Wednesday 25 August 2010

A Cauldron Boiling. Thunder. Enter the 3 Witches.

Here at Schloss C@W, we've been anticipating autumn for some while, and what will happen when everyone gets back from their holidays. It won't all be good -

... powerful trouble / like a hell-broth, boil and bubble

Hmm, mustn't get carried away.
Long-term readers of this blog (Sid and Doris Bankers ?) will know my views on dominos - they fall slowly, and another of them is rocking gently. Yes, S&P have downgraded Ireland again.

"we believe that the government’s support of the banking sector represents a substantial and increasing fiscal burden, which in our view will be slow to unwind"

Now which other government hereabouts might need to think carefully about that issue ? Actually, it probably wasn't top of George Osborne's worry-list this summer, and there were some modestly encouraging results published in July from the UK banks. But they weren't so robust as to be proof against any weakening of retail activity or default-rates, still less a full-blown double-dip. Martin Weale, newly-appointed to the BoE's monetary policy committee, has thrown some eye of newt and toe of frog into the brew: yesterday he

"identified rising unemployment, falling house prices and a renewed banking crisis as the threats to the economy".

No rest for the wicked, eh George ? Harpier cries, 'tis time, 'tis time !

And so, back to Ireland: I shall be off to Cork again shortly (hip-flask at the ready, see comments here) and will report on local sentiment in due course.


Update: tragedy looms and Steven L has done the Shakespearean business good & proper, see 5th comment below


Steven_L said...

In the poison’d subprime throw,
Rates, that under teaser loan,
Days delinquent thirty-one,
Shoddy housebuild’s going to rot,
Throw it in the melting pot,

Housing bubble, toil and trouble,
Sovereigns burn, banks buckle!

Nick Drew said...

excellent Steven ! more !

I shall be looking to my laurels

Steven_L said...

Loans advanced for equ’ty stake,
In the caldron boil and bake,
All the crap we canny flog,
Off the balance sheet unclog,
Salesmans talk, investors sting,
Deals all signed and we’re ker-ching,
For the central bank there’s trouble,
It's a bursting credit bubble,

Housing bubble, toil and trouble,
Sovereigns burn, banks buckle!

alan said...

it is going to be a long winter for all except a minority who have all the wealth.

Steven_L said...

OK Nick - full version here

Laban said...

"rising unemployment, falling house prices and a renewed banking crisis as the threats to the economy"

Average UK wage 24-25K (and falling?).

Average UK house price 175K ?

Meaning that someone on an average UK wage has zero chance of buying a house on one wage - something that was commonplace in the 1950s/60s/70s ?

And apparently the UK has grown "richer" since then ?

One wage house purchase being the prerequisite for raising children outside of welfare - what Steve Sailer calls 'affordable family formation'?

Did you see the historic US house price graph in Alphaville ? They are still well above historic averages. Ours must be higher still.

House prices need a 50%+ drop to become affordable again. Is the calculation that outstanding mortgage loans are so high, and the damage to financial institution so great were the underlying assets to halve, that the bubble must be kept inflated at all costs ?

Nick Drew said...

something else to give pause for thought, Laban - this graph (which seems to be copyright otherwise I'd stick it up) showing US bank failures, at higher rates this year than 2009 (& much higher than 2008)

I know there are many small banks in the US, but still ...