Anyone else watching Mervyn King's speech?

aardvaak

Pobby wrote: »

Given the circumstances I think the boe have done an Ok job given the criteria they have to work with.Poor old Merv has had a lot to put up with.The way inflation is measured(pretty much the same goes for unemployment figures) is a massaged,make it look right,set of data to apply the figures to.

In real terms, inflation is well beyond the official figures.Merv has a brief to curb it.Well by tradition,that means he has to raise interest rates.Hmmmm,wouldn`t be wanting to do that as that puts more grief on an
already indebted society.So where does he go from here?

Do we end up with a full scale recession?Hope not,been there done that but I cannot see an easy way out of this.If personal debt(mortgages included) are as high as they seem,something has to give.Market corrections always happen.

As a grand old feller once told me people should never complain at paying interest whatever rate it is as in effect you are borrowing someone elses life - they have saved the money in a lifetime!

agracooble

aardvaak wrote: »

As a grand old feller once told me people should never complain at paying interest whatever rate it is as in effect you are borrowing someone elses life - they have saved the money in a lifetime!

Well said totally I agree.

Rover

The state of the economy is not down to the BoE and King.
The losses and lack of confidence stem entirely from the private bankers and their incredibly irresponsible practices.
King and BoE are trying, in vain, to control the consequences.
Incidentally, King doesn't deserve any blame for NR. That is the responsibility of the their old board, including someone who held board positions on both NR and a well known house builder.
If King had had his way he'd have let it sink and we wouldn't be owed ~£50 billion.
Instead, after political intervention, we've propped it up with our money! That precedent setting will now leave the door ajar for other institutions to call on our money via the back door.
The great British public will have to take their medicine, it is just a question of timings. Will we be bed ridden for a month and then recover, or will we have coughs, colds and a fever for a few years before we shake it off ?
It'll be better for the elite if we have the latter and therefore that's the route we'll be going down.

RHemmings

merlinthehappypig wrote: »

Got to be one of the most sensible speeches I have heard on the UK economy in a long time.

We need to borrow less, save more, watch inflation which he has said could rise steeply and that house price inflation will be 'less buoyant'.

Listening to him you wouldn't assume that there will be any interest rate cuts, let alone steep cuts. He's certainly making the point that inflation is the key responsibility of the bank, not house prices (sorry Gordan and Alastair)

I reckon he has been reading these forums from the good sense he is talking.....................

I think Merv himself has always talked a lot of sense, and knows what he is doing. However, I think there are too many people with their fingers in the economic pie (including our Prime Minister) who are prepared to put short term gain over long term gain and dig us further into the hole.

brit1234

Mervyn King has done a good job within the constraints of BOE. He has said in the past he wanted House Price inflation in his figures so he could put up interest rates to control it. With this important area of inflation out of his remit a dangerous property bubble has been created bigger than the USs.

I liked what he said about the credit crunch likely to swell up again restricting bank lending more so in the near future. He truly has a good understanding on whats going on, his voting record backs this up in the BOE minutes..

Its Gordons Fault for changing inflation figures from RPI to CPI and not of Mervyn Kings.

twhurl

He needs to go. We need to reinflate the bubble and then in a controlled manner deflate it to level out . Its obvious from the last few weeks the market controls everything. If he doesnt do what they want they are going to scare the public more than any terrorist would.

Rover

You're an idiot. Reinflate the bubble for Christ's sake, I really do despair sometimes.

RHemmings

Rover wrote: »

You're an idiot. Reinflate the bubble for Christ's sake, I really do despair sometimes.

I think I'd put it differently from you, but I have to agree with your analysis. The bigger the bubble gets, the more pain when it bursts. Look at Japan.

wolvoman

Rover wrote: »

You're an idiot. Reinflate the bubble for Christ's sake, I really do despair sometimes.

Re-inflate might be the wrong way of putting it. What the BoE needs to do is somehow keep economic growth going, engineer a soft landing in the housing market but keep an eye on structural inflation.

This means interest rates at between 3.75% and 4.25% by the end of 2008.

RHemmings

wolvoman wrote: »

Re-inflate might be the wrong way of putting it. What the BoE needs to do is somehow keep economic growth going, engineer a soft landing in the housing market but keep an eye on structural inflation.

Is it possible for the BoE to engineer a soft landing in the housing market? I personally believe that current property values are dependent on a considerable amount of speculative demand. If housing stagnates or even increases at a modest rate, demand from those expecting double digit house price inflation, and I believe that there are a lot of these people, will eventually dry up. What then?

This means interest rates at between 3.75% and 4.25% by the end of 2008.

What if inflation takes off, as Merv. himself predicts that it will. No point reducing interest rates in the hope that results in cheaper mortgages if inflation raises living costs elsewhere so that on balance even less money is available to fund mortgages.