CEBR Predicting London Led House Price Drop in 2015

cebr-house-price

CEBR’s Douglas McWilliams says “the London housing market is being hit by a double whammy of reduced domestic and overseas demand. Sterling appreciation since the start of 2013 means that London property is no longer as attractive an investment as it was a few years ago. In addition, fears of a future mansion tax are eroding the UK’s international safe haven status. This will bring down prices at the top end of the capital’s housing market.” House price apocalypse? Not really, the forecast 2.6% drop will be a pause for breath before the demographics reassert themselves…

SKETCH: Professor Krugman, Where’s the Shark?

Paul Krugman, the Nobel-prize-winning economist is in Oxford until mid-June as the Sanjaya Lall Visiting Professor in Development and Business.

The liberal Princeton/NY Times professor just delivered his inaugural lecture asking the question (the almost-rhetorical question) Do We Face Secular Stagnation?

It follows on from his books The Age of Diminished Expectation, the Return of Depression Economics and articles like Is Capitalism Too Productive? The Myth of Asia’s Miracle and – suggested title – What Are You Laughing At, Can’t You See the State We’re In?

His proposition is that the glory days are behind us, that each recession has been harder to get out of than the last, that we will have extended periods of low-to-no growth, and that under-employment will create “dreary lives” for large numbers of people – because politicians will not listen to him and his $300bn job-creation schemes.

If Labour can get him onto a stage with Ed Miliband, the election will be in the bag. For the Tories.

He talked about the impulses to “austerity” saying that it’s as though governments want to engineer a gratuitous recession in order to have a pre-election year boom, “like the Government has done here” (cosy laughter from the full-to-overflow hall).

Small, bearded, charming, Prof Krugman looks like the oceanographer in Jaws. Remember, that clever fellow, expert in his field, ran up and down the beach warning the pleasure-seekers there was a giant shark out there waiting to devour them.

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Even Labour MPs See Falling Unemployment, Economy Growing

comres-expectations

As the economy grows, Labour’s poll lead disappears…

UPDATE:  Note the 4% of Tories who think unemployment and economic growth are going to get worse are more pessimistic than their LibDem colleagues.

 

IMF Contemplating Mass Expropriation in €-Zone

IMF-exproriation

Christine Lagarde the French chief of the IMF narrowly escaped being charged recently. Her candidacy’s main cheerleader for the IMF was George Osborne, Guido had his doubts at the time. The IMF is searching for a solution for debt laden European states to stop the €uro collapsing. Stop spending more than you tax is considered naive – how will the ruling elites get re-elected if they stop bribing the electorate with their own children’s money? Option 6 in the IMF’s discussion paper on the subject is brutally straight-forward. The final act of financial repression is to steal from everyone who has savings with a 10% wealth tax.

You have been warned now – just like Cypriot political insiders were – don’t keep any capital in €urozone banks. The IMF argues that the element of surprise is essential for the success of a capital levy…

Brown’s Favourite Economist David Blanchflower Wrong Again Economist Who Advised Brown To Privatise, Ronald Coase R.I.P.

Yet another installment in the series of David Blanchflower’s Terrible Tips. The former Prime Mentalist’s favourite former appointee to the Bank of England’s Monetary Policy Committee got his faulty crystal ball out again at the end of March, predicting growth for the year of 0.2%. In April he said that a triple dip remains a real prospect. In May he nearly fell over laughing at the suggestion a recovery was in sight. He regularly predicted rising unemployment, when it fell. So did he fare any better this time round?

Well this week the OECD doubled its outlook for UK growth to 1.5%, now the OECD expects Britain to even outstrip Germany and France over 2013. What’s more, in the last quarter, the UK grew at an annualised healthy 4.5%, with growth across all sectors. The fastest for decades. Even Ed Balls now admits we are on the road to recovery…

Ronald Coase Obituary

David Blanchflower is a poor excuse for an economist, compared to Ronald Coase, who sadly died on September 2nd aged 102. The Nobel prize winner enjoys nowhere near as much fame as media-savvy left-wing economists like Blanchflower. Coase should be more famous because it was his idea originally to sell off radio spectrum rights, a policy idea which led to Gordon Brown raising £22.5 billion from the privatisation of the 3G spectrum. The greatest one-day privatisation ever seen in Britain, carried out by a socialist. That was genius… 

AP Changes Password

One hacked tweet yesterday and the DOW plunges 100 points, only to regain it all in a matter of minutes. The AP twitter account has been restored this afternoon, the offending tweet deleted, and normality returns to the markets…

Talking Balls

It was less than fifteen minutes after the GDP news was announced before Balls’ people started calling for more borrowing and spending on the back of the news:

Two hours later they have has managed to scramble together a line:

“A one-off boost from the Olympics is welcome. But it is no substitute for a plan to secure and sustain the strong recovery that Britain desperately needs if we are to create jobs, get the deficit down and make people better off.”

