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  • FIRST POST
    • MatthewAinsworth
    • By MatthewAinsworth 13th Oct 16, 10:16 AM
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    MatthewAinsworth
    Hooray for savings rates cuts
    • #1
    • 13th Oct 16, 10:16 AM
    Hooray for savings rates cuts 13th Oct 16 at 10:16 AM
    I figure you wouldn't need to hold many shares in a bank to benefit more than you lose from any cuts they make to current account rewards and savings interest

    Question is how much would you need invested?

    How much would the banks dividends improve for these rate cuts?

    Some of you probably would be net beneficiaries
Page 2
    • talexuser
    • By talexuser 14th Oct 16, 5:34 PM
    • 2,095 Posts
    • 1,559 Thanks
    talexuser
    The balancing act for people going into the (record level) market now (including me next April) is whether it is overvalued by all the money going in chasing yield, and whether the next shock on the £, or brexit rumours will trigger a big fall which might turn into a crash with newbies panicking and rushing to sell up.
    • MatthewAinsworth
    • By MatthewAinsworth 14th Oct 16, 6:40 PM
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    MatthewAinsworth
    Bowl - your example is correct if you continue selling to UK customers, I suppose say we became more of an exporter? China previously deliberately weakened the Yuan to do so. I suppose it depends on the nature of the business. Benefits lag is true but better than nothing, I suppose inflation may help debt as well as the price of shares themselves being subject to inflation as more money enters our system, perhaps as China begins to spend its reserves of sterling or at least slow the pace of hoarding it

    Very intrigued - growth investors yes, value investors no. Value investing for the dividend usually does better than growth I've read
    • jimjames
    • By jimjames 14th Oct 16, 6:44 PM
    • 10,851 Posts
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    jimjames
    Its a no brainer that people already invested in markets want others to join them and hence hike up their pots too.
    Originally posted by veryintrigued
    Nope. I'd rather markets drop so I get a better price for units I'm still buying.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • MatthewAinsworth
    • By MatthewAinsworth 14th Oct 16, 6:46 PM
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    MatthewAinsworth
    Talex - crashes shouldn't really be a problem with lifestlying and buy&hold - I feel young enough to be 100% equity a crash would be a great opportunity in fact

    I think a rate rise would at least slow the rate of investment but I think it'd be done carefully enough. Mortgages are supposed to tolerate a 3% rise too on the affordability checks so I wouldn't think a 0.5% or 1% rise would trash all the banks
    • veryintrigued
    • By veryintrigued 14th Oct 16, 7:33 PM
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    veryintrigued
    Nope. I'd rather markets drop so I get a better price for units I'm still buying.
    Originally posted by jimjames
    And then what.....
    • talexuser
    • By talexuser 14th Oct 16, 7:57 PM
    • 2,095 Posts
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    talexuser
    There seem to be so many advantages in a weak currency and high inflation it's surely incompetent we haven't pursued this excellent policy before.
    • wmb194
    • By wmb194 14th Oct 16, 8:23 PM
    • 22 Posts
    • 21 Thanks
    wmb194
    There seem to be so many advantages in a weak currency and high inflation it's surely incompetent we haven't pursued this excellent policy before.
    Originally posted by talexuser
    Britain did, during the financial crisis. You don't remember there were a couple of years of c.5% consumer price inflation and King talking down the currency at every opportunity? Then things settled down.

    Edit: If you define 5% as high but many did at the time, and many uncritically extrapolated that it would last forever.
    Last edited by wmb194; 14-10-2016 at 8:26 PM.
    • MatthewAinsworth
    • By MatthewAinsworth 14th Oct 16, 9:46 PM
    • 2,243 Posts
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    MatthewAinsworth
    I think the pre brexit vote establishment was largely consisted of an elite who bought foreign labour, foreign products, and went on lots of holidays; they didn't want their little bubble threatened.

    Migrants only percieved the UK as "well paid" because the £ used to be strong and they could send money home, and the old elite were more than happy to have extra labour supply to suppress the UK pay rate. Without a strong pound we're not so "well paid" by international standards so there should be more room to grow than before

    The strong £ of before was doing no favours to local workers, they rarely went abroad and only bought foreign products because that was the only choice they reasonably had
    • mollycat
    • By mollycat 14th Oct 16, 10:13 PM
    • 565 Posts
    • 841 Thanks
    mollycat
    I think the pre brexit vote establishment was largely consisted of an elite who bought foreign labour, foreign products, and went on lots of holidays; they didn't want their little bubble threatened.

