Vince Cable

JonnyBravo

Quite a few posters regularly seem to rate this fellow. Seem to have seen several posts wishing him as chancellor etc.

This morning he was on the Andrew Marr show and was saying the chancellor should write to Merv and tell him to forget his inflation target for a bit and significantly cut interest rates. ie to temporarily have interest rates back under political control.

Do people agree this is the right approach?



What is more important... "potential" recession or inflation?


I suspect it's on i-player for those who want to look it up but I found him quoted in this story.
http://news.bbc.co.uk/1/hi/uk_politics/7653194.stm

Pobby

Rock and a hard place I would say.

amcluesent

Letting rip with inflation like Labour did in the 1970's is pretty much inevitable, which is why the smart money is piling into gold and index linked bonds.

Eroding their debt with inflation is great for mewers and the government; the fact it wipes out pensioners and the hated middle-class savers well be a welcome bonus to Clown and Mandy.

Banderman

JonnyBravo wrote: »

Do people agree this is the right approach?

No, he's gone down in my estimation. He can only say these mad things because he'll never be in power.

lynzpower

what I dont understand in all this is why reduce IRs, is it so that those on SVRs can maange thier payments without going into default- or to increase lending?

If its to increase lending then where is the money going to come from for this? If Libor is dried up and interbank lending is , for so many dead in the water, then what next?

ad9898_3

Vince normally has good vision and some good ideas, I feel this isn't one of them. Anything that may encourage people to start borrowing again like no tomorrow can't be good

The banks realise now that the market is over inflated by as much as 40% (the best deals are now at 60% LTV),

The BoE are going to cut anyway shortly, any panic measures by the government to take the independence of the BoE away and then cut rates by 1-2% would really spook the markets.

napoleon

I think Vince might have been smoking the funny stuff over the week-end. Liberals like that sort of thing, don't ya know

WTF?_2

lynzpower wrote: »

what I dont understand in all this is why reduce IRs, is it so that those on SVRs can maange thier payments without going into default- or to increase lending?

If its to increase lending then where is the money going to come from for this? If Libor is dried up and interbank lending is , for so many dead in the water, then what next?

It serves a couple of purposes.

First, it helps the banks. They should be able to borrow their money cheaper. They can then either increase the margin that they make on it when they lend, or they can offer cheaper loans to attract more business, whilst retaining their margin.

(Of course, ever since it became obvious that interest rate policies were out of whack with reality the market has been taking matter into its own hands with the increase in the spread between LIBOR and real world rates.)

Secondly, it should help businesses borrow money more cheaply and thus stimulate economic activity.

... and it might bring down the costs of servicing mortgages and debts for that section of population in over their heads - meaning more votes.


Things against it - well, it will likely hit the pound making imports more expensive. Given that there's such a huge balance of trade deficit and that we on balance we import practically everything (even food) these days it'll likely push prices up even further. This may well wipe out a lot of the gains made by people saving a bit on their debt repayments. But most people up to their knackers in debt probably don't bother worrying too much about their overall accounts and probably will not realise that the cuts give with one hand and take away with another. General price raises of the stuff we import will be blamed on the 'global economy', not interest rate cuts. That's the tack the govt have been taking for all our ills anyway.

And in general those nasty, prudent, financially-savvy 'cash hoarders' (ie savers) will be forced to take a hit. Hooray! Why should them gits have savings when we have huge mortgages and credit card bills to pay, innit?

Of course, if you are retired and relying on supplementing your income from savings interest you will be screwed especially hard with cost of living increases and decreases in income.


Just watch out what happens as the government attempt to borrow their way out of the mess. With record public sector deficits already they are going to have to borrow on a simply unprecedented scale. That means they will eventually be forced to shift rates on Sterling back upwards all the more sharply to attract finance. A real shock coming then.

carolt

I think Vince has had a better grip on the housing issue - my particular interest - than the other 2 main parties, and has been warning re the dangers facing the housing market for a while.

He's not perfect, but he does seem to have a better grip on the economy than Gordon or George Osborne do.

Am I the only one to think Osborne looks about 9? Unnervingly, Osborne is my age and was at university with me - just can't take the guy seriously. I mean, what do I know about running the country? And nothing in his CV gives me the impression he has any more idea than I do.

Kez100

I do think it is an option. I wish it had no come to this as the innocents will pay too but I do think at the crossroads we are at this is a way to go. I'd prefer no change at the moment (despite being BOE tracked on my mortgage) just to guage the tide a bit more.

amcluesent

>A real shock coming then.<

And so another Labour government collapses with inflation out of control and an exchange rate crisis.