All aboard the EU single monetary policy train. Choo Choo!

[BobF64]

The are numerous examples of the Tories asset stripping the country. The Royal Mail was a recent one.

The Royal Mail, with its debts, losses and pension hole were an asset?

[TheAnimus]

Investors money and risks? These banks were given huge amounts of tax payers money to pass on to business as loans. Instead they sat on it and awarded themselves huge bonuses. The idea behind the negative interest rates is to get the banks to lending to business again so that jobs and economy can grow again. The same idea was considered as an option by the current Governor of the Bank of England not so long ago as George Osborne presided over the longest recession in the last 100 years.

Do you want to actually know or understand any of the things you are talking about?

I can't tell if you just want to have these views, that 'all this is evil, and if they weren't so rich it would all be fine' as your comfort or something, but your being absurd.

So, let's go through this one by one.

'These banks' - Which banks? The ECB hasn't engaged in the QE that the BoE has. However, all major banks raise money on many markets, the primary effector in each one will be what any contract is based on.

Banks at the end of the day make a 'swap' any financial product can be views as a fixed fee, for a floating fee.

During the height of the credit crunch, the ECB lent heavily on some main banks, particular of note is Commerzbank, they were forced to swallow the loses made by the political lending of Germany to Greece.

The idea behind the negative interest rates is to get the banks to lending to business again so that jobs and economy can grow again.

These aren't negative base rates, these are to do with the way banks deposit with the central banks. This is a very important distinction to make.

The problem is that people blame the bank if they lend money, and the businesses don't repay it, politicians of all parties have been slamming them for taking risks, but now the banks don't lend so easily, some believe it is hurting investment.

In the wider context of the ECB area, you've got Greece, which is running at -1%, it is suffering deflation. This becomes disastrous, because consumers know they should wait until tomorrow to buy something, as it will be cheaper, producers likewise know that it will be cheaper to make it tomorrow.

The problem comes that the eurozone mandated that certain requirements be met before countries could join, some simply lied about it. When you have countries which have very different requirements for a currency, all using the same one, it's very problematic.

What the ECB is trying to do, is not mess up the German economy, not impact the French economy, whilst reducing stress on the PIGS.

as George Osborne presided over the longest recession in the last 100 years.

Again, it's like you actually go out of your way to ensure your views, even when the numbers lie completely disagree. If you are going to have a view on something, at least try and be informed. I'm in disbelief at how ignorant, how wilfully incorrect you are on this.

And he did see them, for a fleeting instant, before the scenery of his mind changed. He saw five fingers, and there was no deformity. Then everything was normal again, and the old fear, the hatred, and the bewilderment.

So it was May 2010, that Osborne became chancellor. Q4 2011 until Q2 2012 saw negative growth, it was -0.6%.

Let's look at Labour's last bash.

Q2-2008 Q3-2009 or twice as long as the most recent one. Growth was -7.2%

So let's just go back to this utterly bizarre assertion you have.

George Osborne presided over the longest recession in the last 100 years.

Ok, so that is obviously false.

The thing to notice is that we've been using QE which, some would argue can effectively behave like a negative repo or base rate, as the QE will drive up inflation.

[Top_gun]

The Royal Mail, with its debts, losses and pension hole were an asset?

Royal Mail pension liability has not transferred to shareholders. As for Royal Mail debts, there are plenty of companies in the FTSE 100 with debts. So why is the Royal Mail any different?

[Phage]

Sigh.....
Don't feed the troll .

[Top_gun]

Do you want to actually know or understand any of the things you are talking about?

I'm afraid I've listened to too many Economists and followed the banking crisis from July 2007.

Clearly, you have not read the BBC article.

It starts with:

The European Central Bank has introduced a raft of measures aimed at stimulating the eurozone economy, including negative interest rates and cheap long-term loans to banks.

It cut its deposit rate for banks from zero to -0.1%, to encourage banks to lend to businesses rather than hold on to money.

Perhaps the whole world is wilfully ignorant apart from the wise one called TheAnimus. OMG I've wasted my time in reading all these economic articles and watching documentaries.

George Osborne presided over the longest recession in the last 100 years.

https://www.google.co.uk/search?q=ge...sm=90&ie=UTF-8

[BobF64]

Royal Mail pension liability has not transferred to shareholders. As for Royal Mail debts, there are plenty of companies in the FTSE 100 with debts. So why is the Royal Mail any different?

