How Not To Restore Credibility..... "BOE´s Adam Posen Edition"

The fact that he is also an American economist & has co-written a book on inflation targeting with Fed Chairman Ben S. Bernanke might explain at least in part his quote...... ;-)

Man muss zu seiner "Verteidigung" erwähnen das er laut Wikipedia ebenfalls ein amerikanischer Ökonom ist. Da verwundert es wenig das er zusammen mit Bernanke Co-Autor eines Werkes zum Thema Inflation ist.... Dies relativiert zumindest ein wenig den fast satirisch anmutenden Charakter seines Zitates....;-)

"CPI, excluding currency, commodities and VAT impact, is low"

The quote came in response after CPI once more "slightly" missed the 2 percent target....... Sometimes it´s better to stay just silent.....

Diese Aussage kam nachdem im Dezember die Konumentenpreisinflation in UK mal wieder "knapp" das angestrebte Ziel von 2% verfehlt hat........ Ähnlich wie bei etlichen "Offiziellen" scheint das Sprichwort "Reden ist Silber, Schweigen ist Gold" nicht sonderlich viele Anhänger zu haben....

Record-breaking, forecast-busting UK inflation FT Alphaville

Highest yy rate for CPI food and non-alcoholic beverages since May 2009
Highest yy rate for CPI housing, utilities component since Aug 2009
Highest yy rate for CPI goods component since April 2010
Highest yy rate for CPI services component since Aug 2010 -
Highest yy rate for CPI fuels and lubricants component since July 2010

Posen is almost as funny as ECB´s Smaghi with his "joke" "€ More Stable Than Deutsche Mark" ..... But in comparison with Bernanke & Greenspan even they seem "reasonable".... ;-)

Finde trotzdem das im Fach "Realsatire" die EZB dank Bini Smaghi mit der Behauptung das der "€ stabiler als die DM ist" noch immer knapp den zweiten Platz hinter den unangefochtenen Spitzenreitern Bernanke & Greenspan einnimmt.....

Now take a look at real rates ( base rates minus CPI ) in the UK......

Der nachfolgende Chart zeigt den "realen Zinssatz" in UK verglichen mit dem Letzins und ich empfehle jedem drigend den treffenden Kommentar (!) der FT Deutschland zu diesem Thema zu lesen.....

UPDATE: The Real 10-Year Rates Chart confirms the "vigilance" of the the BOE ....

UPDATE: Der Chart der realen 10 Jahresrenditen bestätigt welch "Sonderstellung" die BOE einnimmt....

This in combination with the next chart showing the printing that the BOE has done so far & the remarks from the end of September doesn´t make Posen´s quote less "cynical".......

Das im Zusammenhang mit dem nächsten Chart, der zeigt das selbst die Fed in Relation zur BOE "zurückhaltend" agiert, sowie den Aussagen Ende September lassen das Zitat nicht gerade weniger "zynisch" erscheinen.....

H/ T RBS via FT Alphaville

Posen Makes BOE ‘Prosecution’ Case for More Stimulus September 29, Bloomberg

Bank of England policy maker Adam Posen made the strongest call yet for the bank to restart its asset-purchase program.

“Additional monetary stimulus at this point should begin in the form of additional QE as the Bank of England pursued by purchasing gilts in 2009-2010,” he said. “In case such QE were to prove insufficiently effective,” Posen said he would “still want preparation ahead of a Plan B of large-scale non-gilt asset purchases” in close coordination with the Treasury.

Posen, 43, an American citizen, joined the central bank from the Washington-based Peterson Institute for International Economics. A co-writer of a book on inflation targeting with Fed Chairman Ben S. Bernanke, he also published a study of the Japanese financial crisis and was a researcher at the Bundesbank and European Central Bank.

Wouldn´t surprise me if down the road even politicians will be more popular than members of the BOE & when the term "central banksters" will gain more and more traction....

Ich persönlich wäre nicht überrascht wenn zumindest in UK die Notenbänker in absehbarer Zeit noch unbeliebter als Politiker unterwegs sind.....

UPDATE:

Searching for BoE credibility on inflation FT Alphaville

From Deutsche Bank, the number of news stories that match three topical words:

SCHADENFREUDE........ ;-)

A Crisis of Faith in Britain’s Central Banker NYT

A central banker need not be loved, but at the least he should command respect — and in Britain these days Mervyn King cannot count on either.

The pre-emptive UK rate hike FT Akphaville

…over the last 6 years (ie 2005Q1 to 2010 Q4), real GDP growth has undershot the MPC’s forecast made a year earlier in 22 quarters and overshot in just 2 quarters. Conversely, inflation has overshot the MPC’s forecast in 20 quarters and undershot in just 4 quarters.

Nomura Gets 6 Years Free Rent For London HQ - Canadian Pensioners Probably Not Happy......

The landlord is Oxford Properties ( the property arm of the Ontario pension fund in combination with UBS )....The 365,000 active and retired members of one of the biggest Canadian pension funds are probably not happy....... The unfavourable CAD/GBP Chart isn´t making things better..... And with stories like this it is only going to get worse...... For more "good" news on the pension front i recommend the blog Pension Pulse.....Unfortunately the situation in Germany isn´t any better.....I have listened to the latest conference call from Thyssen Krupp ( one of the largest steel producers and close to a junk rating ) & the CFO ( former CFO from überlevereged CONTI..... ) said the ( analogous ) following ( and he was not kidding! )..... "Good that our pension plan is still underfunded by over € 6 billions..... If we would have funded it in the past few years the deficit would be much bigger".... Probably the best spin attempt i´ve heard so far... CHUZPAH!

Der Vermieter ist in Kombination mit der UBS der Immobilienarm des Pensionsfonds von Ontario.....Keine guten Nachrichten für 365,000 Mitglieder einer der größten kanadischen Pensionskasse...... Wenn man jetzt auch noch die nicht gerade vorteilhafte Währungsentwicklung hinzunimmnt ( siehe CAD/GBP Chart ) dürfte der Ärger nicht geringer werden..... Und dank Nachrichten wie diesen ist eine Besserung nicht in Sicht...... Wer mehr "gute" Nachrichten zum Thema Pensionskassen hören möchte dem empfehle ich Pension Pulse oder die letzte Telefonkonferenz von Thyssen Krupp ( demnächst höchstwahrscheinlich mit einem Junkrating )..... Sinngemäßes Zitat CFO ( kommt von Conti.....) " Gut das wir zur Zeit mit über 6 Mrd unterfinanziert sind ...." Nach dem Motto je größer das Defizit desto weniger können wir mit unseren Einlagen verlieren..... So verkauft man grotesk schlechte Nachrichten noch als Erfolg.....PS: Überflüssig zu erwähnen das solch geringe Summen in der Präsentation die fleißig den Aufbau der flüssigen Mittel abfeiert vollkommen fehlt....CHUZPE!

