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Funding for Lending = Stealing from the Poor to Pay the Rich

MikeTV

Distinguished Member
This is quite unbelievable. On top of the government already lending to banks at the cheapest rates in history, and £375bn in quantitive easing, the government has now decided that the way to boost the economy is give the banks even cheaper loans courtesy of the taxpayer:

BBC News - Funding for Lending scheme aims to cut loan costs

What this will do is simply make borrowing cheaper for banks, and any increase in availability of mortgages (cheaper or not) will put upward pressure on house prices, further fuelling inflated asset prices. And who predominantly owns all the property assets? Wealthy property owners, of course! And who is financing all this? The taxpayer.

And of course the banks will then be able to make even more money off lending, with higher margins. And they will happily claim it's "new" lending under the scheme, rather than a transfer of loans out of their old scheme into this new one. In other words, no net-increase in lending, just a bit of paperwork and cheaper borrowing for them. They'll be laughing all the way to the...err...bank.

Meanwhile welfare and public services get drastically cut.

The tories are stealing from the poor to pay the rich, as usual.

:suicide:
 

domtheone

Distinguished Member
Gotta keep the house price bubble bubbling:laugh:
 

andyparksy

Prominent Member
Sorry, but every time I read a post by some o you I feel moved to respond, despite the fact you clearly have your own agendas and have no interest in letting things like fact get in the way of that.

So please, how are taxpayers paying for this again? Is this government funding going into this? You do know that the BoE is not the government don't you. You make it soundalike they are cutting back on nurses just to hand money over to banks, and no, before you even dream of quoting me on that in some ill thought out response, THEY ARE NOT.

One posts talks about wealthy landowners getting all the benefit but I think you are about 200 years too late. The vast, vast, vast majority of mortgages are now taken out by the rank and file of society....... There is not some elitist class that control all the land anymore. Sure, some people are more fortunate than others in that they may be able to buy there own place, but (I would say thankfully) many more people are able to do this now.

So I ask again, how are we paying for this? And please don't mention inflation again, we have been through that once already and even some of the biggest supporters of that theory conceded that the banks hoarding money could not push up prices.

These measures are put in place to specifically target the areas that the banks are not lending enough to. I have talked elsewhere about the very real problems we are facing in the banking markets about lack of liquidity (and by that I am talking about liquidity, as in liquidity, as in what banks talk about when they talk about liquidity, being the availability of cash throughout the markets) and this scheme is proof positive of what anybody who knows even the remotest bit about what is actually going on already knows, we have to try and get the banks lending again.

Yes, with more control than previously, and yes, we need to take as many lessons from it as borrowers as they should as lenders. And am sorry, but no matter what has happened I will never subscribe to a notion that a housing price bubble is desired by anyone and also that the risk of a bubble should mean that we stop people from attempting to enjoy all the benefits of home ownership. One post above implies that we should stop lending to stop a bubble forming, but I feel sorry for people with such a view.

And as for the accusation that they can just fiddle the books, call it one thing and pocket the difference, is just beyond the absurd. The systems are not infallible, and the LIBOR scandal has shown that, but it is another thing completely to think there are not incredible levels of procedure and oversight around such schemes. Do you think the BoE is just going to hand out £80bn and just say "we want you to do this with it but we won't check up properly...........".

QE was used as a tool to try and help liquidity. As was correctly mentioned, there is a risk of increasing inflation with it though so cannot be used roughshod (but I personally believe they have managed to use it responsibly so far and there is no current risk to inflation because of it - inflation looks higher than target at the moment mainly due to fuel prices which are not going to be effected by QE). Sensibly then, they have looked at other measures that might increase liquidity.

Yes, there is a real risk that the banks will not pass on all of the base rate savings they will be getting, and in not doing so will create bigger profits ( then again as bank owning taxpayers that is at least partly to our benefit), but that is not the big picture here, which is to get them lending again at all.
 