But those arent public companies, theyre private, and the debt rests with the shareholders and company.

[Top_gun]

But those arent public companies, theyre private, and the debt rests with the shareholders and company.

Sorry, it doesn't answer my original question. Have you actually researched Royal Mail?

[TheAnimus]

I'm afraid I've listened to too many Economists and followed the banking crisis from July 2007.

Clearly, you have not read the BBC article.

It starts with:

Which if you'd bothered to read my quote, and read the article, with any understanding of terms, you would see that is the deposit rate, not base rate. Big difference.

You can't just read a word or two in isolation, the context is what is important. Hence why I was careful to note the distinction. It will be much bigger news if (when some might say!) the ECB has negative base rates. This is what people would refer to as 'negative rates' without qualifier, as it is probably the most important.

Perhaps the whole world is wilfully ignorant apart from the wise one called TheAnimus. OMG I've wasted my time in reading all these economic articles and watching documentaries.
https://www.google.co.uk/search?q=ge...sm=90&ie=UTF-8

Yeah I think that nicely proves you did. If you can grasp the concept of a recession, then really you are below C grade GCSE. I spelled the details out for you before, my numbers are from source (ONS) you've put a vague google which doesn't back up anything, hell you didn't even get the time frame the same as before.

I'm not sure if you are a troll, or just evidently mentally deficient at very simple maths.

I also find this rather worrying, at a time when our euro interactions are coming under closer questioning from the voting public, that most people simply don't care or understand how much better our economy has been doing. The fact that been able to QE or bring around some control on spending is a very useful ability.

[Top_gun]

Which if you'd bothered to read my quote, and read the article, with any understanding of terms, you would see that is the deposit rate, not base rate. Big difference.You can't just read a word or two in isolation, the context is what is important. Hence why I was careful to note the distinction. It will be much bigger news if (when some might say!) the ECB has negative base rates. This is what people would refer to as 'negative rates' without qualifier, as it is probably the most important.

You have missed my original point on why the ECB adopted their negative interest rates strategy (creating jobs & growth) and then you got caught up in a pedantic moment on the difference between deposit and base rate. Yes I know there is a difference between deposit and base rate but it was irrelevant to the point I was making at the time.

Yeah I think that nicely proves you did. If you can grasp the concept of a recession, then really you are below C grade GCSE. I spelled the details out for you before, my numbers are from source (ONS) you've put a vague google which doesn't back up anything, hell you didn't even get the time frame the same as before.

I'm not sure if you are a troll, or just evidently mentally deficient at very simple maths.

Thanks I know the definition of a recession in terms of successive negative quarterly growth in GDP. I lived through quite a few recessions under the Tories to understand how they usually mismanaged the economy. However, I was merely mentioning the claims made by other financial experts and numerous journalists that George Osborne has resided in the longest recession for 100 years or since records began.

By the way my maths is excellent. In fact it's better than your reading and writing. If I'm mentally deficient then God help you!

I also find this rather worrying, at a time when our euro interactions are coming under closer questioning from the voting public, that most people simply don't care or understand how much better our economy has been doing. The fact that been able to QE or bring around some control on spending is a very useful ability.

If the public really understood GDP, debts and deficit reductions then it's really easy to point out much the Tory party had twisted and lied during their time in office. Isn't that more worrying for you?

[TheAnimus]

You have missed my original point on why the ECB adopted their negative interest rates strategy (creating jobs & growth)

No, I did not 'miss' it. I dismissed it, because as parter the wider story here, they can't do what they want to do, which is give negative base rates for Greece. Estimates on Greeces current deflation vary, but some put it at 1%.

How can you fix that? The traditional tactic is lower base rates, print more money etc. But doing so could create big problems for Germany and a lesser extent France, who are currently holding up the house of cards.

This is why they are trying to send a message, that is all, depo.

I'll try and give you an idea of why this doesn't matter and will not effect things. But first we have to talk about depo/repo.

Base rates, in this context is a repo rate, this is what they are agreeing to repurchase at. Deposit rates on the other hand are what interest will accrue for money deposited.

They are the opposite of each other. Repo allows banks to 'raise' money, Depo allows banks to 'stash' money.

