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Bo E Shocker: 7:2 Against A Hike


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#1 Realistbear

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Posted 22 June 2011 - 09:19 AM

http://uk.reuters.co...E75L1CN20110622

(Reuters) - The Bank of England's Monetary Policy Committee judged the growth outlook had weakened and some members raised the possibility of future quantitative easing, minutes to its June 8-9 meeting showed on Wednesday.



From here on things will be getting very nasty. Its payback time folks.

BTW--the BoE have no control over the bond market--THEY determine our IR from here on in. And of course Merv and the rest know that and will not have to be the ones to do the necessary.

So where from here?

Higher IR, falling demand, higher unemployment, lower wages, crashing house prices.......................

Deflation cometh
CRIMBOCASTS for y/e 2013

1. The Euro will have another bad year and may hit parity with the US$ before the end of the year.
2. The Pound will not move much against the dollar (range 1.47-1.60) but is likely to regain a lot of ground verses the Euro which may not survive. US $ will be a safe bet, especially ST bonds and large caps.
3. Stocks should finish moderately higher than 2012 barring a war with Korea and Iran.
4. Gold will not be flying to the moon (again) and will bitterly disappoint (again) any who got in during the run up in 2011.
5. House prices: Flattish to up single digits overall..
6. Not much in the way of inflation again this year--those who forecast hyperinflation will be proven wrong (again--as in 2011 and 2012)
7. Could see a snap GE after the May elections which will be the worst result EVER for Dave. UKIP continue to make headway and will be number 3 before year end.

#2 VeryMeanReversion

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Posted 22 June 2011 - 09:31 AM

BTW--the BoE have no control over the bond market--THEY determine our IR from here on in. And of course Merv and the rest know that and will not have to be the ones to do the necessary.


Yet HSBC are still offering base rate trackers (base+1.89%). Someone is still prepared to lend at BoE linked rates.
"A pound is just a promise to give you another one."

#3 MrFlibble

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Posted 22 June 2011 - 09:31 AM

These spinning plates are starting to wobble badly, cannot be long now before one comes crashing down, and the printing press gets fired back up :ph34r:
"Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves." - Norm Franz

In Gold we trust...

#4 Thane Tasker

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Posted 22 June 2011 - 09:36 AM

I want people to really think about this question. cui bono?

#5 Harry North

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Posted 22 June 2011 - 09:42 AM

Surely it is QE 2 now, same as in the US

#6 Djini

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Posted 22 June 2011 - 09:46 AM

Yet HSBC are still offering base rate trackers (base+1.89%). Someone is still prepared to lend at BoE linked rates.

Actually First Direct (essentially HSBC) is offering base+1.49% for 2 years (£999 fee).

I'm seriously thinking of pulling the trigger on that for my £70k Mortgage.

#7 A.steve

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Posted 22 June 2011 - 09:59 AM

BTW--the BoE have no control over the bond market--THEY determine our IR from here on in. And of course Merv and the rest know that and will not have to be the ones to do the necessary.


But... do they?

Are we talking about the same interest rates?

I've read about the 'stratospheric' interest rates in the early 1990s - and didn't really understand what was supposed to have happened then... or - maybe - I understand - but don't really believe.

I do not see why bond prices necessarily dictate central bank base rates. I don't even see why short-term rates (LIBOR, for example) should correlate strongly with bond yields. Sure, I understand yield curves - and how an excessively steep slope yields a tendency for arbitrage... but - if central banks chose - they could keep their rates far lower than that we'd traditionally have inferred from bond prices... and control things by the amount of credit they issue not the rates they charge.

I don't see why the central bank base rate had to climb so high in the crisis of '92. I understand that the government borrowed £16bn unexpectedly and was charged an arm and a leg for doing so... but I don't see why that one-off shock required central bank interest rates to follow suit... and definitely not as quickly as they did.

Similarly, today, I see no reason in principle why bond prices couldn't become detached from central bank base rates... and the difference be considered the risk premium.

Perhaps you mean that retail borrowing rates are determined by the bond markets - and I'd agree - but that's always been the case.

#8 Errol

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Posted 22 June 2011 - 10:14 AM

Surely it is QE 2 now, same as in the US


2? 3, surely?

Either way, this is the titanic and all hands are going down with the ship ...

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#9 JaneTracy

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Posted 22 June 2011 - 10:39 AM

I was reading about this earlier and thought it was put nicely here.

The Monetary Policy Committee Minutes

These latest minutes just released have shown that we are further away from an interest-rate rise as the new member Ben Broadbent voted for unchanged policy. As I mull over the idea of an ex-employee of Goldman Sachs voting for no change to the current – very beneficial for Goldman Sachs- status quo I am reminded of the quote from Turkish in the film Snatch.

Who’d da thunk it?

http://t.co/H4Z3Mha

There were also some interesting thoughts on problems with the UK's public-sector finances from the figures released yesterday...

#10 rantnrave

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Posted 22 June 2011 - 10:48 AM

I don't see why the central bank base rate had to climb so high in the crisis of '92. I understand that the government borrowed £16bn unexpectedly and was charged an arm and a leg for doing so... but I don't see why that one-off shock required central bank interest rates to follow suit... and definitely not as quickly as they did.

To defend the £'s value in the Exchange Rate Mechanism, the forerunner to the Euro. It could only trade between certain values against a basket of currencies including the Deutsche Mark and was dropping through that floor.

#11 Democorruptcy

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Posted 22 June 2011 - 10:57 AM

http://uk.reuters.com/article/2011/06/22/uk-bank-idUKTRE75L1CN20110622

(Reuters) - The Bank of England's Monetary Policy Committee judged the growth outlook had weakened and some members raised the possibility of future quantitative easing, minutes to its June 8-9 meeting showed on Wednesday.