Let´s at least hope they have viewed this deal from the start as "opportunistic"........

Bleibt zu hoffen das der Deal von Anfang an als "Opportunistisch" angesehen worden ist........

> From the 2007 press release when the deal was anounced......

> Aus der Pressemitteilung vom Sommer 2007

"The Watermark Place development is another important step in the expansion of Oxford's global investment platform,demonstrating the skills, capabilities, and reach of Oxford and its investment professionals. We are excited about our relationship with UBS - a world-class investment manager and a great like-minded partner." Andrew Trickett, Vice President of Corporate Development & Investment, added "this development represents a unique investment opportunity for Oxford and an outstanding addition to London's office market.

LONDON, Aug 31 (Reuters) -

Japanese investment bank Nomura has secured a rental deal on its new London headquarters allowing free rent for almost six years, the Financial Times reported, citing the terms of a deal to be announced on Tuesday.

The FT said the bank will confirm plans to move its UK business, including the staff taken on as part of the Lehman Brothers acquisition, into a new office development on the Thames.

Up to 4,000 banking staff will move into the 12-storey Watermark Place next year, many relocating from the former Lehman Brothers building in Canary Wharf.

The landlord, Oxford Properties, is the property arm of an Ontario pension fund and UBS

UPDATE via German FT Mietfrei im Londoner Hybrisbau

The term of the leasing contract is 20 years and the price is 40 british pound per square meter ( peak boomtimes 70 british pounds )

Der über 20 Jahre laufende Mietvertrag sieht nämlich vor, dass die Japaner in den ersten sechs Jahren kostenlos (!) in dem Glaspalast an der Themse residieren dürfen. Für die verbleibende Zeit verlangen die Eigentümer - ein Konsortium aus der Schweizer UBS und einem kanadischen Pensionsfonds - 40 Pfund je Monat und Quadratmeter. Zu Boomzeiten waren 70 Pfund üblich.

> With news like this no wonder Canary Warf needs a bailout......

> Dank solcher Nachrichten ist es wenig verwunderlich das Canary Warf in extremer Schieflage ist......

China invests in Canary Wharf with £880m bail-out of Songbird Telegraph

China is set to become the joint-largest shareholder in the owner of Canary Wharf after joining an £880m bail-out of Songbird Estates with its first major investment in UK property.

UK CRE Now Off 45 Percent From The Peak.......

According to IFD, UK commercial properties values have been declining fast with peak to current declines of around 45%, with major declines noted in all major segments - retail, offices and industrials

At the same time the amount of available floor space for occupation increased at the fastest pace since 1999 in all regions with the exception of London (Chart 2) and thevalues of inducements rose at its fastest pace since the survey’s history in 1999. Collectively this implies that an upward correction in prices in the foreseeable future is unlikely.

> I still would almost die to see a similar stat for Dubai ( see The Upcoming Skyscraper Tsunami..... )

> Ich würde immer noch liebend gerne eine ähnliche Statistik für den Markt in Dubai sehen ( siehe The Upcoming Skyscraper Tsunami..... )

> Only 6 years of free rent.......Cleary a sign that the bottom is near....... ;-)

> Lediglich 6 Jahre Mietfrei in einer Top Lage Londons......Klares Anzeichen das der Boden wie tagtäglich propagiert inzwischen erreicht ist.... ;-)

Update:

Stuy Town, Which Is On Verge Of Default, Costs Florida's Pension Fund Entire $250 Million Investment

For Commercial Real Estate, Hard Times Have Just Begun

Corporate Pension Fund shortfalls weigh on recovery

When Monetizing 12% Percent Of GDP Isn´t Enough.......

Not quite an "Exit Strategy"....... This Cartoon on "Green Shoots" is spot on..... :-) As long as the pound & gilts are not crashing this will continue.....I´m pretty sure Bernanke is watching the market reaction very closely UPDATE: Fed’s Kohn on Lessons From Buying Government Bonds… in Britain .... Especially with the Fed running low on ammo..... Read A 300-year-old example of quantitative easing.... John Law, Alan Greenspan, Ben Bernanke... via The Mess That Greenspan Made as a reminder what can happen.......

Das ist wohl das Gegenteil der dank der tagtäglichen "Green Shoots Visionen" diskutierten Exitstrategie der Notenbanken......Die Lage muß wirklich KLASSE sein......Dieser Cartoon trifft den Nagel auf den Kopf...... Aber solange das Pfund & Gilts nicht crashen wird dieses in der Vergangenheit mehrmals massiv fehlgeschlagenes "Experiment" ( siehe A 300-year-old example of quantitative easing...... John Law, Alan Greenspan, Ben Bernanke... ) weitergehen...... Bernanke dürfte die Marktreaktion sehr genau verfolgen UPDATE: Fed’s Kohn on Lessons From Buying Government Bonds… in Britain ..... Das gilt umso mehr als die Programme der Fed auf "Reserve" ( siehe Running low on ammo via R.Winkler ) laufen......

The governor’s insatiable appetite for QE FT Alphaville

The Governor invited the Committee to vote on the proposition that:

Bank Rate should be maintained at 0.5%;

The Bank of England should finance a further £50 billion of asset purchases by the creation of central bank reserves, implying a total quantity of £175 billion of such asset purchases. The Bank should seek to complete the additional purchases within the next three months.

Six members of the Committee (Charles Bean, Paul Tucker, Kate Barker, Spencer Dale, Paul Fisher and Andrew Sentance) voted in favour of the proposition. Three members of the Committee (the Governor, Tim Besley and David Miles) voted against, preferring to increase the size of the asset purchase programme by £75 billion to a total of £200 billion.

