Jump to content
House Price Crash Forum

Cameron Sending Coded Message To Vigilant Merv?


Recommended Posts

http://www.bloomberg.com/news/2011-01-09/cameron-backs-king-in-extremely-difficult-u-k-rate-policy.html

Cameron Warns Mervyn King Has `Difficult Task' on U.K. Rates
By Robert "Bob" Hutton - Jan 10, 2011 11:21 AM GMT
U.K. Prime Minister David Cameron said recent levels of inflation have been “concerning” as he offered Bank of England Governor Mervyn King his support in the “extremely difficult task” of setting interest rates.
“That is what the Bank of England have to get right,” Cameron told the BBC’s “Andrew Marr Show” yesterday. “I’m in no doubt the inflation is extremely harmful, it destroys people’s savings.
We don’t want to go back to having an inflation problem as we had in the past.”

Dave to Merv: Inflation is getting out of hand me old son, better cut the vigilance crap and hike 'em---NOW.

But willl he do it as it means affordable housing will follow sooner than they may have liked, if ever.

Link to post
Share on other sites

http://www.bloomberg.com/news/2011-01-09/cameron-backs-king-in-extremely-difficult-u-k-rate-policy.html

Cameron Warns Mervyn King Has `Difficult Task' on U.K. Rates
By Robert "Bob" Hutton - Jan 10, 2011 11:21 AM GMT
U.K. Prime Minister David Cameron said recent levels of inflation have been “concerning” as he offered Bank of England Governor Mervyn King his support in the “extremely difficult task” of setting interest rates.
“That is what the Bank of England have to get right,” Cameron told the BBC’s “Andrew Marr Show” yesterday. “I’m in no doubt the inflation is extremely harmful, it destroys people’s savings.
We don’t want to go back to having an inflation problem as we had in the past.”

Dave to Merv: Inflation is getting out of hand me old son, better cut the vigilance crap and hike 'em---NOW.

But willl he do it as it means affordable housing will follow sooner than they may have liked, if ever.

Unless Merv gets his act together he may find himself the first victim of Dave's newly proposed employment laws.

Link to post
Share on other sites

Sterling up this morning when, after Halifax data, it was headed down. Perhaps Merv is being told to hike just a smidgen to make it look like he is obeying the remit to keep inflation under control. The "vigilant" word has been worn out now by Merv op its really no loner meaningful.

A shock .25% rise on Thursday? Might be worth a £5 if you could get 20:1 odds. :D

Link to post
Share on other sites

IMO, the thing preventing a House Price Correction (or to use the terms liked on here; House Price Crash) is simply the interest rates and banks reluctance to lend without BIG stipulations.

Owners are happy to keep paying less than renting. Who cares what the supposed value is of their home, they have to live somewhere.

'Landlords' are happy to have their morgage covered by renters, with a bit on top, even if house 'value' drops a bit, because they can't sell it, and why should they?

Tennents are happy because the rent is affordable, and about what they'd pay if they could get a morgage, not that they can, because the banks are asking for a deposit which they can't (be bothered to try to) save.

If intrest rates rise the 'Landlords' have to cover their own costs by

1. Charge more rent

2. Sell and 'cash in'.

If they up the rent, tennents will start seeing the rent cost move away from the morgage cost, so they will decide to buy their own. Some might be able to scrape the deposit (or pay a higher interest rate to get a bank to take their risk on). For the Landlord, this means risk and possibly bankrupsy, as they'll be a shortage of renters. They'll drop the price even more to get someone to buy.

If they are in -ve Eq they'll take a loss, and this assumes they can find a buyer who can pay the morgage and deposit, and are actually willing to pay the asking price.

So, IMO, when interest rates rise, the price will crash. All we are seeing now are the nervous, or smart people getting out. This 'signal' if taken as correct, is the nod that rates are going to rise. The banks already know, because they've closed the books to anyone without a big deposit.

Edited by Djini
Link to post
Share on other sites

What's so tricky? If interest rates rise, hordes of people will be unable to service their debts. Bad for the banks. If interest rates don't rise, savers will continue to put their savings into precious metals and other more foolish "investments". They've already chosen option B.

The problem IMO is the assumption there's no more bank debts to come in. We could go on indefinitely with people up to their necks in debt, and a non existent interest rate. Eventually people would have paid off enough debt for normal interest rates to resume.

However, if there is a steady drip drip of banks demanding more and more QE, otherwise they go bust, then eventually the currency will collapse (and the banks will too). That's the mad hatter's view.

Link to post
Share on other sites

What's so tricky? If interest rates rise, hordes of people will be unable to service their debts. Bad for the banks. If interest rates don't rise, savers will continue to put their savings into precious metals and other more foolish "investments". They've already chosen option B.

The problem IMO is the assumption there's no more bank debts to come in. We could go on indefinitely with people up to their necks in debt, and a non existent interest rate. Eventually people would have paid off enough debt for normal interest rates to resume.

However, if there is a steady drip drip of banks demanding more and more QE, otherwise they go bust, then eventually the currency will collapse (and the banks will too). That's the mad hatter's view.

well, apart from the soverieng debt hole that is enlarging to accomodate just such a policy.

the BUST will out...whatever they do to delay it.

