Growth,money and banks


Recent poor figures from Germany show that the Euro malaise has spread to the motor economy of the zone. Growth remains very slow and unemployment high in many countries within the single currency area.  Money growth is almost non existent, confidence  levels are low and  new credit constrained.

The European Central Bank is putting the commercial banks through further stress tests. These may be necessary, but they are taking a long time. During this process banks are reluctant to lend additional money, for fear of their ratios remaining poor or weakening further. The ECB is offering more cheap loans to the banking system, but all the time they have limits on their balance sheets it is difficult for them to take full advantage of this to lend more money on to the commercial sectors.

The German authorities are still keen to avoid full scale Quantitative Easing in the zone to offset the weak bank position. All the time the commercial banks are under tough control any monetary experiment will have limited favourable impact on activity.

Meanwhile, in both the US and the UK self sustaining recoveries are underway, with commercial banks now capable of  lending more money to facilitate sensible investment and consumption. In Japan where they are undertaking another huge quantitative easing they are still struggling to get decent money growth owing to the problems of their commercial banks.

In due course the UK and US will be able to put interest rates up a bit to make savings more worthwhile. In the meantime at least the US and UK have ended quantitative easing and  do have growth and a better record on generating new jobs. The Euro zone still has not worked out how to recycle or limit the huge German balance of payments surplus, nor how to transfer enough  money from rich to poor, or how to create a commercial banking system which can finance a decent recovery.


  1. Lifelogic
    October 9, 2014

    Indeed but in the UK we have banks still charging huge margins to companies more credit worthy than they are, while paying .01% or similar on deposits. There is still no real competition in the banking sectors, their current customers are having to pay for the banks past errors (both in excessive fees and through taxes) when their bond holders and shareholder should be.

    One of the very large banks is simply not interested in commercial investment property lending under about £10 Million as the regulatory and capital hurdles are too onerous.

    The sector is still a huge mess with lack of competition enabling excessive margins/fees and over regulation and poorly designed regulation having replaced under supervision.

    1. Mondeo Man
      October 9, 2014

      Lifelogic – The people lapped up the banks’ shennanigans – they loved the high house prices and credit it brought.

    2. APL
      October 9, 2014

      Lifelogic: “charging huge margins to companies”

      Huge margins to everyone else too.

      2% top rate to lend in an ISA,
      4% mortgage rate.
      15% unsecured credit card debt

      Just about to cash in my ISA and pay off the remainder of my Mortgage.

  2. Derek Hoxha
    October 9, 2014

    “In due course the UK and US will be able to put interest rates up a bit to make savings more worthwhile. ” I bet you 50p it will not be in your lifetime John. The government continues to deficit spend and levels of personal debt remain at record levels. While the “recovery” produces loads of low skill low paying jobs. Where is the increased aggregate demand going to come from that lot? Meanwhile the biggest five American banks have bigger balance sheets and a bigger exposure to derivatives than they did in 2007. You know its only a matter of time before the whole thing blows up again.

    1. A different Simon
      October 9, 2014

      Never mind the U.S. , it is a disgrace that U.K. banks which have been bailed out by the taxpayer are sill buying and acting as counter parties to synthetic derivatives with no social value .

      Even with ZIRP and being able to charge huge margins on loans the U.K. banks have not returned to the lending business and I don’t buy it that it is only due to rules regarding capital requirements .

      Our banks don’t serve business . All they are interested in is financialisation and govt’s just stand by and let them devastate the country and world economy .

  3. Lifelogic
    October 9, 2014

    I see that Teresa May has said that women should celebrate the “different approach” they take to male colleagues in the professional world. Speaking at the launch of a new female mentoring scheme in London, today, she said: “It’s important to recognise that women may approach work in a different way to men. But that’s equally as valid an approach as men bring to a role. And it can achieve just as good results.

    Sounds like what the BBC would call evil “gender stereotyping” to me. Meanwhile more ageism drivel, it seem we cannot any longer advertise for “recent graduates” and might have to interview 88 year old people as potential brick layers and roofers lest we get sued for ageism. Even if the employer knows the job would far better suit a 19 year old and they have no intention of employing a pensioner. What a waste of everyone’s time.

    Do the government and the BBC want everyone to be employed in the legal, litigation, bureaucrat and regulation industries? We cannot get rich just suing each other after all.

