Poll - What do YOU THINK the MPC should do on 7th Feb?

Generali

Just to make the point, whatever the BoE does, interest rates are set in the markets. If base rates are hiked up to 100% pa, you won't find many accounts paying that rate because the banks can't afford it. In the same way, if the BoE cuts to 0% tomorrow, the cuts won't be passed on in full and the banks can charge more than that for their money.

To take an extreme example, during the 70s when in most countries the twin beasts of socialism and inflation roamed the land, Swiss banks could get away with giving a negative interest rate I believe. That is they could charge you for looking after your money.

I guess it was an insurance policy against that nice Mr Healy (who let us not forget was considered to be on the right wing of the labour party) decided that a top marginal tax rate of 98% wasn't enough and that he should confiscate wealth as well as income.

firsttimetom

my education has involved going massivly into debt...............this is what were all supposed to do.........getting loans out...credit cards etc........no big deal to anyone under 30 (the Government has taught us how to do it)

I'm well under 30 (23) and Its a big deal to me. I don't buy into this labour nonsense about borrowing, which is why I'll be glad when they are gone (wont be too long)

The problem with things like this is that everyone is different and in different situations. If i had a mortgage, I'm sure i'd be welcoming the cuts. which brings me too......

PhilDS wrote:

I don't like these people who want to "punish" us for buying a home. We weren't reckless, we save every month and .25% rate cut will save £30 per month...which is good.

I certainly don't want to come across as punishing you. In fact you sound like you are in a great position. You've only borrowed 3x your income and do have savings. I think that is great.

What I don't like is people that borrow amounts they simply cannot affrod (7x income etc) and then try and blame it on everyone else. People that save up rather than stick it on a credit card ultimately get punished, which I really don't like. Why should we have to pay because they can't control their spending?

And there is the inflationary effects of lower interest rates and a weaker pound. 2.1% inflation rate is something in one of Gordons dreams.

firsttimetom

top marginal tax rate of 98%

Generali, is that true?

You blow me away with some of the things you know sometimes. Your mind is like a history of economics.

PhilDS

firsttimetom wrote: »

What I don't like is people that borrow amounts they simply cannot affrod (7x income etc) and then try and blame it on everyone else. People that save up rather than stick it on a credit card ultimately get punished, which I really don't like. Why should we have to pay because they can't control their spending?.

I agree with you there. I don't want to sound like I'm blaming lenders here as I truely believe people are responsible for their own actions, but...shouldn't a body like the FSA crack down on companies lending money to people who cannot afford it? That would of helped stop this "credit crunch" (in this country) without needing yoyo interest rates.

WTF?_2

adr0ck wrote: »

were all supposed to be borrowers now!!!!!

this is what a labour government wants its citizens to do.....borrow

my education has involved going massivly into debt...............this is what were all supposed to do.........getting loans out...credit cards etc........no big deal to anyone under 30 (the Government has taught us how to do it)

can all the old people please stop moaning about a rate cut

I'm in my 30s and have no debt whatsoever and a healthy amount of savings. So don't make out that people these days have no choice but to go heavily into debt.

I know a lot of people in my peer group in debt but that is because they have chosen to live beyond their means. ie. Expensive cars, big tellies, 2 foreign holidays per year etc.

Really, when you see people with average jobs driving around in flash new top of the range cars, owning a huge plasma telly with SkyHD, massive surround sound system, a wardrobe full of designer gear etc. etc. you know that something isn't right with the way people manage their finances.

free4440273

!!!!!!? wrote: »

I'm in my 30s and have no debt whatsoever and a healthy amount of savings. So don't make out that people these days have no choice but to go heavily into debt.

I know a lot of people in my peer group in debt but that is because they have chosen to live beyond their means. ie. Expensive cars, big tellies, 2 foreign holidays per year etc.

Really, when you see people with average jobs driving around in flash new top of the range cars, owning a huge plasma telly with SkyHD, massive surround sound system, a wardrobe full of designer gear etc. etc. you know that something isn't right with the way people manage their finances.

Ditto. And I have no problem with people living beyond their means, so long as their 'stupidity' does not impact upon my financial prudence: rates should be going UP, not down. We need people to save (it's not a dirty word) more.

Generali

firsttimetom wrote: »

Generali, is that true?

I believe so although I'm having trouble finding historic rates of tax. Some cheeky monkey has bought taxhistry has a URL and has the cheek to put on the home page words to the effect, "I can't find historic tax rates, please provide". DYOR old chap.

I did find this on the HMRC website:

http://www.hmrc.gov.uk/history/taxhis7.htm

Special rates have been introduced twice within the post-war years, causing income tax in certain circumstances to exceed 100%.

• For 1947-48 a special contribution was payable when a person’s total income exceeded £2,000. For investment income over £5,000 it was 50%. So with income tax at 45% and surtax at 52.5%, the effective rate was 147.5%.
• In 1967-68, the special charge was imposed. For investment income over £8,000, the rate was 45% which - with income tax at 41.25% and surtax at 50% - meant a total rate of 136.25%.

Obviously Labour was in power both times.

Famously there was the song The Taxman (1 for me 19 for you...). Better was 'Sunny Afternoon' by The Kinks that took the Michael out of The Beatles

The Taxman's taken all my dough,
And left me in my stately home,
Lazing on a sunny afternoon.
And I can't sail my yacht,
He's taken everything I've got....



http://www.youtube.com/watch?v=n9KaI5T0zRw

wolvoman

free4440273 wrote: »

Ditto. And I have no problem with people living beyond their means, so long as their 'stupidity' does not impact upon my financial prudence: rates should be going UP, not down. We need people to save (it's not a dirty word) more.

There's a bit of a nasty undercurrent in these threads that somehow borrowing is bad and saving is good. As if there's some sort of 1950s moral crusade at the heart of it.

It's a fact - 99% of people cannot buy a house without borrowing.
It's a fact - 99% of businesses need to borrow to expand and grow. The very same growth that enables us all to have employment and perhaps save

wolvoman

aardvaak wrote: »

Yes there is - as dannboycey said to reward us hard working savers and not reward the whinging borrowers who have got themselves to blame for borrowing.

Interest is my only source of income.

And you have got yourself to blame for only saving and not investing - why are you anymore entitled to reward than someone who borrows?

Generali

wolvoman wrote: »

And you have got yourself to blame for only saving and not investing - why are you anymore entitled to reward than someone who borrows?

Also, an income from capital can be locked in at any time by buying govt bonds or an annuity at almost nil risk (inflation excepting).

Generally you get a better rate on a savings account because you take on more risk (that rates will drop and so will your income).

You pays yer money and takes yer choice.....