Yep, Mervyn King, together with Besley and Miles wanted the rate of monetary stimulus increasing, not just extending at the current rate of £50bn-a-quarter. That was good for half a cent off sterling versus the dollar and a third of a cent v the euro on Wednesday morning. Gilts, of course, spiked higher.

Somebody stop me Alice Cook from the great blog UK Bubble

The extraordinary thing about UK monetary policy today is how close it is shadowing fiscal policy. This year, the Bank of England printing presses will produce roughly the same amount of new money as this year's fiscal deficit. Or to put it more bluntly, the private sector have, on a net basis, stopped lending money to the government.

The Casey Report

> The estimated issuance is based on this "optimitic" forecast.... Especially compared to the IMF, OECD, Bloomberg etc..... No surprise to see the BOE also out of touch....... Good to know that at least this leads to a "review" of the AAA rating.... Hallelujah! :-) After watching this & this chart it should be clear to anybody not working at an rating agency that an AAA is more or less history.....

> Die o.g. Emission der Gilts basierd auf der unten aufgeführten "wenig konservativen" BSP Prognose...... Vergleicht diese mal mit denen von IMF, OECD, Bloomberg..... Überflüssig zu erwähnen das die BOE ebenfalls jenseits aller Realität prognostiziert..... Immerhin wird "gedroht" das AAA Rating einer ernsthaften Prüfung zu unterziehen..... Was wären wir nur ohne die Ratingagenturen....... Spätestens nachdem man sich diesen & diesen Chart vor Augen führt dürfte jedem der nicht gerade für eine Ratingagentur arbeitet klar sein das ein AAA wohl auf Jahre hinaus nicht mehr als ein feuchter Traum von Brown & Co sein wird.....

FT Alphaville

The Chancellor has forecast that the economy will contract by 3.5% in 2009, followed by GDP growth of 1.25% in 2010 and 3.5% in 2011. He sees long-term trend growth at 2.75%

> While i´m still in the deflation camp for some time to come but i´m pretty sure down the road the central banks will once more cause massive inflation ( read Inflation: What the heck is it? from Mish). If you want to know the details why i think this will happen i would like to refer to the podcast with Chris Martenson. Couldn´t have said it better.....H/T Pension Pulse.... One of many reason why i´m a "Goldbug" ( regardless of the timing - H/T Zero Hedge). The best "insurance"( relatively speaking ) you can buy to protect yourself from the "wisdom" of King, Bernanke & Co.. :-)

> Obwohl ich die nächsten Jahre noch dem Deflationscamp zuzuordnen bin steht zu befürchten das die Notenbänker Ihr Ziel einer stark "erhöhten" Inflation nicht verfehlen wird. Wichtig zu wissen das ich mit der Definition von Mish ( siehe Inflation: What the heck is it?.) übereinstimme die mit den Veränderungen der Konsumentenpreisen nur sehr indirekt etwas zu tun haben. Für alle die die Logik hinter dieser Einschätzung erfahren möchten die verweise ich gerne auf den erstklassigen Podcast mit Chris Martenson. Kann es beser nicht formulieren..... Dank an Pension Pulse..... Einer von vielen Gründen warum ich ein Freund des Goldes bin ( und das unabhängig vom timing / Dank an Zero Hedge ) Auf Dauer gesehen die zumindest relativ beste Absicherung gegen die "Weisheit" von Bernanke, King & Co .....

UK CRE Now Off 45 Percent From The Peak.......

Could be worse if you are a foreign investor..... The British Pound is 20 percent off against all other major currencies over the past 12-18 months.....

Wenn man jetzt noch bedenkt das das britische Pfund gegenüber allen relevanten Währungen auf Jahressicht über 20% verloren hat sieht die Lage für ausländische Investoren noch düsterer aus...... Der Sektor der gewerblichen Immobilien dürfte schon sehr bald die Schlagzeilen mit spektakulären Pleiten dominieren..... Mich wundert das die in Deutschland dominierenden offenen Immobilienfonds ( etliche mit signifikanten UK Exposure siehe Chart Geographische Verteilung der Objekte In Offenen Immobilienfonds via FAZ/Scope ) trotz einer regelrechten Implosion im gesamten Sektor ( plus der teilweise drastische Währungseffekt in UK & Osteuropa ) querbeet über alle Regionen es noch immer schaffen keine Verluste auszuweisen...... Denke das spätestens wenn die Mieterneuerungen anstehen die ein oder andere Überraschung "droht".....

“Losses on UK commercial real estate could equal subprime” FT Alphaville BNP Paribas analysts are worried about the health of the UK’s commercial real estate sector. In a note released on Friday, they warned that a “combination of rising vacancy rates, falling rentals and extraordinarily difficult financing conditions will almost certainly drive UK CRE losses higher.”

Analysts Vivek Tawadey and Olivia Frieser contend that CRE is the “next leg of the credit story” in both the US and the UK, which they believe could see a major CMBS default.

From the note (any emphasis FT Alphaville’s):

Bonds backing CRE assets of a UK property investor (Simon Halabi) are likely to default on £1.15bn of debt. In this particular case, the values of the nine “prime” London office buildings (included the offices of JPM, the UK headquarters of Aviva, the Naval and Military Club amongst others) that were securitised have fallen from £1.8bn in November 2006 to £929mn as of 8 June, a reduction of almost 50%.

According to IFD, UK commercial properties values have been declining fast with peak to current declines of around 45%, with major declines noted in all major segments - retail, offices and industrials

At the same time the amount of available floor space for occupation increased at the fastest pace since 1999 in all regions with the exception of London (Chart 2) and thevalues of inducements rose at its fastest pace since the survey’s history in 1999. Collectively this implies that an upward correction in prices in the foreseeable future is unlikely.

> I would love to see a similar stat for Dubai ( see The Upcoming Skyscraper Tsunami..... )

> Ich würde liebend gerne eine ähnliche Statistik für den Markt in Dubai sehen ( siehe The Upcoming Skyscraper Tsunami..... )

Tawadey and Frieser also point to the refinancing risk ahead:

Around £43bn (or 19%) of all CRE loans comes due for repayment in 2009. A further 14% matures per year annually in 2010 and 2011 (Chart 3) or in excess of £100bn over the next 3 years, implying very significant refinancing risk inevitably leading to higher defaults.

