Special Feature
Will “funding for lending” ease the banks’ home-o-phobia? As trend analysts, we naturally watch trends very closely. Last week, we noticed something quite unusual. About eight house-building shares have moved into an uptrend, almost simultaneously. Is the market trying to tell us something? In our view it is, and it’s the sort of signal you ignore at your peril; certainly if you don’t like missing decent investment opportunities.
Persuading the banks to lend has, so far, been a bit like cajoling an elephant to move forward by beating its backside with a wad of cotton wool. The banks naturally claim that it’s not their fault. It’s not a supply problem, they assert. It’s because of lack of demand from British business. They say that, despite copious evidence, businesses are suffocating in droves from a lack of credit.
So why has this happened? We believe that the government’s latest cunning plan for getting the banks to lend- the “funding for lending” scheme - has a lot to do with it. Details of how the scheme will work were released last week. Of course, there have been similar schemes in the past, none of which has been conspicuous by its success. Remember Project Merlin, for example? Or the National Loan Guarantee Scheme? Me neither, except that both scheme fell well short of expectations.
July 2012 | www.financial-spread-betting.com | 27