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

SuperV

Dylanwing wrote: »

Nearly spot on - A lot of military spending does create real jobs, and with times being so turbulent, wisdom would suggest retaining funding on defence of the UK, but getting out of foreign jaunts..

I suggested to the Government to invest in space and marine research instead of Tridents and airplane carriers.

Much better, don't you think? More jobs, much more useful, turning the corner in the new race in weapon armament as well.

SuperV

Dylanwing wrote: »

And let's not forget about pursuing the wealthy tax dodgers......

Flat rate, first 10-12k 0% tax - applied to small companies as well.

That will also cut all non-jobs in the Government and private sector making the whole UK economy much more competitive and agile. Savings? A LOT!

poppy10_2

Ztuart Law of Assetz agrees with you:

http://news.assetz.co.uk/articles/4454.html

SuperV

poppy10 wrote: »

Ztuart Law of Assetz agrees with you:

http://news.assetz.co.uk/articles/4454.html

Unfortunately, we know what we are talking about. Mr Marvin King was lucky to be Governor of BoE during some very lean times and his mistakes were "forgivable" or at least not so obvious.

He is not the right person for BoE today!

SuperV

http://business.timesonline.co.uk/tol/business/economics/article5114367.ece

Is it too late?

SuperV

"Gordon Brown on Monday gave his firmest signal yet that the government is planning imminent tax cuts to bolster the economy, in what he hopes will be a concerted global effort to stimulate demand."

http://www.ft.com/cms/s/0/f1738aa4-af64-11dd-a4bf-000077b07658.html

Keynes in practice. Maybe they should offer me a job ))

SuperV

http://www.ft.com/cms/s/0/856f40c6-b02e-11dd-a795-0000779fd18c.html

"Analysts attributed the loss of confidence in Britain’s currency to worries about the UK economy."

It seems that the high interest rate only helped to crash British economy. End sterling as well. Very "good" news for savers!!!

SuperV

"Japanese nightmare
The Japanese experience is often quoted as a case study of how governments and central banks should not behave in a downturn.
Falling property prices and corporate failures in the early 1990s were not matched with early government action. Fire sales of assets made an already weak market even worse.
When the government did implement tax cuts and spending increases, and the central bank slashed interest rates, it didn't make much difference.
By the time Japan's banks had cleared their balance sheets of bad loans and owned up to their losses, it was too late.
From 1999 deflation set in, with persistently falling prices. Interest rates fell to zero but the economy stagnated.
If prices are falling, buyers hold back in expectation of yet lower prices and a downward spiral is generated.
Japan did not see positive inflation again until 2006.
Avoiding Japan's "lost decade" is now the over-riding priority for the Treasury and the Bank of England.
That's why a fiscal boost involving tax cuts is being planned by Downing Street following the Bank of England's big interest rate cut."
(http://news.bbc.co.uk/1/hi/business/7736193.stm)

In order to stabilise economy, Mr King should resign. He proved on many occasions that his horizon of how BoE decisions will affect the whole economy is not very long.

Can he assure money markets what will be BoE next prediction and next move? Answer is clear - no!

SuperV

... has to be broken.

Job is worth so much so the market pays for it = how much money is there to pay for that kind of the job.

Salaries in Government and Government funded jobs have to be priced realistically - the Government doesn't exist only to fund them, it also has to support growth of the whole economy.

Salaries in the Government also have to reflect climate - people invest time to obtain a position that will provide them an income. Government jobs are very secure, well paid, a lots of benefits and a golden pension on top. It could be argued that for the same kind of a job in private sector a package should be between 20 and 50% bigger (guess 30%). Or - current salaries in the Government should be smaller. If they were to stay at current levels, they will starve private sector and the UK of valuable experts (euro is very attractive as a currency to earn).

Government should also provide a service back for stamp duty - it should be an insurance against a fall in the price of house, so if there is a drop in value, the Government should cover the loss.

Some players in financial markets will have to adapt their costs packages as well. It is not only that the top echelons made mistakes, mistakes were made at every level. They should properly assess market conditions and potential new employers if there are any.

In the future financial sector should provide guarantees for investments backed by the wealth of the involved participants and potential beneficiaries of profits. Risk should be shared in both directions, both if there is a profit and if there is a loss.

Sounds familiar?

SuperV

1) Higher rates killed economy and caused ran on sterling.
2) Sterling is weak, so it is a best buy among governments bonds.
3) BoE should offer mortgages directly to households and cut the banks completely. Banks should concentrate on what they know - business loans (I hope).