Thursday, Jul 24, 2008
Professor Miles touts new "discovery"
Bank of England has room for interest rate relief: Telegraph
Is this an attempt to rig the interest rate? They way the word "discovery" is used in the article describe an academic paper by Prof Miles on the new "natural interest rate" to my mind smacks of Victorian quackery. "Ladies and Gentleman, roll up, roll up, Professor Miles is today, and this day alone selling his new restorative remedy for 1 shilling and 6." The punters never find out it is made from old soapy water and cat urine.
Posted by mikelivingstone @ 07:04 AM (478 views) Add Comment
7 Comments
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1. str 2007 said...
Does Prof Miles preside over a large BTL portfolio by any chance.
Perhaps he could advise the rest of the world about his amazing new discovery.
So when we drop interest rates our Pound doesn't devalue further, pushing up inflation.
2. sold 2 rent 1 said...
This has nothing to do with a "large BTL portfolio" but everything to do with selling us lies and spin so that wealth can be transferred to the power eite.
3. waitingfor hpc said...
and lowering rates would do what exactly? I would not buy a house even if the IR was 2%. If i buy a house for 250K and in 1 year it is worth 200K. I will just wait.
4. techieman said...
Wating - what you have demonstrated in your comment is what many people will think (hopefully). If say Mortgage rates were to fall to 2% then I am assuming net yields on BTL would make BTLing a profitable foray again. Add to that people would be able to buy on a capital repayment basis for prices below rent meaning that (and i accept all other things being equal) the hp would be underpinned.
The saviour? People think like you and they see prices have fallen and they think the trend will continue. However this could be the dead cat bounce.
5. nooneo said...
3. waitingfor hpc @ 3.
Agreed.
Interest rates go down - House prices will still fall, but retail sales might go up - Whatever happens inflation goes up - Pound goes down against other currencies
Interest rates go up - House prices still fall, but retail sales should steady - Inflation should start to be controlled - Pound goes up.
Whatever this joker says with his fag-packet economics.
The dead cat has finished bouncing and we can hide no longer from the last decade or two of easy credit and artificial interest rates. America is currently destroying it's economy by, basically, not letting what should happen, happen. They are running their currency into the ground and hastenning their demise as the worlds largest economy. They won't change their ways because they still think it is their "manifest destiny" to do whatever they want, without any consequences.
Interest rates - the only sensible option is upwards and if we don't then we will fall out with our european partners as we increasingly borrow more and more to pay for what we can't really afford.
6. nooneo said...
techieman @ 4.
"People think like you and they see prices have fallen and they think the trend will continue."
You ARE Kurtsie Allsop and I claim my £1000
7. techieman said...
nooneo -I promise to scweam and scweam and scweam if you hadnt a case of mistaken identity.
First we have to have these falls in IR - now dont get me wrong I am as bearish as the next man (more so than most actually) but anyway we arent ging to get those falls soon so my point was by the time we do the overriding view will be that property just continues to fall. My point about all other things being equal basically refers to the state of the economy and the price of renting. If the economy collapses, then the rent will collapse too - which means that the yeilds will fall so the equation wouldnt add up (and we would have continued bear) BUT its naive to say if interest rates fell to 2% (mortgage rates) then (and this is NOW at this point in the cycle) prices wouldnt find some support. Now later once the confidence has collapsed thats another story at that point IR cuts will be pushing on a string.
Re the dead cat seems odd to me that you dont understand what i mean. [everyone on this site seems to have a problem with this phrase]. Ok if a price of anything plummets then there will generally be a counter-trend move (we are seeing that now in shares for example) - as predicted along with Crash and burn a few days back. This counter trend move will be classified as a DCB if its a false dawn (which in my view it will be).