Interest Rates - BoE should cut them or the governer should go!

SuperV

dunstonh wrote: »

Its below the long term average.

Economy today is not the same as economy yesterday. Or is a localised as it used to be 100 years ago.

dunstonh wrote: »

Its not often in the past the UK would have considered 3.8% inflation uncontrollable.

And the busts were controllable?

dunstonh wrote: »

The economy is slowing down and could fall into deficit but at present it still is growing,

It is already shrinking in real terms. if the cost or raw material rose 30% causing 10% increase in factory prices, that would mean that they consist only 1/3 of the whole cost of the product.

As not the whole of the UK are software engineers, that may as well be much higher. That means the profits are shrinking and the Britiwsh based cost will have to be cut - means a number of redundancies, but not huge, only regulatory ones.

Take a look across the Channel, I just wander how will EuroBank react after very bad news from Germany.

SuperV

lisyloo wrote: »

Someone going from 5% to 7.49% (with northern rock for example) will see a huge increase and we are going to see big rises in repossessions.
Northern Rock are not going easy on people who don't pay . I'm not saying they should, but there will be no breathing space.

:rotfl::rotfl::rotfl::T:T:T
In the US they use Freddie Mac and Fannie Mae to stop housing market melting, here they will use Northern Rock to cause it :T:T:T:T

SuperV

http://news.bbc.co.uk/1/hi/business/7508816.stm

""The claimant count is the biggest in more than 15 years. While not vastly different from what was expected, it is a sign of things to come over the next year as the economy weakens," said Philip Shaw at Investec."

This is just the start of the things to come.

Mr King and MPCs either don't follow news or don't know what they are doing. They should be replaced as soon as possible to prevent them from causing even more lasting damage.

SuperV

Simple explanation of the current situation.

Imagine a blind(folded) driver. He or she can only use accelerator to change the speed of a car.

When the road surface is smooth, he or she can accelerate. When there are some potholes, he or she will decrease the speed.

But what if the pothole is HUGE? What if there is a pedestrian in front of the vehicle? It will brake to late! It can't predict really what will happen and can react only AFTER something has happened.

Use this analogy for BoE basic interest rate. When the economy is doing very well, they increase interest rate. When there are some bumps, they decrease.

But what can they do AFTER they cause an accident - a number of lost jobs?

SuperV

We forgot about one huge victim of housing bubble crash - The Treasury.

Effects of that hole in its purse - maybe the Olympic games in London in 2012 should be cancelled?

Just another reason to lower interest rate and do everything possible to avoid crash.

SuperV

"It follows news last week that house prices are falling at the fastest rate since the Great Depression in the 1930s." (http://www.telegraph.co.uk/money/main.jhtml;jsessionid=LFUVBOC5Z22YPQFIQMGCFF4AVCBQUIV0?xml=/money/2008/07/18/bcnbrown318.xml)

What else to say?!

lisyloo

What else to say?!

I'm sure you'll think of something :rotfl:

SuperV

lisyloo wrote: »

I'm sure you'll think of something :rotfl:

Cut interest rate? :beer:

lisyloo

Cut interest rate?

Medium term I think that is likely, but the BOE have said they will do "whatever it takes" to control inflation and with inflation at 3.8% I can't see that happening immediately.
I don't see inflation coming under control if petrol keeps rising and gas increases 66%.

How do you see things playing out?
I'd be interested to know what you think WILL happen not what SHOULD happen with interest rates.

dunstonh

SuperV wrote: »

"It follows news last week that house prices are falling at the fastest rate since the Great Depression in the 1930s." (http://www.telegraph.co.uk/money/main.jhtml;jsessionid=LFUVBOC5Z22YPQFIQMGCFF4AVCBQUIV0?xml=/money/2008/07/18/bcnbrown318.xml)

What else to say?!

Excellent news. Now first time buyers can start to benefit and maybe people will begin to treat houses as a home and not an investment.