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inflating

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Posts posted by inflating

  1. No surprise that in shopping centres you can see lease deals being advertised to the public. I saw a Clio being advertised recently.

    Like mortgages thesedays, it's all about the monthly payment and not the overall costs.

    It's blatantly cheaper to buy a car outright if you'll be sure to need it for several years, but that's not an option for many, so pay monthly it is.

    I believe it's the same in Poland, from what an accountant told me. Neighbour in a Polish city has just acquired a 40K luxury car, only 1 in the family has a f/t job (wife, an estate agent)

  2. Exactly. First, policy was to target inflation. Then when HPI made those numbers ugly we moved to targeting an inflation measure which didn't include house prices, (switch from RPIX to CPI in 2003). Now when CPI is above target but bank solvency is threatened by HPI going negative, we'll shift to "intermediate thresholds". All the while real incomes are under attack from rampant inflation which is measured with hedonic regression, meaning that when you have to pay £250k to buy a south facing bin you have to share with a mangy fox, there has been no inflation compared to 10 years ago when a £250k bought you a semi-detached 3-bed, because a house is a house, and if the price of beef goes up, you'd buy chicken because all you really want is meat.

    For my money, a period of deflation means "You broke your banks and your ability to convince people that you haven't has run out of steam" and a period of inflation means "There is something wrong with your economy that is not going to fix itself, and your attempt to ignore the problem by monkeying with your money is about to run out of steam". The fact that we appear to be trying to steer our banks and economy between the Scylla and Charybdis of inflation and deflation should be taken as good evidence that we've broken our economy and our banks. Popcorn, please.

    Very interesting for me, thank you

    But my point is that their reward is their utility described by yourself . Cash gives them security, liquidity and insurance .

    Cash is also a credit note. We can't go on describing sheeple as stupid for investing in property without considering the risk and simultaneously forgive cash savers for not considering or understanding their own risk profile .

    As I stated , I agree that it is folly NOT to incentivise storage of cash ( savings) or at least it is folly to distort the incentives .

    However , there are plenty on here who FULLY understand the risks of holding cash and lending GBP ( savings) and yet they appear to insist on being bailed out ( £85k guarantees) , rewarded for risk ( desiring higher rates), whilst continuing to lend to insolvent entities ( banks, hmg).

    I agree its bad for the economy but the risk / rewards are clear to see so individuals can't insist on having safety, liquidity , insurance AND return

    Of course, good points, thank you

    Its a mess and no-one has a broom

    All Carney can do is what he can do...which is more of the same.....

    Why did he spout off about raising rates last week (assuming he did, as reported) ?

    Is it for the same reason as he previously (allegedly!) ruled himself out as BofE governor and then took the job ?

  3. http://www.dailymail.co.uk/money/markets/article-2356235/New-Bank-England-star-Mark-Carney-rocks-markets.html

    .............The Bank said the shift in expectations ‘was not warranted’ in a sign that it has no plans to raise interest rates any time soon. ‘In the committee’s view, the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy,’ it said.

    Carney – who favoured forward guidance during his spell in Canada – has been asked by George Osborne to report on the potential use of such tactics in Britain at next month’s inflation report.

    The Bank said the analysis ‘would have an important bearing’ on what the MPC decides to do next month in terms of interest rates and QE.

    But David Tinsley, UK economist at BNP Paribas, said: ‘...they are looking to forward guidance as a key tool in massaging yields and expected Bank Rate lower.’

    In the comments section there's a fair bit of joy coming from homeowners, some sarcastically (I presume) suggesting their house's price will double within 2 years.

    *However, unless I'm going round the bend, bond yields are

    Name Yield 1 Day 1 Month 1 Year Time

    UK Gilt 2 Year Yield 0.38% +1 +2 +16 04:05:40

    UK Gilt 5 Year Yield 1.37% +1 +29 +70 03:46:12

    UK Gilt 10 Year Yield 2.40% +3 +38 +74 04:06:55

    UK Gilt 30 Year Yield 3.58% +2 +22 +53 03:50:25

  4. Sadly a local agent has just put up a one bed flat for sale in the sister block to mine.

    The price £65,950.

    The only other price I have to go on, is about £28k around 2007/8 as not many have changed hands.

    It must have been bought by a tenant relatively recently as it has the standard council gas boiler fitted and they were all replaced over the past few years (originally they had warm air heating).

    So there we have it. The depressed "North" with a Sovietised economy (West Yorkshire to be more specific) and flat prices have doubled. :lol::blink:

    I feel like rushing out and buying some twigs.

    28K sounds very low for '07, but 65K sounds very aspirational or a hedonistic price as some quarters call it

  5. I don't think he's saying that at all.

    It's also a completely different thing to suggest that saving is generally good for society and deserving of encouragement and another completely to request that savers stop bleating about rates being low . I subscribe to both .

    My rationale is that the governments can only suppress rates for as long as sufficient people ( savers) continue to keep sufficient cash at hand at those rates .

    I'm assuming that people saving in our environment are doing so because they need or desire liquidity . Tptb have set the price and savers are freely taking it.

    If savers are annoyed then they should move into assets, pm's , equities , foreign currency etc etc . If they don't like the risk reward then they should stop bleating .

    I agree that it's a sorry state of affairs to discourage saving but the rates are being allowed to stay low because there is not sufficient capital flow away from gilts or cash ( both credit notes issued by UK plc)

    Not everyone has the ability, expertise or courage to do so. Would you also not agree asking savers to do forex, the ftse, pms etc, is asking them to switch from being risk averse to far more adventurous and potentially seriously loss-making activities? People who have saved a nest egg are not going to want to chuck it all on some shares or PMs, those investment or speculative vehicles are a whole different animal to the safety of seeing an above or equal inflation return from a savings bank.

    When there is sufficient outflow then tptb will have to turbo charge the printers or raise rates , both will ultimateky lead to a correction with different groups feeling pain. Savers are preventing this from happening by freely lending cash to the system at these low rates .

    Yes and for the very reasons I mentioned, they aren't speculative in nature, on the whole, and the BofE is milking that big time. But ofc you're right.

  6. On the other hand, if we're about to STOP targeting inflation with monetary policy (did we ever really start? :lol: ), we can all look forward to an even more aggressive destruction of the value of our wages, (in the attempt to keep our houses overpriced). What could possibly go wrong?

    Apologies if this is stating the bleedin' obvious, but are you referring to this new fangled Nominal Level GDP Targeting smoke & mirrors http://www.saveoursavers.co.uk/bank-of-england/the-next-governor-of-the-bank-of-england-brought-to-you-by-loreal/

  7. BBC News now with a massive house ramping item - woman who could not sell her house for years just put it back on market for 10K more than previously and first buyer snapped it up.

    Block of 20 flats sold before completion.

    Freck!!! It is relentless.

    Did they say who bought the house (assuming it's a true package ofc) BTLer buying it 'for me pension innit'? Or foreign buyer? UK taxpayer/saver sponsored buyer? Cash buyer fearing hyperinflation/dash for assets buyer?

    The flats I suppose we can guess went to BTLers largely

  8. Whoever said they have no sympathy with savers is an idiot of the first order...

    I couldn't find the quote but it's what the rep from SoS said in the video with MK, so I would be very surprised if untrue. If he actually said that, I question why he was appointed to that role at the bank. Or maybe that's an oxymoron (and I'm a moron for thinking otherwise, yeah I know)

  9. .

    Japan's property prices have, until perhaps recently, been dropping for 21 years. http://www.worldpropertychannel.com/asia-pacific-commercial-news/japan-ministry-of-land-japan-property-prices-j-reits-sumitomo-mitsui-trust-research-institute-co-moodys-japan-japan-land-values-6146.php

    What isn't clear is whether that's in nominal or real terms going back before 2005.

    It seems from this Japan property price graph that price changes were very closely aligned in both nominal and real terms at least going back to 2005. http://www.globalpropertyguide.com/real-estate-house-prices/J#japan

    Japan has 128 million people so I can understand why people would compare it to the UK, but I have some nagging doubts. For example:

    Did the Japanese govt introduce property price supporting schemes years ago, like our FFL/HTB etc? I know they slashed IRs.

    Has Japan a thriving BTL market with people buying BTL as 'my pension innit'? If it does, the comparison to the UK is valid of course.

    Has Japan admitted a million or so immigrants in the past 20 years? I wasn't aware that they had, if they have then the comparison to the UK holds true I guess. And does the UK have a population decline as Japan apparently does:

    http://online.wsj.com/article/SB10001424052970204712904578090774214680736.html

    This seeming bargain is no fluke. While Tokyo keeps its mantle of being the world's most expensive city, a steady migration to urban centers and the country's long-term population decline have left swaths of property that can be had for a pittance by international standards.