OK, why is this important? Well going by some ECB figures, which I'm sure you've taken the time to read, you will know that in 2012 the depo amount was heading up to around ~800Bn (this is from memory, forgive me if I'm out by a few hundred), then in late 2012, that halved to around ~400Bn (ie the banks 'lent' money, or rather stuffed it some place else), this trend carried on until this year, last Q it was about ~40Bn.

This is why I say it is more about sending a message. Warning almost that they might set interest rates to 0. So now with a bit more context do you understand why the distinction between the two is so important, and why this really will do sod all to 'increase lending'.

edit found a graph: http://www.nakedcapitalism.com/2014/...rate-next.html

Thanks I know the definition of a recession in terms of successive negative quarterly growth in GDP. I lived through quite a few recessions under the Tories to understand how they usually mismanaged the economy. However, I was merely mentioning the claims made by other financial experts and numerous journalists that George Osborne has resided in the longest recession for 100 years or since records began.

You have to be kidding.

No expert has made that claim, mostly because, as we've covered, it's demonstrably false. You might as well claim he is a reptilian because it's been mentioned by experts.

If you believe that someone can make such an assertion, then clearly you aren't understanding these numbers.

http://en.wikipedia.org/wiki/List_of...United_Kingdom

It's very simple, you truely need an Orwellian re-write of history to get your original point.

By the way my maths is excellent. In fact it's better than your reading and writing. If I'm mentally deficient then God help you!

Errr I am mentally deficient at spelling. That much is normally obvious. The key thing is to recognise the weaknesses and strengths, work on ensuring that you don't get held back by them, or heavily miss led. It always made me chuckle at uni, I was given something like £2k for being dyslexic, but half that for my percentile ranking in pattern recognition and general psychometrics, the former afflicting something like 5% the other being one in a hundred thousand. We've strange priorities! Obviously a fancy £2k laptop doesn't really help much more than a £1k one.

If the public really understood GDP, debts and deficit reductions then it's really easy to point out much the Tory party had twisted and lied during their time in office. Isn't that more worrying for you?

Not at all, I don't think the Tory party enacted any austerity. I think we've failed to address the pension blackhole, which to me is just pure robbery of the N+1 generation, we've not tackled what the NHS is, and how much we are willing to pay for it.

If people really understood those things, they'd be super angry at the Tories for fibbing about what they've not done, vs what they claim to have.

[Top_gun]

I didn't want to comment on Greece as there is so much right wing nonsense written about the country. I remember watching a lecture on Greece which explored the myths with actual data - fascinating.

Thanks for the link to the Naked Capitalist blog. Clearly, it shows that you don't understand what you talk about or rather shout about. From the link you've supplied I found this:

"With the normalization of money markets and the repayment of the 3-year longer term refinancing operations (LTRO), the sum of banks’ deposits and excess reserves may return to their pre-crisis close-to-zero values. A negative deposit rate may even accelerate the repayment of the LTRO. Therefore, the direct impact of a negative deposit rate, in terms of changing the incentives to hold deposits and excess reserves, would be minimal."

So basically what the chart show is the sum of banks'deposits and excess reserves returning to their pre-crisis close to zero values. Note the word pre-crisis.This suggest the positive effect of a negative interest rate on deposits. Another bonus is "a negative deposit rate may even accelerate the repayment of the LTRO".

When experts (ie not theAnimus) says we've had the longest recession for a hundred years, they are actually referring to this chart:



George Osborne, our economics illiterate Chancellor has made this recession lasting longer than any previous recessions thanks to his daft economic policies.

[TheAnimus]

I didn't want to comment on Greece as there is so much right wing nonsense written about the country. I remember watching a lecture on Greece which explored the myths with actual data - fascinating.

Riiight. But I think everyone agrees they need a different central banking outcome, than would be best for Germany. (I'm not sure what point you are trying make, do you disagree with the sentiment that Greece is in a period of deflation?)