The fact that only 10% of CRE loans are securitised in Europe (US: 30%), also underscores that more of these loans are held on bank books, leading to potential write-downs down the line.

S&P On US CMBS / CRE FT Alphaville

The agency wants CMBS credit enhancement levels sufficient for AAA-rated tranches to be able to withstand some pretty severe declines (40 to 50 per cent) in the value of commercial property.

> So it looks like 50 percent off is the new normal...... And watching the next graph ( HT Zero Hedge ! ) i´m not sure if this will be enough..... Needless to say that the Fed just a few weeks ago has proposed a CRE TALF program to buy tons of this crap ( No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF ). It will be fun to watch how they will go along with the collateral criteria..... They already have loosened it once ( see ( see Fed Bends Over Backward For CMSA, Will Feed Inflation Capacitor With More Toxic Garbage via Zero Hedge ). .....

> Sieht ganz so aus als wenn eine coole Halbierung vom Top in den ehemals heißgelaufenen Märkten eher die Regel als die Ausnahme ist....... Bin mir sicher das Banken in Ihrer bekanntermaßen vorausschauenden Weitsicht hierfür ausreichend "Vorsorge" getroffen haben..... Wenn man sich jetzt die nächste Grafik ( Dank an Zero Hedge ) ansieht dürfte klar werden was sich für ein Debakel zusammenbraut....... Möchte nur noch mal zur Belustigung darauf hinweisen das die Fed vor wenigen Wochen extra ein TALF Programm gestartet hat um für wahrscheinlich bis zu 100 Mrd $ den Giftmüll zu kaufen ( siehe No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF ) ...... Bin gespannt wie weit die Fed noch sinken kann....Bisher hat Sie bereits einmal die Bedingungen für die Sicherheiten gelockert ( siehe ( see Fed Bends Over Backward For CMSA, Will Feed Inflation Capacitor With More Toxic Garbage via Zero Hedge ).......

UPDATE :

Graph
European Top 20 From JPM’s CRE Risk List

( Note: Data from end of 2008! )

Pounding The Pound

The Queen is probably "not amused" .........

Sterling continued its slide on currency markets on Tuesday, dropping 2.7% on a trade-weighted basis amid uncertainty about the terms of the government insurance for toxic assets held by banks and fears of creeping nationalisation of the sector. Analysts said sterling had been trading with strong correlation with UK bank stocks, which suffered fresh falls. The likelihood that the Bank of England would soon create money to buy assets has intensified speculation that sterling’s value will be progressively eroded. This week, it has fallen 4.5% against the euro, 5.8% against the yen and 6.1% against the dollar, retreating about 34% against the dollar from highs in November 2007

> The following chart is a little bit outdated but gives a good impression what is going during the past 6 month..... See the FT link to take yesterdays action into account.....

> Der nachfolgende Chart beiinhalted noch nicht die Bewegugen siet Beginn der Woche......Verweise auf den FT Link für die aktuellen Absicherungspreise....

CDS report: Sovereigns rattle markets

The cost of buying five-year credit protection on the UK gapped wider to 133bp on Tuesday, compared to Monday’s close at 124.9bp. Ireland was out at 281bp from 275.2bp yesterday, Spain was at 156.3bp, compared to 142.5bp, Austria climbed to 157.5bp from 146bp and Germany edged wider to 55.8bp from 55bp on Monday, according to CMA.

The UK has nothing left to sell, official

To quote Jim Rogers (he who broke the Bank of England with George Soros on Black Wednesday in 1992): “It’s simple, the UK has nothing to sell.”

Ambrose Evans-Pritchard is SERIOUSLY ALARMED

For the first time since this crisis began eighteen months ago, I am seriously worried that British government is losing control.

If the Government is forced to nationalise RBS and perhaps Barclays with their vast exposure in dollars, euros, and yen, it risks being submerged. It is one thing for a sovereign state to let its national debt jump in a crisis — or a war — perhaps even to 100pc of GDP. It is another to take on foreign debts on such a scale with no reserves. Yes, the banks have foreign assets as well to match the debts. But how much are these assets really worth?

We cannot even do what Iceland did to save its skin. Reykjavik refused to honour the foreign debts of its buccaneering banks. It let them default, parking the losses in Resolution Committees. Small islands can do that. Iceland has fish instead, and lots of metals

England has not defaulted since the Middle Ages. There is a real risk it may do so now.

RBS et mon droit: HM deficits

Did you know that by assets, RBS is the world’s largest company?

Naturally, the UK government is rather keen RBS does not fail. And indeed, it has gone all out. Just about every conceivable measure has now been thrown down to stave off disaster for the UK banking system: recapitalisation, asset guarantees, commercial paper guarantees, liquidity backstops, quantitative and qualitative easing and subversion of Basel II risk weightings.

The hope is that they will work. Clearly RBS’s shareholders don’t believe so. It would seem that they are discounting for the effect of the one policy option remaining: Nationalisation.

Nearly matching RBS’ £1.9 trillion of assets, RBS has £1.8 trillion of liabilities.

To put that into perspective with regard to the (small) risk of nationalisation: inclusive of the Northern Rock nationalisation, the UK public debt, defined by the ONS, is currently only £650bn. Nationalising RBS would increase UK public debt 369 per cent.

A couple of other pieces of info for UK Plc: the world’s third largest organisation by assets is Barclays. And the fourth is HSBC.

UPDATE Bloomberg Barclays Falls Seventh Day on Nationalization Fears

> After looking at the next graph it not surprising that the BOE is now ready to use "unconventional measures"....

> Nachdem man einen Blick auf die nächste Grafik geworfen hat ist es nicht weiter verwunderlich das die BOE demnächst die Notenpresse anschmeissen wird........


Bank of England to Start Quantitative Easing Naked Capitalism

In his first speech of the year, Mr King outlined radical plans for the Bank to buy up an initial £50bn of illiquid assets in the market to increase the flow of credit, with the option of ex-tending the scheme to boost the money supply by effectively creating new money.

> Probably no surprise Gold in Pound is at a historic high & that the the flight to "the real money" around the globe continues .....

> Sicher kein Zufall das ausgerechnet in diesen Zeiten Gold in Pfund gerechnet neue historische Hochs erklimmt & die Flucht in "wahre Werte" weltweit anhält .......

