Comments on: Bank of England Allowed ‘Crazy Borrowing’

By: cityunslicker

cityunslicker — Mon, 29 Dec 2008 10:14:48 +0000

I write a UK financial focused blog Capitalists@Work. The UK too had a huge property boom just like the US and also, whatever Super Trooper may assert, has the world financial centre in London; home of securitisation. As such, when the property credit bubble collapsed the UK was left nursing huge losses at its Banks. All of whom had gorged on CDO’s, CLO’s and the rest. The Financial Services sector was also 35% of the UK economy. It’s collapse is really hurting.

As to why we did not need Fannie mae etc, the answer is the Socilaist government just loved all those extra tax revenues from banks and oil companies these past years, and no doubt they enjoyued the banking lobbyists no expense spared approach. It has employed over a million extra state workers to non-jobs for the most part and has won 3 elections on the back of this strategy. State workers in the Uk almost all vote Left (labour).

Finally, in 1997 (when labour came to power) the UK split regulatory Governance between the bank of england, the Government’s Treasury department and a new organisation called the FSA. Confusion has become the norm as these three agencies argue about who is in charge of what and who has regulatory oversight where. The net effect is they dropped the ball big time between them.

And so come 2009, the UK finds itself saddled with terrible problems.

By: wally

wally — Thu, 25 Dec 2008 13:51:34 +0000

The blunt instrument he needs is some realistic modern measure of M. It used to be understood – the amount of M was a big deal. M now includes money created by every storefront mortgage lender, every 60 to 1 hedge fund leverager and every tacky credit card issuer. When there is too much credit issued, it cannot be paid back – that is a pretty fundamental basic truth. But today we pay no attention to how much credit is floating around. If everybody on earth committed themselves and 2 more generations to a lifetime indentured servitude we would chalk it up to a fantastic GNP and bankers would dance in the streets.
There is a certain point where debt rises too high and we have a credit collapse, debt-deflation, call it what you wish, and no modern economist seems to have a clue where that level is… and we all suffer for their ignorance.

By: mikeinpanglao

mikeinpanglao — Thu, 25 Dec 2008 13:33:29 +0000

@usphoenix

True, the few in power want more not less. Having said that, the central banks give the few in power even more chance to manipulate the open market. Getting rid of the central banks and letting the markets set rates will take away some of their power. Why leave rates too low for too long? The open markets would not allow it to happen as long as the central banks did.

By: usphoenix

usphoenix — Thu, 25 Dec 2008 01:13:20 +0000

@patient renter

Letting the market set interest rates sounds ideal, per Hayek. But exactly what went wrong with oil and gas prices this year. Everyone should have known those prices were not sustainable. Not with healthy economies.

I wish I could remember the exact history. Seems to me monopoly was a big deal some time back during the Depression. People in power were setting prices.

Speculating. I find it very scary, and un-free market, that oil prices can rise so IRRATIONALLY. Unless rational thinking has to do with a few players pushing global prices where they want them.

I am going to guess, once again, that SMART MONEY bailed leaving dumb money to pick up the pieces.

In our reality, there is no such thing as a free and open market. We live in a world of billions of people where the wealth and power are controlled by an amazingly small number of people. And those few want more not less.

By: danm

danm — Thu, 25 Dec 2008 00:50:09 +0000

BR: Not until late 2005 — prior to that, they could not buy sub-prime.]
—–
But they greased the wheels in the prime market. And we’ll be finding out how well that was priced very soon.

By: super_trooper

super_trooper — Wed, 24 Dec 2008 21:46:51 +0000

Obviously W. is the worst modern US president. Is Tony Blair the worst modern UK PM? Forcing the country into the messs in Iraq and financial failure. Soon the pound will be lower than the Euro. I thought the UK would have abandoned the pound for the Ecu standard back in early 90s. Will you finally make up your mind about joining Europe or US? You can’t be special friends to everybody. Clearly central Europe can manage without the UK, the UK has been on a slippery downwards slope since WWI. Isn’t it time to focus on rebuilding the industrial base again? The financial center has moved to Frankfurt.

By: Mannwich

Mannwich — Wed, 24 Dec 2008 20:26:12 +0000

True Whammer, but then you factor in the debacles of Iraq, Afghanistan, Katrina, torture, Guantanamo, and a whole host of others I won’t get into because I don’t think it’s necessary to make the point, and W is still by far the worst president this country has ever had.

By: Pat Shuff

Pat Shuff — Wed, 24 Dec 2008 20:09:54 +0000

The pound sterling’s namesake, 12 troy ounces fetches $123.72 at today’s closing Comex.
A silver dollar, unavailable from the Mint can be found on Ebay for twenty. Correlation
is not causation but the US and Britain do share that in common. Because all societal and
political forces conspire on the side of the temptation for a free lunch, the independent central
banks are to be the watchdogs over currency and price stability. Given the fresh outbreak
emanating from the CDC, the Center for Deflation Control, an epidemic of quantitave easing,
it seems the watchdogs have become the foxes peddling Kentucky Fried out the henhouse
window. Robert Mundell has some suggestions for the lonesome medium of exchanges,
bereft of their requisite traveling companions unit of account and store of value.

By: Whammer

Whammer — Wed, 24 Dec 2008 19:11:25 +0000

@leftback, I think you have a good point; this was something that was bugging me on a thread a week or two ago.

It is pretty clear that blaming the CRA is complete nonsense. However, as much as I would like to lay the blame at the footsteps of GW Bush, Worst President Ever, I think the UK boom/bust tends to take the starch out of my argument a bit.

By: Mark E Hoffer

Mark E Hoffer — Wed, 24 Dec 2008 18:53:16 +0000

yes, of course, the whole of the G-20, for the most part, and then some, all in a MMORPG of Economy Ramp n’Crash2.0 (beta version)..

Game Over, and all, to the ‘locals’, a different excuse to shill, but, luckily, all with the same ’solution’–”Global Governance, for a Global Problem”

1 – 8 of 14,200,000 results for Global Governance
http://www.icerocket.com/search?tab=web&fr=h&q=Global+Governance&x=61&y=20

The Centre for the Study of Global Governance
is a leading international institution dedicated to research, analysis and dissemination about global governance. Based at the London School of Economics, the Centre aims to increase understanding and knowledge of global issues, to encourage interaction between academics, policy makers, journalists and activists, and to propose solutions.

The Centre, established in 1992 by Professor Lord Desai, has pioneered research into globalisation. Today it is led by co-directors Graham Wallas Professor of Political Science David Held and Professor of Global Governance Mary Kaldor.

HQ’d in London, whowoodanode? saves on Flying, no?

The Bank of England is the central bank of the United Kingdom. Sometimes known as the ‘Old Lady’ of Threadneedle Street, the Bank was founded in 1694, nationalised on 1 March 1946, and gained independence in 1997. Standing at the centre of the UK’s financial system, the Bank is committed to promoting and maintaining monetary and financial stability as its contribution to a healthy economy.
http://www.bankofengland.co.uk/about/index.htm