Link to post
Share on other sites

U.K. Prime Minister David Cameron said recent levels of inflation have been “concerning” as he offered Bank of England Governor Mervyn King his support in the “extremely difficult task” of setting interest rates.

:lol::lol: How much of an "extremely difficult task" can it be to see that inflations gone well beyond even the outer limits and to do something about it.

How many times and over how many years are they allowed to continually get projections wrong.

Helpfully the Governor was even given a note signed by the Chancellor and it set out the target and the permissable limits in writing so there could be no mistake.

Katherine Tate's comedy sketches about the "I can do that" recruitment culture was so spot on and evidently goes for jobs like the Governor's as well.

Link to post
Share on other sites

Sterling up this morning when, after Halifax data, it was headed down. Perhaps Merv is being told to hike just a smidgen to make it look like he is obeying the remit to keep inflation under control. The "vigilant" word has been worn out now by Merv op its really no loner meaningful.

A shock .25% rise on Thursday? Might be worth a £5 if you could get 20:1 odds. :D

Betfair are offering 35/1 on a raise to 0.75%. That's an implied probability of 2.78% :rolleyes:

Link to post
Share on other sites

Dave knows that we need to have near-but-not-quite breaking-point inflation, and hold it there for as long as possible.

He won't admit that though.

No, we need to stop spending what we dont have.

That is ALWAYS the cure for too much debt.

Inflation cures nothing, enriches the banks and no-one else.

Link to post
Share on other sites

What I find amusing is that they obviously believe the degree of sensetive 'control' they have over the economy is so great that even changing the base rate by a pathetic quarter of one percent will make such a huge difference to anything!!

In the scheme of things, they are simply powerless morons full of their self importance.

Edited by Reck B
Link to post
Share on other sites

What I find amusing is that they obviously believe the degree of sensetive 'control' they have over the economy is so great that even changing the base rate by a pathetic quarter of one percent will make such a huge difference to anything!!

In the scheme of things, they are simply powerless morons full of their self importance.

When you are teetering on the brink of a precipice, waving your arms around trying to move your centre of gravity so that it is back above solid ground, that nudge of one quarter of a percent will decide the issue.

Link to post
Share on other sites

When you are teetering on the brink of a precipice, waving your arms around trying to move your centre of gravity so that it is back above solid ground, that nudge of one quarter of a percent will decide the issue.

yes, the image of Michael Caine directing the guys to recover the gold at the front of the bus to the tune of "its the self preservashuuunn so-ciiiet-tee" comes to mind

Link to post
Share on other sites

When you are teetering on the brink of a precipice, waving your arms around trying to move your centre of gravity so that it is back above solid ground, that nudge of one quarter of a percent will decide the issue.

Really?

Say they put the base rate up to the 'crazy' heights of 0.75% - what is it in the economy that is affected by this base rate increase? Tracker mortgages would be but what else? I don't see how a quarter of one percent can make such a difference and if it can/does make such a difference what chance do we have of seeing 5% rates ever again?

Edited by Reck B
Link to post
Share on other sites

IMO, the thing preventing a House Price Correction (or to use the terms liked on here; House Price Crash) is simply the interest rates and banks reluctance to lend without BIG stipulations.

Owners are happy to keep paying less than renting. Who cares what the supposed value is of their home, they have to live somewhere.

'Landlords' are happy to have their morgage covered by renters, with a bit on top, even if house 'value' drops a bit, because they can't sell it, and why should they?

Tennents are happy because the rent is affordable, and about what they'd pay if they could get a morgage, not that they can, because the banks are asking for a deposit which they can't (be bothered to try to) save.

If intrest rates rise the 'Landlords' have to cover their own costs by

1. Charge more rent

2. Sell and 'cash in'.

If they up the rent, tennents will start seeing the rent cost move away from the morgage cost, so they will decide to buy their own. Some might be able to scrape the deposit (or pay a higher interest rate to get a bank to take their risk on). For the Landlord, this means risk and possibly bankrupsy, as they'll be a shortage of renters. They'll drop the price even more to get someone to buy.

If they are in -ve Eq they'll take a loss, and this assumes they can find a buyer who can pay the morgage and deposit, and are actually willing to pay the asking price.

So, IMO, when interest rates rise, the price will crash. All we are seeing now are the nervous, or smart people getting out. This 'signal' if taken as correct, is the nod that rates are going to rise. The banks already know, because they've closed the books to anyone without a big deposit.

IF THE BoE think it better to keep IR's low to avoid a HPC and risk inflation then they are very very short sighted indeed. Inflation, if it gets any kind of grip will have a distinct will of its own. There will then be wage push inflation with plenty of strikes, reduced competitiveness in export markets, savers screwed again etc. What we need is 5% rates now before it's too late. The banks NO LONGER NEED THESE RATES and have already made massive sums out of 0.5%, then charging mortgages of 5-6%, and giving savers virtually nil. They are having the easiest bonus time ever and all at public and saver expense. Much better to control inflation, let houses find their own level and carry on exporting.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.