Bank of England DERANGED?!

silentfox

Am I the only one who thinks cutting rates all the way to zero is a seriously bad idea, wasn’t it cheap money that got us in this situation. Rather then learning any lessons the quick fix appears to be to do the same bloody thing again.

Are the people of this country so stupid and frankly thick to simply ignore what has happened over the past year and a bit and once again borrow themselves to insanely high levels, I just can’t believe that people would be so stupid. If people really are that daft and borrow in the middle of this year at dangerously high levels, I will rejoice the following year when they end up in an even more screwed position as they can’t claim ignorance anymore.

And what about all those people who lived within their means and actually saved and only spent what they could afford, why should they be shafted because other people borrowed like Idiots and thick bankers actually gave them the money!! People have been warning for years that the property market is a bubble but the bank just kept cutting and bankers kept lending.

These bankers should be taken out and hung, but no, lets reward them for the crap work they have done and shaft all the people who played no part in it, it is an absolute disgrace.

Cutting the rates is not going to work, because in roughly 1-2 years time they will go up massively, around about the time you come off any fixed rate deals! Take my word for it you will not build up a single penny of equity in that short period, so come 2010/2011 we will all be shafted again!!

Happy New Year

st

silentfox wrote: »

Am I the only who thinks cutting rates all the way to zero is a seriously bad idea, wasn’t it cheap money that got us in this situation. Rather then learning any lessons the quick fix appears to be to do the same bloody thing again.

Are the people of this country so stupid and frankly thick to simply ignore what has happened over the past year and a bit and once again borrow themselves to insanely high levels, I just can’t believe that people would be so stupid. If people really are that daft and borrow in the middle of this year at dangerously high levels, I will rejoice the following year when they end up in an even more screwed position as they can’t claim ignorance anymore.

And what about all those people who lived within their means and actually saved and only spent what they could afford, why should they be shafted because other people borrowed like Idiots and thick bankers actually gave them the money!! People have been warning for years that the property market is a bubble but the bank just kept cutting and bankers kept lending.

These bankers should be taken out and hung, but no, lets reward them for the crap work they have done and shaft all the people who played no part in it, it is an absolute disgrace.

Cutting the rates is not going to work, because in roughly 1-2 years time they will go up massively, around about the time you come off any fixed rate deals! Take my word for it you will not build up a single penny of equity in that short period, so come 2010/2011 we will all be shafted again!!

Happy New Year

not at all I have always said that the only answer was to increase interest rates -not by a huge margin to the rates had back in late 80s -early 90s but back up to around 5-7% -perhaps should be 2 types of rate a commercial lower rate for business and standard rate.
Just look what reducing rates has done for the pound =more expensive import and 90% of all our goodds and food is inported.

dunstonh

Am I the only who thinks cutting rates all the way to zero is a seriously bad idea, wasn’t it cheap money that got us in this situation. Rather then learning any lessons the quick fix appears to be to do the same bloody thing again.

It is an irony that what was one of the causes of the recession is what is needed to get us out of it.

Are the people of this country so stupid and frankly thick to simply ignore what has happened over the past year and a bit and once again borrow themselves to insanely high levels, I just can’t believe that people would be so stupid. If people really are that daft and borrow in the middle of this year at dangerously high levels, I will rejoice the following year when they end up in an even more screwed position as they can’t claim ignorance anymore.

Its not just consumers that the interest rates are used for. It is companies as well. You dont have to borrow again and you will find criteria has generally tightened up. However, the extra money that lower monthly payments bring can be used in the shops, restaurants etc. rather than to obtain new credit.

Lower interest rates also devalues Sterling and that can help kickstart a recovery.

You are right though that anyone taking on extra debt and spending on the basis that monthly payments now are going to be the norm is running a stupidly high risk.

And what about all those people who lived within their means and actually saved and only spent what they could afford, why should they be shafted because other people borrowed like Idiots and thick bankers actually gave them the money!! People have been warning for years that the property market is a bubble but the bank just kept cutting and bankers kept lending.

The real net return on cash after inflation is not too different to what it has been historically. Also, whilst you are critical of bankers (and there is good reason to be) it is worth noting that they were also responsible for a massive amount of tax income to the treasury which has benefited everyone over the last 10 years. The Govt didnt plan much for a rainy day during that period.

silentfox

dunstonh wrote: »

It is an irony that what was one of the causes of the recession is what is needed to get us out of it.

Its not just consumers that the interest rates are used for. It is companies as well. You dont have to borrow again and you will find criteria has generally tightened up. However, the extra money that lower monthly payments bring can be used in the shops, restaurants etc. rather than to obtain new credit.

Lower interest rates also devalues Sterling and that can help kickstart a recovery.

