Capital Economics expects a 35 per cent nominal fall and a 41 per cent decline in rea

Edale

!!!!!!? wrote: »

Well then - why bother setting rates at all? Let's just fix them at 2% forever and live in economic paradise because we know that low rates are always good!

Problem solved :rolleyes:

At least we have the ability to set our own rates unlike if we had joined the Euro. Imagine where we would have been over the last few years if interest rates had been lower. There is a rate that is too high and a rate that is too low for the current climate, unfortunately we won't really know if the current rate is too high or low for some time.

WTF?_2

justpurchased wrote: »

No, but they have to respond to the state of the economy not just your savings.

Most of which are in a foreign currency which would leave me personally better off, if you'd read what I posted :rolleyes: I have no vested interests in rate rises - other than not wanting to see the economy completely trashed.

Don't spit your dummy just because you can not see that.

I know I'm winning the argument when you resort to insults

Just like people ram down peoples throat lower house prices are a good thing, Recessions are a bad thing.

And recessions with a thumping inflation problem are even worse.

It's time for you to snap out of your state of denial: The recession is going to happen no matter what anyone does.

We are past the point where we can do anything to stop it, there's no magic bullet or miracle cure as you seem to think slashing interest rates are.

We can only try to make sure that it's not compounded by inflation which would really make things worse.

harbinger13

Inflation arrives when there are 2 essential things present in an economy, Cheap Money and more than Normal Demand.

In the current scenario - Cheap Money has come down. Banks are tightening, Households have cut back, House owner can no longer take out Home Equity Loans and there is a general awareness, that we can not simply stretch our wallet.

More than Normal Demand - has come down or is coming down. No body is interested in buying an extra car, not too many are going out to eat - at least not every day, brown bag lunches are on the rise, only essential products are being purchased, home decorations/painting/repair have been put off or being put off.

With these 2 factors firmly in the mind of the people - the inflation is going to come down.

Now we have to address recession; no doubt it will happen - but BoE can ensure that it does not drag for years (Japan). BoE has to spell out its terms that it is there NOT only to fight inflation but also to keep the economy running - even if it is slow painful growth.

Inflation will not run wild if there is a temporary recession or very slow growth. It was different in the 80's where the jobs were mainly blue collar and those were the only dependable sources of income. Now people have diversified and there are other jobs which people can switch to. (Jobs which may not seem great - but they are present such that we can earn enough for a living).

HammersFan

!!!!!!? wrote: »

It's time for you to snap out of your state of denial: The recession is going to happen no matter what anyone does.



We can only try to make sure that it's not compounded by inflation which would really make things worse.

we are in recession now, the question is what to do? Cutting rates has a good chance of decreasing the depth and length of it. I struggle to see the rationale in letting recessions run wild. For me, I would rather be in a job and pay more for things (obvioulsy not in Zimbabwesque proportions) than be out of a job. A previous poster mentioned Japan being too slow to cut and it just ended up with a long period of grief that could have been avoided.

PS Also, I am curious about your multi-currency investment strategy. you seem to be saying you lose if rates go up and you lose if rates go down???

justpurchased

!!!!!!? wrote: »

Most of which are in a foreign currency which would leave me personally better off, if you'd read what I posted :rolleyes: I have no vested interests in rate rises - other than not wanting to see the economy completely trashed.

I know I'm winning the argument when you resort to insults

And recessions with a thumping inflation problem are even worse.

It's time for you to snap out of your state of denial: The recession is going to happen no matter what anyone does.

We are past the point where we can do anything to stop it, there's no magic bullet or miracle cure as you seem to think slashing interest rates are.

We can only try to make sure that it's not compounded by inflation which would really make things worse.

Sorry you said on another thread you would be better off sterling wise though, as that money is to buy a house!(your deposit)
Is it about winning an argument! sorry but your coments were that of someone can not accept that intrest rates need to come down (also saying I make clueless accusations does not make me warm to you.)

Try this link it may help you.
http://afp.google.com/article/ALeqM5hsuH6IqBKcg82fIc77hpyKm14HtQ

Otherwise type "oil prices uk inflation" in google news reality may start to sink in then.