    Migrants only percieved the UK as "well paid" because the £ used to be strong and they could send money home, and the old elite were more than happy to have extra labour supply to suppress the UK pay rate. Without a strong pound we're not so "well paid" by international standards so there should be more room to grow than before

    The strong £ of before was doing no favours to local workers, they rarely went abroad and only bought foreign products because that was the only choice they reasonably had
    Originally posted by MatthewAinsworth

    As Bowlhead said earlier, you should really try and educate yourself.

    The stuff you're posting is total nonsense.
    • bigadaj
    • By bigadaj 14th Oct 16, 10:20 PM
    • 7,861 Posts
    • 4,796 Thanks
    bigadaj
    As Bowlhead said earlier, you should really try and educate yourself.

    The stuff you're posting is total nonsense.
    Originally posted by mollycat
    I'd agree with the gist of your point, though the post you've actually quoted does make some sense, unlike most others.
    • bowlhead99
    • By bowlhead99 14th Oct 16, 11:56 PM
    • 5,145 Posts
    • 9,076 Thanks
    bowlhead99
    Without a strong pound we're not so "well paid" by international standards so there should be more room to grow than before
    Originally posted by MatthewAinsworth
    Great: we used to be paid $15 an hour, but if we give up 20% of our wealth from a global perspective in terms of what worldly goods our money will buy us, and get paid $12 an hour instead, we will have plenty of room to eventually grow our salary to $15. Where do I sign?

    ... only bought foreign products because that was the only choice they reasonably had
    Yes, because things like tea, coffee, sugar, bananas, oranges, oil, plastics, precious metals and gems etc are not native to this country, and non-UK businesses from elsewhere in the world dominate the market in manufactured products and consumer services such as white goods, vehicles, smartphones, TVs, video game systems, erection medication, international internet services and social media, market leading industry-standard computer software, not forgetting blockbuster movies and top selling music and arts etc etc, whatever floats your boat, the list goes on.

    The idea that 'the average person' doesn't take foreign holidays so the strength of the pound is not an issue, is nonsense. (aside from the fact that that millions of less-well-off people do still find the £200 for a package holiday to the Med). We can look back fondly on yesteryear when kids didn't want their Playstations and Pokemon and were happy with Hornby and Scalextric, but both those have been made exclusively in China for 15 years now. British retailers like M&S source most of their fabrics from Eastern Europe, Africa or Asia.

    If you are saying that people buy things from overseas because it's the only choice they practically have, you are damn right, but the problem of most goods and services having their market leaders based in non-UK countries is not solved simply by stating it, nor by increasing interest rates or inflation as you would like.

    Devaluing the currency is something that might be expected to improve the current account deficit, although it did not help much in 2007-13 when the deficit widened despite sterling falling. The world is a tricky place, and elasticity of demand for exports and imports together with global economic conditions like recessions, credit availability and money printing, change the outcomes.
    • MatthewAinsworth
    • By MatthewAinsworth 15th Oct 16, 4:44 AM
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    MatthewAinsworth
    I think the previously strong pound was reinforcing that though, things that could've been made here got made elsewhere, that will take time to slowly change or we accept higher prices or different products. As someone who's struggle to afford a holiday I spend nearly all my money here, even if the underlying products are imported, but there's a fair amount of UK labour involved in that so what I make on the £ scale is more relevant than what I make on the $ scale- so hypothetically if I'm now being paid less in $ but eventually more in £ as jobs are brought to these shores, then I would be better off. Its the idea that I'm someone whod benefit from protectionism.

    Some things we can never make here without the intervention of science, but its mostly food and housing and energy that concerns me. They say petrol prices will rise but nowhere near what they used to be

    I think some people nonsense it and some don't because of the political nature of it and different people wanting different things from our politicians
    • bowlhead99
    • By bowlhead99 15th Oct 16, 8:39 AM
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    bowlhead99
    As someone who's struggle to afford a holiday I spend nearly all my money here, even if the underlying products are imported, but there's a fair amount of UK labour involved in that so what I make on the £ scale is more relevant than what I make on the $ scale-
    Originally posted by MatthewAinsworth
    But because the underlying products are imported, the fact that you spend your money in Tesco or Aldi or Currys or Amazon UK in pounds sterling doesn't immunize yourself from the fact that they'll set their prices based on what it costs them to bring stuff in.