    1. Roy Grainger
      October 9, 2014

      Off topic, but you are right that May statement can itself be regarded as an example of the gender stereotyping it is supposed to be attacking. Here is another similar example, the Guardian favourite George Monibot said this in an article:

      “If wealth was the inevitable result of hard work and enterprise, every woman in Africa would be a millionaire”

      This is quite simply a racist statement – it ascribes a characteristic (hard-working) to an entire racial group (African women). It is the exact equivalent (paraphrasing Jeremy Clarkson) of “All Mexican men are lazy”.

      So why was the Guardian prepared to print it ?

      1. Lifelogic
        October 9, 2014

        Ah well, to the Guardian it is clearly only one way street. Perhaps, in a rather sexist manner, the Harriet Harman/Cameron/Guardian/ fake enforced “equality think” people actually do think women are inferior & need all the help they can get. Including all this positive “gender stereotyping”.

        Personally I think women are quite capable of making their own way very successfully a victim culture actually harms them. They make their work/life balance/family choices as we all do. Perhaps they (on average) prefer to study certain subjects & jobs over others, or not to seek some jobs with long hours, shift work and often away from home jobs. But surely that is their right, should they wish to.

        You make you own choices on pay, convenience, job satisfaction, travel, stress, compromise. One cannot really expect it all ways.

  4. Narrow Shoulders
    October 9, 2014

    Germany is still growing albeit slowly – Britain has a housing market where foreigners can put down their (sometimes illicitly earned) cash and contribute to massivly growing house price inflation while funny money created by the bank of England and other banks gives those who can raise an unrealistic deposit the means to add more inflation to the merry go round.

    Quantitive easing has increased asset prices, devalued savings and contributed to a huge, mostly hidden increase in the cost of living in order to allow government to continue its profligacy. I acknowledge that a government and country with its own currency can never go bankrupt but there are costs to the populus of quantitative easimg and encouraging greater productivity is a wiser approach.

    Life is not all about topline figures

    1. libertarian
      October 9, 2014

      Narrow Shoulders

      I suggest you actually look at the cost of housing in Germany ( hint its higher than here as are German rents ). 70% of Brits own their own home 54% of Germans

      1. Narrow Shoulders
        October 10, 2014


        But what has been the change in Germany over the last ten years?

        Has the proportion of income spent on housing in Germany risen as exponentially as over here.

        Legacy costs are already factored in to the standard of living. It is changes that hurt and consequences of government feathering vested interests’ nests hurt more

  5. Richard1
    October 9, 2014

    I doubt the stress tests really test for a downturn, its another game of pretend. Leverage is still far too high in the European banking system (inc the UK). Nor is it clear there is a proper resolution regime for failed banks which will not in any circs involve public subsidy. The more the authorities try to control the banking system through micro-management by regulation the more infantilised and inured to the market the banks will be. We need a proper free market in banking. Much more disintermediation of banks through new sources of financing, much greater development of capital markets – a sounder source of finance for growth than bank lending.

    Meanwhile we see the result of political postuting to ‘gaol bankers’ is going to mean no-one wants to be a director of a UK bank! The baleful effect of the bank bailouts (Brown’s in the UK being Europe’s worst) is still an enormous cost in terms of lost opportunity and continues to be used to justify bad policies.

  6. Ian wragg
    October 9, 2014

    Do you really think the Germans want to recycle their surplus. It’s not much good lending it to their southern neighbours if they can’t afford to buy Mercedes and BMW cars. The Euro is bankrupting countries and it’s time it was gone.

  7. Mike Stallard
    October 9, 2014

    “The German authorities are still keen to avoid full scale Quantitative Easing in the zone to offset the weak bank position.”
    You betcha! For us, the Somme, for them inflation. All along they have been guaranteed that their banks would not be pressurised into inflation. Now, like many other lies and half truths, that has been revealed as a dam that has busted.
    If I were a German I would be livid.

  8. Andyvan
    October 9, 2014

    One problem with putting up interest rates is that it puts up government borrowing. The abject failure to reduce the massive deficit and the resulting huge interest payments make it highly unlikely that interest rates will be raised by any meaningful amount, it would be too risky for the beneficiaries of the current house of cards economic system.

  9. alan jutson
    October 9, 2014

    If you tax people to the hilt, then they have less to spend on goods and services.

    Less goods and services bought, less manufacture and staff needed to produce such.

    Less people in work, even more less people able to spend, etc. etc.

    Germany finding to their cost that whilst they can produce goods, there are perhaps less people able to purchase them outside of their own Country.

    1. Martyn G
      October 9, 2014

      Quite right but, Oh Dear, I fear that you have pushed my pedant button!

      In lines 2, 3 and 5 for ‘less’ read ‘fewer’…..


      1. Lifelogic
        October 9, 2014

        Only Waitrose left now with “10 items of fewer”, perhaps even they only have basket only queues – its just like that now init.

      2. alan jutson
        October 10, 2014


        No problem at all.

        I am certainly not a wordsmith, but I am solvent, unlike our Country.

  10. Tad Davison
    October 9, 2014

    All true John, and the former head of the Fed, Alan Greenspan, didn’t seem too upbeat about the future prospects of the EU either when interviewed on the BBC’s Newsnight programme last night. Astoundingly, (although perhaps we really ought to expect such things from the BBC) the Newsnight presenter seemed incredulous when he suggested that the problem in the EU hadn’t been fixed and wasn’t effectively over two years ago, as was widely reported. Most of the contributors to your blog could have told him that!

    We have just witnessed the finish of the conference of perhaps the most EU-loving party of all, the Lib Dems, and they’re still saying what a great institution the EU is. Little wonder they want to get better and speedier services for those with a mental impairment. Perhaps any cognitive therapy should begin with the words, ‘Are you a Lib Dem, and do you think the EU will ever work for the people of Europe, as its champions suggest? If so, how, and why?’. That should at least give the health professional an inkling as to whether the patient has a grasp of reality and needs a course of treatment.

    Tad Davison


    1. Bob
      October 9, 2014

      “the most EU-loving party of all”

      Their current leader is most accomplished at pleading ignorance of and apologising for any Lib Dem misdemeanours that come to light.
      #MichaelBrownDonation #CyrilSmithTribute #Hancock #Rennard

    2. Denis Cooper
      October 9, 2014

      I’ve noticed that the LibDems have been holding some kind of meeting. I’m not sure why, it would have been best if it was a meeting just to wind up their party but I don’t think it was; however apparently in a speech Clegg had the nerve to say that it is “un-British” to oppose the subjugation of Britain to the EU.

      I shall refrain from making too much of Clegg’s own foreign origins, as it is quite possible for the child of foreign immigrants to grow up as a loyal and patriotic Briton just as it is quite possible for a child to grow up as a traitor despite having parents of old British stock; but it shows the grotesque perversity and weirdness of the mentality of LibDems that they should have chosen a party leader who sees opponents of the EU as being “un-British” when their sole purpose is to defeat its systematic assault on British sovereignty and national democracy.

      1. Bob
        October 9, 2014

        Clegg has “Common Purpose” written all the way through him like a stick of seaside rock.

  11. formula57
    October 9, 2014

    The situation in the Eurozone is grotesque and those running it seem content to blight a generation in pursuit of their Euro dreams. It is the fact that the architecture of the Eurozone exacerbates the crisis and prevents solutions that calls into question its morality.

  12. John E
    October 9, 2014

    Does anyone have any bright ideas yet about how and when to unwind QE?

    1. agricola
      October 9, 2014

      Yes stop spending and stop borrowing to pay for favoured political schemes. To be specific:-
      Cut Overseas Aid from £12 Billion to £2 Billion.
      Leave political Europe and save £12 Billion on membership fees plus an unquantifiable amount on British Industry and our Life choices. Being able to shop for food in the free World should reduce the weekly grocery bill for a start.
      Ditch much of the Green Agenda. Insulating ones home is beneficial but building windmills and signing unsustainable contracts for nuclear energy is just insane.
      Reduce the cost of building houses by doing so in factories. Just think what you get in terms of technology in a £25,000 car and that includes all the free choices of colour, engine size , and alloy wheels. Now try to justify the cost of concrete, bricks, tiles and wood which takes months to erect and costs a fortune.
      While maintaining free at the point of delivery, privatise the mechanism of providing a health service. Do not let government write the contract because they have already proved just how incompetent they can be. Employ people from industry who know the price of a bandage.