Balls chooses to simply ignore the ONS stating that it only 0.2 of the 1% change was down to the Olympics.

Funny how abnormalities are only considered when the growth is positive.

+++ GDP UP 1% +++ Above Expectations, GDP Flat Year-on-Year

David Blanchflower’s Terrible Tips

Whenever Gordon Brown’s favourite former appointee to the Bank of England’s Monetary Policy Committee, David Blanchflower, makes a prediction, it’s probably a safe bet to expect the exact opposite to come true. Back in 2009 the out-of-luck economist looked into his evidently faulty crystal ball and predicted that unemployment would top 5 million if the Tories came into power. As of yesterday it stands at 2.53 million and falling. David is very nearly 100% wrong – quite a wide margin of error.

He forecast that unemployment would surge past 3 million to 3.4 million in 2010. It peaked at 2.5 million in 2010.

On Tuesday Blanchflower was at it again, wagering that the new set of unemployment figures would bring bad news:

Lo and behold once again the opposite happened, with unemployment dropping by 50,000 to below 8%. Keep trying David, you might get one right eventually…

Mugabenomics: Inflation in UK Higher than in Zimbabwe

Remember when Vince Cable warned that Quantitative Easing (QE) was “Mugabenomics”? Vince flip-flopped on that even before he joined the coalition. Guido remembers when George Osborne said “Printing money is the last resort of desperate governments when all other policies have failed.” In government Osborne has overseen the printing of more money than any other Chancellor in British history. A quarter of the national debt – all this government’s overspending – has been bought by the Bank of England via QE. Guido warned against this madness in 2008…

So it is not a shock that inflation in Zimbabwe (3.63%) is now lower than inflation in the UK (3.66%, August 2011-July 2012). Gold is good.

He's Still Jonah Brown

As we predicted beforehand, the Jonah effect wiped over 100 points off the value of the Dow and saw the NASDAQ experience its worst day since June. If you watch the video closely you’ll see that he even screwed up “ringing the bell” to open Wall Street.

He’s still the accursed one-eyed son of the manse…

Chuka Takes Cash From Casino Capitalist Tycoons to Party

Two-faced Chuka Umunna is forever banging on about the need for “responsible capitalism”. Chuka might be keen to bash the bankers in public, yet the latest update to the Register of Members’ Interests shows that the Streatham MP pocketed a generous donation of £6,030 from a financial services company to sponsor his summer party in July:

Realtime Analysis and News are better known to day traders and other running dogs of casino capitalism as RANsquawk, an extremely profitable online service set-up by City whizz-kids providing tips and rumours to traders. They promise to provide “rumours that may move the market”. Responsible capitalism in action.

As impressive a service as this sounds to Guido, it does seem like the sort of thing Chuka had in mind when he was attacking the City’s “casino culture”. With Chuka he has the trick of saying one thing to one audience and something very different to another when their backs are turned…

ECB President Draghi Goes Comical Ali

Mario Draghi, president of the European Central Bank, told a press conference following the meeting of the ECB Governing Council in Frankfurt this afternoon that “the euro is irreversible”. Asked by the media what he meant by that he exclaimed to much laughter “It stays, it stays, it stays. It’s pointless to bet against the euro, it’s pointless to go short on the euro.” From the beginning of the press conference to the end the € fell 200 pips against the $, so he was proved factually incorrect before he even finished speaking.

At the end of the press conference Spanish yields were back over 7%, capital flowed into German bunds as a safe haven, trading in Italian bank stocks was halted, the euro had pointedly rewarded those who were short and bet against it, costing the ECB a lot of credibility. Spain has now been told it will, like Greece, have to formally ask for a bailout on austere German terms. The can has been kicked down the road again, the end of the road however is in sight…

Debt Bomb: Deficits and Dancing Girls [VIDEO]

Keynesian economics stripped bare…

Simon Jenkins is uneasy about Quantitative Easing…

“The Bank of England quarterly bulletin is full of QE theology. Its report on a recent conference on the subject is pure angels on pinheads.”

Bank of England Still Artificially Lowballing Interest Rates

This morning the Bank of England’s Monetary Policy Committee will meet and in all likelihood order another £50 billion of Quantitative Easing, or money printing. This will again be used to buy government bonds, artifically holding down long term interest rates. This deliberate policy is approved by George Osborne and allows the Treasury to finance government over-spending via sales of government gilts to the Bank of England. It robs the old of the value of their savings and the young who will have to finance the future taxation which the government has effectively deferred.