    So the inevitable inflation of prices on the high street isn't driven by people wanting more stuff or having more money available to pay for stuff, it is 'cost push' inflation, and the only way for the retailers to avoid it is by squeezing the cost of the stuff they can control locally (i.e. not give pay rise to the shop workers), or simply make lower profits so there's less reward for them investing and they'll be reluctant to expand the business and employ more people.

    If you buy a microwave oven on the highstreet rather than on the internet, you'll have a relatively lower exposure to the 'pure' cost of the imported product because there is more in the way of UK-costs like shop assistants. But those shop assistants want paying more money because everything in their lives are costing them more. If you're instead buying personal services like childcare or going to the barber or having a cleaner or gardener, then all those people want more money too. Because in the same way a UK bike factory charges more for the finished product because their cost of buying rubber and metal and plastic went up, the childcare person or barber delivering a personal service that they created themself, charges more for the finished product because their living costs of buying a TV or a car or a bunch of imported bananas or onions all went up.

    So this idea that you are not worried about how many dollars you've got because you are not one of those people who needs to spend dollars, is maybe misplaced.

    Its the idea that I'm someone whod benefit from protectionism.
    If you can avoid buying goods or services containing any imported inflation and at the same time you're working in an industry that grows because people find the UK a low-cost centre to do stuff, you will be better off than some.

    There is a general consensus by economists, which has existed for decades, that overall less protectionism is better because the free market results in more stuff being produced more efficiently without it. This doesn't mean certain countries or individuals couldn't be winners at least for a period of time by being protectionist.

    They say petrol prices will rise but nowhere near what they used to be
    Last year, crude oil was down at $30 a barrel. Which was £20 at an exchange rate of 1.5ish. Now it is over $50, which is £40 at an exchange rate of 1.2ish. So in sterling, the oil used to make petrol has literally doubled.

    Fortunately, while the cost of refining it and distributing it has gone up with exchange rates, they haven't doubled, and the cost of running a petrol station hasn't doubled, and most of the cost you pay at the pump is fuel duty which is a certain number of pence per litre and hasn't doubled. So you are not seeing petrol at the pump for £2 when it was £1 last year. For once, we can be grateful(!) that the government charges us so much tax that we are insulated from changes in the underlying cost of the petrol ingredients themselves, because of more of the tax being a flat rate per litre than being the value-based VAT stuff.

    Still, i) the oil price increases and exchange rate differences haven't all made their way to the forecourts yet because it takes a time for all the forward pricing agreements to run out, and ii) the oil price is not as high as it will eventually get, and iii) sterling is projected to weaken further.

    Back in 2007/8 we had oil price sky high at $100+ but fortunately the dollar was 2 to the pound so it was 'only' £50-60 a barrel (and dollar weakness was part of the reason for the price in dollars being high). We got away with £1-1.20 a litre at the pump. Then 2011-14 we had oil price at over $100 without the dollar being so dirt cheap, at a more medium-y level of 1.6 ish, and found petrol at £1.40 a litre and diesel sometimes up to 145, 148. Then we got cheaper barrel prices with dollars at 1.5 to get us down to £1/litre. What we haven't tried yet is oil at $100 a barrel with dollars at 1.1 to the pound. I'm not predicting $100 oil any time soon, but that wouldn't be fun on the forecourt.
    • Gadfium
    • By Gadfium 15th Oct 16, 10:24 AM
    • 545 Posts
    • 989 Thanks
    Gadfium
    I think the pre brexit vote establishment was largely consisted of an elite who bought foreign labour, foreign products, and went on lots of holidays; they didn't want their little bubble threatened.

    Migrants only percieved the UK as "well paid" because the £ used to be strong and they could send money home, and the old elite were more than happy to have extra labour supply to suppress the UK pay rate. Without a strong pound we're not so "well paid" by international standards so there should be more room to grow than before

    The strong £ of before was doing no favours to local workers, they rarely went abroad and only bought foreign products because that was the only choice they reasonably had
    Originally posted by MatthewAinsworth
    Do you actually read the garbage that you post or does it flow from you in a stream of [un]consciousness???

