Massive bailout for banks: Get ready for inflation.

Generali

Sorry:

NRK - Northern Rock
BARC - Barclays
BoE - Bank of England

Stagflation is a possibility but I don't see where the inflation bit is going to come from without a further big drop in the £.

Before people bring up food prices, the UK consumer spends about 8% of their combined incomes on food so rising food prices are unlikely to have ahuge impact on inflation.

Treadmill

My Brother in law owes me £100, will I be able to package that up as a bond and flog it to the BoE ?

merlinthehappypig

From a letter in today's press........

And the Lord sayeth unto the multitude that were irresponsible with credit and took out mortgages they could barely afford...Repent and don't bleat on to the rest of us about it. Here endeth the lesson.

Made me smile anyway.

pamaris

I've not made it through the whole thread yet- but I had a question- does the stock market as a whole keep up with inflation?

Generali

pamaris wrote: »

I've not made it through the whole thread yet- but I had a question- does the stock market as a whole keep up with inflation?

Usually in the long term.

Generally speaking, fixed interest stuff like bonds and gilts are bad when inflation is high or rising. Shares and property do better.

WTF?_2

pamaris wrote: »

I've not made it through the whole thread yet- but I had a question- does the stock market as a whole keep up with inflation?

On the whole I think it's a better bet long term than most other conventional avenues of investment.

Obviously, it goes through cycles so you need to be careful when you buy in and when you cash out. For example, if your investment in the market must be withdrawn during a period of low stock values then you are out of luck.

Generali

!!!!!!? wrote: »

On the whole I think it's a better bet long term than most other conventional avenues of investment.

Obviously, it goes through cycles so you need to be careful when you buy in and when you cash out. For example, if your investment in the market must be withdrawn during a period of low stock values then you are out of luck.

There are ways of getting round having to time the market (which you are only ever going to do by luck anyway). The simplest way is to drip feed your money in month-by-month.

kennyboy66_2

It seems a little odd that the government is bailing out banks while almost without exception banks are increasing their dividends and refusing to have rights issues to increase their capital base.

WTF?_2

kennyboy66 wrote: »

It seems a little odd that the government is bailing out banks while almost without exception banks are increasing their dividends and refusing to have rights issues to increase their capital base.

Absolutely. At the end of the day they are private businesses (except Northern Rock of course ) and generating revenue for their shareholders at the same time as receiving literally billions of pounds in aid from the government.

If they aren't solvent, by all means bail them out to prevent systemic damage but let their shareholders take the hit first.

What we are seeing now is the beginnings of the govt offering Northern Rock style underpinning for the entire banking sector. What does this say to those running the banks? Will they be inclined to make sensible, prudent decisions for long term stability and growth or will they go for risky, high-margin, bonus-generating bets safe in the knowledge that they can't really lose and the taxpayer will foot the bill?

We know what they've done for the last six or seven years and there's no reason to assume that now they've been bailed out that they won't revert to similar behaviour in the future.

MissMoneypenny

Stand by for more rises in taxes.

I was talking to some Polish people who are moving to Germany at the end of the month. They work long hours, but can make (keep) more money if they work in Germany.