Tide turning for interest rates?

Glen_Clark

Freecall wrote: »

A great thread with some seriously interesting views on the state of the economy.

We need to be a bit careful with the Costa Coffee stories though. We had a similar one our way and when I was at a friend's house in Bristol a couple of weeks ago they had similar there.

I imagine that it is Costa's PR department placing stories which shows them as a desirable and popular company. Remember, from their point of view all publicity is good publicity.

Maybe, but it isn't just that though is it?.
A geology graduate, (geology is essential in many productive industries) forced to work in Poundland for her £63 a week benefits. National debt increasing at £4billion a day? I think that is a better indication of the state of the economy than Osborne's pre election statistics and spin. How can you trust anyone who devises a scheme to pump up house prices and calls it 'Help to Buy'?
QE and Credit junkies are getting high on rising share and house prices, thinking its growth. Just like before.

grey_gym_sock

Glen_Clark wrote: »

Basic benefit rates are about the lowest in Europe. The big benefit claims (which you see in the Daily Mail) are for housing benefit. They can't reduce that at the same time as pumping up housing costs with Osborne's Help to Bubble Scheme.

i meant that the costs of benefits would fall if/when the economy picks up and so there is lower unemployment (or better paying jobs, reducing the cost of benefits paid to ppl in work).

it's part of the argument that public finances will be improved by a proper economic recovery. how we get that is the problem, since the policy of austerity is making it less likely to happen.

"help to bubble" can only be counterproductive in terms of the costs of housing benefit. it's possible it will also encourage more house building, but there are much better ways to do that.

Glen_Clark

grey_gym_sock wrote: »

"help to bubble" can only be counterproductive in terms of the costs of housing benefit.

Peopple can't afford to move to where the jobs are, or have to spend longer commuting, more congestion, less productivity etc
More money going into housing costs, less into productive industry, - lending to business has actually fallen

grey_gym_sock wrote: »

it's possible it will also encourage more house building, but there are much better ways to do that.

No need to 'encourage' house building, just to allow it by reducing planning constraints. Instead of deciding planning applications at local level where they will always be stopped by selfish Nimbys, decide them at regional or national level so they are decided in the national interest, not just local interest. Relax the so called 'Green Belt' etc. The Government always does this anyway when its something they want to build - military installations etc.

lvader

Glen_Clark wrote: »

You cannot disconnect interest rates from Gilt Yields as long as investors can buy Gilts.

Why not? I see the 2 as almost comletely independant, the Eurozone has a single low interest rate and wildy different government bond yields.

grizzly1911

grey_gym_sock wrote: »

i meant that the costs of benefits would fall if/when the economy picks up and so there is lower unemployment (or better paying jobs, reducing the cost of benefits paid to ppl in work).

Is unemployment going to fall much in reality. Continued net immigration or older people having to stay on at work for longer stymieing younger aspiring workers for example.

Will wages and job security improve or are they just as likely to harden or slip further (in volume terms) if not actual terms.

grey_gym_sock

grizzly1911 wrote: »

Is unemployment going to fall much in reality. Continued net immigration or older people having to stay on at work for longer stymieing younger aspiring workers for example.

Will wages and job security improve or are they just as likely to harden or slip further (in volume terms) if not actual terms.

yes, i'm not very optimistic at the moment, hence use of "if/when".

though immigration tends to reduce when job opportunities in the UK reduce. and indeed some immigrants have gone home because of that. so that is to some extent self-limiting.

Glen_Clark

Of course, much unemployment has been caused by increases in productivity through technology. Keynes wrote about this in the 1930's and estimated productivity to improve eightfold over the following century. He thought that maybe the working week would be reduced to about 15 hours. But instead of that the working week has stayed about the same and we have mass unemployment. (despite all the unproductive jobs created in the public sector, like creating statistics and forecasts nobody can trust, or invading other countries for their oil when we have millions of tons of coal beneath our feet)
I find it so sad that this wonderful opportunity has been turned into a problem. Yet the Government seems intent on making it even worse by forcing the old to work for longer.

doughnutmachine

Glen_Clark wrote: »

Yet the Government seems intent on making it even worse by forcing the old to work for longer.

I think the problem of people having to work longer is largely due to people living longer. Perhaps if the Government and NHS was less keen on prolonging human life annuity rates would go up and people could retire earlier.

Personally, I think living a few years less would be a worthwhile price to pay for retiring earlier and having more holidays etc. When I see those old folk with vacant faces staring at the TV in the OAP home it type of makes me wish that I smoked.

grey_gym_sock

doughnutmachine wrote: »

I think the problem of people having to work longer is largely due to people living longer. Perhaps if the Government and NHS was less keen on prolonging human life annuity rates would go up and people could retire earlier.

annuities have rarely been the best way to retire early. certainly not now.

if you save and invest a higher enough proportion of your earnings, you can retire early. it's that simple.

some ppl do that. some have other priorities.

it's incredibly short-sighted to try to fix financial problems by making medical care less effective.

Personally, I think living a few years less would be a worthwhile price to pay for retiring earlier and having more holidays etc. When I see those old folk with vacant faces staring at the TV in the OAP home it type of makes me wish that I smoked.

as a shareholder in BATS, please go ahead

there is nothing stopping you saving enough money to retire early and go on some nice holidays while you're old enough to enjoy them, and then run out of money and fall back on the state pension when you're old enough to get it. many ppl do that in a less extreme form, i.e. spend more in early retirement, but not spend everything they have.

there is nothing preventing you from arranging your life in accordance with your own priorities, whatever they may be.

lisyloo

there is nothing stopping you saving enough money to retire early

I'd say lack of the money would be a major issue :-)
I agree that some people make choices, other simply don't have it.

while you're old enough to enjoy them

Some people leave it too late. Some people don't make it to retirement.
Best not to save the ski-ing holidays til your 80s and 90s.
You may not get there at all, but if you do you may be in no fit state to go ski-ing (for ski-ing supplement any active activity).

there is nothing preventing you from arranging your life in accordance with your own priorities, whatever they may be.

I can see your point a wholeheartedly agree with you for people that have spare money.
You seem to be overlooking the fact that a lot of ordinary low paid people do not have such choices.