From City AM:
Under QE the Bank prints money to buy government debt, to push down interest rates. This is meant to stimulate the economy, but it also drives up inflation. In addition, QE has been criticised as it reduces the value of the annuity retirees can buy with their pension pots, attracting the ire of the older generation.(1)
Weale yesterday defended the policy, arguing that young people have been particularly badly hit by the downturn(2) and so need support from the central bank.(3) In particular he noted that almost 10 per cent of young men have been unemployed for more than six months, compared with just over three per cent for men aged 31 to 64.
As a result he feels hitting the old with QE has been justified because it helps the young.(4)
1) The first paragraph is a fair summary, apart from the bit about QE being intended to "stimulate the economy", there is absolutely no reason to assume that it will achieve anything of the sort, like just about everything else the UK government has been doing for the last five years, it's about propping up banks and house prices.
2) Yes, just about everything the government is doing - propping up rents and house prices, taking away benefits, hiking tuition fees, increasing taxes on labour which destroys jobs and makes it disproportionately harder to get a job in the first place, massive deficit spending etc - is designed to fob off as much of the burden onto the young and future generations, so the end result is hardly surprising.
3) The central bank is part of the government, if it wanted to "support" the young , it would be doing pretty much the opposite of what it is actually doing (see long list in 2).
4) Woah! False choice there! This is not a question of sharing a dwindling cake between the under-40s and the over-65s, what's happening here is that the usual suspects are f-ing over both groups simultaneously, the only winners here are the bankers, insurance companies and landowners.
Just to illustrate the point, also from City AM:
MORTGAGE lending climbed to an 11-month high in October, according to data out yesterday, as the Funding for Lending Scheme (FLS) entered its third full month of activity...
Mark Harris, boss of SPF Private Clients, a mortgage broker, said he expected the mortgage market to ease further and further over the coming year. "This bodes well for next year – as lenders saturate the low loan-to-value (LTV) market with a plethora of rock-bottom rates, they will be forced to turn to the higher LTV bracket," he predicted.
The FLS is out of the same stable as QE, it's about reducing interest rates for the benefit of the already wealthy and the Baby Boomers. Apart from the fact that easy credit and high house prices are what got us into this mess in the first place, the only people to benefit from FLS are people who are selling land (because they can sell them for higher prices) and people with a lot of equity who can double on their mortgages and expand their BTL empires.
Showing posts with label Kleptocracy. Show all posts
Showing posts with label Kleptocracy. Show all posts
Wednesday, 21 November 2012
Friday, 24 August 2012
They are getting increasingly blatant about it.
The powers that be are gradually abandoning any pretence that what they are doing is for the benefit of the wider economy. Here are some examples from the current month:
Exhibit One
Chancellor George Osborne has announced that the government's £80 billion Funding for Lending scheme is open for business... The Bank 0of England] will offer the funding at below market rates and will monitor banks' progress in lending it out.
Yup, the banks get our money at 'below market rates' so that they can lend it back to us at market rates, so that's guaranteed profits of 2% x £80 billion = £1.6 billion which can go towards the bankers' bonuses.
Exhibit Two
Mr Pickles is concerned that too much development is being stalled because of economically unrealistic agreements negotiated between councils and developers at the height of the housing boom. This results in no development, no regeneration and no community benefits at all when agreements are no longer economically viable.
Yup, the government has just handed the land bankers (they refer to themselves as 'home builders' or 'developers') massive windfall gains. There are other reasons why construction has stalled, and this move, on its own won't make any difference. The land bankers will still wait until prices start rising again before they cash in, thus getting double the benefit.
Exhibit Three
THE GOVERNMENT has today launched a long-awaited review of the private-rented housing market that calls for councils to waive affordable housing requirements on private rented schemes and for financial incentives to encourage investment into the sector.
The review, conducted by 3i chairman Sir Adrian Montague, makes five recommendations to the government for encouraging large institutions to invest in privately rented homes to help meet demand.
As well as waiving affordable housing requirements, these include making more public sector land available for private rented schemes and setting up a “task-force” of developers to advise the government and set standards.
The report also recommends the government provide equity or debt funding to share the risk and help kickstart investment.
Aha, what do you call it when the government provides the land to build houses on, and provides the finance and bears the risk? Isn't that a bit like 'social housing'? Only with proper social housing, the profits are dished out as reduced rents to the tenants, but with the government's vision, all the profits go straight into the pockets of vulture capitalists like 3i.
Exhibit Four
The Bank of England has defended its policy of quantitative easing, despite admitting that the top 5% of households have benefited the most... "By pushing up a range of asset prices, asset purchases have boosted the value of households' financial wealth held outside pension funds, although holdings are heavily skewed, with the top 5% of households holding 40% of these assets," the Bank said.
Enough said?
Exhibit One
Chancellor George Osborne has announced that the government's £80 billion Funding for Lending scheme is open for business... The Bank 0of England] will offer the funding at below market rates and will monitor banks' progress in lending it out.
Yup, the banks get our money at 'below market rates' so that they can lend it back to us at market rates, so that's guaranteed profits of 2% x £80 billion = £1.6 billion which can go towards the bankers' bonuses.
Exhibit Two
Mr Pickles is concerned that too much development is being stalled because of economically unrealistic agreements negotiated between councils and developers at the height of the housing boom. This results in no development, no regeneration and no community benefits at all when agreements are no longer economically viable.
Yup, the government has just handed the land bankers (they refer to themselves as 'home builders' or 'developers') massive windfall gains. There are other reasons why construction has stalled, and this move, on its own won't make any difference. The land bankers will still wait until prices start rising again before they cash in, thus getting double the benefit.
Exhibit Three
THE GOVERNMENT has today launched a long-awaited review of the private-rented housing market that calls for councils to waive affordable housing requirements on private rented schemes and for financial incentives to encourage investment into the sector.
The review, conducted by 3i chairman Sir Adrian Montague, makes five recommendations to the government for encouraging large institutions to invest in privately rented homes to help meet demand.
As well as waiving affordable housing requirements, these include making more public sector land available for private rented schemes and setting up a “task-force” of developers to advise the government and set standards.
The report also recommends the government provide equity or debt funding to share the risk and help kickstart investment.
Aha, what do you call it when the government provides the land to build houses on, and provides the finance and bears the risk? Isn't that a bit like 'social housing'? Only with proper social housing, the profits are dished out as reduced rents to the tenants, but with the government's vision, all the profits go straight into the pockets of vulture capitalists like 3i.
Exhibit Four
The Bank of England has defended its policy of quantitative easing, despite admitting that the top 5% of households have benefited the most... "By pushing up a range of asset prices, asset purchases have boosted the value of households' financial wealth held outside pension funds, although holdings are heavily skewed, with the top 5% of households holding 40% of these assets," the Bank said.
Enough said?
Subscribe to:
Posts (Atom)