UK interest rates held at 0.5% for years

buglawton

lvader wrote: »

So if we had been in the Euro and no option of printing money we would have been fine? :rotfl:

--- Yes ---

grey_gym_sock

lvader wrote: »

So if we had been in the Euro and no option of printing money we would have been fine? :rotfl:

what's that got to do with what i said? which was that UK public finances are better than the banks' finances (which is not saying much!) and better than is generally said.

if we'd been in the euro, of course it would have been worse than it has been. though still not as bad as the banks, some of which would actually have gone bust without outside support.

if you keep adding more "what if"s, then eventually i'll agree that, if all those things were true, UK public finances would be as bad as the banks' finances. but they aren't, so it isn't.

sabretoothtigger

UK gilts have the advantage of being long term. The banks main mistake was short term funding and long term debt, meaning they had fatally mispriced their sales.

Everything was secondary to that really even the defaults, they couldnt handle even the good money they had lent and which of course people only repay after 25 years (or sooner inc. profits)


Guess which gov is as badly positioned as the banks are. If market raises prices, their entire budget will be taken up with interest payments presuming they get financed at all. The whole situation is a landslide, till it happens no problem!

Thrugelmir

Glen_Clark wrote: »

Yes I do think you have a point, the Government is effecttively cutting wages by not increasing them in line with the real rate of inflation.

The UK is not earning enough to match inflationary pay rises. Nor is productivity growing , over the credit boom years it actually fell. As many people preferred leveraging with debt to buy property rather than working hard and earning their money. Rather than investing the profits were frittered away on consumables, holidays and second homes. None of which was of benefit to the wider economy.

lvader

grey_gym_sock wrote: »

what's that got to do with what i said? which was that UK public finances are better than the banks' finances (which is not saying much!) and better than is generally said.

if we'd been in the euro, of course it would have been worse than it has been. though still not as bad as the banks, some of which would actually have gone bust without outside support.

if you keep adding more "what if"s, then eventually i'll agree that, if all those things were true, UK public finances would be as bad as the banks' finances. but they aren't, so it isn't.

QE didn't bail out the banks, it paid for the government deficit spending. Without it the government would have been bankrupt.

buglawton

Which is the point of my post #105

https://forums.moneysavingexpert.com/discussion/comment/62817292#Comment_62817292

the House make the rules and will shift them if need be

sabretoothtigger

Solved! Interest rates at 0.5% forever.

:j why have we never done this before, my parents paid 15% for their mortgage interest and all this time BOE was holding out the good stuff

If the French come up with Fusion power and/or maybe a couple other things I agree on zero or near that as interest otherwise it might be a more temporary mirage then our vision allows us

QE didn't bail out the banks, it paid for the government deficit spending. Without it the government would have been bankrupt.

I always favour the ironic consequence to unilateral actions and that is the flipside to that logic.
I believe QE has made bankruptcy or similar effect more likely. We would not have been bankrupt, deficit spending would have been restricted and though it might hurt at the time it was likely a better idea to not spend money
.
They had liabilities and income and debt also, its likely they could have managed all that without QE, higher rates is the main result I guess. Thats not bankruptcy it is higher apparent nearterm cost rather then the delayed results we have now and distant recovery

grey_gym_sock

lvader wrote: »

QE didn't bail out the banks, it paid for the government deficit spending.

it both continued the bail out of the banks and paid for deficit spending.

Without it the government would have been bankrupt.

no, government debt would be have been higher than it is now, but not nearly as high a percentage of GDP as it was after WWII. the UK got out of that with a combination of inflating the debt away and some decent economic growth.

talexuser

sabretoothtigger wrote: »

higher apparent nearterm cost rather then the delayed results we have now and distant recovery

Quite right, all the politicos remembered John Major's negative equity and decided it must be put off at all costs in case the other lot got in for another 3 terms in the wilderness. We will have to see just how long it takes to regain the lost output in trend compared to a more conventional shorter recession followed by recovery a la Thatcher and Major. However then saying that this would just have been boom and bust again is a moot point. At the end of the day we were led to the point where we were ****ed.

talexuser

grey_gym_sock wrote: »

decent economic growth.

and that was the missing link in the austerity plan... doh!