FED cuts by 0.5%

van_persie

People seem to think that interest rate cuts are the miracle cure to the current economic crisis; let's not forget, it's low rates that encouraged this insane boom, along with lax lending criteria, making over-leveraged borrowers sensitive to even the smallest rate rises.
Now, we have a disconnect between the IRs set by the BoE and that exercised by the banks. Those on tracker rates will not benefit fully from rate cuts, for example. Other mortgage products will probably go UP in the event of another IR cut with most banks keen to attract savers rather than borrowers.
Personally, I feel rates will be going up again to counter hyperinflation by mid next year.
As for house prices, they'll continue their downward spiral until they reach affordable, sustainable levels with sensible lending criteria.

Realy

!!!!!!? wrote: »

Why bother addressing points made and defending your own position when you can just make a sarky put-down against the person whose views you disagree with, eh?

Seems to be a time-honoured tradition amongst a certain element on this forum.

:rolleyes: Because you won't answer a very simple question, you know lower intrest rates will result in less unenployment than increasing it.
But you won't, can't admit it becaues you want higher rates!
You are very touchy when it suits you.;)

purch

Which of these interest policies when applied to the current situation will result in the highest levels of unemployment and business failures ?

As has been proven by the current "mess" it is the availabilty of credit, rather than the actual price of it that usually is the determining factor.

Japan has shown that reducing the price of borrowing does not necessarily result in stimulating economic activity.

But to get back to your question........undoubtably raising borrowing rates in this environment will have a negative effect, but lowering them will not automatically have a positive effect.

fatpig_2

!!!!!!? wrote: »

But of course, low interest rates will stop that happening, right?

We are going to have recession and job losses no matter what happens to interest rates.


.

This is very true. We should just take the punishment that's coming and stop whingeing.

And put interest rates up to stop this ever happening again

Realy

purch wrote: »

As has been proven by the current "mess" it is the availabilty of credit, rather than the actual price of it that usually is the determining factor.

Japan has shown that reducing the price of borrowing does not necessarily result in stimulating economic activity.

But to get back to your question........undoubtably raising borrowing rates in this environment will have a negative effect, but lowering them will not automatically have a positive effect.

100% agree, the only hope of lower rates is that it will free up some cash over time and this is paid back to the banks ( I dont think lowere rates will increse borrowing just make current debts chaper to service) But it will take months, and months to show the effect.
When things have stabelized rates will go up I think but putting them up at the moment is financial suicied.

Realy

fatpig wrote: »

This is very true. We should just take the punishment that's coming and stop whingeing.

And put interest rates up to stop this ever happening again

I wonder if you will be whinging down the job center.:rolleyes:
If you belive higher intrest rates won't cause mass unenployment you are foolish.

Why do you want mass unenployment?

fatpig_2

Realy wrote: »

I wonder if you will be whinging down the job center.:rolleyes:
If you belive higher intrest rates won't cause mass unenployment you are foolish.

Why do you want mass unenployment?

Increasing unemployment is going to happen anyway thanks to having interest rates too low for many years. Increasing interest rates and keeping them high will stop it happening again

kennyboy66_2

!!!!!!? wrote: »

Why not include zero percent interest rates in there (if low interest rates are the be-all and end-all to economic problems) and tell me what you think is the best option?

.

"without throwing bogus arguments in".

I just knew you wouldn't be able to help yourself.:rolleyes:

I'd like to see interest rates down to 2.5% by April.

It is laughable to think that rates that low would re-ignite the housing market.
I suspect house prices will fall for the next 2-2.5 years, albeit at a slightly lower rate than over the last year.

Keeping interest rates the same or increasing them will mean more business failures, more unemployment, more repossessions, reduced tax revenues & higher government borrowing.

Of course unless you are only interested in seeing house prices fall by as much as possible then keeping rates as they are doesn't seen to make much sense.

Or you could have a holiday booked to Florida.

Realy

fatpig wrote: »

Increasing interest rates and keeping them high will stop it happening again

:rotfl: :rotfl: You right there won't be a banking system as everyone will be jobless and homeless. Might as well put them up to 100% that wil teach them all.:rolleyes:
So it was the low intrest and not the lax lending:rolleyes:
Every one must now suffer.
I think you will find they set rates for stability not revenge.:rolleyes:

kennyboy66_2

fatpig wrote: »

Increasing unemployment is going to happen anyway thanks to having interest rates too low for many years. Increasing interest rates and keeping them high will stop it happening again

We kept interest rates too high in 1981 & 1991, thus making each recession deeper and longer than necessary.
Neither time seemed to "stop it happening again", but I admire your optimism.

Lets go for the hat-trick.