Thanks to Tim from The Mess That Greenspan Made

Just in time to "celebrate" Gordon Brown´s wisdom ( see Gordon Brown's 415 tonnes Gold Sale Blunder, 10 Years On ) & Times

Da paßt es gut das der jetzige Premierminister Gordon Brown vor ziemlich genau 10 Jahren 50% aller britischen Reserven zum absoluten Tief verscherbelt hat ( Times )

Brown offloaded the gold at a 20-year low in the market — now nicknamed the “Brown Bottom” by dealers. The 17 auctions achieved prices for the gold of between $256 and $296 an ounce, with an average of $275.

Couldn´t resist......... Konnte einfach nicht widerstehen.........

> Needless to say that the UK has still a AAA rating...... I wouldn´t be surprised to see "The Sex Pistols" with their "Anarchy In The UK" to get quite popular again..... :-)

> Überflüssig zu erwähnen das UK immer noch ein AAA Rating hat....... Ich persönlich würde mich nicht wundern wenn wir zukünftig die Sex Pistols mit "Anarchy In The UK" demnächst wieder öfter zu hören bekommen...... :-)

"33 Great Ways To Save Money" .... UK Yellow Press On CPI / Credit Crunch

No Kidding! The piece from the SUN ( yellow press ) in the UK is no satire ! Things must be really ugly ....... I´m not sure if this is qualifying for a contrary indicator / cover story indicator ( like this one ) regarding the inflation debate but when you read the follwoing advice in relation with mayonnaise i assume we are nearer the CPI top than most peolple think.... On the other hand i´m very very confident that the same is not true for the credit crunch in the UK !

Kein Witz! Diese Geschichte in der SUN ( britische Gegenstück zur Bildzeitung ) ist in keiner Weise satirisch oder ironisch gemeint. Scheint momentan nicht nur wegen der verpaßten EM ziemlich ungemütlich zu sein.... :-) Ich bin mir nicht sicher ob diese Berichterstattung bereits ausreicht um als Kontraindikator ( siehe dieses Beispiel herzuhalten. Bei Betrachtung des nachfolgenden Vorschlages könnte man alledrings zu dem Schluß kommen das die Konsumentenpreisinflation demnächst Ihren Höhepunkt gesehen hat...... Für den gerade erst angefangegen Credit Crunch in UK gilt das allerdings auf keinen Fall. Hier hat der Spaß sicher gerade erst begonnen......

21. Mayonnaise is a fine hair conditioner, adding shine.

Give hairdressers the brush off if you want blonde highlights — just brush lemon juice into your barnet and let it dry in the sun.

I think it´s difficult for the BOE & other central banks to claim that are still in control over "inflation expectations" ( see Real Cost of Living Index (RCLI) is rising at 9.5 per cent. via Barry Ritholtz ) ........Disclosure : I´m with Mish´s definition on Inflation ( see Inflation: What the heck is it? )

Der ständige Hinweis das die Notenbänker immer noch Kontrolle über die Inflationserwartungen haben klingt allerding von Tat zu tag lächerlicher ( siehe auch Real Cost of Living Index (RCLI) is rising at 9.5 per cent. via Barry Ritholtz ) ..... Hinweis : Bekanntermaßen sehe ich die Definition von Inflation wie Mish ( siehe Inflation: What the heck is it? )

The SUN THE credit crunch is biting but you can ease the squeeze if you take a few simple steps.

Here Sun cheapskate TIM SPANTON shares his expertise, with 33 great ways to save money now that prices are rising at 3.3 per cent, the highest rate for more than ten years.

But be warned – there are some tips here even miserly Ebenezer Scrooge might be ashamed of taking up.

Remember, if you’re feeling the pinch, laughter is the best medicine – and it’s FREE.

1. Use banana skins to clean your shoes. The inside of the skins contains potassium, a key ingredient in commercial polishes.

Finish off with a soft cloth. Oils in the banana will even enrich the leather in your shoes and help them last longer.

2. Collect old slivers of soap and squeeze them together to make a new bar.

3. Never buy the first round in a pub. If you go drinking once a week and always get to the bar first you will end up buying dozens more rounds more a year than a person who always buys the fourth round.

This is because drinking sessions often end after an odd number of rounds. .....

8. Buy postage stamps in bulk, before the prices go up, which we all know they will. .....

14. Mix milk with equal amounts of water to go on your breakfast cereal. You will soon get used to it. The slight difference in taste is very small and soon won’t be detected at all.

15. Watch telly in bed in the dark. You’ll save on heating and lighting costs and if there’s a sexy show on, you might even get a bonus cuddle from your partner.

18. Get off a stop early if you commute by bus or Tube to save cash. ....

24. Buy Christmas presents in the sales after the holidays and keep for a year.

27. Shower instead of bathing. To save even more, shower with a friend.

>If you don´t believe me that this is not an ironic piece from the SUNn click the link and read the entire link... There are lots of suggestions that do make sense and are less "exotic".

> Wer mir nicht glaubt das dieser "Ratgeber" ernst gemeint ist sollte zur Kontrolle den kompletten Link lesen .... Dort finden sich in der Tat etliche Hinweise die hilfreich und weniger "skuril" sind.

UK : Egg/Citigroup Clamps Down On Riskier Credit Card Customers

Probably no coincidence that Citigroup is forced to make the move first and one of the largest US pawnbroker & payday lender is entering the market at the same time..... Once again their risk modeling wasn´t quite perferct...... How can you buy a UK credit card company close to a top in the UK housing market...... But i think it is very safe to say that others will have to follow ( not only in the UK ) Citi in this kind of tightening.....I suggest to read this Total UK personal debt statistic February 2008 from Credit Action to understand the magnitude of the mess especially in UK .

Sicher kein Zufall das ausgerechnet Citigroup den ersten Schritt machen muß und gleichzeitig das größte US Pfandleihaus & einer der größen "Kredithaie" in den UK Markt eintritt..... Es sieht so aus als wenn die mal wieder genau zum Top eine riskante Investition getätigt hätten.... In diesem Fall bin ich mir sicher das Citi mit diesem Schritt nicht lange alleine bleiben wird. Andere Anbieter ( auch länderübergreifend ) werden sich dieser Art der Kreditverknappung anschließen müssen.... Um einen Überblick über das Ausmaß gerade in UK zu bekommen empfehle ich einen Blick auf diese Übersicht Total UK personal debt statistic February 2008 von Credit Action zu werfen.

