Tuesday, May 08, 2007
A bunch of economists believe this is the last rise in rates
The Times (Online): Rate increase ‘will be the last’
I have a dim view of The Times' economic journalists (Gary Duncan and Noshbag Smith) but I thought I'd post this one to stimulate debate and to prove not all the Media is claiming financial doom.
Posted by talking rot @ 06:41 AM (318 views) Add Comment
7 Comments
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1. sold 2 rent 1 said...
These economists may well be right becasue they have great knowledge of the business cycle.
We have already seen housing wobbling in France, Spain and Ireland and their rates are 3.75%.
In the US, the economy is slowing and housing is wobbling with rates of 5.25%
Our debt levels and HP increases have been on a similar level to these countries. Why would we require much higher rates to break the consumer.
This asset price boom has come off the back of deflationary pressures. These pressures still exist in the world economy.
Unfortunately most of these economists don't understand secular cycles and k-theory so they still think it will be a soft landing because IR have not hone that high
2. taffee said...
historically(because of sense)all assett booms end with assett busts regardless of interest rates.When reality sets in its a spiral down.
usually 18 year cycles......debt that cannot be paid back equals bust possibly depression.
3. royston said...
I understand that most economists are fixated on a previous rise in fuel costs that will drop out of the CPI measure in the next few months and that that is why they believe that CPI is currently overstated. However, I don't get how they can ignore other more long term inflationary forces in the UK - firms are upping their prices, wages demands are going higher, money supply and credit are through the roof and still rising, petrol prices have spiked up again and show no sign of mitigating, etc.
There is just more to it than "the fuel price increase is going to drop out"!
4. Davros said...
I read that over the next 2 years, 6-7% will be the norm, what with the money supply as it is.
I'd be tempted to believe that is nearer to the truth.
5. harold said...
Gary Duncan and Noshbag Smith are consistent advocates of lax monetary policy and therefore just bubble propagators. They're specifically hired to do push this view.
6. Scott said...
1 rate increase being the last necessary one? Depends on the increase. 8% should do it.
7. denzil said...
If a freak storm completely stripped Smith of his skin he would still manage to attach a positive slant to it!