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Home / Business / The companies celebrate as it is 2007. Time the bank played pooper | business

The companies celebrate as it is 2007. Time the bank played pooper | business



You're eager for something, so when that happens, that's not what you hoped for at all. It is so that central bankers must feel like they see corporate debt to record heights.

They wanted companies to borrow and grow, but not so. Last week, this concern was visible in the minutes of the Bank of England's fiscal committee. They show that the committee, which foreign bank lending and led by Governor Mark Carney, resembled a rapid growth in lending to debt-settled companies worldwide to the US subprime housing market, which triggered the financial crisis in 2008.

For a sober, usually reticent group Regulators who compare today's corporate loans to the ruthless years before 2008 are a start-up date.

The trillion dollar of cheap money pumped out of Threadneedle Street, the European Central Bank, the US central bank and the bank in Japan for the last 1

0 years had to find a home. The hope was that companies starved by money would take the money and invest in new machines and processes.

Instead, they seem to have done two other things. The first was to borrow enough to pay off old debt. This is classic zombie behavior and leaves the company's leaders without any means of investment. If they make a profit, it's because workers can accept low pay and bad conditions now, as cheap loans keep their bills low.

The second destination for central bank money was property – viewed as a safe haven investment when a point of new machinery seemed like a stupid gamble.

Central bankers must have known that this can happen. They assume that a cyclical cycle of eight to ten years culminates in a recession. During the recession, interest rates and companies that borrowed heavily and failed to improve profits went out of business.

The economic crash was so great that it took good business and bad. To prevent an accident, the bank reduced interest rates, expanding the amount of money that saved the bad companies and the good ones.

Banking lenders to businesses that have done little with their previous loans is a concern. The debt only hangs up, and too often continues to be used to pay off old debts. Not just once but on a rolling program for debt financing.

That the money pumped up house prices is not much better. It also has obvious consequences.

As the committee points out, this is a global trend and not just a part of British narrative. Perhaps it makes Britain's politicians feel better. Nevertheless, it only means that when crashes occur, it becomes more bloody.

Is there a means? The Bank for International Settlements, the merger of central bankers in Basel, said interest rates should go up in the developed world, and more importantly, more should be done to make business banks deliver the impact to customers.

For sometimes, the answer from high street banks has been to keep interest rates low by pushing their margins and making up for loss of profits by lending even more.

But when so much commercial activity is based on ultra low interest rates, the BIS solution matches Lord Kings warning to regulators after the collapse of Northern Rock – namely, when the party is in full swing, they must be prepared to remove the bat .

Is the party in full swing? Full employment will tell them it is. On the other hand, wages still below 2008 levels pay on average that the party has not even begun.

Full-time banks can not help themselves when it comes to reckless lending, which leaves regulators considering more direct intervention. Given the potential for another accident, direct intervention should be an option.

  Investors monitor stock prices in a securities company in Jiujiang, China's central Jiangxi province.



Investors monitor stock prices in a securities company in Jiujiang, China's central Jiangxi province. Photo: STR / AFP / Getty Images

Lies, Curse of Lies and China's GDP

The regularity of China's official growth figure is going to turn on the forecast confirms the assertion, Benjamin Disraeli attributed, that there are three types of liars: lies, cursed lies and statistics. No serious observer believes that the world's second largest economy actually grows to 6.5% a year, or anything.

The real story in China is of an economy that went slowly even before Donald Trump took his protectionist measures. 19659002] Its exports were indeed robust in the third quarter, when US companies promoted purchases of Chinese goods to avoid paying tariffs. China's problems are mainly of a homemade nature. It avoided disaster during the global recession a decade ago, through a combination of public and private debt. State-owned enterprises were kept floating, and cheap credit ran a housing boom. Rising real estate prices allowed Chinese consumers to spend their homes as cash, and this increased demand for cars and other durable consumer goods.

In recent years, China's police have tried to do what proved impossible in the west: deflates the bubble without causing a massive recession. All the talks have been of slower but better balanced growth. If only.

Balanced growth will mean that production differs from inefficient state-owned enterprises (SOE) against private companies. In recent months, China's political decision makers have done the opposite. Purchases from SOE have increased while loans to the private sector are limited. Limitations on credit have relieved.

With the effect of Trump's trade war not yet fully felt, Beijing will increase the scope of its stimulus. In the short term, this will lead to growth purchases – but will hurt the country's long-term growth and make a future bust more likely.

  A passenger plane lands in Gatwick.



A passenger plane lands on Gatwick. Photo: Toby Melville / Reuters

Another Gatwick runway should be stopped

Only Gatwick has seen a groundbreaking scheme cut down as above as a asphalt-splitting hydra with two.

Having seen its expansion plans reversed by the government in favor of Heathrow, West Sussex Airport, Ubashed has revealed a master plan to turn its emergency runway into a fully operational second landing strip and protect land beyond its reach for a possible third runway.

This last proposal is based on businesses and the London mayor – mainly one can believe he is not Heathrow. The competing benefits of expansion at rival airports can fill a book – as they of course have: The Air Commission commissioned this question in two long plots, over many years of consultation and research. So why will it be asked again?

Gatwick's 15-year plan makes it clear that it could handle significantly more flights by maximizing production on the existing single-lane. Turbocharging the growth with another asphalt strip raises several questions.

At the practical level, there is still a shelf on this. Approved wisdom has long been that the dimensions of the airport could not accommodate two landing lanes; Extension of the emergency rail can not convince safety regulators. The Commission also made it clear that only a runway in the south-east would give economic opinion – and give Britain a fair shot to meet its climate change goals.

UN warning this month of the destruction expected beyond another 1.5C of temperature increases may have given the airport expansions a moment's break. More airplane capacity is available and more coming, at a time when economic breasts and Brexit could dampen the demand for airline.

Few require or will benefit from these further landing run Gatwick's largest shareholder, GIP, which aims to cash in its 42% stake and needs to sell a vision of ever more flights across southern clouds.


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