D

Deleted member 51156

Guest
Why do we wants banks to lend money for house prices which are way above actual value.
Come on anybody really think that terraced house is worth over £100,000 when ten yrs ago it was more like £25,000
 
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MikeTV

Distinguished Member
Sorry, but every time I read a post by some o you I feel moved to respond, despite the fact you clearly have your own agendas and have no interest in letting things like fact get in the way of that.
Andy, please can I give you some friendly advice? Please don't start posts that way as it is incredibly condescending and arrogant. It actually suggests to me that you have an agenda, and have no interest in letting facts get in the way.

Cheers.

:smashin:
 

sidicks

Banned
MikeTV said:
Andy, please can I give you some friendly advice? Please don't start posts that way as it is incredibly condescending and arrogant. It actually suggests to me that you have an agenda, and have no interest in letting facts get in the way.
:

Andy

Unfortunately, you will find that this post is typical of MikeTV's arrogance - hopefully you will ignore him as many of us have learned to do.

He has a very tenuous perception of 'facts'.
:)
Sidicks
 

MikeTV

Distinguished Member
So please, how are taxpayers paying for this again? Is this government funding going into this? You do know that the BoE is not the government don't you. You make it soundalike they are cutting back on nurses just to hand money over to banks, and no, before you even dream of quoting me on that in some ill thought out response, THEY ARE NOT.
I'll try to explain. The bank of england is not a private enterprise. It is only independent from the government in an organisational sense. But it is as much an asset of the UK taxpayer as any other publicly-owned institution. Nobody else owns it.

The scheme is funded by treasury bills, and the lending is guaranteed by the UK treasury (at least in part). The UK government is a net borrower, and borrows at a market rate. The BofE and Treasury is lending to banks (effectively) at a lower rate than it borrows. Subsequently this is a cost to the tax payer. The government is trying reduce it's spending. Any increase in costs affects the government's budget. Budget cutting results in less money to spend on public services.

So that is why it sounds like cutting nurses to give money to banks. It's obviously not as direct and simple as that, but that might be the ultimate consequence. The money has to come from somewhere. Extra borrowing doesn't help, because that adds to the costs too.
One posts talks about wealthy landowners getting all the benefit but I think you are about 200 years too late. The vast, vast, vast majority of mortgages are now taken out by the rank and file of society....... There is not some elitist class that control all the land anymore. Sure, some people are more fortunate than others in that they may be able to buy there own place, but (I would say thankfully) many more people are able to do this now.
True. But the majority buy average properties at relatively low cost. The wealthy have a proportionately far larger amount of their worth tied up in property, and because of this, they stand to benefit more from asset price inflation. In addition, the wealthy are far less likely to be borrowing in order to own their property - so they are not paying any bank interest. They are just riding the asset price inflation, and getting richer, by doing nothing. Wealth inequality today is far higher than it has been for a very long time in history. Asset price inflation will increase inequality still further. We are not far aware from an elitist class controlling all the land - or rather the wealth.
So I ask again, how are we paying for this? And please don't mention inflation again, we have been through that once already and even some of the biggest supporters of that theory conceded that the banks hoarding money could not push up prices.
I don't think I conceded that. I conceded it takes years to filter through into the economy.
These measures are put in place to specifically target the areas that the banks are not lending enough to. I have talked elsewhere about the very real problems we are facing in the banking markets about lack of liquidity (and by that I am talking about liquidity, as in liquidity, as in what banks talk about when they talk about liquidity, being the availability of cash throughout the markets) and this scheme is proof positive of what anybody who knows even the remotest bit about what is actually going on already knows, we have to try and get the banks lending again.
I think you are getting carried away saying nobody knows anything about anything except you. I disagree. The banks can already borrow at historically low rates. Why do we need to make it even cheaper?

We have been through all this. The banks are recapitalising, which is the main reason they are not lending.

