Tuesday, Jun 01, 2010
Anatole Kaletsky: The man who denied the existence of the credit crunch
Times Online: Ignore this call for interest rate rises
This guy has been so wrong, so why should anyone listen to him? ''Yet the need for a long period of near-zero interest rates, if the world is to have any chance of pulling out of recession and restoring fiscal solvency, is a point many policymakers still refuse to acknowledge''
Posted by hpwatcher @ 09:12 AM (1999 views) Add Comment
24 Comments
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1. paul said...
Notice there's no comments allowed in the article.
2. tyrellcorporation said...
The man's a debt junkie - although I have to agree the only way out of this mess now is to inflate or die! I really don't think we're (all those on HPC) going to escape this. We will undoubtedly end up paying for eveyone else's debts through the erosion of the value of our savings and standards of living. :(
...Oh and house prices are still going up, especially in Devon.
3. titaniccaptain said...
@Tyrellcorporation
Property prices in Wales are definitely coming down.....all the good areas I have been looking in for the past 4 years have seen some serious drops. Abergavenny area is down 20% and continuing to fall.
Having just sold my house I am putting an offer in on a well reasonableishly priced cottage today for 10% below asking price if they say no its all going into that yellow shiny stuff.
4. mark wadsworth said...
Ho hum.
Let's not forget that the BoE "base rate" is the rate at which the government borrows money.
In the spirit of getting value for taxpayers' money, why should they pay anything more than they have to? If banks are scared enough to lend the govt money at 0.5% interest (i.e. deposit it with the BoE) why would the govt voluntarily pay more?
I personally would love to earn oodles more interest on my NS&I savings, but such is life. Nominal house prices are still falling faster than the nominal value of my savings (which is constant, of course). I think what'll really kick start the HPC is when the Lib-Cons demand that banks repay the £300 billion bail out loans (which to a large extent can be netted off with the £150 billion they have deposited at BoE via teh QE shenanigans).
5. tyrellcorporation said...
That's heartening news TC. My ONLY remaining hope now is that the proposed rise in CGT goes ahead as planned and flushes more 2nd homes onto the market. My fear though is that'll it'll be watered down - the bleating has recently turned into a cacophony and this may sway the government to hold off.
6. tyrellcorporation said...
Kaletsky has always been seriously hostile to savers, this article merely supports his stance. What he fails to realise though is that huge numbers of people use savings income to fund there lifestyle, from rent to food to bills to going out. These people have been hammered over the last 2 years and simply aren't spending as a result. Yes the current policies are bailing out debtors but high street consumption is being taken away at the same time by skint savers.
Pulling on a piece of string is the best analogy.
7. This comment has been removed as it was found to be in breach of our Blog Policies.
8. hpwatcher said...
Here is one comment from the bottom of the page:-
Roland Richardson wrote:
The famous buy property Anatole strikes again. While all the money the country needs is tied up in property value he still wants more.
BoE rate by now should be 2% and steady leaving room to drop should the need arrise. Instead of this rate being passed on to business, who are now issuing bonds it is that bad, it is being used to shore up banks and property developers. Average business loans seem to be around 6% Giving 5.5% to the spivs.
Ignore the OECD and denigrate as you chose The UK is not poised to benefit
People need to be encouraged to save and be more productive, the socialist polities of BoE and people like Anatole simply aren't working - UK, US and Europe and now bust.
9. quiet guy said...
"The Bank of England, for example, still justifies all policy decisions in terms of their supposed effects on inflation prospects in two years’ time. But if central banks are judged by their actions, rather than their rhetoric, it is obvious that they are all now pursuing multiple mandates similar to the “triple mandate” that has always governed the actions of the US Federal Reserve"
I more or less agree with that. The BoE's policy seems to be designed to save insolvent banks. Mortgage debtors benefit as a side effect because letting property prices correct will damage bank balance sheets. Business and savers are paying the price, as noted by TyrellCorporation.
When I'm in town, I sometimes check the bank and building society windows for saving accounts offers. What I find remarkable is that I mostly see mortgage finance offers! Most bank and building societies don't seem much interested in savers.
10. hpwatcher said...
I more or less agree with that. The BoE's policy seems to be designed to save insolvent banks. Mortgage debtors benefit as a side effect because letting property prices correct will damage bank balance sheets. Business and savers are paying the price, as noted by TyrellCorporation.
Yes, but the real question is whether irresponsible banks should be saved - and I say no. They should go down, then the other competent banks will come in and take the business so the quality of banking will improve.
This way the rubbish banks will drive the good banks out of business as the good ones won't be able to compete with free government money.
11. the number cruncher said...
hpwatcher said at 7... "the socialist polities of BoE and people like Anatole simply aren't working"
There is nothing socialist about this policy - its is greed for the few, not the many - this is a capitalist view - protecting people with capital at the expense of those that work and are productive.
Artificially low interest rate only help those with assets and vested interests in the current financial industry. You have a very twisted view of what socialism is, which no doubt suits your political view. The current system of government we have is crony capitalism NOT socialism.
12. cynicalsoothsayer said...
You can sense the fear in his words. Interest rate rises on top of capital gains tax loophole closure?
13. mark wadsworth said...
HPW, TNC, let's not argue and bicker about whether this is "socialism" or "crony capitalism" :-)
The economic system we have in the UK manages to combine the worst of all economic systems and can be referred to as "Home-Owner-Ism".
(For example, TNC says "artificially low interest rates only help those with assets", which is not really true - if you have loads of cash in the bank, then low interest rates make you worse off.)
14. George said...
The UK end Europe economies are having structural problem. Lowering the interest rate won’t help. The government spending in UK is almost 50% of GDP and some EU states are even higher to almost 80%. In China the proportion of government expenditure is just about 17% of the nation’s GDP and 22% in United States. There are plenty of rooms for these two countries to raise tax filling the government’s funding hole.
1in every 5 working population in UK is public sector employees where all communist members in China accounts for 10% of the population.
I would say UK and Europe is a socialist state and China and USA are entrepreneurial state!
15. quiet guy said...
@hpwatcher
"the real question is whether irresponsible banks should be saved - and I say no"
I absolutely agree with your sentiments but were you willing to let the retail banking system collapse as well, before the bailout? Personally, I'm keen on forcing the banks to separate retail and investment banking, whatever the bankers say about the idea, so that we will have a choice when the next crisis hits. Unfortunately, we can't undo what has happened so far.
16. rumble said...
"The current system of government we have is crony capitalism " -- aka polite fascism. Whatever one's perspective, it's oversized government tapping into any available resource.
"for starters"
17. hpwatcher said...
You have a very twisted view of what socialism is, which no doubt suits your political view. The current system of government we have is crony capitalism NOT socialism.
It is definitely not capitalist as there is no free market. Anybody being to buy absolutely anything and/or everything they want, without any kind of sensible restraint sounds like socialism to me. Money has been socialised, anybody can get it - not so much now, but throughout the 2000's
I absolutely agree with your sentiments but were you willing to let the retail banking system collapse as well, before the bailout? Personally, I'm keen on forcing the banks to separate retail and investment banking, whatever the bankers say about the idea, so that we will have a choice when the next crisis hits. Unfortunately, we can't undo what has happened so far.
I would not say that Halifax and RBS represent all the whole of the retail banking in this country. I would definitely have let them collapse.
18. Doom&gloom said...
@george. They are interesting statistics. What is the source?
19. jack c said...
hpwatcher - "I would not say that Halifax and RBS represent all the whole of the retail banking in this country. I would definitely have let them collapse" - please do not take my reply the wrong way but you need to read up on systemic risk and I believe you will then alter your opinion (unless you want economic oblivion)
20. quiet guy said...
"I would not say that Halifax and RBS represent all the whole of the retail banking in this country. I would definitely have let them collapse."
Even assuming that the rest of the banks could withstand the shock of Halifax and RBS imploding, that would be a pretty ugly scenario: many millions of individuals and businesses having their access to the banking system abruptly cut off.
21. hpwatcher said...
(unless you want economic oblivion)
Well, I think there is far more chance of that now - including currency collapse.
Even assuming that the rest of the banks could withstand the shock of Halifax and RBS imploding, that would be a pretty ugly scenario: many millions of individuals and businesses having their access to the banking system abruptly cut off.
It would have been cheaper than the bail out - though I agree that confidence would have been shaken for a while.
BUT: The question is, do you want to get this thing sorted out over 2 years, or 20 years?
22. quiet guy said...
"The question is, do you want to get this thing sorted out over 2 years, or 20 years?"
Point taken. Mightn't there still be time to separate the retail and investment banking components i.e. prepare the real economy for the next crisis? At least if we had a working retail bank system, getting the economy going again would be easier.
23. mark wadsworth said...
HBOS and RBS could have been sorted out via a swift debt-for-equity swap, no ordinary saver or depositor or mortgage borrower would have noticed a thing, yer frontline bank clerk's job would have not been endangered. Seeing as their bonds must have been trading way below par, the bondholders wouldn't really have lost anything either. Nothing terrible would have happened, it just requires the government to understand balance sheets and corporate finance and insolvency law and so on.
After two years faffing about, this is effectively what they did with northern rock.
24. Davidg said...
> Let's not forget that the BoE "base rate" is the rate at which the government borrows money.
the govt currently borrows money at more like 4 to 5%. The base rate is the rate at which the boe lends or borrows money on a very short term but not the rate at which the government borrows money.