      Government likes low interest rates because it can then borrow. Couple it with a dose of inflation, quantitative easing , they are on a winner. They can then borrow again to cover the reduced value of the original debt. Try it in the real world and see how far you get. If you are interested in what successive governments have been up to since dropping the gold standard read Douglas Carswell “The End of Politics”. In a vote for honesty in politics I wish him well today.

    2. Bob
      October 9, 2014

      The first step would be to free ourselves from the EU.
      Once we regain control of the UK we can take steps to eliminate the causes of our dysfunctional economy, such as open borders, the CAP, fisheries and welfare tourism and green crap. We should aim for a budget surplus.

  13. Bert Young
    October 9, 2014

    The North/South differences make it impossible for the ECB to issue a conclusion that would satisfy all parts of the EU . Germany is – and will remain , the dominant influence and , as long as it continues a policy of restraint , the relaxation needed to boost the economy of the weaker countries , will not happen . Introducing the Euro as the equality factor was the biggest mistake ever made ; it has done nothing to unify Europe and bring about a ” One for all and all for one ” mentality . The more recent UKIP shift in Germany shows how difficult it would be for their wealth to be released to the rest of Europe , even if this did happen , it would not result in a spread of sustained growth – there are too many countries looking for something for nothing . I am amazed that international dealers and the market in currencies do not reflect this sham ; it only goes to show why the atmosphere of uncertainty will continue to shake the attitude of investors . We must pursue a policy of diversification in our export drive and keep away from any form of carrot dangling from the EU .

  14. Leslie Singleton
    October 9, 2014

    One thing one never reads about in articles like this – literally never any reference at all – is whether the banks’ (that is individual lenders’) credit analysis of companies, indeed countries, wanting to borrow indicates that it is a prudent risk to lend. It comes as no surprise that lenders are very leery at present. Funding, though important, is another story, though one would never guess it. I remember puzzling over this years ago when recycling the oil money was all the rage–again a total disregard in the media for anything resembling credit analysis.

    Reply I just assume that all new lending will of course be put through sensible tests to ensure repayment. There are plenty of opportunities for banks to lend more money to people and companies that can use it well and repay it.

    1. Leslie Singleton
      October 9, 2014

      Dear John–We are not, certainly not wholly, talking about something like mortgage lending where “sensible tests” covering a myriad small secured loans like peas in a pod can be applied and one can rely on the (non existent!) Law of Averages. Bigger, sometimes huge, perhaps club or syndicated, probably unsecured, Loans involve judgement based on a Business Plan and knowledge based on a relationship and possibly satiated appetite for a particular type of Loan and are simply not made in the way you suggest. Apart from anything else they are all different. I have the greatest difficulty understanding what funding has got to do with it. The clearers make it explicitly clear to depositors that the reason they pay derisory interest rates is that they do not need, indeed do not want, the money; is the Interbank market as dead as all this implies?

  15. Denis Cooper
    October 9, 2014

    Meanwhile, somebody at the Bundesbank objects to a proposal from EU Commission President-designate Juncker that the ESM should be used to finance €300 billion of infrastructure investment through the EIB, the European Investment Bank:

    It will be recalled that the ESM, the European Stability Mechanism, was set up on the basis of an EU treaty change which Merkel demanded in the late summer of 2010 and which Cameron agreed to give her without asking for any other EU treaty changes in return, and the 2012 Act of Parliament to approve it is here:

    “European Union (Approval of Treaty Amendment Decision) Act 2012”

    And that there was no UK referendum on this EU treaty change, because Hague had written fine print into his “referendum lock” law so he could block a referendum.

    In the Explanatory Notes to that Act, the section on the Background starts thus:

    “4. The Treaty amendment Decision came about as a result of the need for a permanent mechanism to be established by the Member States of the euro area to safeguard the financial stability of the euro area as a whole. Prior to this, EU Member States had already established two temporary mechanisms in May 2010 to deal with the emerging sovereign debt crisis … ”

    “5. At a meeting of the European Council on 28 and 29 October 2010, the Heads of State or Government of the 27 Member States of the EU invited the President of the European Council to consult members of the European Council on a limited treaty change to Article 136 TFEU to provide for the establishment of a permanent stability mechanism, the European Stability Mechanism (“ESM”) to replace the EFSF and EFSM.”

