Saturday 18 March 2023

Banking Crisis - again ...

Commodities down on banking stress
Here at C@W we pride ourselves on having spotted the "2008" banking crisis in the summer of 2007, when two German banks went down, followed by Northern Rock - all three being canaries in the dank, dirty coalmine of culpably fatuous and irresponsible banking strategies being practised deep underground, that turned out to be systemic.

So what's happening now?  It doesn't look good.

  • Silicon Valley and Signature
  • Deutsche Bank (again) and Credit Suisse
  • risk to economic recovery due to reduced bank lending
  • likely response of the authorities: back to QE! (interest rates coming off already ...)
Thus far, the current banking woes have been accompanied by a pronounced downtick in commodity prices.  If, on the basis of economic contraction, that persists then maybe inflation doesn't just take off again with QE ... and people are forever pronouncing on the Chinese property market ... but I'm no good at predicting these macro phenomena.  (What's more, I don't know who is.)  Are you out there, CU?!



E-K said...

He doesn't seem to be. You're doing a sterling job, ND.

Matt said...

The inflation genie is out of the bottle.
Public sector workers demanding anything up to 35% pay rises (based on some extremely dodgy calculations of what their salary would be now if the country wasn't a basket case over the last 15+ years).
Taxes up to pay for the monumental failures by the political class.
Net Zero to make the CV-19 support costs look like a bargain.

The actual productive part of the economy will have no choice but to charge more and pay workers more in response.

Round and round the inflation merry-go-round will spin...

djm said...

Downtick in commodity prices

Already evident in spot oil which has immediately fed through into lower prices at the fuel pump.

Said no-one

dearieme said...

Here's interesting news. Apparently after giving the impression that fedgov would bail out all bank depositors in the US, Mrs Yellen has backed off and said they'll only rescue depositors at banks run by friends of hers. (I paraphrase but that's the gist of it.)

Will there now be lots of e-runs on little banks this weekend? The video here is well worth watching: she's unimpressive but the chap questioning her makes his points well.

E-K said...


35% ie Junior doctors. Currently they are on £15 per hour and are expected to pay memberships, insurance, validations and student debt (£100k on top of debt accrued NOT being paid for six years.) There is also the need to run a car as placements are hither and tither and often not easy to get to.

I have just come back from visiting a shared house of doctors living in tiny rooms with shared bathroom and kitchen.

What's 35% of naff all ?

Matt said...

E-K - everyone has a reason why they need more money and so inflation will rip.

Junior doctors will go on to earn far more than most other people over time. Just about everyone starts with a low salary and earns more over time - should doctors be different?
Would they agree to more money now and capped salaries later? Or less pension? I have my doubts - like most, they imagine the magic money tree will keep delivering.

That's the problem - we haven't increased productivity to generate more money to pay everyone what they believe they are worth. We've borrowed more money per capita than the majority will ever contribute back in taxes etc. Basically we're bust and when the music stops we'll be the one without a seat.

Sackerson said...

Workers aren't asking for pay rises so much as a limit to their real-terms pay cuts. Mortgage rates are soaring (if only we were like the US used to be, with long-term fixed rates) and energy prices also.

If only there were some way of slashing debts.

E-K said...

Matt - Unless doctors become consultants, no, they won't earn much more over time and even then there will be 13 years of low to zero pay to make up for and missed years on the mortgage ladder.

The private sector has managed to do better with a busted economy and pays Deliveroo/Pret workers a better hourly rate than Junior doctors (including fourth and fifth year post grads) with far less responsibility and zero study time.

E-K said...

... and student debt bigger than my first mortgage even in real terms.

Anonymous said...

To be fair, E-K, with a child in roughly the same position as your son, they start at about 28k but it goes up something like 6-7k next year, 6-7k year after etc etc - so while it's not as good as it used to be it's still not poverty wages.

My child is just discovering that the money that hits the bank each month is no longer spending money - that rent, electric bills, insurance, MOT work etc has to be budgeted for.

Spent most holidays over the last 5 years doing HCA work, lowest rung on medical ladder - all pay went on holidays while M&D paid rent and bills. Suddenly feels living standard dropping and is aggrieved!

My bank account is looking healthier now, but of course the next outlay will be a house deposit...

Anonymous said...

ND - the Chinese property market is very unlike the UK one as much as I understand it. But just as in the UK, I doubt China will let it collapse.

Last time property really took a hit in UK was maybe 90-91, a few people in negative equity then. But every contraction since then its been "cut interest rates and print money" - dot-com bust, 2003-4, 2007-8 - why should this be much different? And they've actually got rates off the floor so there's room to keep static if not to cut.

God forbid we go back to those dark days of house prices being 4x median income! People could afford them and women could raise children!

Anonymous said...

