Interest rates so low - don't bother saving!

Glen_Clark

grey_gym_sock wrote: »

supporting banks: there are very large liabilities here, but also very large assets, surely matching most of the liabilities. the important question is how much the public sector likely to lose before it can exit the banking sector. any ideas?

The assets are only matching the liabilities because the BoE are printing like lunatics to keep property prices inflated, and as James Callaghan said, Inflation is the Mother and Father of Unemployment. This is costing the economy in many ways - in some areas the cheapest available housing is above the basic wage so people can only keep a roof over their head by having kids and going on benefits. Job seekers cannot afford to move to where the jobs are. The Government may be able to produce statistics saying we haven't lost much on the banks because they will ignore all these hidden costs.

Linton

Glen_Clark wrote: »

The assets are only matching the liabilities because the BoE are printing like lunatics to keep property prices inflated, and as James Callaghan said, Inflation is the Mother and Father of Unemployment. This is costing the economy in many ways - in some areas the cheapest available housing is above the basic wage so people can only keep a roof over their head by having kids and going on benefits. Job seekers cannot afford to move to where the jobs are. The Government may be able to produce statistics saying we haven't lost much on the banks because they will ignore all these hidden costs.

I dont think this analysis has much to do with the real world. The money being created is largely going to refinance the banks. There is little evidence of excess cash floating around the day to day economy.

grey_gym_sock

current unemployment is not due to high inflation. perhaps sometimes it's been true. but now the problem is that we're in a depression.

the depression is the major economic problem. far greater than the public sector deficit. and there is no chance of solving the latter without solving the former. it was only possible to reduce public sector debt (as a % of GDP) in the post-war period because the economy as a whole was doing OK.

grey_gym_sock

Glen_Clark wrote: »

There has long been an unfunded public sector pension liability, but it is now out of all proportion to what it was. Doctors and Dentists on £250k plus Town Hall Bureaucrats on £500k plus, more overpaid Bureaucrats than we have ever had before, and living longer.

ok, take the NHS scheme. it may have funding issues, but there are proposals to change the scheme (again), by increasing contributions.

see http://www.parliament.uk/briefing-papers/sn03281.pdf

so where is the deficit to the public sector from this scheme? there isn't 1: the scheme will be changed to prevent that happening.

i agree there are a lot of hidden costs in PFI. we should buy all the schemes out now, which would save money in the longer term. a much better use for some of the QEx money than buying gilts.

marathon_man_3

gadgetmind wrote: »

Out of interest, do you recall the date when you did this?

Approx 2006/2007.

Glen_Clark

Linton wrote: »

There is little evidence of excess cash floating around the day to day economy.

Borrowers are being paid to borrow money* What more evidence could there be?
*Interest rates below the real rate of inflation

gadgetmind

marathon_man wrote: »

Approx 2006/2007.

And at that time you were concerned about "shrinking valuations"?

buffman

Coastline, have you taken into account dividends in your FTSE return calculations? The FTSE index does not include dividends paid by its constituents. Over the last decade, the dividends have provided a substantial amount of the total return in investing in shares.

gadgetmind

Here is the FTSE versus the FTSE Total Return on a few dates.

Dec20 1999, FTSE 100=6930, FTSE 100 TR=3141
Jan30 2006, FTSE 100=5780, FTSE 100 TR=3141
Aug17 2012, FTSE 100=5852, FTSE 100 TR=4077
Dec19 2012, FTSE 100=5972, FTSE 100 TR=4198 (current live!)

OK, so 33% in 12 years is still lagging inflation, but who invested everything on just one day in 1999?

coastline

buffman wrote: »

Coastline, have you taken into account dividends in your FTSE return calculations? The FTSE index does not include dividends paid by its constituents. Over the last decade, the dividends have provided a substantial amount of the total return in investing in shares.

The calculator does take dividends into account...but its just a bit of raw data.I have said many are now turning to trackers and passive investing...theres a good reason for that...many funds don't beat the indicies.
Its only in the last few years that investors have been able to fine tune their funds online...years ago people just picked the best performers in the weekend press...hoped for the best.
Its forums like this that are making people aware of alternatives.

http://swanlowpark.co.uk/svad0901.jsp