July 2013 - BoE rates left on hold

Graham_Devon

N1AK wrote: »

It is what we need; take some of your own advice and think longer term. A highly valued pound is great for those with a good income and/or good savings; it sucks for those struggling to find work and for the wider economy.

A lower value £ means buying UK goods and services just became more attractive both domestically and internationally.

I do understand the theory here.

However, recent reports have shown no increase in exports internationally or nationally when compared to the lower pound.

So I'm not really sure if the perceived benefit is actually working out. Certainly the report I read, which was posted up on here, didn't seem to tally with the the perceived benefits of alow pound.

It was around the time that Mervyn King came out and the £ was around 1.49 to the dollar and stated that the pound had fallen far enough.

Graham_Devon

Rinoa wrote: »

Well, you could have celebrated the fact that interest rates won't be rising anytime soon, to the benefit of households who will enjoy cheaper mortgages. But, as per usual, you chose to find the negative.

I could have. But it's at the detriment of everyone else. Savers, renters, the younger generations, pensioners who don't own, the taxpayer through debt payments and the economy itself...we've already seen what the markets do at even the thought that interest rates may rise in the next 3 years.

Great for some homeowners who were probably in the best situation in the first place .....sure.

I'd suggest you have a look at the BBC response comments on the base rates today. Nearly 300 comments, and ALL sharing my general point of view. Then put it into order of worst rated comments....this isn't a pop at you, but you will find those who share your view.

People are sick of getting poorer everyday. The negaitve rated comments are your typical landlords and the like.

My views are not alien. They are just alien on this place which seems to be 50% made up of a landlord cartel!

http://www.bbc.co.uk/news/business-23177463

ILW

grizzly1911 wrote: »

Or the detriment of millions who continue to suffer poor returns on their savings and woeful annuity rates that will have to live with for the rest of their natural.

There are always two sides to the coin. Depends which way you want it to fall. Doesn't help when it is a weighted coin.

Seems to be the thing to reward the indebted these days. A falling pound will also push up the price of imported items such as fuel with no domestic alternative.

N1AK

grizzly1911 wrote: »

UK goods and services may not become more attractive if they are imported commodities or products. If they become relatively more attractive it doesn't mean that they will be any cheaper so the impact on the individual will still be felt..

If the product/service is imported then it isn't a UK good or service

If buying a bag of Spanish oranges suddenly costs 30p more then buying some British apples that haven't changed in price becomes a more attractive proposition.

When a major multi-national is deciding where to produce thousands of cases of product and the cost of production in the Netherlands just got higher vs Kent then the UK is more attractive comparatively.

Neither of which makes us as individuals richer but more demand for UK products and services means more demand for people to produce them; and that is what our economy and youth need.

wotsthat

Graham_Devon wrote: »

I could have. But it's at the detriment of everyone else. Savers, renters, the younger generations, pensioners who don't own, the taxpayer through debt payments and the economy itself...we've already seen what the markets do at even the thought that interest rates may rise in the next 3 years.

Only seems like yesterday (oh it was) that you were saying rates should be set according to the needs of the economy and not dictated by the needs of different groups within the economy. That view seems to change depending on whether they're on the naughty or nice list.

For sure, the BoE may have made a mistake but you seem to imply that the needs of one group or another are getting preferential treatment.

If leaving rates lower for longer is in the best interests of the economy won't we all have a better chance of benefiting?

ILW

N1AK wrote: »

If the product/service is imported then it isn't a UK good or service

If buying a bag of Spanish oranges suddenly costs 30p more then buying some British apples that haven't changed in price becomes a more attractive proposition.

When a major multi-national is deciding where to produce thousands of cases of product and the cost of production in the Netherlands just got higher vs Kent then the UK is more attractive comparatively.

Neither of which makes us as individuals richer but more demand for UK products and services means more demand for people to produce them; and that is what our economy and youth need.

Fruit is not a great example, the workforce in the UK is predominately itinerant immigrants.

N1AK

Graham_Devon wrote: »

I do understand the theory here.

It was around the time that Mervyn King came out and the £ was around 1.49 to the dollar and stated that the pound had fallen far enough.

With respect Graham you're not an economist. Do you have any idea at all what would have happened if the pound had remained more highly valued?

There are few things in economics that are cast in stone. One that is, is that in a remotely functional market virtually all demand is price elastic: Demand increases when prices fall and vice-versa.

Personally I don't think the £ needs to see further falls, certainly not a very large one, because it encourages people to move out of the currency entirely and that has other negative consequences.

grizzly1911

N1AK wrote: »

If the product/service is imported then it isn't a UK good or service


Neither of which makes us as individuals richer but more demand for UK products and services means more demand for people to produce them; and that is what our economy and youth need.

Edited my post for you;)

Or it simply means we can afford less products from abroad.

ILW

N1AK wrote: »

With respect Graham you're not an economist. Do you have any idea at all what would have happened if the pound had remained more highly valued?

There are few things in economics that are cast in stone. One that is, is that in a remotely functional market virtually all demand is price elastic: Demand increases when prices fall and vice-versa.

Personally I don't think the £ needs to see further falls, certainly not a very large one, because it encourages people to move out of the currency entirely and that has other negative consequences.

Inflation would have been lower.

N1AK

ILW wrote: »

Fruit is not a great example, the workforce in the UK is predominately itinerant immigrants.

It's also got a relatively long life-cycle and supply chain making short term currency movements largely irrelevant; none the less it provides a clear example of the logic, if not where it is best applied

The immigrant workforce isn't actually a flaw though. Very little of the fruit value goes directly to the pickers, much of it goes to the farmer who will spend it on the seeds, equipment, nutrients required where again UK products and services would be more attractive. Furthermore if the £ decreased in value by 10% then the farmer could increase wages by 10% without increasing his relative cost, this could lead to wages being high enough to attract the odd, normally bone idle, Lincolnshire lad :rotfl: