Friday, 13 September 2013

Carney Urges Calm On House Price Bubble Talk

On this one, Carney may be very wrong! 

He does not seem to grasp how lending for the housing market should be severely separated from bank lending to grow business. 

In short, he does not grasp that banks are in the WRONG business when they mismatch maturities. 

His approach dooms the UK to slow business growth or boom and bust because interest rates are useful only as long term instruments of policy when tied to house purchases. 

They need to be separated away in fact so that traditional banking and saving can be conducted to give prioritisation of non-long term business opportunities.  Mixing hosing loans with the need for short term capital is crazy and shows he does not understand the difference between stock market funding and bank funding and funding for housing!

Simply what is good for the exchange rate may not be good for house loans may not not good for business generation may not good for working capital and may not be good for pension building and saving. Tying these all together through bank lending is stupid banking and economics beyond belief.



I think it is important to be frequently optimistic and thoughtful! 

RT

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