Santander are not marking-to-market foreclosures, instead transferring them to another company at full value. We have management chasing survival, bonuses & anything else does not matter.
Then again considering the lending standards from 1997-2008 nothing surprises me.
Well, inflation might... lets see...
- 2008 Devaluation takes about 24 months to pan thro the economy
- 2010 Devaluation if it occurs is another to consider
- Post election VAT to 20%
- Post election VAT increased on energy (Green)
- Post election VAT on food, books, water, everything
- General tax rises of about 3p income tax at baserate
- Pensions probably hit by another "dividend-the-sequel" tax
USA has China buying its Treas to hold price-up/yield-down re mortages/ loans/finance/houses. UK does not have China, so probably more Quant Easing to try to stop Gilt yield exceeding 6% 2011, which in turn will eventually create more inflation long term. Driving people out of Corp-Bonds & Gilts into equities re 1) dividend 2) dividend based on USD Euro earnings will eventually create an equities bubble. Cash yields next to nothing in MM and not much different elsewhere. 2015 corporate debt rollover looks to suck bricks, too much oversupply.
Long term it looks like inflation may be a) larger and b) sticky - which in turn could trash the "loony consumer" spend/loan/finance & housing market. If they can't hold up housing by immigration & low rates, it's all over.
It used to be Northern unemployment was an acceptable cost to limiting the south (Eddie George), now it is young financial ruin is an acceptable cost to protecting house prices. Demographics are ticking UK to USA to World. USA has declining white tax base with new immigrants not providing sufficient tax revenue. UK created a similar mess with a mostly non-existent social mobility and disconnect between earnings and cost of living. Even the bank of england is surprised by a quiescient young.
Remember a high unemployment society + minimal pensions + high house/ rent prices result in high benefit cost. Real unemployment in the UK is 5-8M when you add in the incapacity benefit increases or "Off Balance Unemployment" to match the rest of our wonderful Off Balance Accounting.
Could well become a wild ride 2010-2015.
If we have lousy export data in Q1 2010 (unlikely given Jan's figure) we may become unstuck sooner.
The banks, well they are on a win-win situations - whatever happens they get paid :-) Too big to fail.