    “8. In December 2010, the European Council agreed to amend Article 136 TFEU. The Treaty amendment Decision, adopted on 25 March 2011, adds a new paragraph 3 to Article 136 TFEU, which provides that:

    “3. The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.””

    But now apparently Juncker has proposed that this “stability mechanism”, which would only be activated “if indispensable to safeguard the stability of the euro area as a whole”, and then any “required financial assistance” would be “subject to strict conditionality”, should in the meantime be used to fund infrastructure projects.

    As the UK is not a party to the ESM treaty it could be said that it is no skin off our nose if the eurozone states agree to use its funds, or more accurately its funding capacity, for a purpose which is entirely different from that originally intended and repeatedly stated; on the other hand, it could be said that the UK Parliament was induced to approve that EU treaty change under what now prove to be false pretences, and moreover a purpose which could well be illegal under the EU treaties.

  16. majorfrustration
    October 9, 2014

    An economic/social question – with the German economy so strong(still) and with a continued surplus on current account why is it that immigrates bypassed Germany over the last ten years or so and headed for the UK? Could it be that the Germany benefit system is not aliened to ours and if so why?

    1. John E
      October 9, 2014

      From the BBC news site:
      Beyond Turkey, a number of people were hurt when clashes broke out in the German city of Hamburg after hundreds of Kurdish demonstrators in Hamburg held a rally against IS militants.

      Some 400 Kurdish protesters fought with a similar number of radical Muslims, police told German media. Demonstrators, some carrying knives and knuckle-dusters, were eventually separated by police firing water cannon.

  17. behindthefrogs
    October 9, 2014

    Despite the UK’s relatively healthy position, the government must take action to maintain that position. In particular this should include a relevant tax regime.

    We should thus be aiming at import replacement and increasing exports. For example we should be reducing employers’ NICs even if this means increasing VAT to pay for it. This is much more important than reducing corporation tax and be equally attractive to companies looking to relocate to the UK.

  18. bigneil
    October 9, 2014

    Whatever the banks do they will be guaranteed safety by a government looking after their pals. After the last bailout what was the first thing that happened? – they paid themselves massive bonuses. So they get themselves a bonus no matter what they do. I’m sure that the rest of the population would like to see themselves looked after so well. As the two sayings go “It’s not what you know, it’s who you know” and ” friends in high places”.
    The euro has created massive problems but the EU wants “our” money to throw about and stuff in “their” pockets, finishing us financially. No doubt if asked for proof of how it has benefitted us a whole lot of iffy figures would be produced, but this is all about control of the English/British/UK economy – from EU HQ. It will not end well – except for Juncker and his mates ( which Cameron is doing his best to become).

  19. fedupsouthener
    October 9, 2014

    Maybe if Merkel hadn’t rushed headlong into the renewable front things might be better. Europe as a whole is obsessed with going ‘green’ and it has been to the detriment of competition in the manufacturing markets. Many big businesses are moving to the USA where prices are lower due to fracking for energy. Germany’s renewables industry is in disarray and their prices for energy are escalating at an alarming rate. Something to watch out for here in the UK where Scotland is out of control on that front. Subsidies for these industries have to come from somewhere and it is the consumer that is paying a high price and set to rise even higher by 2020.

  20. Denis Cooper
    October 9, 2014

    Also meanwhile, the Irish government plans to save itself €2 billion by early repayment of its IMF loans, but some in the Bundestag would like that to be made conditional on Ireland raising its corporation tax, presumably to match that in Germany:

    “Germans want Irish tax reform in return for deal on IMF loans”

    As usual the Irish minister carries on pretending to the Irish people that the Germans are their best friends and they will get their money back, but when dealing with Europe you need to act strategically.

  21. Peter
    October 9, 2014

    Northern Europe is being swamped by southern european economic migrants. The sooner we can relieve the weight of of EU membership from our ankles then we can continue to accelerate away. London is fast being overwhelmed with over 400,000 Italians and Spanish applying for NI numbers in the last 6 months. Plenty of jobs here, that should/would be taken by Brits if a life on benefits were not preferable. Rather than scurry away from their failing countries; ungratefully supping at the cup of British growth these people should vote/fight for free market strategies in their own countries and against the big government, welfare policies which characterise both Ed Milliband and PIGS country malaise.