The point is people shouldn't be spending that extra money they should be saving most of it. The idea that you bought a house a couple of years ago and your monthly payment is cut means you feel richer is wrong. I'm not saying it doesn't happen, but it is is still wrong, if your house has fallen over 20% and continues to fall you should be saving as much as possible.

This country has the highest level of debt then any other, but the fundamental point remains the same, those who lived and borrowed within their means are being shafted and they have done nothing to deserve it.

Those borrowing are the same people who have been telling others over the last few years... "guess what my house had gone up by £100K" again this is a daft point, unless you sell and buy a smaller house you are no better off. Are those same people still saying that if they bought in the last 2 years...NO!! But they will be exactly the same people who will borrow themselves stupid once again. I understand your point about stimulating the economy, but people should live within their means and if they don't (as it is a free world) then they and they alone should pay the price. You can't eat your cake and expect others to pay for it, it can't be your birthday everyday.

Oblivion

silentfox wrote: »

............

This country has the highest level of debt then any other, but the fundamental point remains the same, those who lived and borrowed within their means are being shafted and they have done nothing to deserve it.

............

I understand your point about stimulating the economy, but people should live within their means and if they don't (as it is a free world) then they and they alone should pay the price. You can't eat your cake and expect others to pay for it, it can't be your birthday everyday.

I fully agree. What we have here is the STUPID (government & BOE) supporting the STUPID (pig-ignorant credit surfers).

Lowering interest rates and spending billions on propping up the banks is having no effect whatsoever on the hoped-for recovery. All it is doing is penalising those who have worked hard and saved for their future.

The BOE interest rate should be immediately returned to at least 5%, preferably 7%, and let the natural fall-out run its course.

Dave.

john_s_2

Oblivion wrote: »

Lowering interest rates and spending billions on propping up the banks is having no effect whatsoever on the hoped-for recovery.

I beg to differ. The Panorama programme just before Christmas highlighted the fact that "HBOS and Royal Bank of Scotland, were on the verge of collapse" back in October. If they had been allowed to fall how much would that have cost the taxpayer in terms of refunding all their personal customers? Especially as the precedent has now been set to compensate customers with more than £50K.

Not to mention the costs to the thousands (tens of?) of businesses, especially small ones, that bank with them, and wouldn't have any protection (if my understanding of the FSCS is correct).

Lesser of two evils I reckon.

http://news.bbc.co.uk/1/hi/business/7796329.stm

sabretoothtigger

Theres no easy answer but I hope the government puts the rates back up just as quickly afterwards.
Im sure they must know they might have to and yep 0% makes no sense, the more artificial moves are made like this the closer we come to ending up like iceland with rates at 18% or so

newsaver2008

As is often the case, I totally agree with sabretoothtigger here:)
In Turkey they had high interest rates but they have made 2 cuts and are still doing it, to kick start the economy because inflation is falling.
Of course it would be nice for those of us who have deposits there to get nice high rates but that country is also affected by the global recession and so it is doing the same as the UK, US etc to try to cure it.
I agree that if rates in the UK are cut to nil, then the risk is that we have inflation and high rates.
As tigger says, they must know this. I can see there is a case for cutting interest rates but not so low.

martinman3

john_s wrote: »

I beg to differ. The Panorama programme just before Christmas highlighted the fact that "HBOS and Royal Bank of Scotland, were on the verge of collapse" back in October. If they had been allowed to fall how much would that have cost the taxpayer in terms of refunding all their personal customers? Especially as the precedent has now been set to compensate customers with more than £50K.

Not to mention the costs to the thousands (tens of?) of businesses, especially small ones, that bank with them, and wouldn't have any protection (if my understanding of the FSCS is correct).

Lesser of two evils I reckon.

http://news.bbc.co.uk/1/hi/business/7796329.stm

Actually, the FSCS does compensate small businesses, the definition of which is a business with a turnover of less than £1m, up to £50k just like personal customers.

I don't believe that, so far, the FSCS has needed to compensate small businesses as it has only been used to pay interest on a government/BOE loan to Northern Rock and for Icesave which didn't have business accounts. Northern Rock and B&B deposits were saved and didn't need compensation.

The other point to note is that the Chancellor promised to compensate personal deposits fully, over the £50k limit, but there has been no mention of what would happen if business deposits were lost in future. I would recommend that small businesses keep their exposure to any one organisation/FSA licence to only £50k to be safe.

Trollfever

Is this the Saturday rant thread?

dunstonh

I don't believe that, so far, the FSCS has needed to compensate small businesses as it has only been used to pay interest on a government/BOE loan to Northern Rock and for Icesave which didn't have business accounts. Northern Rock and B&B deposits were saved and didn't need compensation.

The FSCS has had to pay out significant amounts. Especially with B&B