All this talk of banks going under has made me twitchy so I went along to see what my cash would purchase in terms of property. Not much but I've put down a deposit on a 2-bed. For the same cash 6 years ago, I got a 4 bed - so is this "good inflation"?

Also had a chat with the Estate Agents to see what the 2-bed would rent for and it's an eye popping amount. Can't see how anyone would pay it, but the EA says they've already moved on similar properties at similar rates in the last month.

So if having cash makes you twitchy, buy assets.

E-K said...

Anon 8.38 To be fair I don't think the wage claim is realistic. They've deliberately over-shot in order to meet in the middle.

The ANZaCs are tempting our junior doctors like crazy. £90k pa Australia.

E-K said...

Even the Royal Navy will take them on £60k pa for starters, Lt Commander within a year of recruitment. They are well undervalued in the NHS.

formertory said...
This comment has been removed by the author.
formertory said...

"well undervalued......."

Perhaps so. Aren't we lucky that our health services are delivered through feckwit Marxist central planning, under the charge of wise politicians who understand what the little people want and need (or perhaps more accurately, what they'll be allowed to have), bending their mighty intellects to our protection and well-being.

I can't even look at pictures of the current crop of Epsilon Semi-Moron politicos without feeling a burst of visceral anger. Not good for me at all!

Caeser Hēméra said...

On Credit Suisse, you may enjoy this tweet...

Caeser Hēméra said...

Banking is a little weird, confidence is such a massive aspect, although that's probably the flip side of the use of arcane and obfuscatory instruments. If the rationality is stored in the middle of a multidimensional Escher maze, don't be shocked if the animal spirits take charge.

Not looking good though, confidence look to be low, and whilst I don't expect a crash as big as last time, it might be a bit rough.

Caeser Hēméra said...

The NHS...

I don't buy the inflationary risks from upping wages in the NHS, the private sector has been chucking rises out there, and that would have a much more direct impact as firms are forced to juggle margins and price rises. A lot of the inflation we're seeing/have seen are a consequences of post-covid supply chains, QE and Russia's moronic invasion.

There's also that working conditions play a part in this, the government has been warned many times about staffing issues, and have ignored them. It's one thing to be asked to suck up the governments economic failings, quite another when you're asked to stack it on top of sucking up their staffing ones too. Juggle the bills *and* work extra shifts? In the wise words of many a 3am Glaswegian philosopher, get tae fuck.

There have been many carrot and stick opportunities for the Tories to handle the NHS issues over the years, they've just been another thing filed under 'too difficult' as though governing should involve only the easy things until events force you to do otherwise.

Elby the Beserk said...

Frankly, given the relentless succession of dreadful treatment of Lils by the RUH, I'd say most medics are wildly overpaid.

One thing we do know, that the two cornerstones of medicine have been discarded wholesale, being "First do no harm" (now the opposite), and the principle of Informed Consent is now completely in the past. The Covid vax campaign showed that - we know nobody who was warned of anything more than a sore arm.

FYI, the Pfizer papers list over 1200 side effects, many life-changing and life threatening.

Our plan is to have as little to do with the NHS as poss. Full marks to the MacMillan nurses tho', and Dorothy House who have pitched in to help Lils with the shit the RUH has relentlessy hurled at her.

Seem to be able to post again. Am sure you will all be delighted ;->

Anonymous said...

Just looked at the PRA's list of building societies (worrying about the 65k limit and looking to spread risk) there are only FIVE left plus a few old names under their 65k umbrellas. FIVE !!

West Bromwich
National Counties

E-K said...

Too much credit for too long - it is at the root of everything, from excessive consumption (greenhouse gasses) to the inflation we see now. Until this is sorted out it will be one black swan after another until nature takes its course.


Elby - Sincerely sorry about your experiences. I'm just pointing out the global market for junior doctors and even in the domestic one the military, at least, recognises the lack of rank and a lack of pay in an instant doubling of salary and a seat at the Captain's table.

Old Git Carlisle said...

Think limit is now £85000 or twice that for joint account. Or I have dropped one!

Anonymous said...

OGC - you are right. 85k

Elby the Beserk said...


To be fair, what has happened to Lils was no fault of the NHS shop floor worker. An truly unpleasant oncologist the worst of the lot, happily replaced with a much nicer female one - tho' she also inflicted on Lils unnecessary and very unpleasant unwarned of side effects.

ps. if you have a CT scan, the Iodine trace my severely fuck you up. And they won't warn you, even tho' it is a known side effect that other recipients have confirmed to Lils, and indeed, other medics. Informed consent, my arse.

