Bank of England warns of the consequences of thrift

Graham_Devon

LOL, the bank of england warning us not to save, go get indebted to save our country.

Class!

tomterm8

Generali wrote: »

I've been banging on about this for a while as it's one of the problems that Japan faced after her housing market fell over. People saved so consumed less so GDP fell so unemployment increased so people saved more so consumed less so GDP fell...........

Japans demographics are pretty terrible, I've always thought 75% of the mess it is in is because the population is just too old... old people consume less, need to save more, and economies just can't cope with this. There are too few workers to nonworkers.

Ironically, what Japan needs to do is encourage immigration and birth, but their policy is actually to get rid of immigrants.

mewbie_2

Graham_Devon wrote: »

LOL, the bank of england warning us not to save, go get indebted to save our country.

Class!

Merve has teamed up with Ocean Finance and Inside Track to move the fuddy duddies into the 21st centruy.

Thrugelmir

Heyman wrote: »

A little bit short-sighted by the BofE - of course people are going to limit spending if they have to make savings because their local bank won't lend them any money. Applies to business as well.

The BOE is fully aware that debt levels have to be reduced. They are trying to avoid a stampede for the exits by consumers.

Banks have money to lend for the right proposition. Though he wants to borrow in the current market?

Pobby

All seemed to work for decades though. Maybe it was of inflation, not sure. I don`t remember a time when we were thinking about this. One side of the coin, got to save for retirement, other side of the coin, gotta spend to keep the economy going. All a bit worrying if you ask me.

Personally I feel that high house prices have caused so many problems in all this. Say in the last 10 years, houses had gone up along side inflation think how different things would be. Certainly we wouldn`t be fooled into thinking that we are " enjoying " a base rate of .5% due to low inflation. Goodness, a lot of older folk like me will be relying, in part, on a credible interest rate.

I have said it to someone already today. If I am going to get any return on savings the only way to go is to buy a couple of flats and rent them out. I then, imo, become a part of the problem not the solution.

Thrugelmir

Pobby wrote: »

All seemed to work for decades though. Maybe it was of inflation, not sure. I don`t remember a time when we were thinking about this. One side of the coin, got to save for retirement, other side of the coin, gotta spend to keep the economy going. All a bit worrying if you ask me.

Personally I feel that high house prices have caused so many problems in all this. Say in the last 10 years, houses had gone up along side inflation think how different things would be. Certainly we wouldn`t be fooled into thinking that we are " enjoying " a base rate of .5% due to low inflation. Goodness, a lot of older folk like me will be relying, in part, on a credible interest rate.

I have said it to someone already today. If I am going to get any return on savings the only way to go is to buy a couple of flats and rent them out. I then, imo, become a part of the problem not the solution.

Down to a change in culture in the past 20 years. Not aided by Mr B's raid on pension schemes. Borrowing to buy property ultimately became a better investment than saving through a pension. Now we have expensive houses, with huge mortgage debt and relatively low savings.

There is no incentive to save for the longer term. Something which the next Government of which ever party has to make a priority.

Generali

tomterm8 wrote: »

Japans demographics are pretty terrible, I've always thought 75% of the mess it is in is because the population is just too old... old people consume less, need to save more, and economies just can't cope with this. There are too few workers to nonworkers.

Ironically, what Japan needs to do is encourage immigration and birth, but their policy is actually to get rid of immigrants.

True and their demographics are one of the things that's driven the savings rate higher there IMO.

It's hard to see a way out for the Japanese economy quite frankly. Public debt is 180% of GDP and their baby boomers are retiring en masse.

Pobby

Thrugelmir wrote: »

Down to a change in culture in the past 20 years. Not aided by Mr B's raid on pension schemes. Borrowing to buy property ultimately became a better investment than saving through a pension. Now we have expensive houses, with huge mortgage debt and relatively low savings.

There is no incentive to save for the longer term. Something which the next Government of which ever party has to make a priority.

How true is that. Of course, reading your post, it came home to me that you wouldn`t borrow to fund a pension. However year after year in goes money and year after year the statements come in and it all looks rather depressing.

Can you imagine if this downturn was coupled with higher inflation? Total melt down, although I think that inflation is a lot higher than we are lead to believe.

However it is a hard right now to decide what to do. Will wait and see.

vigilaire

Do what is best for YOU.

Pay down creditors - debt is like prison - no choice.

I can afford pretty well any car I want, it is my choice to drive a £500 quider, an aquaintance approached me a couple of months ago wanting to borrow a grand to pay his mortgage and get up to date. I said sell that BMW X5, can't he said £490 pm finance. I gave him 5mins of wisdom about priorities. He's now back with his inlaws and skint... I rest my case.

If you look at everything you want to buy to see if you really need it rather than just want it you'll be suprised how much money is left over at the end of the month to help knock down the mortgage.

My advice is get out of debt ASAP and let the others look after themselves.

adouglasmhor

fc123 wrote: »

Where are you? China or Afghanistan? If the latter....good luck.

North Lanarkshire - it's just blocked on this computer!