From here on things will be getting very nasty. Its payback time folks.

BTW--the BoE have no control over the bond market--THEY determine our IR from here on in. And of course Merv and the rest know that and will not have to be the ones to do the necessary.

So where from here?

Higher IR, falling demand, higher unemployment, lower wages, crashing house prices.......................

Deflation cometh


You started this thread at 10:19 when at 10:01 a thread was already here

http://www.housepric...howtopic=165543

Can't you at least look at the first page before you start a new repititive thread or do you have some sort of long running bet on who can start the most threads?

Mods merge?

Democorruptcy
If you say "Democorruptcy" quickly, it sounds a bit like "Democracy". In a "Democracy" people vote for politicians who represent their interests. In the UK's "Democorruptcy" people can only vote for expense fiddling thieving MPs who are in the hip pocket of big business and the finance sector.

Governbankment
A "Governbankment" is a Government that has no line between itself and banks. It diverts public money (our taxes) to private companies (banks). George Osborne's Help to Buy Bail Banks, will see our taxes go to bankers to cover their losses on mortgages that default. The UK's Governbankment will even pay bankers "reasonable repossession fees" on Help to Bail Bank mortgages that default.

The Funding for Lending Scheme (FLS) is stealing from savers to make them pay for crimes by bankers. Via lower interest on savings, all the bank fines for PPI, LIBOR, interest rates swaps, etc. are being paid by savers so that bankers can keep pocketing bonuses. 

"We need to make a really big change: from an economy built on debt to an economy built on savings" - David Camoron Jan 2009
"Printing money is the last resort of desperate governments when all other policies have failed" - George Osborne Jan 2009
- So what do Camoron & Osborne do? Print money and leave interest rates at 0.5% when inflation is over 5%

If it is asserted that civilization is a real advance in the condition of man -- and I think that it is, though only the wise improve their advantages -- it must be shown that it has produced better dwellings without making them more costly; and the cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.
http://classiclit.ab...en-Part-2_4.htm

I want to tell you my secret now.... I see debt people


#12 Traktion

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Posted 22 June 2011 - 10:59 AM

But... do they?

Are we talking about the same interest rates?

I've read about the 'stratospheric' interest rates in the early 1990s - and didn't really understand what was supposed to have happened then... or - maybe - I understand - but don't really believe.

I do not see why bond prices necessarily dictate central bank base rates. I don't even see why short-term rates (LIBOR, for example) should correlate strongly with bond yields. Sure, I understand yield curves - and how an excessively steep slope yields a tendency for arbitrage... but - if central banks chose - they could keep their rates far lower than that we'd traditionally have inferred from bond prices... and control things by the amount of credit they issue not the rates they charge.

I don't see why the central bank base rate had to climb so high in the crisis of '92. I understand that the government borrowed £16bn unexpectedly and was charged an arm and a leg for doing so... but I don't see why that one-off shock required central bank interest rates to follow suit... and definitely not as quickly as they did.

Similarly, today, I see no reason in principle why bond prices couldn't become detached from central bank base rates... and the difference be considered the risk premium.

Perhaps you mean that retail borrowing rates are determined by the bond markets - and I'd agree - but that's always been the case.


Largely, I would agree - we are now at/near debt saturation point, so having low rates is hardly going to drive mass credit creation. If anything, they will print more with QE to counterbalance some of the credit contraction and to keep a lid on gilt prices, IMO. Ofc, this debasement won't be good for buying power, but I don't see where any runaway credit inflation is going to come from - everyone (via the banks) is already tapped out.

I just see a long period of lower living standards, due to cost-push inflation (both from more external demand and currency debasement). EDIT: Much like Japan and their lost decade, in fact.

Edited by Traktion, 22 June 2011 - 11:00 AM.

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#13 exiges

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Posted 22 June 2011 - 10:59 AM

This will just push inflation up further right ? As the food, fuel etc. we import has just got more expensive.

http://community.nas...x?storyid=81902

The Pound is giving away previous gains and dipping to fresh day lows against its main rivals after dovish BoE minute, where some voices called for a GBP 50 billion expansion of the Bank's "Quantitative easing" programme.

GBP/USD recovery from 1.6075 lows last week has capped at 1.6260, and the pair pulled back to day lows at 1.6145 after BoE minutes, while the EUR/GBP bounced at 0.8855 to reach fresh 8-daty highs at 0.8915, and GBP/JPY retreat from day highs at 130.55 has extended below 130.00 to day lows at 129.50.

The BoE Monetary Policy Committee approved the decision to leave rates at 0.5% by 7 votes to 2, with Adam Posen calling for a 5GBP 50 billion expansion of the Bank's "Quantitative easing" programme.

Read more: http://community.nas...2#ixzz1Q09R2vD5
Constant growth the cancerous cure, a swarming race of profiteers ensure cheap cars for the rich, cheap lives for the poor, cheap weeks in the sun, free drinks at the door. Puerile propaganda plugs up the TV, keep folk following the money so they'll never be free.

Bankrupt schools grind out fool after fool then feed them to a system where idiots rule. Polling booths, phone votes, bogus questionnaires, you get a say as if anybody cares. Joe Public doesn't want to play so liquidate his life as he looks the other way.

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#14 R K

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Posted 22 June 2011 - 11:10 AM

7:2 at close to the peak in the CPI cycle.

One might have thought people had got the message by now.


"The problem with capitalism is that eventually you end up with everyone else's money" RK
"We have now entered The Great Rebalancing 2007-20xx" - RK
"Gold will go to $1000, Silver to $18" - RK August 2011
QE £100bn and build 1m council homes - RK
Carney announces the launch of Empire 2.0 - Rise of the Banksters Oct '13


#15 Conrad

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Posted 22 June 2011 - 11:17 AM

Time to buy a house?




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