The deep problem is as noted - Socialist Command and Control, with an added dash of Blairite Managerialism. Lils got Sepsis after her op. The special dressing they used after 6 WEEKS (costs too much. More than a life, clearly), a suction dressing that worked well) was given to a firnd of ours with Sepsis after a Colon cancer removal, immediately. As were the cancer marker blood tests on a monthly basis. Pen told they were unreliable. Nor was she told that chemo only works for 10% if breast cancer patients and that a blood test can detect if it will or not after ONE session. Were we told that? No.

So anyway, we fled the RUH after the most appalling treatment on Lils re-admission with Sepsis, with a truly nasty nurse got Lils to discharge herself, in her gown and with cannula trailing. Friday. Rushed her in Monday to the Breast Clinicm, where a lovely nurse from our part of the world (When she drained Lils' wound, I said the blood - a truly horrible colour - looked like the Manchester Ship Canal. Nurse burst out laughing and agreed.

Anyway, I asked her later what she thought of management in the NHS. Note - she had 20 years + under her belt.

"Management" she spat out - "dickheads with clipboards who stop us working".

And there you have it. Blair's decision to swap beds for managers still an unaddressed disaster, and Brown's decision to double doctor's salaries and tell them they didn't have to work weekends the initial cause of the utter shambles that is A&E now. A riper par of ****s than Blair and Brown you'd be hard pushed to find. Tho' Johnson's working hard to join them.

There was a gap of over 6 weeks between Lils' op and her getting chemo. 6 weeks plus for the cancer to spread. When we asked about follow up checks, Onco #1 the shit said - "Mammograms". Given that she had also had 26 lymph nodes removed and radiation for those not operable, clearly the cancer would have spread. So what ****ing use would a Mammogram be? Happily a radiographer sorted this out.

Chemo of course destroys the immune system to save it. Ho hum. I'm 100% sure that the gap between op and chemo, and then the chemo itself, led to the bone cancer. The RUH did this to her.

That it seems to have been stopped in its tracks we put down to going Carnivore some two and a half years back. This diet means you ingest NO carbs => glucose at all; and all your body needs it makes. Sugar feeds cancer, which is in reality a cell that should die, doesn't, and multiplies in effect by fermentation fed by sugar. Lils has encountered others who have had terminal cancers/terminal brain tumours halted by going Carnivore.

I am sure that there is a genetic element in cancer that predisposes some to cancer; but that in reality it is a metabolic disease.

This book covers this in depth.

dearieme said...

BS bs. Here's a list - umpty-um, not five.

Matt said...

The inflationary risk of increasing NHS pay is straightforward. More tax required to pay doctors means lower take home for the productive part of the economy who then want a pay rise to compensate. Doctors then see the private sector wages rising and want more as well. Repeat until the country goes bankrupt.

Diogenes said...

These issue pre-date Blair and Brown and Boris. It's a perennial or even millennial issue of the naiveté of the voting classes.

We're on a Ship of Fools whether it is banking or health or waging of wars. But it does give an endless amount of subject material to discuss on social media.

Elby the Beserk said...

"Ship of Fools" leads this old Hippy inevitably back to the Good Old Grateful Dead...

Went to see the captain, strangest I could find
Laid my proposition down, laid it on the line
I won't slave for beggar's pay, likewise gold and jewels
But I would slave to learn the way to sink your ship of fools

Ship of fools on a cruel sea
Ship of fools sail away from me
It was later than I thought when I first believed you
Now I cannot share your laughter, ship of fools

Saw your first ship sink and drown, from rocking of the boat
And all that could not sink or swim was just left there to float
I won't leave you drifting down but whoa it makes me wild
With thirty years upon my head
To have you call me child

Ship of fools on a cruel sea
Ship of fools sail away from me
It was later than I thought when I first believed you
Now I cannot share your laughter, ship of fools

The bottles stand as empty
As they were filled before
Time there was and plenty
But from that cup no more
Though I could not caution all
I still might warn a few
Don't lend your hand to raise no flag atop no ship of fools

Ship of fools on a cruel sea
Ship of fools sail away from me
It was later than I thought when I first believed you
Now I cannot share your laughter, ship of fools

"With thirty years upon my head" - that line kept changing as the years rolled on (first sung in the 70s)


E-K said...

The inflationary risk of increasing NHS pay is straightforward. (Matt)

Not straight forward at all. This isn't about getting a pay rise but mitigation of the wage losses for doctors since 2008 - the disparity between those paid by our military are now 100% ... ANZaCs now 300%.

Pret pays a counter worker the same hourly rate as a junior doctor.

There is mismanagement in the NHS. Rip offs by suppliers - an inordinate amount paid to consultants (fewer doctors become consultants than you might think) but largely the problem is a cycle of high government tax, poor government spending decisions and the reliance on credit (backed by a housing bubble) to disguise all that and prop up our standard of living.

The junior doctors' issue is a classic example of the younger generation becoming poorer than the one before.