Thanks for the link to the Naked Capitalist blog. Clearly, it shows that you don't understand what you talk about or rather shout about. From the link you've supplied I found this:

"With the normalization of money markets and the repayment of the 3-year longer term refinancing operations (LTRO), the sum of banks’ deposits and excess reserves may return to their pre-crisis close-to-zero values. A negative deposit rate may even accelerate the repayment of the LTRO. Therefore, the direct impact of a negative deposit rate, in terms of changing the incentives to hold deposits and excess reserves, would be minimal."[/QUOTE]Ok, let's read that quote that apparently shows I don't understand the viewpoint.
Therefore, the direct impact of a negative deposit rate, in terms of changing the incentives to hold deposits and excess reserves, would be minimal.

So they are concurring with the view that this isn't going to have much effect. That is what I'm saying. That is why I'm saying it won't influence lending to businesses etc.


So basically what the chart show is the sum of banks'deposits and excess reserves returning to their pre-crisis close to zero values. Note the word pre-crisis.This suggest the positive effect of a negative interest rate on deposits. Another bonus is "a negative deposit rate may even accelerate the repayment of the LTRO".

When experts (ie not theAnimus) says we've had the worse recession for a hundred years, they are actually referring to this chart:

Find one expert saying that. You've yet to, because you are wrong, and now your so far up your rectal passage, you know it.

George Osborne, our economics illiterate Chancellor has made this recession lasting longer than any previous recessions thanks to his daft economic policies.

You do realise the biggest drop in the that red line was before he got in power. Since then there has been slow controlled growth, which most would say is due to the inflation of QE.

You can't call it a recession, when there hasn't been the requisite consecutive quarters of negative growth. It's not a recession, it's stagnant growth at worst.

But let's take that completely incorrect by formal definition that your 'experts' throw around. And apply it with the knowledge of when Osborne came to power.

Discounted GDP from the election in May 2010 would be about 370, compared to the current 2014 figure of 388 (source: BBG). To give you and idea, look at what it was in 2007, when Labour were running things, 393.

You really don't have a clue about what your talking about, I've tried to explain the terms used, the meaning, I've provided data that simply shows it, yet you just make stuff up to suite your world views. Try and understand these things have formal accepted meanings. You can't name them what you want. A recession means something precise, there is a difference between the micro and macro effects of repo/depo rates.

The thing to remember is that nothing I've suggested is controversial, granted it might be in bad taste to be looking at the problems of the ECB, but everything has been backed up by the articles in question, I mean, I started this thread based on them.

[peterb]

@ TheAnimus - Top_gun edited his post while you were composing yours - changing 'worse' to 'longest'.

Whether it is "The longest in 100 years" is not something I can comment on, although length of recession is probably less important than depth - but given the economic train crash left by Brown/Balls, it probably isn't surprising that it took so long to turn it round.

[TheAnimus]

No it most certainly isn't the longest.

Recession has a formal definition. That is, two successive (ie contiguous) quarters of negative growth.

Hence the Wikipedia page listing recessions. We had a 'double dip', but it wasn't long and the biggest damage to GDP was made prior to May 2010.

It's the incredulous behaviour, that shows a lack of understanding of economics, an inability to look at data points I mean we're talking 16 data points here, you could build something with TTL gates.....

There is no way this can be the longest recession for 100 years.

[Top_gun]

@ TheAnimus - Top_gun edited his post while you were composing yours - changing 'worse' to 'longest'.

Whether it is "The longest in 100 years" is not something I can comment on, although length of recession is probably less important than depth - but given the economic train crash left by Brown/Balls, it probably isn't surprising that it took so long to turn it round.

PeterB, the "economic train crash left by Brown/Balls" shows a naive understanding of the 2008 recession on your part. It was the banks that caused the economic mess. They stopped lending because of the lack of trust in the banking industry and so the economy halted through lack of money supply.

If you look at the 1920-24 recession, a much deeper recession than the 2008 one, it recovered within 45 months. Therefore one would expect the 2008 recession to recover much more quickly. Thanks to our illiterate economics Chancellor George Osborne, this recession lasted much longer than any other recession in the last one hundred years.

[wasabi]

[


They stopped lending because of the lack of trust in the banking industry

Self-referential argument. Banks stopped lending because they didn't trust the banks? Huh?

[


and so the economy halted through lack of money supply.

With base rates falling through the floor, threats of regulation, bond rates spiralling, and the whole sub-prime mortgage game having gone pop, the economic trainride of living on borrowed money hit a roadblock and forced us down Austerity Street. Just spending borrowed money is not the same as an economy.