This quote sume it up / Dieses Zitat spricht Bände

"We can certainly understand the concerns, but even if people are up-to-date with repayments, they are people we decided we no longer wish to lend money to regardless of their status." Egg spokesman

Egg customer anger at credit move BBC
Angry customers of internet bank Egg have hit out at its decision to cancel their credit cards.

Egg says 161,000 cards belonging to people whose credit profiles have deteriorated since they signed up will stop working in 35 days' time.

But people who insist they have good records have been contacting the BBC to say they are on the list.

A spokesman for the bank said those affected were customers it no longer wanted to lend to "regardless of their current status".

Credit cards are being withdrawn from 7% of Egg's customers who it deems to pose an unacceptably "high risk".

This could include those who have missed repayments or exceeded their credit limit.

'Arbitrary action'
Cardholders will be able to continue making minimum monthly repayments on their balances but will not be able to spend any more after the deadline.

The move follows a "one-off" review after Egg was bought by US-based Citigroup for £575m last year.

The bank is not demanding immediate repayment of balances or making any changes to customers' terms and conditions or their interest rates. ....

Gillian Cox, of Farnham, Surrey, said she was "absolutely furious" to learn her credit card had been cancelled in what she described as an "unbelievable arbitrary action".

Mrs Cox said she and her husband are "retired, no mortgage, no debts" and "always paid the balance off in full each month".

She added that she had contacted credit reference agency Experian who said she was marked as having an excellent credit rating, "thus totally negating Egg's claim that this measure is about credit risk".

'Stop spending'
A spokesman for Egg said: "We are sorry some customers are upset after receiving notification we are ending their credit card arrangement, but they are people we do not feel it is appropriate to lend any money to."

He added: "The decision was taken after an extensive one-off review of our credit card book following acquisition by Citigroup."

Der Spiegel London - Die Internetbank Egg greift durch. Die britische Citigroup -Tochter will rund sieben Prozent ihrer zwei Millionen Kunden die Kreditkarte sperren. Offenbar haben es Egg und Mutterkonzern Citi mit der Angst zu tun bekommen - sie fürchten, die Risikokunden könnten sich übernehmen und ihre Darlehen nicht zurückzahlen können. Offiziell heißt es: Das Kreditrisiko der "riskanten" Kunden sei zu hoch.

Egg teilte zwar mit, der Schritt habe nichts mit der weltweiten Kreditkrise zu tun. Es handele sich bloß um eine "Neubewertung der Risiken", nachdem Egg im vergangenen Jahr von der Citigroup gekauft worden war. Die Maßnahme zeigt aber, dass Banken weltweit konservativer bei der Darlehensvergabe werden und hart gegen Risikokunden durchgreifen.

Die Egg-Mutter Citi hatte sich bei riskanten Kreditgeschäften so sehr verhoben, dass an den Finanzmärkten sogar zeitweise Insolvenzgerüchte zirkulierten. Citi hat im Zuge der Kreditkrise mehr als 18 Milliarden Dollar abschreiben müssen und damit einen Verlust im vierten Quartal von rund zehn Milliarden Dollar verbucht. Mit der Wahrheit über das Ausmaß der Krise rückte Citi nur scheibchenweise heraus. Egg will die Karten innerhalb von 35 Tagen sperren, die Kunden wurden bereits angeschrieben.

UK Update & BOE Spin

Mid September Mervyn King, the governor of the Bank of England said this ...

Mitte September Tagen hatte Mervyn King, the governor of the Bank of England folgendes zu sagen .....

In an unusual public display of discord, the British central bank criticized other central banks yesterday for injecting cash into the financial system to help stabilize credit markets, saying that such a policy amounted to a bailout of investors who made bad decisions.

The main thrust of his written testimony to Parliament, however, was a sharp warning about “moral hazard” — a term used to describe the downside of policies that effectively rescue investors when their bets turn out wrong.

“The provision of such liquidity support undermines the efficient pricing of risk by providing ex-post insurance for risky behavior,” Mr. King wrote. “That encourages excessive risk-taking and sows the seeds of a future crisis.”

Too bad that everything he has said has been proven dead wrong ( in the case of Northern Rock he flip flopped within 48 hours) and he often did the exact opposite of what he was proposing. Welcome to the world of "respectable" central bankers.......Now move on to todays headlines......

Zu dumm nur das er bereist wenige Wochen um im Fall von Northern Rock nach wenigen Tagen in allen Bereichen eingeknickt ist und das oftmals das genaue Gegenteil praktiziert hat. Willkommen im Club der "ehrenwerten" Zentralbänker............ Hier ein weiteres Beispiel Wolfgang Münchau: Entzauberung einer Zentralbank

Is Britain's economy heading for the perfect storm?

UK's Northern Rock could be nationalized: report

U.K. House Prices Fall the Most Since December 2006, HBOS Says

U.K. Consumer Confidence Falls Most Since 2004

Lenders 'must prepare for worst'

Update Blogroll

Time for another update......

Undoubtedly UK is currently the biggest mess when we talk about bubbles in Europe and probably the entire world. If you want more inside i suggest to visit the excellent Blog The UK Housing Bubble from "the bitter renter" Alice Cook

Unzweifelhaft ist UK momentan die Hochburg in Sachen Bubble. Ich persönlich denke das es sich diesen Rang sogar weltweit verdient. Für mehr Expertise in diesem Bereich kann ich euch wämrstens den Blog The UK Housing Bubble von der "frustrierten Mieterin" Alice Cook empfehlen.

This statistic gives a hint how bad the situation has become Total UK personal debt.... And all this on top of the failure from the "Three Lions" against Croatia ..... Tough times!

Diese Statistik Total UK personal debt gibt einen ziemlich ernüchternden Blick auf die finanzielle Verfassung der Briten. Das Sie nach dem EM Aus auch emotional ein bißchen durchhängen macht die Lage sicher nicht besser.... Schwierige Zeiten!

UK House Prices Largest Decline since 1995

Crunch, crunch, pop, pop........ No wonder the Bank of England Extends Lending to Relieve `Tight' Money Market . The numbers of loans approved for house purchase are also showing signs of "strss".....For more insight visit the label or the excellent blog from Alice The UK Housing Bubble .

