Interest Rates

Glen_Clark

Interesting discussion on the ISA thread about whether interest rates will rise anytine soon.
Clearly the Government wants to keep interest rates very low.
But the Government needs money to pay for imports, and there may come a point when the Chinese will not accept more barrowloads of freshly printed pounds. They will want hard currency. Won't the Government have to raise interest rates then?

Hominu

Don't forget the new £5.4 billion package of financial support to tackle long-term problems in the housing market. If they lend out 20K to first time buyers to buy houses and get the banks to give them an 80K mortgage with only a 5K deposit for a new build, then hike interest rates, don't you think a lot of those people would then default, bringing us back to the property crash and banking crisis, etc?

i.e., do you really think those people have checked to see if they can afford to make the mortgage payments if the interest rates are hiked?

I'd say maybe in the next 5 years we'll see between 0.25% and 0.50% hike, but not much more than that.

Thrugelmir

Glen_Clark wrote: »

But the Government needs money to pay for imports,

What does the Government import ?

maghater

Footsie 100 companies awash with cash US markets steaming ahead, if you want to invest medium term look at FTSE tracker funds, slight risk but rewards will better 0.5% saving returns

grizzly1911

Thrugelmir wrote: »

What does the Government import ?

Doesn't it heat anything, light anything, transport anything?

Not to mention all that lovely IT hardware finding it's way into the DWP to host that flagship software package or tablets into schools, hospitals etc.

redbuzzard

There's no problem with printing more money except inflation, the theft of savings, eventually interest rates, and the return of boom and bust!

But there is no alternative since the government is in unwilling or unable to make the necessary cuts in spending.

innovate

redbuzzard wrote: »

There's no problem with printing more money except inflation, the theft of savings, eventually interest rates, and the return of boom and bust!

and the pound getting worth next to nothing

redbuzzard wrote: »

But there is no alternative since the government is in unwilling or unable to make the necessary cuts in spending.

You must be the first MSEer who says they aren't making enough cuts.

redbuzzard

innovate wrote: »

and the pound getting worth next to nothing


You must be the first MSEer who says they aren't making enough cuts.

Nobody wants cuts. The alternative is to keep spending more than is coming in. The only way to do that is to borrow more and print more. The debt can't be paid off that way, so it has to be inflated off.

By this means debts come down in real terms at the expense of savers.

We haven't seen any cuts at all compared with say Greece, or Ireland. And they wouldn't have made them either if they had been able to print and borrow.

The politicians have blamed the banks, now they would like us to think its the poor, those on benefits who have run off with all the money. The reality is we are where we are because of !!!!less government spending commitments.

The lesson has still not been learnt.

redbuzzard

The unacceptable word rhymed with reckless, which would also make sense.

I blame Father Ted too.

ColdIron

innovate wrote: »

You must be the first MSEer who says they aren't making enough cuts.

Allow me to be the second

We simply cannot carry on spending more than we earn. To get the deficit under control we have to spend less, earn more or ideally a combination of both

Compare and contrast to Ireland, with which I have some connection. They have imposed swinging cuts that would make Ed Balls' eyes water but they are sucking it up and getting on with it. I see they have been able to sell 10 year bonds on the open market recently thereby reducing their reliance on external financing. They are turning the corner

talexuser

But is this the right time to spend 20 billion on missiles (probably end up more like 130 bil over time) and 35 bil on high speed rail (considering the 50 mil already wasted on rail franchise fiasco), compared with SOME of that money spread around the country to smaller firm infrastructure stuff.

How much was wasted on NHS computer system, not used now, how much on universal benefit computer not working (roll outs cut down and now to be done manually on spreadsheets) ?

It's not ideas on how to save money - it's incompetence in implementing programs and crack pot political schemes with never a true cost benefit analysis.