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Warning Of 'sharp Interest Rate Rise' In 2012

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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7982303/Warning-of-sharp-interest-rate-rise-in-2012.html

The Bank of England is this week set to hold interest rates at 0.5pc, with a growing expectation that when rates do start to rise they will do so quickly.

2012 seems a long, long way away.

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If, at x date, the BoE believe now is the time to raise interest rates or so-called 'Economists' or the MSM believe now is the time BoE will raise interest rates I think those not in the loop (i.e. me and probably most HPCers and the public) will be the last to hear about it :o(. Contrary to the Telegraph article, I expect very gradual interest rate rises starting sooner than most commentators are indicating.- end of 2010 beginning of 2011 with a modest 0.25% rise. J

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If, at x date, the BoE believe now is the time to raise interest rates or so-called 'Economists' or the MSM believe now is the time BoE will raise interest rates I think those not in the loop (i.e. me and probably most HPCers and the public) will be the last to hear about it :o(. Contrary to the Telegraph article, I expect very gradual interest rate rises starting sooner than most commentators are indicating.- end of 2010 beginning of 2011 with a modest 0.25% rise. J

Yup. Our system is well geared to tackle these problems ahead of time and before the brown stuff hits the fan. There is no way they would leave it to the last minu... errr hold on....

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Guest Elephant_In_The_Room

Why are we waiting unitl 2012?

Isn't that like the specialist waiting until the cancer is larger than your head, before starting treatment?

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Why are we waiting unitl 2012?

Isn't that like the specialist waiting until the cancer is larger than your head, before starting treatment?

Because the cancer in your head is invisible to their forecasts....they NEVER see whatever it is coming. they deal with risks...they will operate on everyones head if the risk of cancer rises.

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Unless debts have been paid down significantly I really can't see how the BoE can increase base rates because all you will do is force default on borrowers and clearly the policy has been to avoid that to save the banks.

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Unless debts have been paid down significantly I really can't see how the BoE can increase base rates because all you will do is force default on borrowers and clearly the policy has been to avoid that to save the banks.

that doesnt and hasnt stopped banks from raising the rates WE pay.

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Why are we waiting unitl 2012?

Isn't that like the specialist waiting until the cancer is larger than your head, before starting treatment?

Advance warning? Give everyone time to batten down the hatches?

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that doesnt and hasnt stopped banks from raising the rates WE pay.

That's because they are seeking margin and profit. My view is that now many are at the limit of what they can pay. If the base rate increases then either the banks have smaller margins or the people pay even more tipping them over the edge.

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Financial insitutions we are told are yet agin increasing their SVRs

They have already increased their min LTV, and charge excessive set up fees etc and become more savvy as to who they lend to and now at long last comprehensively check applicants finacial records.

So the BoE base rate is 0.5%. Let's just say they increase it to 1.5% over the next 2 years. Firstly the cost of Govt debt repayment goes up. It doesn't in itself mean that the finacial institutions will put up their SVRs. Of course those on trackers will be seriously affected.

I have long been in the camp where interest rates ought to have been higher long ago and certainly higher than where they are now. Accordingly I fixed for 5 years at 4.69% last Aug. Oh how I thought I was being clever. Hindsight is a wonderful thing and clearly I ought to have realised that those who make all the decsions on "our welfare" would do anything to keep the party going for the short term rather than consider everyone and the future of the UK long term.

Savers, pensioners, the prudent are and will continue to be shafted. It is disgraceful. Cash will be king again, the question is when.

Is it smarter to have cash today losing say 5% pa through inflation, or purchase illiquid assets which might lose 10% plus over the next few years? The key here is the liquidity of the asset purchased. Housing in my view is not a smart asset (other than ones home) because it is illiquid, fixed, highly taxable.

With the inevitable increase in VAT, the increase of other taxes Brown and Darling put in the pipeline for next April 2011, surely house prices have only one way to go? Down.

The feckless have been bailed out temporarily. The greedy who have bought into housing since late 2007 have been lucky so far.

The prudent will have their chance to rejoice soon.

I am quite bullish the stock market, gold and some currencies. I am very bearish classic cars, real estate, art in general.

