Comments on: The Central Banks spook the markets http://www.johnredwoodsdiary.com/2007/08/10/the-central-banks-spook-the-markets/ Conservative Party Member of Parliament for Wokingham Wed, 19 Nov 2008 13:48:53 +0000 http://wordpress.org/?v=2.6.2 By: Steven_L http://www.johnredwoodsdiary.com/2007/08/10/the-central-banks-spook-the-markets/#comment-4678 Steven_L Sat, 11 Aug 2007 12:11:24 +0000 http://www.johnredwoodsdiary.com/?p=409#comment-4678 In 1979 much of what is now Labour heartland was blue. Twenty-odd years ago folk up my end of the country were marching on London in protest at pit closures. I blame all this easy money and consumerism partly for the political apathy that has swept the nation. Hardly anyone actually cares about anything these days. Up my way they all blindly vote Labour bacause their parents did or because they read the Daily Mirror. A recession on Gordon Brown's watch might change a few things politically - which is why he'll just borrow even more money and pump it into pointless projects to keep alive the illusion of prudence and prosperity. Worldwide tightening of monetary policy? Don't worry, Father Brown won't let the world economy affect you, get back to your reality TV and credit card funded shopping sprees. Turn on the Brown Broadcasting Commissars and watch some more house-porn. Everything will be alright while Father Brown is looking after you. In 1979 much of what is now Labour heartland was blue. Twenty-odd years ago folk up my end of the country were marching on London in protest at pit closures. I blame all this easy money and consumerism partly for the political apathy that has swept the nation.

Hardly anyone actually cares about anything these days. Up my way they all blindly vote Labour bacause their parents did or because they read the Daily Mirror. A recession on Gordon Brown’s watch might change a few things politically - which is why he’ll just borrow even more money and pump it into pointless projects to keep alive the illusion of prudence and prosperity.

Worldwide tightening of monetary policy? Don’t worry, Father Brown won’t let the world economy affect you, get back to your reality TV and credit card funded shopping sprees. Turn on the Brown Broadcasting Commissars and watch some more house-porn. Everything will be alright while Father Brown is looking after you.

]]> By: Chatterbox http://www.johnredwoodsdiary.com/2007/08/10/the-central-banks-spook-the-markets/#comment-4652 Chatterbox Sat, 11 Aug 2007 01:01:11 +0000 http://www.johnredwoodsdiary.com/?p=409#comment-4652 Interesting article which explained the situation to those of us who do not have a degree in economics while still having to balance the personal finances. Sometimes in the greater scheme of things, the dynamics which effect the world markets or the UK economy get a headline on the 6pm or 10pm news bulletins, but fail to make an impact on ordinary voters because the story never goes into the level of detail which explains how it will eventually impact on them. One thing that worries me most about political parties is way that none of you are prepared to get too honest with us about the unacceptable level of personal debt in the country. What does the platitude "its manageable" mean? For a lot of people they think it means that they are safe to carry on as they are because there is a safety net all ready on standby to catch them with a soft bounce. How about a bit more honesty about the level of uncertainty about the credit boom? Would it be so damaging if we issued a more stark warning that we need to reign in the spending, pay off debts like credit cards or loans to protect the more important debt like mortgages? I know, it does not send a positive message and might negatively impact on the economy, but by allowing the economy to carry on with this almost decadent access to debt risks a 10 year boom turning into Armageddon rather than a bust. Glad I bothered to see this coming and took the appropriate measures, others won't but will still feel like the victim and look for a culprit to blame. Reply: Opposition parties have held debates on how there is too much debt in the economy, pointing out that at some point higher interest rates and a weaker economy will leave too many people struggling to pay the interest let alone repay the principal. If the Bank of England decides to really squeeze inflation out of the system it will mean more personal and corporate bankruptcies. Interesting article which explained the situation to those of us who do not have a degree in economics while still having to balance the personal finances.
Sometimes in the greater scheme of things, the dynamics which effect the world markets or the UK economy get a headline on the 6pm or 10pm news bulletins, but fail to make an impact on ordinary voters because the story never goes into the level of detail which explains how it will eventually impact on them.
One thing that worries me most about political parties is way that none of you are prepared to get too honest with us about the unacceptable level of personal debt in the country. What does the platitude “its manageable” mean? For a lot of people they think it means that they are safe to carry on as they are because there is a safety net all ready on standby to catch them with a soft bounce.
How about a bit more honesty about the level of uncertainty about the credit boom? Would it be so damaging if we issued a more stark warning that we need to reign in the spending, pay off debts like credit cards or loans to protect the more important debt like mortgages? I know, it does not send a positive message and might negatively impact on the economy, but by allowing the economy to carry on with this almost decadent access to debt risks a 10 year boom turning into Armageddon rather than a bust.
Glad I bothered to see this coming and took the appropriate measures, others won’t but will still feel like the victim and look for a culprit to blame.