    Mr. Leach bought his property in 2003 for ¥13 million (equal to about $120,000 at the time, now about $163,000).

    I'd really like to keep the faith by comparing the UK with Japan. I'm just not at all sure it's looking similar, especially with the seeming divergence of nominal and real terms price fluctuations.

  10. Thats all fine until the UK Gubmint dont have any control or say in the matter.

    I think we are much nearer that point than we were a year ago. :)

    Oh yeah and don't forget to vote Labour at the next election if you want a cheaper house. :)

    No offence but I won't be voting for any of the main parties, they can all shove it, I don't trust any of them any more

    Putting aside the fact that the banking criminals all vote blue, a lot of the Tory champions on here forgot their side has a long history of using house price inflation to enhance its election prospects. Understandable in many ways since home owners make up the Tories' core constituency. It must be clear to everyone by now that Osborne intends to do the same for 2015.

    Very clear :(

  11. See

    http://www.itv.com/news/2013-07-04/mark-carney-hints-interest-rate-might-not-rise-for-some-time/

    It's a hint that the Bank is minded to tell us next month that it won't raise rates for some time - which would be a promise that cheap borrowing will continue.

    This would constitute "guidance," Mr Carney's innovation which worked in Canada at his last job as governor there and which he hopes will help the UK by providing confidence to borrowers that they're not going to get stung with high interest rates.

  12. There are old articles from Q1, but am mentioning them now because I suspect savers are screwed unless gilts rise and QE can't be used to douse the rise. Apologies if already posted.

    http://www.telegraph.co.uk/finance/personalfinance/interest-rates/9922941/Interest-rates-predictions-Four-more-years-of-0.5.html

    Coutts, the Queen's bank, has warned that monetary policy committee (MPC) may not increase Bank Rate from 0.5 per cent until 2017.

    http://www.telegraph.co.uk/finance/personalfinance/interest-rates/9888611/Interest-rates-predictions-Why-Ill-keep-betting-on-low-rates.html

    For my part, I have flocked with the interest rate “doves” since the crisis began. I’ve stuck with a lifetime “tracker” mortgage despite the temptations of falling fixed rates. After further falls in recent weeks, taking a fix would now add only a quarter of a percentage point to my rate, plus the costs of remortgaging, in exchange for two years’ peace of mind. It’s simply not worth it.

    None of this is what savers want to hear, and not what they deserve.

    Their predicament has been worsened by the £80bn Funding for Lending scheme, which hands cheap money to lenders. It has pushed down savings rates as much as it has the cost of loans. With the scheme far from exhausted, savers could face more of the same.

    Sibley must be smiling to himself wherever he is. For the most part, he was right, and the government indeed didn't let it happen (for London and large swathes of the British Isles, not so far at least). I can recall many of us thought the blue team would bat more fairly, but now we know it's the same old rubbish, or LabourTory, as someone else called them

    Actually, the Funding For Lending, which has completely smashed savers' returns, was probably just Osborne's idea. Let's be fair.

  13. We all know George Osborne's famous quote about QE when he was in opposition. But here's another from the dynamic duo, courtesy of Save Our Savers

    George Osborne, March 2009: “Action is needed to help savers. At the moment, income from savings in bank accounts suffers from double taxation – the money is taxed when you earn it and then any interest is taxed again. For basic rate taxpayers, this unfair double taxation of savings should be abolished.”

    David Cameron, January 2009: “We need to make a really big change: from an economy built on debt to an economy built on savings, from a country and government that has lived beyond its means to one that lives within its means.”

    George Osborne delivering his Budget on March 20th, 2013: “A Budget for those who want to save for their retirement.”

    Very little has appeared in the press today about the measures in the Budget intended to help savers, boost the UK’s savings culture and reduce the country’s indebtedness. So we thought we should list them all here:

    Here ends the list.

    Today's no move on IRs shows their words are worth their weight in the shiny yellow stuff (custard).

  14. The yes and no man...

    http://www.standard.co.uk/news/uk/new-bank-of-england-governor-mark-carney-rules-out-early-interest-rate-hike-8688455.html

    New Bank of England governor Mark Carney ruled out an early hike in interest rates today.

    The article goes on to list various experts saying that today's hold indicates interest rates will go nowhere etc.

    This of course knocked GBP down, despite some economist on one of the business TV channels saying earlier in the afternoon that the BoE decision would not harm sterling "as no further QE was mentioned".