The time is fast approaching where a regualr income stream will be more important than anything else. The winners will be those who have minimum debt, cash holdings and a regualr job irrespective of their overall "wealth".

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This is just the BOE firing warning shots. They don't want people to think low rates are here for ever.

It makes very little difference how steep the line on the graph paper is. it's the area under the line on the graph paper that's important.

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Unless debts have been paid down significantly I really can't see how the BoE can increase base rates because all you will do is force default on borrowers and clearly the policy has been to avoid that to save the banks.

But surely the the sensible thing to do is to raise them very gradually as of now, that would hopefully get the message across to the indebted that rates can and will need to rise. Postponing the inevitable surely is going to cause more problems as peoples heads remain firmly stuck in the 'rates can't rise' mindset.

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From and including: Sunday, 5 September 2010

To, but not including : Sunday, 1 January 2012

It is 483 days from the start date to the end date, but not including the end date

http://www.timeanddate.com/date/durationresult.html?d1=5&m1=9&y1=2010&d2=01&m2=01&y2=2012

(it's only It is 111 days to Christmas!)

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One answer...................

While M4 is falling/contracting, may go negative......................Until growth in M4 picks up, 0.5% is here to stay.............M4 falling is deflationary, cost inflation tends to lag.

But while credit supply keeps dropping, then less credit, less credit chasing goods/assets, falling prices etc etc.................

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14% M4 growth over the past ten years did not find its way into the wage economy, it went into assets, now its going negative asets will fall back in line with what is deemed affordable with wages.

But interest rates will not rise while we are in a credit deflationary place, and while business are not borrowing, no jobs created, less demand for human resource, falling wages, rising costs, its a sh!t sadwich scenario for many.

But i do not see wages shooting north, niether do i see interest rates shooting north, just falling assets prices, rising cost of living. So cash falling in value relative to living costs, but rising in value relative to asset prices...............

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14% M4 growth over the past ten years did not find its way into the wage economy, it went into assets, now its going negative asets will fall back in line with what is deemed affordable with wages.

But interest rates will not rise while we are in a credit deflationary place, and while business are not borrowing, no jobs created, less demand for human resource, falling wages, rising costs, its a sh!t sadwich scenario for many.

But i do not see wages shooting north, niether do i see interest rates shooting north, just falling assets prices, rising cost of living. So cash falling in value relative to living costs, but rising in value relative to asset prices...............

the uk govt cannot guarantee that, they will only remain zirp if the uk govt can control its borrowing levels against tax receipts, whilst its possible its not guaranteed, they will rise if they have to, ask Iceland, they could do with zirp right now if they had the choice

an interest rate rise is about as likely to happen as far as most people are concerned as zirp would have been to them 3 years ago.

These are unusual and dangerous times, its about time people started having less faith in govt action guaranteeing a smooth exit and started considering the possibility they are inept and the main cause of the problems given where we are and whats happened over the last 30 years, no govt is more powerful than reality

Edited by Tamara De Lempicka

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the uk govt cannot guarantee that, they will only remain zirp if the uk govt can control its borrowing levels against tax receipts, whilst its possible its not guaranteed, they will rise if they have to, ask Iceland, they could do with zirp right now if they had the choice

an interest rate rise is about as likely to happen as far as the average joe is concerned as zirp would have been to them 3 years ago

We are not Iceland, while we buy our own debt, we will eventually own all our own debt. While we buy US debt, they seem to be trumping up for our debt? So maybe not own it all, but the US are so f00ked anyway, why not have some of our debt?

I would say currency may be a risk, but already a 30% fall, so whats another 30%, these jokers just will not be happy till we are trading at £1 to $1 Ozzy Dollar...

Its a strange one, Japan borrowed overseas, carry trade, we have not, we have borrowed from ourselves, well give it time, not sure where this will end, but it seems to tie in with the US, so until China does a big dump of T Bills, well its just another day at the office?

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We are not Iceland, while we buy our own debt, we will eventually own all our own debt. While we buy US debt, they seem to be trumping up for our debt? So maybe not own it all, but the US are so f00ked anyway, why not have some of our debt?