    I suppose say we became more of an exporter?
    Originally posted by MatthewAinsworth
    How do we do that then? I suppose one way might be to trash our economy so we end up as poorly paid as your average Chinese worker. Then we can compete with them on a like for like basis....
    • Thrugelmir
    • By Thrugelmir 15th Oct 16, 10:42 AM
    • 51,336 Posts
    • 43,184 Thanks
    Thrugelmir
    As Bowlhead said earlier, you should really try and educate yourself.

    The stuff you're posting is total nonsense.
    Originally posted by mollycat
    In a roundabout way there's a far amount of truth in the statement. Some people are benefiting at the expense of others. The wealth divide has grown. As a nation we have lost the community spirit and become increasingly self centred. Concerned in the main with the value of our property rather than ownership of other assets.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • Gadfium
    • By Gadfium 15th Oct 16, 10:52 AM
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    • 989 Thanks
    Gadfium
    In a roundabout way there's a far amount of truth in the statement. Some people are benefiting at the expense of others. .
    Originally posted by Thrugelmir
    And the way to correct is is to tank the value of sterling and do long term economic damage?
    I'm sorry, as much of a leftie liberal that I am I cannot see any sense in the path that we are taking at the moment. I must be one of the metropolitan elites that is having my "bubble" threatened.
    • coyrls
    • By coyrls 15th Oct 16, 11:49 AM
    • 598 Posts
    • 550 Thanks
    coyrls
    I think the previously strong pound was reinforcing that though, things that could've been made here got made elsewhere, that will take time to slowly change or we accept higher prices or different products. As someone who's struggle to afford a holiday I spend nearly all my money here, even if the underlying products are imported, but there's a fair amount of UK labour involved in that so what I make on the £ scale is more relevant than what I make on the $ scale- so hypothetically if I'm now being paid less in $ but eventually more in £ as jobs are brought to these shores, then I would be better off. Its the idea that I'm someone whod benefit from protectionism.

    Some things we can never make here without the intervention of science, but its mostly food and housing and energy that concerns me. They say petrol prices will rise but nowhere near what they used to be

    I think some people nonsense it and some don't because of the political nature of it and different people wanting different things from our politicians
    Originally posted by MatthewAinsworth
    So to summarise: “it’s the rich that will suffer not the poor”, that truly is a triumph of hope over experience.
    • MatthewAinsworth
    • By MatthewAinsworth 15th Oct 16, 1:31 PM
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    MatthewAinsworth
    Bowl - it does depend on how much UK labour is involved in the distribution too, I hope that what I buy is fairly flexible

    I agree with what you say on oil and I think that's a big influence in overall figures

    I hope my mortgage will inflate away a little, cost push could do that I suppose, all depends on rates too

    Gadfium - is there really economic damage, or just change? We couldn't carry on with a trade deficit forever, being the worlds customer and Europe's source of employment, maybe its better to shift our economy more towards export before all the family silver is spent
    • MatthewAinsworth
    • By MatthewAinsworth 15th Oct 16, 1:39 PM
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    MatthewAinsworth
    Its possible that brexit will end up with more free trade than before though, with China , Australia, etc

    I think what we need is to have a deal with a country that's richer than us, that can be our customer, that UK citizens will migrate to
    • Thrugelmir
    • By Thrugelmir 15th Oct 16, 1:40 PM
    • 51,336 Posts
    • 43,184 Thanks
    Thrugelmir
    And the way to correct is is to tank the value of sterling and do long term economic damage?
    I'm sorry, as much of a leftie liberal that I am I cannot see any sense in the path that we are taking at the moment. I must be one of the metropolitan elites that is having my "bubble" threatened.
    Originally posted by Gadfium
    Seems as if you have little understanding of the true state of the UK economy. Brexit or no brexit. Sterling was significantly overvalued. No point in kidding ourselves that the UK was ultimately immune from market forces and could continue to spend beyond its means. Selling property to each other doesn't create real wealth.
    Last edited by Thrugelmir; 15-10-2016 at 1:43 PM.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
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