Crunch, crunch, pop pop......Kein Wunder das die Bank of England ernuet "creativ" werden muß Die Anzahl der genehmighten Hypotheken befindet sich wenig überraschend im freien Fall Für mehr zum Thema UK bitte das Label durchforsten oder dem wunderbaren Blog von Alice The UK Housing Bubble einen Besuch abstatten

FT More dismal news for UK homeowners. House prices fell 0.8 per cent in November, according to Nationwide - reining in the annual rate of growth to 6.9 per cent.

That drop is the first since February 2006 - and is the largest decline logged since the summer of 1995.

The figures reverse the unexpectedly strong performance in October - when prices rose 1.1 per cent - but which was widely seen as an aberration in what is a markedly weakening trend for house price data. That’s born out in the three-monthly growth numbers that in the latest period fell back to 1.5 per cent, from 1.8 per cent the month before.

The figures come on the back of dark predictions made through the medium of new derivatives contracts, through which the City is betting on house prices falling 7 per cent next year. The deterioration in outlook reflected in derivs trading, which showed expectations shifting from a 2 per cent fall to a 7 per cent decline in the space of one month, demonstrates how quickly sentiment can shift.

UK Commercial Real Estate / NAV

How old fashioned..... Discounts on NAV........ And when you read UK commercial property "Dizzying heights" it should be clear that the discount trend will continue for years to come

Wie altmodisch......Einen Abschlag auf den inneren Wert..... Wenn man sich diesen Lagebericht Commercial property "Dizzying heights" durchliest sollte klar sein das dieser Trand wohl noch für Jahre anhalten wird.

FT Mid-season stock clearance in the property sector

Phewee. A brief respite for property stocks on Monday, as the likes of British Land and Land Securities just about managed to hold steady in a rising market.

Update 11.30 - that didn’t last long. As the FTSE turned lower, so did the real estate companies with British Land losing almost 4.5 per cent, and Hammerson and Land Securities down almost 4 per cent.

The sector finished last week in a fashion to which it has become accustomed - with all the large property companies taking a battering amid concerns that the UK real estate market has turned and that portfolio valuations will inevitably need to be marked down in the coming months.

> You don´t nedd to be a genius to see that something didnt add up when they pushed the premium to 30 percent above the NAV....... But i assume common sense in the "City" or "Wall Street" was out of favour during the past few years....

> Ich denke man benötigt hier kein Studium um zu erkennen das gerade zu Jahresbeginn mit als der Aufschlag satte 30 % zum NAV lag etwas nicht ganz stimming gewesen ist.... Aber wie weit verbreitet scheint während der letzten Jahre der gesunde Menschenverstand reichlich aus der Mode gekommen zu sein.......

How things have changed since the start of the year. With the introduction in January of property’s great hope, the real estate investment trust, the stocks enjoyed a bull run and started the year trading above their net asset values. Since then though, as this chart from KPMG shows, it has only been one way.

Land Securities, which has previously argued that owning both offices and retail property smoothed returns, admitted defeat last week, unveiling plans to split itself into three specialised companies - offices, shop and its outsourcing business, Trillium. The market though, seeing no reason to award focus for its own sake, marked the shares down further on the news last week.

Property stocks get whacked when the sector goes over the top of course, and this property peak coincides with an expected broader slowdown that has its roots right back in bricks and mortar. Banks and other City occupiers will have already put new space requirements on hold, squeezing the capital’s office market, while financing for real estate-linked deals is proving tough to come by. Sellers, note KMPG, are seemingly in denial, unwilling to recognise deteriorating values, while buyers don’t fancy getting into a falling market.

Is the sell-off overdone? The last downturn saw a wave of take-privates by property companies frustrated at being market at a large discount to their net asset value. Jim Pickard wrote in the FT over the weekend that, financing constraints or no, there are potential buyers abroad, and possibly cash-rich property grandees at home, already looking at whether there are bargains to be had.

BOE Says Banks Vulnerable to `Shocks' After Credit Collapse

Looks like the BOE ( and other central banks) will have do to some more bailouts like they did with Northern Rock..... Should be no problem in times when their credibilty is no longer vulnerable ( already gone) .... ;-)

Sieht ganz so aus als wenn die BOE ( und andere Notenbanken weltweit ) zukünftig noch weitere Bailouts wie bei Northern Rock befürchten muß.... Nachdem die Glaubwürdigkeit eh schon arg angekratzt und kaum noch vorhanden dürfte das nicht weiter schwierig werden..... ;-)

BOE Says Banks Vulnerable to `Shocks' After Credit Collapse
Oct. 25 (Bloomberg) -- The Bank of England said the global financial system is at risk of further instability because of ``ongoing uncertainties'' about credit-market losses.

The central bank said in its financial stability report today that markets are now more susceptible to a potential slump in global stocks, a slide in the dollar or a crash in U.K. commercial property after the U.S. subprime mortgage collapse. Merrill Lynch & Co. yesterday reported the biggest quarterly loss in its 93-year history after $8.4 billion of writedowns.

> I highly recommend to read The Role of CDOs in Merrill's Losses (Updated and Expanded Version) from Naked Capitalism

> Kann dazu jedem The Role of CDOs in Merrill's Losses (Updated and Expanded Version) von Naked Capitalism ans Herz legen

``Financial systems in advanced economies are vulnerable to further shocks, either in credit markets or from new sources,'' the Bank of England said in its semiannual report.

Investors are assessing the fallout from a credit-market rout that led to a surge in borrowing costs and a run on the deposits of U.K. mortgage lender Northern Rock Plc. Today's report said British banks are still hoarding cash to protect their balance sheets, which may keep credit conditions ``tight'' into next year and make it harder for some borrowers to manage debt.

While the central bank said ``there have been signs of recovery'' in money markets, the interest rate that banks charge each other for three-month loans hasn't returned to the level before credit costs surged on Aug. 9. The London interbank offered rate, which was 6.05 percent at the start of August, was 6.28 percent yesterday. It touched a nine-year high of 6.9 percent on Sept. 11.

Crisis Management
In a worst-case scenario, U.K. banks would have to raise as much as 170 billion pounds ($348 billion) if market conditions prevented them from selling the loans on their balance sheets to other investors, the central bank said.