You are right that the scheme is intended to encourage them to lend more to consumers and small business. Nobody is disputing that.
Yes, with more control than previously, and yes, we need to take as many lessons from it as borrowers as they should as lenders. And am sorry, but no matter what has happened I will never subscribe to a notion that a housing price bubble is desired by anyone and also that the risk of a bubble should mean that we stop people from attempting to enjoy all the benefits of home ownership. One post above implies that we should stop lending to stop a bubble forming, but I feel sorry for people with such a view.
No need to feel sorry for me. As I see it, we are already in a housing bubble. House prices are many multiples more than average salaries compared with the what they were in the past. Cheap lending will just exacerbate that, and bubbles tend to burst eventually.
And as for the accusation that they can just fiddle the books, call it one thing and pocket the difference, is just beyond the absurd. The systems are not infallible, and the LIBOR scandal has shown that, but it is another thing completely to think there are not incredible levels of procedure and oversight around such schemes. Do you think the BoE is just going to hand out £80bn and just say "we want you to do this with it but we won't check up properly..........."..
The banks are notoriously opaque, and unregulated. We know this as a fact (just look at the Vickers findings). I hope there are safeguards to prevent it happening, but I certainly don't have any confidence that there are.
Yes, there is a real risk that the banks will not pass on all of the base rate savings they will be getting, and in not doing so will create bigger profits ( then again as bank owning taxpayers that is at least partly to our benefit), but that is not the big picture here, which is to get them lending again at all.
Bank margins have consistently increased for decades. There's no reason to suspect it won't continue as long as banks remain behemoths.
 
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MikeTV

Distinguished Member
Andy

Unfortunately, you will find that this post is typical of MikeTV's arrogance - hopefully you will ignore him as many of us have learned to do.

He has a very tenuous perception of 'facts'.
:)
Sidicks
Oh, come on Sidicks! You must admit that the barefaced arrogance of Andy's tone is something that even you can only aspire to?

:D
 
D

Deleted member 13294

Guest
MikeTV, surely you aren't misrepresenting the impact of this to push your agenda of evil Tories?

The wealthy don't benefit from cheaper borrowing as much as the rest of us.

QE negatively affects those with assets. I.e. the wealthy

The wealth gap has actually closed slightly over the last couple of years.

But as others have said, don't let facts get in the way.
 

andyparksy

Prominent Member
Mike, am afraid there is an awful lot of misrepresentation in your response, but am going to take others (and my own advise) and not get drawn into something that is less of a debate and more of a bashing, so will leave you to it.

It's a shame as you obviously have a passion and some intelligence, but IMO it gets lost in the rhetoric.
 
D

Deleted member 13294

Guest
MikeTV said:
Andy, please can I give you some friendly advice? Please don't start posts that way as it is incredibly condescending and arrogant. It actually suggests to me that you have an agenda, and have no interest in letting facts get in the way.

Hey, nice way of marginalising all the excellent points Andy made.
 

BISHI

Distinguished Member
I still prefer the jubilee idea, divide the amount of QE money and that being made available to the banks and give it away as credit notes to tax payers who either put in a bank for x amount of years or pay off some credit or mortgage amount. Banks get their liquidity, tax payer gets something back and personal debt gets reduced freeing up income to spend ( or save) elsewhere in the economy. Seems fairer to me all round instead of pumping money into the banks to improve balance books and giving them a cheap line if credit to profit from,
.
 

sidicks

Banned
I still prefer the jubilee idea, divide the amount of QE money and that being made available to the banks and give it away as credit notes to tax payers who either put in a bank for x amount of years or pay off some credit or mortgage amount. Banks get their liquidity, tax payer gets something back and personal debt gets reduced freeing up income to spend ( or save) elsewhere in the economy.

Seems fairer to me all round instead of pumping money into the banks to improve balance books and giving them a cheap line if credit to profit from,
.

1) For the four million, two hundred and thirty three thousand, six hundred and seventeenth time, QE does not involve 'pumping money into the banks to improve their balance sheets'.

2) Money lent to the banks has to be paid back. Money given to people to invest or pay off debts does not get paid back

...and breathe....
:mad:
 

karkus30

Banned
Lots of interesting points. Trouble is you miss the big picture. The Banks and the Government are playing the system as it exists, they have very few options, one is QE delivered at the top end which hasn't worked, the reason it hasn't worked is that top end QE is usually spent by Government on public projects. The Government has thankfully resisted the urge to do that.