WTF?_2

HammersFan wrote: »

we are in recession now, the question is what to do? Cutting rates has a good chance of decreasing the depth and length of it. I struggle to see the rationale in letting recessions run wild. For me, I would rather be in a job and pay more for things (obvioulsy not in Zimbabwesque proportions) than be out of a job. A previous poster mentioned Japan being too slow to cut and it just ended up with a long period of grief that could have been avoided.

If anything, Japan proves that cutting rates in the hope of 'stimulating the economy' just doesn't work once the massive housing bubble pops. But by all means try to complain that it's just that the cuts came 'too late'. It's because they allowed a bubble to develop where property became ludicrously, insanely, hideously overvalued and then tried everything they could to avoid suffering the consequential effects as loans based on that property defaulted.

In their case, they failed to counteract the deflation despite practically giving the banks as much money as they wanted and just dragged everything out into a long slow perma-slide which they are still feeling the effects of more than a decade later.

PS Also, I am curious about your multi-currency investment strategy. you seem to be saying you lose if rates go up and you lose if rates go down???

It's not a strategy, it just reflects the fact that I worked abroad for a good few years and accrued a lot of savings. I could see that the rates was very poor vs sterling when I moved back to the UK so I kept my savings mostly where they were. I could also see that UK houses were stupidly overpriced, so I rented instead of buying.

Since those savings are 'up' almost 25% thanks to sterling weakening and house prices in my area are down maybe up to 20% in places and continuing to fall fast, it's worked out OK.


Of course I'm saving Sterling now from my current earnings so I'm not happy at seeing them inflated away but thanks to the wodge I had abroad and houses falling in price I'm still better off.

I'm now just figuring when the best time to convert is as the entire raft of western currencies look set to take a tumble and it's a bit of a crapshoot as to what ends up on top after the dust settles.

tr3mor

justpurchased wrote: »

Recessions are a bad thing.

They're a necessary evil. They clear out the crap companies and get rid of worthless middlemen. The vast majority of productive people will be okay with a bit of belt-tightening.

Also, it's a price well worth paying to get rid of the profligate attititudes of the past 5 years.

justpurchased

tr3mor wrote: »

They're a necessary evil. They clear out the crap companies and get rid of worthless middlemen. The vast majority of productive people will be okay with a bit of belt-tightening.

Also, it's a price well worth paying to get rid of the profligate attititudes of the past 5 years.

Tell me that when all of your savings have gone!:rolleyes:
A Liquidated company does not pick any staff to keep.The best companys can be borught down in a recession "BAD DEBT" is a company killer,

HammersFan

!!!!!!? wrote: »

Since those savings are 'up' almost 25% thanks to sterling weakening and house prices in my area are down maybe up to 20% in places and continuing to fall fast, it's worked out OK.


I'm now just figuring when the best time to convert is as the entire raft of western currencies look set to take a tumble and it's a bit of a crapshoot as to what ends up on top after the dust settles.

Thanks for the detailed reply - its interesting stuff, and way out of my field of competence. Good luck with the conversions.

I would point out - in a very non-aggressive way - that house prices have only come down for you if you manage to buy one at a lower price. As yet you haven't bought one so such gains are hypothetical in much the same way as you could say the gains made by homeowners during HPI are hypothetical.

WTF?_2

HammersFan wrote: »

Thanks for the detailed reply - its interesting stuff, and way out of my field of competence. Good luck with the conversions.

I would point out - in a very non-aggressive way - that house prices have only come down for you if you manage to buy one at a lower price. As yet you haven't bought one so such gains are hypothetical in much the same way as you could say the gains made by homeowners during HPI are hypothetical.

Yes - but I'm confidant that prices have a loooong way to fall.

I'm not so confidant that my foreign currency savings will hold up, not even vs Sterling, as they are pretty much at an all time high.

My personal idea is to go 10% gold as a hedge and some mixture of savings of NS&I Sterling certs and 'A.N. Other' currency (the exact mix and denomination to be decided) .... until around 2010 when I think the time will be right to buy a house.