Does Mervyn King really have a clue about what's happening?

shortchanged_2

Just read this article, http://www.bbc.co.uk/news/business-12478468

Talk about hedging your bets.

I love Mervs statement that there are large risks and inflation could overshoot or undershoot the BoE's target of 2%.

I must say I'm filled with confidence after that statement.

B_Blank

No, he doesnt have a clue. But in a way that is a good thing, because at least he is open minded and ready to react to changes in the economic situation. It would be bad if he blinkered as to what the right thing to do would be for interest rates and inflation

shortchanged_2

B_Blank wrote: »

No, he doesnt have a clue. But in a way that is a good thing, because at least he is open minded and ready to react to changes in the economic situation. It would be bad if he blinkered as to what the right thing to do would be for interest rates and inflation

That is a fair point.

Typhoon2000

Why is the target rate of inflation 2% and who decides what the target rate should be? Government or BOE?

satchmeister

B_Blank wrote: »

No, he doesnt have a clue. But in a way that is a good thing, because at least he is open minded and ready to react to changes in the economic situation. It would be bad if he blinkered as to what the right thing to do would be for interest rates and inflation

He knows exactly what he is doing; he is helping the banks.

1984ReturnsForReal_2

satchmeister wrote: »

He knows exactly what he is doing; he is helping the banks.

I think he is doing a pretty good job of not bringing the UK to its knees.

Graham_Devon

Does Mervyn King have a clue? Probably....but you'd need several clues to work things out currently.

More to the point, does anyone else have a better clue of what's happening and how to sort it? Well, maybe, that's why he's got a group of members.

Outside of his group of members, does anyone else have a clue? I'd probably say not really, as no ones really got predictions on the entire economy correct. Politicians like to think they know, and slate the opposition at every given opportunity....even taking opportunies when they are not there to prove they know better seems the norm.

Difference on websites and media comments, is 95% of people (at a guess) have a vested interest in what they see as correct, and therefore believe what they say is correct for the entire economy, based on their VI on a tiny part of said economy.

Marvyns biggest downfall is pretending he does have a clue. He seems to have decided this month that pretending hes got a clue, and being wrong for the past two years has been a mistake, so decided to change stance, and simply say probably the best thing he can right now....it could be up, it could be down, and we shall continue sitting on the fence as doing anything will have us to blame.

bendix

satchmeister wrote: »

He knows exactly what he is doing; he is helping the banks.

How, exactly, is he helping the banks? Please explain.

Do you understand the key role of retail banks is to borrow money from lenders and then lend it to borrowers.

So . . again, how is he helping them?

B_Blank

bendix wrote: »

How, exactly, is he helping the banks? Please explain.

Do you understand the key role of retail banks is to borrow money from lenders and then lend it to borrowers.

So . . again, how is he helping them?

Keeping interest rates at record lows (even in the face of rising inflation) means that all those idiots the banks leant massive mortgages to are able to continue paying their debt off. If rates were to rise (as they should given the banks roll to control inflation - which it has failed to do for 3 years now) then more people would default on their debts to the banks. The banks would then reposses these homes and the housing market would be flooded wit lots of new houses. This would drive down house prices and mean that the repossed houses lose value (and dont cover the outstanding debt owed to the banks on their mortgage). Seen as the banks would own these houses they would fail to recoup alot of the money they leant out and fall into trouble.

This is all because the banks, and the idiot people who borrowed off them, gave out stupid mortgages on the understanding that the false housing boom would go on forever.

That is how he is helping the banks at the expense of savers.

julieq

Where do you think the money required to pay savers interest above inflation came from B Blank?

ILW

julieq wrote: »

Where do you think the money required to pay savers interest above inflation came from B Blank?

From borrowers paying anything between 4% on mortgages and 30% on credit cards.