I would say currency may be a risk, but already a 30% fall, so whats another 30%, these jokers just will not be happy till we are trading at £1 to $1 Ozzy Dollar...

Its a strange one, Japan borrowed overseas, carry trade, we have not, we have borrowed from ourselves, well give it time, not sure where this will end, but it seems to tie in with the US, so until China does a big dump of T Bills, well its just another day at the office?

its clear the UK isnt Iceland or ud already be junk status, but Iceland werent argentina three years ago, they are now, if sterling falls low enough interest rates will rise, there is no new paradigm here, the uk arent special, they just have more leeway which they are continuing to use up at a great rate. Theres really nothing new under the sun, Bankruptcy is bankruptcy, it can only be hidden until all of a sudden its not and then things happen very quickly once the sentiment changes.

As for Japan, their domestic savings are also just about running out now aswell. The one thing the uk has going for it is everyone is pretty much equally fcked but thats hardly a ringing endorsement of sustainability

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its clear the UK isnt Iceland or ud already be junk status, but Iceland werent argentina three years ago, they are now, if sterling falls low enough interest rates will rise, there is no new paradigm here, the uk arent special, they just have more leeway which they are continuing to use up at a great rate. Theres really nothing new under the sun, Bankruptcy is bankruptcy, it can only be hidden until all of a sudden its not and then things happen very quickly once the sentiment changes.

As for Japan, their domestic savings are also just about running out now aswell. The one thing the uk has going for it is everyone is pretty much equally fcked but thats hardly a ringing endorsement of sustainability

OK...................

I am asset bearish, cost of eating/warming bullish, make sense?

But i am sitting on a big lump of paper sterling trash, looking for a home, how many others are? The problem is, i see another big collapse soon, maybe even another bank run, and some of these banks could go. Its finding a yield, well nigh on impossible, finding a safe home is not easy either.

I just have a feeling that asset cost, pensions, equities, bonds, cash, they will all have to take an haircut of anything up to 30 to 40% to get back to some kind of equilibrium.

Everything is overvalued, relative to yield, the only safe haven is a well paid in demand job, which is safe from a haircut...................

Edited by Panda

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...once the government deficit has been reduced from cut backs and tax increases...once house prices have reduced back to some sense of normality and the over leveraged have either stuck with it of defaulted, back to the position they would have been in if lending polices had not been so lax, to a renter rather than a home borrower or owing one house rather than more than one...interest rates will rise, just 1% will make a big impact....the preparations for this are being put into place as we speak...base rates will go up, it is just a matter of time. ;)

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...once the government deficit has been reduced from cut backs and tax increases...once house prices have reduced back to some sense of normality and the over leveraged have either stuck with it of defaulted, back to the position they would have been in if lending polices had not been so lax, to a renter rather than a home borrower or owing one house rather than more than one...interest rates will rise, just 1% will make a big impact....the preparations for this are being put into place as we speak...base rates will go up, it is just a matter of time. ;)

well a point i have a problem with is as soon as you reduce the deficit you reduce consumption within the private sector so where do the tax increases come from. The tories are basing it on the mid 90s canadian model ( which required the beginning of the biggest tech innovation in history where Nortel growth would have offset any reductions almost singlehandedly (these come about every 100 years or so). I wont even begin to mention they are reducing it whilst all countries worldwide do the same.

whilst i agree with the cuts which to me is simply a reduction in malinvestment, I see no reason why the cuts wont lead to the same result of deficit increase as not bothering with them

Edited by Tamara De Lempicka

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well a point i have a problem with is as soon as you reduce the deficit you reduce consumption within the private sector so where do the tax increases come from. The tories are basing it on the mid 90s canadian model ( which required the beginning of the biggest tech innovation in history where Nortel growth would have offset any reductions almost singlehandedly (these come about every 100 years or so). I wont even begin to mention they are reducing it whilst all countries worldwide do the same.

I see no reason why the cuts wont lead to the same result of deficit increase as not bothering with them

...taxes on investment banks? VAT that cannot be avoided? Maybe we are at the beginning of the green innovation.....new styles of transport, new ways of producing power/producing food....are we are entering into the 'new world' a new way of working and living?.....things will be different this time.

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  • 239 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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