    In other news: in depth political discussion re:Syria, with that well known defence specialist and IR expert Richard Madeley on the BBC Daily Politics today. Seriously!!!! A platform for Jo Coburn to express Guardian/BBC ‘think’ , at least no misquoting of you today John!

  22. Douglas Carter
    October 9, 2014

    …’Recent poor figures from Germany … Growth remains very slow’…

    They will be desperate to attract those very large numbers of unqualified migrants currently camped out in Calais then – I have it on good metropolitan elite advice that it’s exactly what an economy such as Germany urgently needs?

    Two significant EU problems solved in one fell swoop, yes?

    1. Narrow Shoulders
      October 9, 2014

      Germany’s economy is of course different to ours with its emphasis on technology and manufacturing. Unqualified immigrants not welcome unfortunately. “Move along now plenty to pick up in UK’s service economy”

    October 9, 2014

    I rather like this explanation published by Bloomberg regarding the European Debt Crisis
    Without a United States of Europe in all regards particularly in monetary and, fiscal policy then the EU seems destined to fail. But surely this was known by all parties, all countries right from the start?

    But outside the banking question, the botched talks held by the EU with Russia which was due to gain membership of the Union in 2024 I believe just about finished the European adventure. Obviously I was not privy to those talks. Very little detail has been revealed about them except from the EU side hinting that Russia was negotiating fiercely because it figured it had an ace with its rich oil and gas fields. It was written in Business newspapers that actually Russia’s energy, mineral resources combined with its educated workforce would turn the EU on Russia’s admission to the world’s leading super-power.
    Anyway it looks like the dream turned sour and we must look to the Fed for pointers for evermore.
    Mr Carney only agreed to work in his present position for three years and not the five and more he had been offered. I feel it will be a catastrophe when he leaves both because of his undoubted expertise but also the timing. There are nasty problems in the European economy which I feel will not be apparent until AFTER the UK and French national elections.

  24. petermartin2001
    October 9, 2014

    ” The ECB is offering more cheap loans to the banking system, but all the time they have limits on their balance sheets it is difficult for them to take full advantage of this to lend more money on to the commercial sectors.”

    I’d say this is not the correct way to understand bank lending. Banks will always find a way of making a loan if they calculate the loan to be safe. All banks are happy to lend to their own central banks, or buy government securities, for very low rates of return because there’s just about zero risk. That wouldn’t necessarily apply to countries in the EZ who effectively use a currency over which they have little control. There is a risk in lending to them.

    So governments, or their central banks, can lend out as much money to commercial banks as they like, but they aren’t going to re-lend it out to the people and companies in the economy who may need it, because the perceived risk is too high. They aren’t doing anything that you or I wouldn’t do. We’d all hesitate to make the sort of loans which bank managers routinely are asked to approve.

    In any case, there needs to be a fundamental re-appraisal of the degree to which governments rely on the two main levers of control which they have at their disposal. That is fiscal and monetary policy. The conventional wisdom, for at least the last 20 years, has been that fiscal policy needs to be kept as tight as possible, whereas monetary policy should be kept as loose as possible. That’s led us to where we are now, with interest rates close to zero and constant fretting about a government’s deficit.

    Well, interest rates cannot go any lower. Fretting about deficits, constantly trying to reduce them does nothing other than send economies spiralling downwards into recession and unemployment. It doesn’t even achieve the desired effect of reducing them. Cuts in spending simply produce reductions in taxation revenue so the deficit never closes.

    Commercial bank lending is of course important for us all, but it should not be over-relied upon to regulate any economy. When the lending is occurring, economies are stimulated. Spending goes up. Profits increase. Unemployment falls. However it rarely lasts for more than a few years. As the debts in the economy build, the lending slows and all the benefits quickly unravel as boom turns to bust as we all know to our cost.

    There has to be more reliance on the fiscal control lever too, or else what we saw happen in 2008 will reoccur time after time.

    Reply You really should study the figures if you wish to pronounce sensibly on these topics. The USA and the UK which have done most to cut their deficits have also grown the fastest of the advanced countries. The US cut more from public spending and its deficit earlier than the UK and started its recovery earlier.Money is not particularly loose in advanced countries, despite the substantial QE in the US, UK and Japan. The main reason is the decision of the authorities to tighten banking regulation making it difficult for banks to lend more.

