Wednesday, Jul 01, 2009
Last credit card
Business Day: Historian Niall Ferguson warns of looming sterling crisis in UK
Currently the UK is running on the last credit card in town, which may last into 2010. As a matter of urgency we need to reduce the liabilities of the banks by encouraging savers to move back into UK assets. Also, I can't link to another article, because I can't find it, but the private/state employment division is in fact 21 million private, 5-6 million state (yes I was surprised so few). Most of taxmoney is simply redistributed. Which makes me think, how are we going to cut government spending by 10%? Cutting state workers won't be enough. Unemployment benefit/state pensions are barely enough to survive as they are. I have a very gloomy feeling about 2010.
Posted by stillthinking @ 01:46 PM (1511 views) Add Comment
13 Comments
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1. hpwatcher said...
we need to reduce the liabilities of the banks by encouraging savers to move back into UK assets
Easy. Just put interest rates up to 10%.
2. Ian343 said...
Does anyone have a view what this crisis will do to house prices???
Thanks
3. bluebeach said...
Does anyone have a view on what this crisis will do to my savings...waiting to by a roof of my own?
Thanks
4. bluebeach said...
"buy a roof"..... Sorry (too much inbreeding in North Wales)!
5. nomad said...
ian343 the raison d'étre of this site is to spot reasons why, or some say, encourage house prices to go down - so if you want a balanced view look elsewhere in addition to here. Although you will get deeply thought out and balanced opinions here, you won't find many estate agents, lenders or property entrepreneurs.
The general view here is that house prices, after treading water for a while, will fall - some think, me included, quite dramatically. We remain in a recession, unemployment is increasing, salary levels in many instances are dropping, borrowing is difficult to obtain even when you can match lenders strict criteria. The country is finding it increasing difficult to borrow money, this should lead to interest rates going up in the coming months.
6. pelethar said...
nomad - I'm prepared to bet cash money that interest rates will stay as they are until after the election. If we're talking about what should happen, then they should be much higher than they are right now. We all know that political pressure, not economic pressure, is what's keeping them low - and that pressure is going to intensify over the next 10 months
7. bluebeach said...
Base Rates to stay the same till after the election you say, Mortgage rates are going up and have no relationship to the base, but savings are still pegged to the base... I lose out again...
8. Philip9134 said...
bluebeach regarding savings you might look at other country's for your savings however, I feel that Iceland is still a little unbalanced at the moment.
9. Alan_540 said...
@bluebeach : Relax, and enjoy the houseprice ride all the way back down to "affordable" after 10 years of ridiculous New Labour boom.
Uncle Brown (a.k.a. The One Eyed Slack Jawed Buffoon) won't be able to keep interest rates this low forever, and the dead cat bounce he has managed to engineer to date already looks like it's running out of steam.
Besides which, after the election (12 months and counting...) Young Cameron will be in charge... expect higher unemployment, public spending cuts and higher interest rates... It reminds me of growing up under Mrs T ... ahhh memories, memories!
10. nomad said...
I hear what you say pelethar, understand the political pressure and would not put money on my view, but I think the pressure on IR is building and building, and it's a big ask that Gordo, even with the support of Mandy, can hold out.
It is getting more difficult for us to sell bonds, the only way to do it will be to raise rates.
Savings rates are also creeping up, though so far just fixed term bonds - and for 18 months plus.
And do you think inflation is conquered?
Politically as well, I can't believe there are not some in the cabinet who want to come out of this with a little credibility. They will continue to increase the pressure on GB who is not far from breaking point - on PMQT today he promised increased spending in 2011/2012 of 0%!
This is a desperate man who, for ten years, saw himself as a colossus straddling the world stage, all the while believing that he and not TB should have succeeded Smith. And if he or his policies begin to unwind how long will Mandy stay loyal.
If he can hold on and keep to current policies then I see the IMF coming in before the end of the year - then we'll see some IR rises.
11. alan said...
@ Ian343 and Bluebeach,
I haven't much of a view as to what might happen next.
What I do know is that it will be in the short term interests of NuLabour (NOT the general population, Renters, Buyers, Estate Agents, Savers, Homeowners or even Buildiing Societies).
12. stillthinking said...
Interest rates on government debt won't rise because of inflationary expectations, they will rise as a clumsy method of insuring against default. Forget inflation. If you want to buy anything at a dirt cheap price just look for the nearest mortgage holder with a family.
Where is wage inflation going to come from? The politics of the last decade have been about controlling wage inflation. Hence foreign worker immigration approval. These have all been to keep wages down. There would not have been much of a house price boom and New Labour feel good factor if our wages had risen at the same rate...
Branchflower is right. The UK problem is unemployment, currently heading skywards like a helium balloon.
I do have a view about what happens next, and I think we get mass unemployment next year. At the moment we are killing our own economy to pretend nothing happened. This is not about house prices now, this is about economic collapse. Everybody seems to think that will never happen to the UK as though we are immune through our extensive debt.
Make no mistake, New Labour have absolutely f*cked the country. What is most ridiculous is the idea this is a recession, somehow our "normal" life is different. This is NOT a recession, this is the UK without debt makeup.
13. stillthinking said...
nomad, don't be so patronising, everybody does look elsewhere. How do you think the news articles get posted?. House prices are the least of our worries.