Time to raise interest rates, time to stop false BRICK economy

SuperV

OptionARMAGEDDON wrote: »

Increasingly looking like a rate cut rather than rise is going to be the next move.

QE2 is already introduced. QE3 is to follow. They are a kind of rate cut. But...

... the problem is that they just buy time, don't solve the problem.

The problem is annihilation of wealth creation industry. The only solution is to invest a lot in recreating wealth creation industry.

To keep confidence interest rate should go up simultaneously with QEfRD. In order to keep bonds value at the current levels money should become more expensive. Investment in RD (instead in fictitious assets - what assets?!?!?) will pay off in 3-10 years when they will affect bonds again in a positive way - lowering yields.

If that doesn't happen, after Italy the UK seems as a very possible next target in the next 3-6 months.

andybenw

SuperV wrote: »

QE2 is already introduced. QE3 is to follow. They are a kind of rate cut. But...

... the problem is that they just buy time, don't solve the problem.

The problem is annihilation of wealth creation industry. The only solution is to invest a lot in recreating wealth creation industry.

To keep confidence interest rate should go up simultaneously with QEfRD. In order to keep bonds value at the current levels money should become more expensive. Investment in RD (instead in fictitious assets - what assets?!?!?) will pay off in 3-10 years when they will affect bonds again in a positive way - lowering yields.

If that doesn't happen, after Italy the UK seems as a very possible next target in the next 3-6 months.

I thought that the consensus of opinion was that QE helps the wealth creation industries by being a sort of de-valuation. ie It will weaken sterling and make our exports more competitive.
(Unfortunately it will also make our foreign holidays more expensive if we take them).

SuperV

andybenw wrote: »

I thought that the consensus of opinion was that QE helps the wealth creation industries by being a sort of de-valuation. ie It will weaken sterling and make our exports more competitive.
(Unfortunately it will also make our foreign holidays more expensive if we take them).

No. To be able to make export more competitive, first condition is to have something to export in big enough quantities.

That capability has been lost and requires a huge investment to be rebuilt. It includes making wealth creating industries more attractive for bright not just by "enjoying doing something creative..."

SuperV

http://www.telegraph.co.uk/finance/economics/8892122/Why-we-should-celebrate-the-death-of-PFI.html

"A national infrastructure fund avoids this problem, by creating a mini-balance sheet of its own. Highly rated assets could be financed in a fully transparent way, with future income streams securing the debt payments involved. Those assets might be new roads and railways, more super-fast broadband networks across the country, better flood defences, better electricity or water supplies, or a new generation of good housing."

At least going in the right direction...

neas

FTBFun wrote: »

Quite how you get house prices falling from this is beyond me.

Because he wants to believe it ... aka vested interest.

I like it how he casually says 'so those who borrowed irresponsibly'.. who decides if they've been irresponsible.. as they say history is wrote by the victor... if they come out trumps with a nice house, after years of low interest rates... and you are left sat with the steaming pooper... then they would state 'so those who couldn't take risks responsibliy'.

History will tell.. but at the moment my decision to buy over 1.4 years ago was a good one . Mortgage paid down 10% already ... overpayments for the win.. at this rate we will be able to move out of our 3 bedroom house in 6-7 years and jump to a bigger 4 bedroom with decent equity . If they fall then im quids in , if they dont'' i'd still have equity to move up...

RenovationMan

neas wrote: »

Because he wants to believe it ... aka vested interest.

I like it how he casually says 'so those who borrowed irresponsibly'.. who decides if they've been irresponsible.. as they say history is wrote by the victor... if they come out trumps with a nice house, after years of low interest rates... and you are left sat with the steaming pooper... then they would state 'so those who couldn't take risks responsibliy'.

History will tell.. but at the moment my decision to buy over 1.4 years ago was a good one . Mortgage paid down 10% already ... overpayments for the win.. at this rate we will be able to move out of our 3 bedroom house in 6-7 years and jump to a bigger 4 bedroom with decent equity . If they fall then im quids in , if they dont'' i'd still have equity to move up...

Top post. I remember when I first came to this board and someone queried my signature. I mentioned my decision to "stop moaning about the zero return on my savings and investment and instead to 'play the game' and get myself a dream house (and a stack of debt)". It was soon all 'debt junkie' namecallng and tales of how I was gambling away my family's future. Well nearly 2 years later and my prediction about low rates for years is proving correct and all I now get are bleats about 'bragging'.

I have borrowed big in a recession, borrowed 5x my salary and borrowed with an interest only mortgage that has no repayment vehicle. This is the unholy trinity of the certain Bear's "irresponsible borrowing". We shall see just how irresponsible this is, though I doubt certain 'Bears' will be gracious in defeat.

geneer

RenovationMan wrote: »

Top post. I remember when I first came to this board and someone queried my signature. I mentioned my decision to "stop moaning about the zero return on my savings and investment and instead to 'play the game' and get myself a dream house (and a stack of debt)". It was soon all 'debt junkie' namecallng and tales of how I was gambling away my family's future. Well nearly 2 years later and my prediction about low rates for years is proving correct and all I now get are bleats about 'bragging'.

I have borrowed big in a recession, borrowed 5x my salary and borrowed with an interest only mortgage that has no repayment vehicle. This is the unholy trinity of the certain Bear's "irresponsible borrowing". We shall see just how irresponsible this is, though I doubt certain 'Bears' will be gracious in defeat.

:rotfl::rotfl::rotfl:But you don't like to talk about it.


Not sure who these "bears" are that you keep banging on about.

Seems strange as I'm a bear, and I wouldn't fault you for buying after a house price crash rather than, y'know, before.

I suspect the criticisms were more along the line of "your a bit self congratulatory and boring RM".
Cos thats certainly the way I've seen it.