  25. ian
    October 9, 2014

    Cuts & growth, more cuts to come at councils & counties and government. Growth, food banks, migrants, student loans and more debt as the 10 year note going under 2%. We at the top are doing great, never had it so good. Don’t worry about climbing the ladder because we at the top have taken it away. Germany people on the move, they know when they are being had. Spain referendum to go ahead, France breaking to the right, Italy down the pan and so go Europe. In the USA it all smoke and mirror like hear,

  26. The PrangWizard
    October 9, 2014

    A little off-topic, but I would like to see our government and participators breaking the strangle-hold the US has over our and others money transactions. As I understand it, for example, they control credit and debit card usage through their control of Visa/MasterCard and so on. We must take a more independent line and many other issues. They can threaten and blackmail anyone they choose at the moment. We can’t be sure we will always be on the same ‘side’ as them in a dispute.

  27. ian
    October 9, 2014

    The government has had 9 months to deal with Ebola, but it was only this Monday that light went on in one of the elite heads and said that are balance sheet could be effected by it, two days later they are in full swing. The people of the country did not get a mention only their balance sheets. 7 years of zirp and they tell us that sky is blue with interest rates at 0%, QE still rolling over, cuts still coming, wages not going up and get out there and borrow and put some more money in are pockets. I got to hand it to you john you talk a good one, that if we are really good you might let us having little bit more interest on are saving some time in the future, that is if any one got any saving left. Nice one john.

  28. ian
    October 9, 2014

    I understand that Ebola patients will be disbursed all round the country so it can spread, instead of being quarantined in one place, great move, Little money to be spent on it, all money going to fight wars and terrorist, expect the army to be in full swing by the new year collecting black body bags from around the country. No competent person in charge of this. NHS staff have not a clue about this and do not expect to see your MPs they will be in hiding till the clear with the elite.

  29. Gary
    October 9, 2014

    Excuse me if I don’t share your optimism. An economy built on QE(which by the way is still in effect), a monster property bubble and record TOTAL debt, has never been the basis for sustainable economic success.

  30. ian
    October 9, 2014

    News black out all week on to night 2 by election, usually that all they talk about

  31. ian
    October 9, 2014

    Government controlling the media

  32. Mark
    October 9, 2014

    I note several newspapers report that the expected cost for the Hinkley C nuclear power station has already ballooned to £24.5bn before a sod has been turned (I believe one paper is forecasting a cost of £34bn). This is a sum sufficient to buy 40GW of CCGT capacity, compared with the 3.2GW planned output of the station. The escalating cost can only mean that the investors will ask for a yet higher tariff than that already agreed once construction is advanced enough to create a large pool of sunk costs.

    Whilst I have nothing against nuclear power in principle, the UK economy cannot withstand state sponsored malinvestment on this scale. The project should be halted now, and replaced with much more affordable CCGT capacity. Of course, that will also entail ending the meddling in electricity markets that DECC are so fond of, and scaling back the other expensive energy investments in wind, solar and tidal.

  33. Steve Cox
    October 10, 2014

    John, you wrote that, “The Euro zone still has not worked out how to recycle or limit the huge German balance of payments surplus…”

    Few people seem to have realised that it’s no longer just a German problem, it’s a major concern for the whole Eurozone. Roger Bootle of Capital Economics highlighted it in this article recently:

    To me this was the surprising part:

    Of course, from the beginning of the single currency there were significant imbalances within the eurozone, with large surpluses for Germany and the Netherlands offset by large deficits in Spain and several of the other smaller economies.

    What has happened over the last few years, however, is that the surpluses run by Germany and the Netherlands have remained constant, but the group of weaker peripheral countries – Portugal, Italy, Ireland, Greece and Spain – has moved from small deficits to a surplus. The primary driver behind this change has been Spain. As recently as 2007, it was running a deficit of 10pc of GDP. The balance is now nearly zero.

    The upshot is that the eurozone’s combined current account surplus is now about double the size of China’s, and roughly equal to the combined surpluses of all the oil-producing countries in OPEC.

    So nowadays it’s really a case of the Eurozone still has not worked out how to recycle or limit its own huge balance of payments surplus…

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