Interest rates cut 0.5%

Generali

neverdespairgirl wrote: »

WE don't have uniquely high rates in this country.

Australia's are now 6%, down from 7%, for example.

That's been due to high expected inflation caused by labour shortages due to the commodities boom. Australian interest rates aren't usually higher than those in the UK I think.

It's all a part of the Dutch Curse/Dutch Disease*




*That is the havoc caused in the rest of the economy by having a large part of the economy based on one or more raw material mining/drilling. It is not a euphemism for anything horrid.

1sue23

Heyman wrote: »

So...anyone voting for Labour at the next General Election?

Labour,Conservative It makes no difference now .

WTF?_2

Generali wrote: »

We have to have higher interest rates in this country as we are (and have been for a while) net importers and have had higher inflation than many other developed nations.

To persuade foreigners to hold sterling denominated assets (which have to be sold to finance exports) they demand a higher rate of return than holders of lower inflation countries' assets to counteract the risks from inflation to their assets values.

Basically it's the price we pay as a country for living beyond our means and trying (in the 1970s) to print money to pay for it.

Given the scale of the government borrowing needed to meet their latest commitments PLUS the borrowing they are going to have to do when the recession really hits, we can expect rates to eventually have to be jacked up again. And pretty sharply.


Did you get your Aussie Dollars yet? If not, I'd hurry up before Sterling slips down, I gather the recent rate has been pretty good for Sterling.

Heyman_2

1sue23 wrote: »

Labour,Conservative It makes no difference now .

A Tory government now would REALLY mess things up. Not that I'm advocating the Darling and Brown show.

I suppose I agree with you then. :rotfl:

Gorgeous_George

Heyman wrote: »

So...anyone voting for Labour at the next General Election?

Nope!

'Round here it's best to vote Lib Dem to keep the Tories out.

GG

Generali

!!!!!!? wrote: »

Given the scale of the government borrowing needed to meet their latest commitments PLUS the borrowing they are going to have to do when the recession really hits, we can expect rates to eventually have to be jacked up again. And pretty sharply.


Did you get your Aussie Dollars yet? If not, I'd hurry up before Sterling slips down, I gather the recent rate has been pretty good for Sterling.

Quite honestly, the amount of money I'm taking with me it's not going to be here nor there.

I've taken a financial risk with the hedge fund thing. That and having 2 little ones and a not working (for money) Mrs Generali hasn't left much in the Generali coffers.

The Aussie economy is in much better shape long-term as (AIUI) their Government doesn't have any debt as they paid off their national debt by selling some land next to their Tokyo embassy during the Japanese housing bubble. The AUD4,000,000,000 bailout they've offered their banking system has reduced their budget surplus rather than bust a huge hole in the budget for generations to come. Anyway if I'm going to be poor, it might as well be in the sun on the beach as anywhere else.

In the medium term there are going to be 2 conflicting parts to the interest rate conumdrum, at least the rate payable on Government debt:

-Government has to sell huge amounts of debt to pay for all this and then to roll over that debt. That will of course increase interest rates as the demand for Government borrowing has risen thus the price (interest rate) rises.

- Loads of people are retiring soon and will be forced, by law, to buy annuities. The annuity provider (AIUI) is forced to buy long-term 'risk free'* Government debt to provide a secure* income stream to the annuity holder. This increases the supply of cash available to the Government for them to borrow thus pushing down the price (interest rate).

Which will win out? You decide - who am I, Mystic Meg? There's a lot of baby boomers out there but there's also a lot of money being thrown at the banks and a very long history of dreadful Government investment decisions.

PS GG - I thanked you for the Gurkha thing in your signature. It's a bloody disgrace the way they've been treated. Not sure about the Lib Dems though, surely things aren't that bad!

kennyboy66_2

Australia has had higher interest rates than the UK for a good while, partly because of the mining led boom and partly because inflation is a bit higher.
NSW & Victoria are hardly growing while WA & Tasmania were booming.
They are certainly better off than the UK in the long term, the government debt (they do have some) is much less & their private pension ("Superannuation") is miles better.
In general you pay less tax but would have to pay for private medical cover.

They also have the advantage of a huge raw material store that will be in demand again in a few years.
Their population is younger, better educated and they will continue to see net immigration for a long time yet.

I would balance this by saying that their property boom in some areas (Perth & WA in particular) makes the UK's boom look tame.

The US $ buys about 45% more AUS $ than it did in July 2008 - that to me is astonishing.
Steling has gained in value by a mere 25% in a similar time frame.