    The newswires are full of IRs won't be rising commentaries.

    Yet, yet, yet just last week we had this alleged comment carried in the press:

    http://www.dailymail.co.uk/news/article-2348576/Mark-Carney-Get-ready-mortgage-rate-rise.html

    Canadian Mark Carney, who takes over from Sir Mervyn King on Monday, told ITV News a rise was on the cards, adding: ‘Without doubt they need to manage their business for the possibility of a slight or material change in the level of interest rates.’

    Today, we have ITV news saying the opposite: http://www.itv.com/news/2013-07-04/mark-carney-hints-interest-rate-might-not-rise-for-some-time/

    It's a hint that the Bank is minded to tell us next month that it won't raise rates for some time - which would be a promise that cheap borrowing will continue.

    But, wasn't it reported he'd said nay to the BofE governor job, not long ago? http://www.telegraph.co.uk/finance/economics/9465334/Mark-Carney-rules-himself-out-of-Bank-of-England-governor-race.html

    Mark Carney rules himself out of Bank of England governor race

    The list of potential candidates to become the next Bank of England governor appeared to further shrink as Mark Carney, the head of Canada’s central bank, ruled himself out of the race.

    and so

    http://www.theglobeandmail.com/report-on-business/international-business/european-business/bank-of-england-holds-steady-on-rates-stimulus-in-carneys-first-vote/article12981275/

    The statement prompted the British pound to fall more than one cent against the U.S. dollar to $1.51, the lowest level since May and sent the London Stock Exchange up. The bank’s commentary “is pretty aggressive stuff that has prompted a sharp move lower in sterling and suggests that Carney is very much in the dovish camp,” said James Knightley an economist at ING Bank in London.

    stock-photo-364272-silver-fork.jpg

    tongue-dt-2-431x300.jpg

  15. The biggest negative for the 'average person' in my view is the iniquitous distributional effects. There's no doubt in my mind that QE is disproportionately enriching elements of the financial sector and the upper tiers of society.

    Although at a personal level I have unquestionably benefited from QE (even though I was originally fearful of its impact) I remain apprehensive of the long-term societal effects of such a massive ongoing wealth transfer.

    Thanks for that

    btw gilts down on the day last time I checked. Does this mean the B of E has prevailed in QeElling any meaningful rise (again) ?

    http://www.bloomberg.com/markets/rates-bonds/government-bonds/uk/

    Tunnel. Light. End. No. ?

  16. Today's BoE press release gave exactly the sort of signalling that I was talking about as regards further QE, although I wasn't expecting this until the release of the MPC minutes.

    There's no formal commitment to keep interest rates low and keep a cap on yields, but that's how currency and equities traders have interpreted today's statement. We might well see the introduction of more concrete forward guidance in either next month's release or the August Inflation Report.

    From that, I take it you mean if gilt yields rise, Carney will p*ss all over the rising yield with more QE until the yield falls back?

    What are the 'negative' (for the average person) repercussions of QE incontinence? Anything else apart from a more devalued GBP, and savings rates remaining low or lower?

  17. Sky reports economists think Gorgeous Mark's possible QE or further ludicrous cutting of interest rates would "pull Britain out of the doldrums".

    Sir Mervyn pointed out last week that while his Canadian successor may be more "persuasive", he only holds one vote on the MPC.

    Some economists expect that Mr Carney will begin to take action to pull the UK out of the doldrums from August.

    Vicky Redwood of Capital Economics said he was likely to introduce "forward guidance", which helps reassure markets that interest rates will remain low in the future while she predicted there was a 50% chance of QE also being resumed.

    http://news.sky.com/story/1111397/stronger-economy-puts-brakes-on-carney

    Like another line will help the addict.

  18. Dwelling prices - the UK's main manufacturing industry, and essential to bring more 'joy' to Daily Express sub-editors.

    I don't suppose there's any hope that the 'positive' house prices gives Gorgeous Mark 'Clooney' Carney complete justification in raising rates, killing QE and FLS, and generally behaving like someone who doesn't want inflation to spin further out of control? That is, if the British public have not yet had enough of seeing portion sizes decrease while their food shopping bill increases, their fuel and energy bills increase, and their GBP buying less and less abroad.

    Any chance of it, I wonder, sanity returning or the loons permanently lobbying for this disastrous can kicking exercise to go on and on

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