If they had, then the beneficiaries are always the large contract holders ( think G4s ). Once the money is spent it enters the money pot and causes inflation to ripple down from top to bottom. It's this ripple down and the associated havoc it causes that is destructive, people at the bottom of the ladder see prices climbing while their wages stay static. Then starts the Union strikes, reduced spend into small businesses, more redundancies and small business failures until everything eases up. However, as yet we don't know the long term affects up top down QE, because it's gone into the banks, it's like a magma chamber in a volcano ( the BoE must be very aware of that) it can sit there a long time until the moment is right and then it will feed into the economy like adrenalin and that is incalculable.

Now the BoE has realised that there is no funds going back into the economy through this route ( don't think the bank are getting rich on it either it's just a big store of unused debt, like fuel in the tank of a car, it's useless until the engine begins burning it. ). So the option is to inject cash ( increase debt ) at high street level. That's not a bad plan but it's horribly flawed. When the Government use the Keynesian approach of public spend at the top level, it is the Government who spends the money on our behalf. It's then recovered from tax receipts. Inflation increases overall and covers over some of the debt. In other words the debt gets paid down. All things equal there are no defaulters.

In lending to high street customers the banks take on risk. In effect what the Government is trying to do is to search out those who are still credit worthy and put them into debt directly. The hope is that customers spend, businesses flourish and therefore tax receipts increase. It reduces the trickle down effect of inflation as it swaps pGovernment borrowing for direct public borrowing and spending. The big fly in the ointment is that this entails risk in lending, both from borrowers and banks. It means banks have to be scrupulous in lending out money, they will have to lend it as secured loans against property. The idea is it would be used to buy consumer goods and for low level capital expenditure. Now, let's look at that. Do they really think the public and small businesses have huge confidence in the economy and housing market ? Do they really imagine that small and medium businesses want to increase debt at a time when it's clear everyone is actually in reverse and trying to reduce debt.

So, now we have a magma chamber of money waiting to be released at commercial bank level and another huge wedge of cash at high street level. It only takes one spark to ignite that powder Keg and inflation is likely to go through the roof. However I think it's highly unlikely in the short term.

So, what's the bigger picture? It's simple, the current banking and Government system has failed, the public has lost confidence, the days of huge debt and happy spending are over, everyone has a big debt hangover and isn't going to another party for a long time. All the time this goes on the economy is in a frightening position, it's stuck in reverse.

The enormous debt expansion had to roll on and on for things to work. When it stalls then debts get repaid, defaults on loans destroy asset prices, people feel poorer and so spending gets less and less, consequently more businesses fail, more people end up on benefits, tax receipts fall and so Government borrowing keeps increasing.

It's that borrowing that benefits the bankers. Despite the rationing of money, the bankers continue to make profit and continue to become richer, the only problem is very high inflation and Government default, but those Greedy bankers don't worry about that, there are always currencies that can be swapped, as long as an economy is running somewhere they are sitting pretty. They are equally happy when we are all borrowing so it's a win win for the bankers.

The BoE is both part of the Government and privately owned through a complex ownership paper chase. The public don't own the actual bank, the owners are kept secret under the official secrets act but are rumoured to include the Rothschild's and the Queen.
 
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Deleted member 297713

Guest
My view of QE.

The poor loose out, low wage or benefits, not catching up with inflation.

The rich in general, loose out not as much. Some asset will gain in value, i.e. gold etc.

Who does it hurt more? take 20% of the poor's income or 20% of the rich's asset?

Banks initially win. £100s billion to process, a few percent processing fees will do nicely, that's if they don't fiddle.

But, bankers rob the banks.

But the liquidity may end up as PFI to cost the public more............

Winners are the selected rich, bankers, politicans etc
Loosers are everyone else.

Problem is, we have already been robbed in the last 10 years or so. Now it is time to pay. There is no easy solution.
 
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sidicks

Banned
My view of QE.
Oh, this should be good...

The poor loose out, low wage or benefits, not catching up with inflation.
Except of course that inflation isn't currently a problem and the aim is to increase growth.

And benefits are increased with inflation...
:nono:

The rich in general, loose out not as much. Some asset will gain in value, i.e. gold etc.
Some assets may increase in value.