My brother (a security guard) bought a one bed house in Shirley (Sth London) on a single wage in 1995. There is absolutely no way a junior doctor could dream of doing that now.

Anonymous said...

Dearieme - ah, the BoE website I got my five from is only a list of the 'multibrand' building societies, not the whole lot. Thanks for that, as it gives me more options.

I'd better check out the banks too, as I assume the list I got from the BoE will also be multibranders only. I did wonder where Bank Of Dave was!

Anonymous said...

E-K - housing is the great intergenerational disaster of the last 50 years, but if you read even the Guardian and BBC, there's no suggestion that "a strong housing market" is anything but a good thing. These people are all bought and paid for.

I see at the moment we have 13% RPI inflation thanks to a "strong tomato market" and a "strong salad market".

And houses are still rising as people with savings try to prevent them being wholly devalued.

Caeser Hēméra said...

@Matt - currently private sector pay raises outpace the public sector by some margin, last summer it was running at 6.2% in the private, 2.2% for the public.

Given that inflation looks to have peaked, and private sector pay raises are continuing in that vein, empirical evidence suggests your model doesn't reflect what has actually happened.

There's quite a lot of flex in current tax take to ensure doctors are paid well without increasing tax too.

Should the NHS ever get a government with a set of balls and a spine not composed of papier-mache, there would be a lot more flex from savings from reduced jobsworths and suppliers no longer viewing it as something to mine cash from.

dearieme said...

Pleasure, anon.

I wonder: can anyone picture a crisis so great that the govt cuts the insured amount from £85k to, say, £50k or even £30k? It wasn't all that long ago that it was smaller. Or leave it at £85k but give only 90% cover?

I assume the political pain would rule it out and anyway the time to do such a thing is when there are no clouds on the horizon. Do it now and they'd probably cause a panic.

dearieme said...

Here we are: deposit protection in the UK started in 1979.

E-K said...

*I see at the moment we have 13% RPI inflation thanks to a "strong tomato market" and a "strong salad market".*

Anon at 9.41

Even if Dishi Rishi gets inflation back to a 'normal' 2% this is not normal at all.

It is 2% ON TOP of the inflation that has already happened. The truth is though, most young doctors are Lefty (including my son.) It's part of the recruitment criteria. They don't understand that the forces ranged against them are also on their own side.

Caeser Hēméra said...

As @EK pointed out inflation has blipped up again, mostly due to food inflation.

Shortages, and supply chain issues, have so drowned out any impact of wage increases on inflation it's like suggesting someone leaving the tap on did for the Titanic, rather than all the seawater gushing in.

Matt said...

So, to fix the country, all we need is parliament not to be populated by idiots, they then address waste in the public sector, followed by giving the doctors (and other needs public servants) a pay rise.


parliament will stay stuffed with prats, who will just put up tax to cover the fact they make crap decisions thus killing off the productive parts of the economy.

If I were a betting man, I'd put all my cash on the latter.

dearieme said...

Given the medical trades' contribution to the Pandemic lies and slaughter I'm not too keen on giving them pay rises. A decimation would be a more apt reward.

Sobers said...

"Given the medical trades' contribution to the Pandemic lies and slaughter I'm not too keen on giving them pay rises. A decimation would be a more apt reward."

The medical 'profession' is now a wholly owned subsidiary of the pharmaceutical industry, covid has shown us that too. All doctors now have to toe the big pharma line, or face expulsion from their trade union and career. Independence of thought is no longer allowed in medicine, all that matters is that you spout the 'safe and effective' line when told to do so. Men (and women) of moral integrity would have revolted at this, moral pygmies can only think of money and so are bought and sold like cattle.

Elby the Beserk said...

"Caeser Hēméra said...
@Matt - currently private sector pay raises outpace the public sector by some margin, last summer it was running at 6.2% in the private, 2.2% for the public"

An overdue correction? I have a graph from four or five years ago which showed public v private sector salaries in various parts of the country. Public larger from 5 to 28%.

Back in the day, a public sector salary was poor; but at the end you got a good pension. Nobody minded that. It seemed reasonable. And was one of the reasons I never went for a public sector job - not to mention dying of boredom in days;

Now, the average pension for a teacher is £46k. My (first) brother-in-law, an IT bod in the NHS, no great techie, and his wife, a nurse, retired early on a combined pension of over £50k.

So now public sector salaries and pensions have outstripped the sector that funds them. I cannot see WHY any PS worked on a good salary has to have their pensions subbed by folks who often can't afford to save for their own. Private sector pension backlog now c£ 2 trillion - but it's the state pension, one of the worst in Europe, which will be attacked and the triple lock removed, as some pensioners don't need it.

So go for the rest who do eh?

FUBAR squared.

Our lovely neighbour, Fred, 88 and not stopping, an ex Radstock miner, pays more than half of his state pension on his energy bills