In 30 years I've never heard such talk from a Bank chief

Flight2quality

But in my several decades as a financial and economics commentator – covering banking crises dating back to the early 1970s and the Latin American debt catastrophes of the early 1980s – I have never heard a sitting governor talk in such apocalyptic terms about the parlous state of the global financial system.



Read more: http://www.dailymail.co.uk/news/article-2068875/Mervyn-King-warns-mortgage-rates-likely-soar-tells-banks-slash-bonuses.html#ixzz1fSTsdB9q

Always the public get the toned down sugar coated version, makes you wonder what the true version is :eek:

If your not on a long fix, then fix now at least you can sleep well for the term of the fix. Be prepared for very high interest rates when it comes to an end.

kabayiri

Flight2quality wrote: »

...
If your not on a long fix, then fix now at least you can sleep well for the term of the fix. Be prepared for very high interest rates when it comes to an end.

A high dose of inflation after the low phase we are in is inevitable. It's just the timing.

Will Hutton when interviewed on television a week ago was recommending high inflation to erode away debts. When that view becomes prevalent it presents a serious shift.

On a side note, I miss the days when we never heard Mervyn King for months on end!

abaxas

kabayiri wrote: »

A high dose of inflation after the low phase we are in is inevitable. It's just the timing.

Will Hutton when interviewed on television a week ago was recommending high inflation to erode away debts. When that view becomes prevalent it presents a serious shift.

On a side note, I miss the days when we never heard Mervyn King for months on end!

On a side note, I miss the days when Mervyn King had any credibility!

amcluesent

Mervyn is the only 'talking head' who is worth listening to IMHO. Unlike the poiticos he's not trying to hide the truth. He gave the nod to the small investor to pile into index-linked way before the PFI went over 5%

justjohn

Ye scary stuff...i hope they do romp up the mortgage rates. Then hopefully they will start reposessing.

Romping up the bank rates will not save this country anyway....it will just line the pockets of the banks and flood the market with repo's.

Pumping money into the rich does not stimulate the economy(not unles its stupid money). Mind you, burdening the the struggling population does stimulate the economy. lol ...does not make it fair or the moral thing to do. However when were these things ever moral.

Flight2quality

amcluesent wrote: »

Mervyn is the only 'talking head' who is worth listening to IMHO. Unlike the poiticos he's not trying to hide the truth. He gave the nod to the small investor to pile into index-linked way before the PFI went over 5%

The problem is these people who release info to the public is nearly always its the toned down version. What would he have said if it was the full truth?

justjohn wrote: »

Ye scary stuff...i hope they do romp up the mortgage rates. Then hopefully they will start reposessing.

Romping up the bank rates will not save this country anyway....it will just line the pockets of the banks and flood the market with repo's.

When rates do go back to more normal levels the auction houses will be flooded with repo's. No rush though this situation will last a while wait for the free market to find the correct value for property. Sooner they take the props out the better, how much longer can house prices defy gravity?

2010

Mervyn King is getting paid a fortune and his main task is to hold inflation at 2% which he has failed to do.

He`s tried holding the BoE rate at .5% for nearly three years to help the economyand that`s failed.
He`s tried printing money and that`s failed.
He`s run out of ideas and hasn`t got a clue how to control the mess we`re in.
Now of course he`s using G.Brown`s favourite excuse "it`s a GLOBAL problem".

All he`s really done by holding interest rates at unrealistic levels for so long, is to encourage people, who have bitten off more than they can chew by borrowing too much, is to spend even more.
Instead of paying the true rate for their mortgage, they`ve ended up, thanks to Mervyn, with a lot of extra cash in their pockets every month, which Merv hopes they will fritter away to help the econmy.

justjohn

2010 wrote: »

Mervyn King is getting paid a fortune and his main task is to hold inflation at 2% which he has failed to do.

".
.

I also find it slightly humorous that he has made a statement that he does not know what is going too happen, and other spokesman/media are/were bigging up the economy.

The-Joker

2010 wrote: »

Mervyn King is getting paid a fortune and his main task is to hold inflation at 2% which he has failed to do.

He`s tried holding the BoE rate at .5% for nearly three years to help the economyand that`s failed.
He`s tried printing money and that`s failed.
He`s run out of ideas and hasn`t got a clue how to control the mess we`re in.
Now of course he`s using G.Brown`s favourite excuse "it`s a GLOBAL problem".

All he`s really done by holding interest rates at unrealistic levels for so long, is to encourage people, who have bitten off more than they can chew by borrowing too much, is to spend even more.
Instead of paying the true rate for their mortgage, they`ve ended up, thanks to Mervyn, with a lot of extra cash in their pockets every month, which Merv hopes they will fritter away to help the econmy.

He has also made the housing bubble inflate even more, what a mess. How long can they keep rates so low and what chaos will it create? How can they go back to normal interest rates without bringing the biggest housing crash ever? If they don't then what are the consequenses of holding interest rates too low for too long? Look at Japan to answer that question.