As has been pointed out previously, the real value of assets reduces. As the rich hold more assets they are impacted harder.

Who does it hurt more? take 20% of the poor's income or 20% of the rich's asset?
Except that is a false comparison.

Banks initially win. £100s billion to process, a few percent processing fees will do nicely, that's if they don't fiddle.
£100 billions to process? What are they processing?
:confused:

But, bankers rob the banks.
Yawn, ignorant rhetoric, once again.

But the liquidity may end up as PFI to cost the public more............
How exactly is the 'liquidity going to end up as PFI?'...!!
:facepalm:

Winners are the selected rich, bankers, politicans etc
Loosers are everyone else.
Yawn, ignorant rhetoric, once again.

Problem is, we have already been robbed in the last 10 years or so. Now it is time to pay. There is no easy solution.

Who is 'we' ?

Who has funded a decade of overspending by the government?
:confused:
 
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karkus30

Banned
Eventually I suspect the Government will be forced into a jubilee in order to stimulate the economy, otherwise they may as well hand the reins to labour to increase public projects. If they step on their tail feathers now after all the other U turns they will sink. Until people have vastly reduced debts then the demand for money will remain high ( demand meaning the requirement to pay down loans or keep additional savings ). The Government can either wait 5 years or so in the hope that money demand will reduce, they can give out jubilee payments to reduce short term debt ( people pay off loans and mortgages and those with no debt have extra money......I suspect it would be very difficult to control, a bit like pulling all the control rods out of a nuclear reactor in the hope it doesn't go critical but produces sufficient short term heat ).
 

karkus30

Banned
keydude said:
My view of QE.

The poor loose out, low wage or benefits, not catching up with inflation.

The rich in general, loose out not as much. Some asset will gain in value, i.e. gold etc.

Who does it hurt more? take 20% of the poor's income or 20% of the rich's asset?

Banks initially win. £100s billion to process, a few percent processing fees will do nicely, that's if they don't fiddle.

But, bankers rob the banks.

But the liquidity may end up as PFI to cost the public more............

Winners are the selected rich, bankers, politicans etc
Loosers are everyone else.

Problem is, we have already been robbed in the last 10 years or so. Now it is time to pay. There is no easy solution.

Only if QE is taken up by spending on public contracts which isn't the case.

Assets will fall when there is no money to buy them. It's supply and demand. Inflation only kicks in if money is revolving in the system.

Too simplistic.

Are you talking about banks or shareholders, are you understanding where in the economy QE is introduced.

Bankers don't rob banks, bankers own banks.

The money only ends up in large contractors hand if the Government spends it. As the Government are not spending this hasn't happened. Top end QE has failed to achieve anything which is why they are moving it to the high street.

Nothing has worked. The Banks are making money from Government spend on public services, but only as long as the debt can be repaid by the taxpayer. It's an uneasy position. Politicians ( conservatives )only crave fame, most are independently wealthy anyway. Banks are businesses, I don't get how you see them as anything different. Are you getting confused with churches back in the annals of history. Once you accept they are monopolistic, government supported businesses it will help you see the reality. If you see Banks as some Alien species who have promised us mana from heaven then you will always have clouded vision.
 

domtheone

Distinguished Member
Why do we wants banks to lend money for house prices which are way above actual value.
Come on anybody really think that terraced house is worth over £100,000 when ten yrs ago it was more like £25,000


Absolutely.

I don't want banks getting silly with lending again to start another boom.

I'd rather they stick to strict (stricter) lending criteria to keep a lid on things.

Somebody should sort out the land issues and start building family homes (3/4 bed) for circa 100K, not 200K +.

I passed by a new Barretts development in Long Eaton, Notts the other day.

I'm sure it said prices from £239K:facepalm: for 4 Bed semis. Long Eaton aint exactly the most leafy suberb with loads of rich people either.

I expected it from Labour but i'm disappointed that all parties will not initiate any programme that may cause house prices to fall significantly. Rampant house price inflation is pure evil.

I guess the UK/Banks will fall apart if house prices were allowed to return to normal which must be why nobody wants to contemplate it.
 

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