Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Dow Long-term Trend Analysis - Coronavirus Triggering a Stocks Bear Market? - 27th Feb 20
Trump or Sanders? Both will pile up the Debt - 27th Feb 20
Oil Price Is Now More Volatile Than Bitcoin - 27th Feb 20
A Digital “Fedcoin” May Be Coming… And It Would Be Terrifying - 27th Feb 20
India's Nifty 50 Stocks: Does the Bad Jobs Outlook Spell Trouble for Stocks? - 27th Feb 20
How Crypto Currencies Are Helping Players Go Private - 27th Feb 20 -
Gold and Silver The Die Is Cast - 27th Feb 20
US Economy Permanently Addicted to Zero Interest Rates - 27th Feb 20
Has the Stock Market Waterfall Event Started Or A Buying Opportunity? - 27th Feb 20
Advantages of Enrolling in a Retirement Plan - 27th Feb 20 - LS
South Korea Coronavirus Outbreak Data Analysis Warning Rate of Infection is Exponential! - 26th Feb 20
Gold Price Long-term Trend Analysis Forecast 2020 - 26th Feb 20
Fake Markets Are on Collision Course with Reality - 26th Feb 20
Microsoft is Crushing the S&P 500, Secret Trait Of Stocks That Soar 1,000%+ - 26th Feb 20
Europe's Best Ski Resorts For The Ultimate Adventure - 26th Feb 20
Samsung Galaxy S20+ vs Galaxy S10+ Which One to Buy? - 26th Feb 20
Gold Is Taking on $1,700 amid Rising Coronavirus Fears - 26th Feb 20
Is This What Falling Through the Floor Looks Like in Stocks? - 26th Feb 20
Gold Minsky Moment Coming - 26th Feb 20
Why Every Student Should Study Economics - 26th Feb 20
Stock Market Correction Over? - 26th Feb 20
US Bond Market Yield Curve Patterns – What To Expect In 2020 - 25th Feb 20
Has Stock Market Waterfall Event Started Or A Buying Opportunity? - 25th Feb 20
Coronavirus IN Sheffield! Royal Hallamshire Hospital treating 2 infected Patients, UK - 25th Feb 20
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Halifax, HBOS Cancer Continues to Eat into Lloyds TSB, £4Billion Loss

Companies / Credit Crisis 2009 Aug 05, 2009 - 04:40 AM GMT

By: Nadeem_Walayat

Companies

Best Financial Markets Analysis ArticleToday Britains biggest tax payer bailed out bankrupt mortgage bank HBOS, contributed towards Lloyds TSB bottom line loss of £4 billion. The HBOS bad mortgage debt losses continue to eat into Lloyds TSB's balance sheet to the tune of another £10 billion, that's £20 billion to date of HBOS bad debt provisions of which the UK tax payers have a 50% stake in and given more capital injections will soon rise to approx 70% of the group. So that there is no illusion A 70% GOVERNMENT STAKE MEANS DEFACTO NATIONALISATION


Lloyds TSB's Path Towards Nationalisation.

Back on September 18th 2008, the shotgun wedding between Lloyds TSB and HBOS (Takeover) was hailed as a smart move by much of the mainstream press, but as I voiced at the time ( Lloyds TSB Takeover of HBOS for £12 billion, £2.32 per share ) that Lloyds TSB may come to regret the decision as the economic slump unfolds, which is now coming to pass. Now the government has squanders more than £30 billion in terms of capital injections and a further potential loss of as much as £275 billion as per the amount of debt insured. This on top of all of the other bailouts brings the total liabilities and capital injections to a huge £1.5 trillion that risks bankrupting Britain as I elaborated upon yesterday - Northern Rock, Tax Payer Bailed Out Bankrupt Bank Adds 750Million More Losses. That risks an eventual real loss of as much as £500 billion, against Alistair Darlings assurances that Tax payers would not lose a single penny!

Defacto Nationalisation is inevitable as I pointed out on the 13th of February (Will HBOS Bankrupt Lloyds TSB into Nationalisation?)- Given the size of the HBOS and Lloyds TSB loan book, the £10 billion loss declared at the time was just the tip of the ice berg as 2009 will turn out to be a worse year than 2008 in economic terms as £10 billion of share holder equity cannot hope to defend against a loan book well in excess of £1 trillion, where even a further 1% loss due to bad debts would equate to more than total shareholder equity, and given the crash in UK house prices of 21% to date with a housing market depression to follow for many years despite the ongoing summer bounce, I cannot imagine how the bank can hope to survive in its present form.

Is the Worst Behind us ?

I am afraid not, we are perhaps at the the half way point (if we are lucky) which implies further capital injections into the bankrupt banks coupled with at least another £600 billion in terms of asset protection insurance. Then we have the budget deficits of as much as £200 billion a year to contend with, as mentioned earlier the consequences of all of this debt will be low economic growth and much higher inflation following the ongoing deflationary economic crash into mid 2009 that will equally be followed by a powerful inflationary up thrust that will send sterling plunging and interest rates higher as investors balk at holding UK government bonds (gilts) which will likely trigger a series of further Quantitative Inflation measures as the British economy is unable to wean itself off of Mervyn Kings magic central bank wand that conjures hundreds of billions out of thin air, that will be necessary to finance the huge budget deficits.

UK House Prices Summer Bounce

The unfolding bounce in UK house prices prices is inline with my May analysis that concluded that UK house prices will experience a bounce during the summer months from extremely oversold levels as a consequence of liquid buyers returning to the market and the debt fuelled economic recovery which 'should' be reflected in rising house prices during the summer months that undoubtedly will increasingly be taken by the mainstream press to conclude that the house prices have bottomed.

To receive my next major in depth analysis of the UK housing market subscribe to my always free newsletter.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Aq
05 Aug 09, 13:53
Incorrect data

The taxpayer owned 43%. Lloyds already paid part of the preference shares so no 70% on the table.


Nadeem_Walayat
05 Aug 09, 14:51
70%

I said current is approx 50%, watch as it rises towards 70%.


Aq
05 Aug 09, 17:13
70% was already paid

Lloyds gave the uk 70% 4 months ago and it already paid that part (pref shares) and the gover. Now stands at 43%

are u suggesting Lloyds is going to be bailed out again?

The bank has already covered the big impairments and the other toxic assets will go into the gov. scheme.

I really fail to see your point.


Nadeem_Walayat
05 Aug 09, 18:36
Lloyds Losses.

The point is being ahead of the curve in seeing through the creative accounting deployed to give the illusion that the stake is less than what it actually is and infact shrinking when it is inevitable that it will grow!

As with Northern rock where loans are converted to equity and this spread the illusion that Northern Rock has repaid more than what it actually has.

Dig deeper and you will see that the REAL tax payer stake is north of 50% and destined to rise to 70% as LLoyds declares more losses that burns through capital, and then who do you think will step in to replace that capital ? Yeh the tax payers hence 70%.


dave
10 Aug 09, 09:25
UK House prices

An informative article as usual, I will am looking forward to reading your next major in depth analysis of the UK housing market. After the bounce we have had recently I am wondering if this is a V shaped recovery or if we will see prices drop off again.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules