Monday, Jan 07, 2013

New year message to renters from our PM

Telegraph: PM: Interest rates 'real' economic test

"The ratings you have are all hugely important, I wouldn't deny that for a minute, but in a way the real test is what are the interest rates the rest of the world is demanding in order to own your debt and our interest rates are extremely low, the lowest they have been really for centuries. The key thing this year is to try and make sure those interest rates are passed on properly to the business and the home owners."

Posted by quiet guy @ 02:46 AM (1421 views) Add Comment

5 Comments

1. hpwatcher said...

So why are the interest rates demanded by the rest of the world so low, when the chances of defaults seem to be increasing?

The fed getting involved again?

Monday, January 7, 2013 06:49AM Report Comment
 

2. alan said...

I was wondering the same thing as hpwatcher. Whatever happened to "risk and reward" My old polytechnic lecturer was always banging on about that! Can you help QG?

Monday, January 7, 2013 09:32AM Report Comment
 

3. mark wadsworth said...

Not just renters! Savers are getting it in the neck as well. Since they dreamed up yet another way of giving their banker chums money (Funding for Lending), one-year fixed interest rates offered by banks have fallen from about 3.4% to 2%.

Now, as a matter of fact, only about sixty per cent of adults in the UK can count themselves as homeowners (the rest are tenants or adult children living with mum and dad etc), and half of those have no mortgage or only a very small mortgage and are probably net cash savers.

So seventy per cent of people are getting done over here.

Monday, January 7, 2013 10:25AM Report Comment
 

4. stillthinking said...

It seems to me that if interest rates should bet at 4%, but lets say a particularly greedy borrower, responsible for half the amount borrowed and swishing around, refused to accept any rate above zero....then the other borrowers who couldn't make private zero rate arrangements might get stung for 8% !

Monday, January 7, 2013 12:44PM Report Comment
 

5. quiet guy said...

@Alan

It seems that sovereign currencies are more robust than people think. Here's a tongue-in-cheek offering from Bruce Krasting about 'JA' and what happened to those who tried to short the yen for a couple of decades or so (Japan's national debt is enormous even compared to the UK):

http://brucekrasting.com/this-and-that-2/

It seems so 'obvious' that our rising national debt will lead to problems but timing the tipping point is pretty much impossible. Maybe we'll be having a similar discussion a decade from now?

Monday, January 7, 2013 01:39PM Report Comment
 

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