."

Britain: Economy hit by inflation and threat of recession

From the world socialist website.


  1. Freddie and Fannie will go this weekend.

  2. It would be interesting to know how much is really owed by Britons - i.e. principal (£1.444 trillion) + interest on the debt. It always amazes me how people forget about interest on loans.

  3. ah yes, money isn't free.

  4. What is with this socialist sh1t?

  5. What do you mean with socialist shit?

    It's a very good and interesting article!


  6. from yesterday

    "Mercifully, there are state owned mortgage companies here in the UK."

    Northern Rock aside did you drop a "no" or am I missing something?

  7. Simon,

    Yes, I meant to say, "mercifully, there are no state owned mortgage companies here; at least not in the Freddie and Fannie mold." As you say, we do have NRK.


  8. OK, so now we know growth was (supposedly) zero in the second quarter.

    But: the first quarter was 0.3, so we all knew it was going to be lower... the statisticians knew o.1 would not be believed, did not want to go to zero straightaway, so guessed (conveniently for their masters) at 0.2. So the downward revision was always coming.

    And guess what - it will finally be revised down again, and we will discover retrospectively that the 'technical recession' was here all along.

    I doubt that any competent statistician would say growth could be measured precisely enough for 0 or 0.2 % , or 10.2% for that matter, to be meaningful anyway.

    B. in C.

  9. I meant -0.2% at the end there. Oops. B . in C.

  10. A friend of mine (not untypical) pays £1400 per month mortgage on a £200k bog-standard 3 bed semi.

    Comparing wage slips I was shocked to see he earned 22k since April. This was achieved through knocking his socks off with overtime - not because he wants to, but because he HAS to.

    He's one of the lucky ones. At least the overtime is still there for him.

    We won't even need particularly high unemployment for tens of thousands of people to be pushed over the edge into bankruptcy. But I think that mass unemployment is coming too.

  11. "Buyers are demanding discounts of as much as 20 per cent on houses"

    Grrrrrr. What-part-of-market-price-don't-these-fools-understand? The value of the house is what someone will pay.