Inflation getting out of control

macaque_2

CLAPTON wrote: »

fairly unlikely that mortgage rates will be in double figures in two years
but a period of falling house prices and then a long period of house price stability will help first time buyers and people who actually want to live in their houses

Not so much unlikely as a racing certainty.

True inflation rate is over 5%. The goverment can manipulate the numbers for a whilt but ultimately markets catch up with these things. The government will delay putting up interest rates (and don't believe that this is a BOE decision) for as long as possible (which will be too long). By that time inflation will have hit 8% and the only way to stop the rot will be to put up interest rates to 10%+. There is nothing new about this. It always happens with Labour governments.

Rafter

I don't think Gordon and Tony would have been thanked for keeping our growth low and interest rates high to hold down our house prices while the American and European standard of living rose faster on the back of low interest rates and easy credit.

Problem is that with hindsight that was probably the right thing, and would have reduced the slowdown and problems we are now facing.

I'm not sure that the Conservatives would have done any better to be honest - apart from John Major, they don't have much of a reputation for saving for a rainy day either.

At the end of the day, a few politicians cannot really influence how 60 million people in the UK behave.

If we all stop spending, batton down the hatches then we are almost guaranteed a recession and job losses.

If we all put our homes on the market then prices will fall.

All politicians can do is try to persuade us to keep spending enough to keep the economy ticking over and hope we don't blame them for our houses being worth 25% less, even though that will still be much higher than when Labour came to power!

I think it unlikely that mortgage rates will be in double figures though, unless inflation is really out of control in which case salaries will be rising faster too.

R.

Treadmill

Out of control ? Inflations still pretty low if you compare it to past decades.

van_persie

macaque wrote: »

Not so much unlikely as a racing certainty.

True inflation rate is over 5%. The goverment can manipulate the numbers for a whilt but ultimately markets catch up with these things. The government will delay putting up interest rates (and don't believe that this is a BOE decision) for as long as possible (which will be too long). By that time inflation will have hit 8% and the only way to stop the rot will be to put up interest rates to 10%+. There is nothing new about this. It always happens with Labour governments.

Absolutely correct.
REAL inflation is far greater than even the RPI figures - if only the benign population of this country understood what fiddled inflation figures are doing to them in real terms (eroding their savings and diminishing spending power), they might think twice before baying for lower interest rates in the hope of lowering the mortgages on their vastly over-priced houses...

macaque_2

Rafter wrote: »

I don't think Gordon and Tony would have been thanked for keeping our growth low and interest rates high to hold down our house prices while the American and European standard of living rose faster on the back of low interest rates and easy credit.

Problem is that with hindsight that was probably the right thing, and would have reduced the slowdown and problems we are now facing.

I'm not sure that the Conservatives would have done any better to be honest - apart from John Major, they don't have much of a reputation for saving for a rainy day either.

At the end of the day, a few politicians cannot really influence how 60 million people in the UK behave.

If we all stop spending, batton down the hatches then we are almost guaranteed a recession and job losses.

If we all put our homes on the market then prices will fall.

All politicians can do is try to persuade us to keep spending enough to keep the economy ticking over and hope we don't blame them for our houses being worth 25% less, even though that will still be much higher than when Labour came to power!

I think it unlikely that mortgage rates will be in double figures though, unless inflation is really out of control in which case salaries will be rising faster too.

R.

The Gordon Brown model for economic growth:

The owner of an antique shop puts a vase in his shop window priced at £200. The owner of antique shop opposite sees the vase and decides to buy it. He puts it in his window for £400. Two days later the first shop owner walks in and buys the vase back and puts it back in his window at a price tag of £600. The second antique shop promptly buys it back and puts in his window for £800. Two hours later a stranger walks into the the second antique shop and buys it for £800. The owner of the first antique shop walks in the next day and says "Where's the vase." The second antique shop owner says "I sold to a man for £800." The first antique shop then angrily says "You fool! We were making a lot of money on that vase and now you have gone and ruined it"

BobProperty

So, at what point do we adopt the Euro then?

neas

lol i think brown has screwed us more and more so the euro looks more appealing...

No way should labour win next election...

slipthru

BobProperty wrote: »

So, at what point do we adopt the Euro then?

Thats what i'm wanting to know to.

Errata

BobProperty wrote: »

So, at what point do we adopt the Euro then?

May 2nd

maninthestreet

neas wrote: »

Whats stagflation.

We've been living on a credit fuelled binge... its time for the hangover... Prepare for a rough storm ahead I say... Im not out partying these days... save save, no debt, some savings, pensions all in international markets...

Battened down the hatches and preparing for it... Just hope i keep my job through it all

Stagnating economy, but high inflation.