Sunday, May 06, 2007
Remember Macmillan?
The Guardian: When Mervyn says we've never had it so good, it's time to worry
Amazingly, the UK's current balance of payments deficit is comparable to the position that produced panic in the Seventies; but 'globalised finance' is happy to provide. However, the Bank states: 'At some stage the current account deficit will probably need to close. At that point, some depreciation of the exchange rate will probably be necessary.'
If this occurred, and got out of hand, the MPC might find itself having to keep rates high - even if, a collapse in house prices made it want to lower the bank rate. That would be a real test for the much-feted committee.
Posted by little professor @ 08:21 PM (158 views) Add Comment
7 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. lvmreader said...
A House Price Crash is to a Currency Collapse what a kid's firework is to a Hydrogen Bomb.
Now that the local elections are over, we may see some steps being taken to protect the currency. We are in the s**t here.
32 years ago, we needed to borrow £20bn (adjusted for inflation) just to keep things going. We also had severe austerity measures.
I marvel at the legions of chinless idiots who do not have ANY clue just what is coming........
2. Uro_who said...
If the real, effective exchange rate needed to fall - as argued by this jounro, surely that would be produced by lowering the base rate, not keeping it higher. Shurely, shome mishtake? I might be wrong (and will no doubt be put right) but it looks like another example of newspaper men showing why the best use for their organ is wrapping fish and chips.
3. harold said...
I have a feeling that the bad news will really start rolling in after Blair's departure.
4. Ash4781 said...
I suppose we should watch gold for central bank sales!
5. talking rot said...
Sorry lvmreader and harold but I think you are wrong. The world is not going to stop spinning when Bliar, or even when Brown, departs. If the bottom falls out of the property market, then it will not happen overnight. I read yesterday or saturday a column asking the Chancellor and BoE to give hard pressed home owners a break. This is a red rag to a bull for me because no one is interested in helping non-home owners but that is another story.
The facts are simple. The Treasury can not afford to lose the tax revenue gained from over inflated house prices. Interest Rates have not reached a level until people are in a situation of FORCED sales (ie they have to accept a lower bid then they otherwise would accept). Unemployment is not high. BTL-ers are not dumping properties. The Pound is not falling.
Given that 2006 saw massive remortgaging, and the Media at the time reported a lot of people were taking out 2-year or 3-year fixed rate mortgages, the effect of interest rate rises will not been seen by many until Aug 2008 / Aug 2009. Then, and only then, will it start to happen. If, and only if, interest rates reach and remain at 6%+.
Sorry - we not standing next to an unexploded bomb about to go off. We are standing next to an unexploded bomb which has a rusty fuze and which may go off at some point in the future.
6. harold said...
TR, by "bad news" I mean general economic news not necessarily news of HPC. While I agree with you that things are probably not about to explode, it is certainly the case that Blair has led a very charmed existence. Whether Brown will be fortunate is another matter, however.
7. talking rot said...
harold
I understand your point now and I agree with you in entirety. Thanks.