Torygraph: Bernanke will make things a lot worse by repeating Greenspan's mistakes

kennyboy66_2

napoleon wrote: »

Yeah, the very same economists whose policies caused the financial crisis in the first place. And you believe what they say now?

It was the journalists quote, not mine.

I am happy to point out economists who said that interest rate policy in the UK was too low from 2005 - 2007 and said so at the time

Roger Bootle for one.

Are there any economists you can think of who think interest rates should be higher in the UK now ?

Or is it just the peverse logic that two wrongs will make a right.

Even Ken Clarke (who would make a far better shadow chancellor than the current idiot) thinks they should go down, albeit by a cautious 0.25 %.

It may be unfair that savers rates are going to get cut & they may not 'deserve it', but thats what happens in recession. Almost everyone takes some pain.

Realy

Also with our high interest rate (compared to other western countries)

Why is the £ not through the roof and people climbing over each other to buy our bonds?

Are these not the bread and butter points of people to say to keep rates the same or go up?
People will only invest in stabillity at the moment and countrys do not see our interest rates in the current climate promote that.
The £ as tanked aginst the $ and the yen but they have cut far deeper than us.

monkeymaster

Realy wrote: »

Also with our high interest rate (compared to other western countries)

Why is the £ not through the roof and people climbing over each other to buy our bonds?

Are these not the bread and butter points of people to say to keep rates the same or go up?
People will only invest in stabillity at the moment and countrys do not see our interest rates in the current climate promote that.
The £ as tanked aginst the $ and the yen but they have cut far deeper than us.

Because the expectation is that our rates are going to fall and fall fast. That and the fact our economy is fundamentally weak - despite what the Government keep telling us.

WTF?_2

monkeymaster wrote: »

Because the expectation is that our rates are going to fall and fall fast. That and the fact our economy is fundamentally weak - despite what the Government keep telling us.

Absolutely - David Owen laid it on the line in 'Hardtalk' on BBC News:

http://www.bbc.co.uk/iplayer/episode/b00fp3wl/Straight_Talk_01112008/

hmmm - see they've renamed it 'Straight Talk'. Actually, quite true.

Realy

monkeymaster wrote: »

Because the expectation is that our rates are going to fall and fall fast. That and the fact our economy is fundamentally weak - despite what the Government keep telling us.

So why the strong $ then?
They are going in to recession and have slashed rates far in excess of us.
Your simple explanation does not ring true.

WTF?_2

Realy wrote: »

So why the strong $ then?
They are going in to recession and have slashed rates far in excess of us.
Your simple explanation does not ring true.

As has been explained before, the dollar is 'strong' right now because people are looking for a safe haven for their cash.

The US is the largest economy in the world with a massive GDP, well developed industrial infrastructure, loads of natural resources such as energy and farmland and a large, dynamic population. In addition, the dollar is the global reserve currency of choice and also the petro-currency.

If you want to put your money in 'safe' government bonds they are the obvious choice at this time (if you assume they make good on the debt and don't debase their currency down the line).

In real terms, it's only the 'least weak' of a bunch of currencies that are falling from their pre-eminent positions.

Realy

!!!!!!? wrote: »

As has been explained before, the dollar is 'strong' right now because people are looking for a safe haven for their cash.

The US is the largest economy in the world with a massive GDP, well developed industrial infrastructure, loads of natural resources such as energy and farmland and a large, dynamic population. In addition, the dollar is the global reserve currency of choice and also the petro-currency.

If you want to put your money in 'safe' government bonds they are the obvious choice at this time (if you assume they make good on the debt and don't debase their currency down the line).

In real terms, it's only the 'least weak' of a bunch of currencies that are falling from their pre-eminent positions.

So if we are not seen as safe we may as lower rates as it will make no difference to our bonds, just help our own companies a bit.;)

kennyboy66_2

!!!!!!? wrote: »

In real terms, it's only the 'least weak' of a bunch of currencies that are falling from their pre-eminent positions.

Apart from the Yen, which free floating currency has strengthened against the US $ in the last 6 months ?

WTF?_2

kennyboy66 wrote: »

Apart from the Yen, which free floating currency has strengthened against the US $ in the last 6 months ?

Ever hear of something called the carry trade? Once all the other major currencies start to cut their interest rates too, it doesn't work too well and the Yen appreciates.

WTF?_2

Realy wrote: »

So if we are not seen as safe we may as lower rates as it will make no difference to our bonds, just help our own companies a bit.

No, they will weaken sterling even further. Though another 0.5% is already 'priced in' - hence the slide last week.