Sunday, Mar 04, 2007
Economic Pundits Suggest Lower Rates to avoid Recession
BBC World Service: World Business Review - On the recent Stock Decline
Start listening from 19:30 (although whole programme is worth listening to). The economic pundits on the World Business Review of the BBC World Service see a need to lower interest rates to stave off global recession. If that occurs then the HPC is toast and HPI will get yet another leg up from cheap credit.
Posted by sirgoogle @ 03:55 PM (151 views) Add Comment
15 Comments
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1. sirgoogle said...
Why on earth they (the experts) do not consider property in their calculations I do not know (it must be the largest asset class by far).
2. paul said...
There's a problem here though. Higher house prices = higher cost of living = higher inflation. You can't have a house price boom without inflation in the long term - it doesn't work!
3. sirgoogle said...
We the public know that. The "experts" do not seem to see this.
4. Financial Planner said...
Absolutley brilliant find. Well done for putting on. I've put on globaledgeinvestors.com
I know the three westerners and Rogers and Hughes are 1st rate global strategists. Nightingale is very clever but a bit of an 4rse - constantly going on about loosening without realising that central bankers have no option.
5. Cheekie Charlie said...
Ah but crash gordon has offered us public sector employees a below inflation 1.9% pay increase to keep our below average saleries in check. How economically prudent of him! If anybody knows of any decent shanty towns in their area and would like to donate any asbestos sheets or clear polyphene I will gladly take it off there hands.
6. enuii said...
Lower interest rates means we can all borrow more printed money to spend, house prices can go up again, everyone who is skint or depressed can MEW a bit more. LUVVLY, just think, new cars all round, nice holdiays again and sod the future, live for today!
Hollow Economy = Big Crash sooner or later, lower interest rates are not the answer as they will just delay the inevitable and make the cold reality even harder to stomach.
I'm waiting for the pound to hit the 2 dollar mark and then slide, that will get inflation going a bit.
7. lvmreader said...
In defence of currency.............................
8. Surfgatinho said...
a) It is the BBC, b) what happened to inflation?
9. sirgoogle said...
enuii and Ivmreader,
I agree with both of you - and hope you are right for the sake of all HPCers sanity. I've been proved wrong so many times before when I have called the top of the market.... I feel that analysis, data, education (and even common sense) are completely worthless nowadays.
Unfortunately if you are right then my savings and investments are toast too.
It is truely a mad mad world.
10. harold said...
Interesting that the £ fell nearly 2% against the Euro on Friday. Maybe the markets are guessing the next move by the BoE to be down. In this climate it is unlikely that the BoE will feel compelled to raise on Thursday. However, to those who think that the BoE can (or would ultimately want to) defend house prices simply by lowering IRs, they can only do that if the money supply, inflation figures and £ strength will allow them to do it. Given these conditions at present the BoE's room to manoeuvre is very limited indeed.
11. magnifico said...
Taxation is the key to lower IRs without inflating the housing bubble further.
The foundations of the market lay in rich foreign investors and BTLs.
Tax them and discourage others, and let FTBs again become the main driving force at the bottom of the market.
12. Tick Tock said...
At present Russian Gangsters ect. get significant tax BREAKS on UK property investment that are not available to UK folks, boosting London prices and thus distorting 'UK averages' even further.
Correcting this New Liebour discrace would be a good start. Taxing 2nd 3rd 4th house ownership etc etc would make even more sense (if that is the Government gave any sort of shit at all about the 'Jilted Generation' that 'their' policy has created). Also, preventing Central Banks 'saving' the hugely overvalued property market over and over again for the benefit of VIs might be a good idea too.
For whose benefit does the BOE make its decissions, foreign capitalists, Gordon Brown, or the British people, who increasingly can no longer afford to live in their own Country?
The free market fundementalists have created the inflation that inevitably follows such selfish and short sighted global economic policy, and now we are expected to shoulder the burden by accepting real term pay cuts? The people who have been priced out of home ownership by property speculators are being asked to pay for the pleasure of protecting the property speculators investments. You couldn't make it up!
Maybe it would be a good idea for people to read a few more History books and discover what might be the long term concequence of such policy. When people get bored of 'capitalist TV' and 'Celebs' they may just start noticing what has been done to their country (and who is behind it!)
13. bidin'matime said...
Magnifico - interesting you should say that, cos I always used to be of the opinion (pre-ERM) that European governments controlled demand / prices by keeping taxes high, whilst the UK controlled them by keeping interest rates high - back then you could borrow DMarks etc at a fraction of the high cost of borrowing in the UK. I wonder if it's the final step towards unification that we have moved towards the European approach as they move towards ours. Mind you, stealth taxes aside, this government has hung it's hat on a low headline rate of tax, so they can't simply jack up tax rates to EU levels.
And because you can't tax borrowings, they can't stop people MEWing and spending that - the only thing that will stop that is IRs or tighter (or any!) laws restricting lending - some of you will be old enough to remember (I do, from my youth..) credit squeezes when lenders were given limits by the government, so they couldn’t lend more than a certain amount - maybe we shall see the return of these, but somehow I doubt it, as the government (of today..) is a major beneficiary of the boom. I often think that if I were Cameron, I'd be tempted to tell Brown and his lot that they could have another 5 years - I'd sit it out while things went horribly pear-shaped, rather than risk getting the blame...
14. waitingfor hpc said...
don't miss the point here. Lower IR's will put the problem on hold only.... people maxed out on credit at lower IR's anyway. I do not think that people have much more ability to borrow - unless house prices go higher.
15. denzil said...
This is little more than feeding a junkies habit. The era of low interest rates coupled with economic mismanagement on both sides of the Atlantic have created the potential for recession and the solution from the "experts" is lower interest rates. Ironic really.