Reply: Opposition parties have held debates on how there is too much debt in the economy, pointing out that at some point higher interest rates and a weaker economy will leave too many people struggling to pay the interest let alone repay the principal. If the Bank of England decides to really squeeze inflation out of the system it will mean more personal and corporate bankruptcies.

]]> By: apl http://www.johnredwoodsdiary.com/2007/08/10/the-central-banks-spook-the-markets/#comment-4643 apl Fri, 10 Aug 2007 20:11:55 +0000 http://www.johnredwoodsdiary.com/?p=409#comment-4643 Hedge funds like many modern investment vehicles are a bit, how shall we say, iffy. Hedge funds like many modern investment vehicles are a bit, how shall we say, iffy.

]]> By: Steven_L http://www.johnredwoodsdiary.com/2007/08/10/the-central-banks-spook-the-markets/#comment-4639 Steven_L Fri, 10 Aug 2007 17:55:21 +0000 http://www.johnredwoodsdiary.com/?p=409#comment-4639 Didn't Warren Bufett call these credit derivatives 'weapons of financial mass destruction' in 2003? I know you're not the biggest fan of the BBC's output, nor am I at times, but http://news.bbc.co.uk/1/hi/business/2817995.stm You see, I would have taken heed of that warning, just like I think 'Hmm, this John Redwood is a clever and knowledgable guy, I wonder what he has to say, maybe I can learn something.' But banks will not care about this as long as they get bailed out by the ECB surely? Reply: Banks that have lent too much money to people who can't afford the mortgage or to funds that have bought mountains of dodgy debt have no easy way out of the problem - they are all trying to sell on their dodgy debts to each other. They are hoping for a bail out. Didn’t Warren Bufett call these credit derivatives ‘weapons of financial mass destruction’ in 2003?

I know you’re not the biggest fan of the BBC’s output, nor am I at times, but http://news.bbc.co.uk/1/hi/business/2817995.stm

You see, I would have taken heed of that warning, just like I think ‘Hmm, this John Redwood is a clever and knowledgable guy, I wonder what he has to say, maybe I can learn something.’

But banks will not care about this as long as they get bailed out by the ECB surely?

Reply: Banks that have lent too much money to people who can’t afford the mortgage or to funds that have bought mountains of dodgy debt have no easy way out of the problem - they are all trying to sell on their dodgy debts to each other. They are hoping for a bail out.

]]> By: Steven_L http://www.johnredwoodsdiary.com/2007/08/10/the-central-banks-spook-the-markets/#comment-4630 Steven_L Fri, 10 Aug 2007 12:18:28 +0000 http://www.johnredwoodsdiary.com/?p=409#comment-4630 Isn't all this good for hedge funds that saw this squeeze coming though? You say that this should come as no surprise to readers of your blog, it doesn't, and if I was filthy rich I'd have stashed all my cash away in hedge funds with what I considered to be sensible positions as soon as you (and others) alerted me to the impending squeeze. As you said the other day 'prices work'. Financial whizz-kids have been warning everyone about these credit derivatives for long enough, I'm surprised so many people are being caught out. If Warren Buffett offered me some financial advice I'd listen to him. Isn’t all this good for hedge funds that saw this squeeze coming though? You say that this should come as no surprise to readers of your blog, it doesn’t, and if I was filthy rich I’d have stashed all my cash away in hedge funds with what I considered to be sensible positions as soon as you (and others) alerted me to the impending squeeze.

As you said the other day ‘prices work’. Financial whizz-kids have been warning everyone about these credit derivatives for long enough, I’m surprised so many people are being caught out. If Warren Buffett offered me some financial advice I’d listen to him.

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