This monetary experiment will have totalled some £375 billion, it is unprecedented in scale and there is no clear exit strategy to unwind QE. The Bank of England’s balance sheet is now loaded up with gilts that were not sold in the open market, holding down interest rates and allowing George Osborne to point to the bond market and claim the UK is a safe haven. In reality we have an artificial bubble in the bond markets that could pop disastrously if confidence was lost. If it goes wrong, we will look back on QE as the biggest rate-fixing scandal of all time.

The Shriti Hiti the Fan

Downing Street are drawing attention to this email in Barclay’s evidence to tomorrow’s Treasury Select Committee:

Click to Enlarge

“Mr Tucker stated the levels of calls he was receiving from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.”

As Guido said this morning, you have to distinguish between the nickle and dime LIBOR fixing scandal of traders trying to massage their end of day mark-to-market and the Treasury / FSA / Bank of England policy of fixing LIBOR. Tomorrow Bob Diamond is likely to point out that manipulation of LIBOR rates was in the national interest and sanctioned by Downing Street and the regulators.

Gordon Brown’s Downing Street economic adviser Shriti Vadera was driving the policy…

LIBORgate: Diamond v Tucker at Treasury Select Committee

After resigning as CEO of Barclays this morning, Bob Diamond may yet exact some revenge on the government when he testifies tomorrow in front of the Treasury Select Committee.

There are two LIBOR fixing scandals – the first involves traders massaging the settling of LIBOR rates a few basis points, mere hundreths of a percent, off market reality to flatter their trading books. It appears to have been going on for years and not just at Barclays. This was not so petty corruption.

The second LIBOR fixing scandal is of a different order altogether – it involves the wholesale systematic substantial misrepresentation of true LIBOR, with the encouragement of the Treasury, the FSA and in particular the Bank of England. The policy was to under-report LIBOR rates at much lower levels than were actually trading in the market. This deliberate policy was to cover-up the increased risks to the UK banking system revealed by higher LIBOR rates.

It is emerging that Gordon Brown’s economic adviser in Downing Street, Shriti Vadera, an ex-UBS investment banker, circulated a paper on “Reducing Libor” at the height of the banking crisis, which she argued would be “a major contribution to the stability of the banking system and to the health of the economy”.

That message will have gone out to the Treasury in Whitehall, the regulators and the Bank of England. They in turn will have given a nod and a wink to the investment banks. Bob Diamond is reportedly furious that the “lowballing” of LIBOR rates by Barclays – which was explicitly encouraged by the authorities  to stabilise already panicked markets – is being used against Barclays. Bob Diamond is expected to testify tomorrow that the Bank of England’s deputy governor Paul Tucker encouraged the “lowballing”.

The politicisation and manipulation of interest rates is ongoing even after Gordon Brown and Shriti Vadera are long gone. The £275 billion Quantitative Easing (QE) programme implemented by Mervyn King with George Osborne’s blessing is designed to artificially lower interest rates. We currently have a false market in Gilts, it is arguably the biggest bubble since the South Sea Bubble. It is cheating pensioners and savers of income on an unprecedented scale. This is a robbery organised from within the Bank of England …

Diamond Is Not Forever

Don’t buy a newspaper this morning – it’s already out of date with the musical chairs:

“Barclays today announces the resignation of Bob Diamond as Chief Executive and a Director of Barclays with immediate effect. Marcus Agius will become full-time Chairman and will lead the search for a new Chief Executive. Marcus will chair the Barclays Executive Committee pending the appointment of a new Chief Executive and he will be supported in discharging these responsibilities by Sir Michael Rake, Deputy Chairman.

The search for a new Chief Executive will commence immediately and will consider both internal and external candidates. The businesses will continue to be managed by the existing leadership teams.

Bob Diamond said “I joined Barclays 16 years ago because I saw an opportunity to build a world class investment banking business. Since then, I have had the privilege of working with some of the most talented, client-focused and diligent people that I have ever come across. We built world class businesses together and added our own distinctive chapter to the long and proud history of Barclays. My motivation has always been to do what I believed to be in the best interests of Barclays. No decision over that period was as hard as the one that I make now to stand down as Chief Executive. The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen.”

Diamond has nothing to lose now at tomorrow’s Treasury Select Committee appearance. He’s unlikely to go out quietly…

FSA's Barclays Report:Staff Believed Bank of England Sanctioned LIBOR Scam

This is from page 36 of the FSA Notice on the Barclays LIBOR fixing scam:

Robert Peston has identified the senior individual at Barclays to be Bob Diamond and his interlocutor to be Paul Tucker, deputy governor of the Bank of England.[…] Read the rest

+ READ MORE +



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