The Bank of England, which had been criticized for not doing enough to help lenders after markets seized up, also said U.K. authorities need to ``strengthen their crisis management arrangements.'' Lawmakers will question Chancellor of the Exchequer Alistair Darling on the U.K. government's role in the affair at 11 a.m. in London today.

``Some important lessons need to be learned by both financial institutions and authorities,'' Bank of England Deputy Governor said John Gieve in a statement. His handling of the Northern Rock crisis was singled out for criticism by members of Parliament last month.

Highlighting the risks to global financial stability, the Bank of England said a slump in U.S. economic growth may spark a further drop in ``asset prices'' that ``could trigger a sharp decline in the U.S. dollar.''

> They don´t need to point fingers to the US..... It looks like the debt problem is also spreading to UK corporations...... Easy to figure out what will happen when the economy slows and the credit is less plentyful....

> Hier muß man nicht auf die USA zeigen..... Es sieht so aus als wenn die Kreditprobleme in UK so langsam aber sicher auch die angeblich so soliden Firmenbilanzen betreffen.... Unschwer zu erahnen was passieren wird wenn die Konjunktur ernsthaft ins stocken kommt und die Kreditklemme so richtig zum tragen kommt......
Debt Burden
The U.S. currency has declined 8 percent against the pound in the past year and dropped to a 26-year low of $2.0654 on July 24.

The central bank also said a slowdown in world growth may hurt global stocks and that it's concerned about a potential decline in U.K. commercial property prices.

>LOL! I agree that they should worry about commercial property ( see Commercial property "View from the top" / Economist ). But the far bigger problem is the residential market. Just click here and you will see unlike lots of BOE members the white elefant in the room .....I highly recommend to read Oh no, it can't happen here where Alice Cook from The UK Housing Bubble takes on the view of Kate Barker, who sits on the Bank of England's monetary policy committee..... Looks like the BOE members are as smart as the Fed members....

> Schon lustig.... Ich stimme überein das sich der gewerbliche Immobiliensektor zweifelsfrei jenseits von Gut und Böse bewegt (siehe auch Commercial property "View from the top" / Economist) Aber das eigentliche Problem liegt doch eindeutig im privaten genutzten Immobilienmarkt. Um das auf einen Blick zu erkennen braucht man sich nur diese Daten und Fakten vor Augen zu halten. Ich kann jedem raten sich den nachfolgenden Link durchzulesen.Oh no, it can't happen here . Hier betrachtet Alice Cook vom The UK Housing Bubble was Kate Barker, ein Stimmberechtigtes mitglied des Bank of England's monetary policy committee zu diesem Thema zu sagen hat..... Man fragt sich schon welche Voraussetzungen man erfüllen muß um in diesen Ausschuß zu sitzen.....

The burden on British households, which have taken on a record 1.4 trillion pounds of debt, is increasing along with credit costs, the Bank of England said today. First-time buyers of residential property and investors that purchased homes to rent them out to tenants are ``particularly exposed,'' the report said.

Still, U.K. commercial banks' earnings and their capital reserves have helped them cope with the market rout, the bank said. ``Robust'' economic growth ``and the high profitability and capitalization of major U.K. banks provide a strong anchor for the financial system.''

The report also said the market selloff may be welcome because investors were taking too-optimistic a view on the risks facing the global economy.

``A return to earlier conditions would be undesirable as that involved an underpricing of risk,'' the Bank of England said.

45% Of All Mortgage Debt Borrowed Since 2004 / UK

Scary numbers! The Brits should get used to headlines like this from July. I wonder how the cover will look like when the pain is really starting.....News like this Halifax Sep House Prices -0.6% On Mo, +10.7% YY are showing that the UK is still in the first inning .......

Beängstigend, oder?. Die Briten sollten sich an Schlagzeilen wie diese vom Juli gewöhnen. Bin mal gespannt wie die besonders in UK verbreitete "Yellow Press" das Thema angeht. Sie werden sicher einige Jahre Zeit haben um die Seiten mit wahren "Horrogeschichten" zu füllen..... Die aktuellen Septemberdaten zeigen recht schön das sich die Briten noch ganz am Anfang des unvermeidlichen befinden DATA SNAP: Halifax Sep House Prices -0.6% On Mo, +10.7% YY

Aboutproperty
Some 45 per cent of the value of all mortgages has been borrowed in the previous three years, according to the department for Communities and Local Government (CLG).

"Housing in England 2005/6" was compiled from 18,386 household interviews - beginning in 2005 – with the results broken down into several key areas.

Trends in tenure
There were 14.6 million owner-occupied properties in England in 2006, constituting 70 per cent of the total, in comparison to 3.7 million social renters (18 per cent) and 2.5 million private renters (12 per cent). ....

And while the growth in homeownership has slowed since the early 1990s, the total number of home owners has continued to grow – up from 9.9 million in 1981 to today's level of 14.6 million.

The social rented sector, however, has been in decline; falling from four million properties in 1999 to the 3.7 million recorded today – this is largely due to tenants continuing to exercise their "right-to-buy".



New households
Finally, the annual average income for a couple setting up a new owner occupied household during 2005/6 was some £26,288.

Owner occupiers
Of the 14.6 million homeowners in England, 5.5 million were first-time owners.

Some 56 per cent of homeowners were purchasing their property with the use of a mortgage, compared to 44 per cent who owned their home outright; of which 29 per cent had successfully paid off a mortgage, 12 per cent had purchased their property at the outset and three per cent had come into their property through other means, for example inheritance.

Interestingly, 45 per cent of all outstanding mortgage debt in England was held in mortgages starting after 2004.

This is partially explained by rising prices in the property market, but also due to longstanding mortgage holders remortgaging in recent years to release equity or simply take advantage of better deals.

The government also finds there are 242,000 households with second homes located in England and 36,000 households with a second property in Wales or Scotland.
A further 211,000 households had a second home outside the UK; of which 34 per cent were in Spain and 23 per cent were in France.

> Probably coincidence that when looking at this chart Spain and France are also in bubble territority...... Here is the detailed survey from CLG/ large PDF

> Wahrscheinlich Zufall das Spanien und Frankreich (siehe Chart) ebenfalls jenseits von Gut und Böse gepreist sind..... Hier alle Fakten der CLG Studie / 200 Seiten PDF