The King's Speech-- Merged thread

[payback period]

I've said it before, put you money in foreign bank accounts, don't know about Sweden etc, but Polish banks are paying over 5% interest and rates are going up a another 0.25% soon

And how high is the risk that these Polish banks will go bust? Would UK nationals be refunded in any bail out?

[OnlyMe]

And how high is the risk that these Polish banks will go bust? Would UK nationals be refunded in any bail out?

It is becoming academic (when your own central bank are intentionally defaulting on the value of your savings)

.

[interestrateripoff]

That view is a misunderstanding of how monetary policy works. Monetary policy

cannot change the amount that we in the UK have to pay to buy food and other commodities, such as

energy, from the rest of the world

I've been saying that interest rate policy is a crock of 5h1t, it would appear Mystic Merv agrees also and yet he still gets what £400k a year for this 5h1t.

WTF are the unions doing, clearly they are run by troughing socialists anyone with any real spine would be organising a nationwide general strike to remove this moron.

[Realistbear]

"I sympathise completely but hey ho, c'est la vie and all that."

The good news is that at least Merv's pension survived.

Do nothing, look sheepish and somehow hope for the best?

I do that all the time.

Don't forget to buy more gold--its an inflation hedge you know.

[interestrateripoff]

http://www.telegraph.co.uk/finance/economics/8282354/Bank-of-England-chief-Mervyn-King-standard-of-living-to-plunge-at-fastest-rate-since-1920s.html

Families will see their disposable income eaten up as they “pay the inevitable price” for the financial crisis, Mervyn King warned.

With wages failing to keep pace with rising inflation, workers’ take- home pay will end the year worth the same as in 2005 — the most prolonged fall in living standards for more than 80 years, he claimed.

Anyone like to bet that Mystic Pr1cks living standards fall back to 2005?

I'm just relieved that banker pay is still going up and the proles pay the taxes to support the entire system whilst getting butt fooked by the same said bankers over commodity prices.

I really don't think my ass can take the punishment much longer.

['Bart']

Don't forget to buy more gold--its an inflation hedge you know.

Good point RB.

[Realistbear]

FTSE's response to Merv--- "Yeah right"

FTSE 100 5,967.35 +49.64 +0.84%

Future earnings propsects must be good--BUY BVUY BUY!!

[jhnpennington]

Just accept it folks.

You will be worse off.

Interest rates are not going to rise.

There will be no HPC.

Sorry.

[davidhpc]

All that is needed is to get King's multi-million pound pension pot out of inflation linked bonds and into a normal bank deposit account. the greedy cant would soon have interest rates rising.

[VeryMeanReversion]

I realised a while ago that savers (me) were going to the mugs in the system. Excess debt requires someone to pay, only savers and pensions have money. They went for the savers first using inflation.

A nominal HPC is looking less and less likely all the time with the commitment to low interest rates. A real-terms HPC however, is looking inevitable.

STRs may as well buy now unless they are inflation proofed, FTB will have to wait a few more years, those poor souls that worked hard and saved up should be very angry. This is the absolute opposite of a meritocracy and will mess up people views for a generation. The system is broken, playing for the rules is now for mugs.

I've left the game by buying last month from a forced seller but kept a lot of savings in NS&I index-linked. With savers paying the price, the decision came down to "buy or leave". I worked in the US for several years but didn't fancy doing it again with young kids in tow.

[wish I could afford one]

The good news is that at least Merv's pension survived.

That's an interesting point. As I wrote one year ago here http://retirementinvestingtoday.blogspot.com/2010/01/government-bond-yields-are-rising.html it was clear that the BoE was going to let inflation rip. If you weren't you wouldn't put 88.2% of your personal pension fund into Index Linked Gilts. After all that's not a very diversified portfolio but given the current state looks a pretty solid move. It's just a pity King et al didn't tell everyone what he was up to or we could have all positioned ourselves for it...

Surely though that must almost be insider trading. Can you go to jail for that?

[Riedquat]

Being worse off is inevitable thanks to the mess. However, I utterly resent being a penny worse off until every last drop of blood has been wrung from the corpses of the greedy, arrogant, self-centred, over-paid scum who got us all into this mess.

[interestrateripoff]

Just accept it folks.

You will be worse off.

Interest rates are not going to rise.

There will be no HPC.

Sorry.

So if people have lower incomes house prices are going to go up then?

[onesmallstep]

Just accept it folks.

You will be worse off.

Interest rates are not going to rise.

There will be no HPC.

Sorry.

Anyone really think there won't be a massive hpc now?

Of course there will be, its all panning out exactly as the people who can add up expected.

Pay the price man, pay,pay,pay...

[Bloo Loo]

I realised a while ago that savers (me) were going to the mugs in the system. Excess debt requires someone to pay, only savers and pensions have money. They went for the savers first using inflation.

A nominal HPC is looking less and less likely all the time with the commitment to low interest rates. A real-terms HPC however, is looking inevitable.

STRs may as well buy now unless they are inflation proofed, FTB will have to wait a few more years, those poor souls that worked hard and saved up should be very angry. This is the absolute opposite of a meritocracy and will mess up people views for a generation. The system is broken, playing for the rules is now for mugs.

I've left the game by buying last month from a forced seller but kept a lot of savings in NS&I index-linked. With savers paying the price, the decision came down to "buy or leave". I worked in the US for several years but didn't fancy doing it again with young kids in tow.

You assume that the BoE or the Government are controlling this beast.

They have no tools in the drawer to handle this.

We are borrowed out, lent out, and stuck with Assets that need to be sold cover.

In the US, they lie about asset values....even ever inserting mortgages into MBS....the court cases are just starting.

The BUST will out....either they will overinflate with serious margin loss for companies, or they let the BUST out and some banks fall.

Either way, Asset prices supported by the public who have to earn their money are going to tumble.

All the Banks have done is tried to buy time for bankers to trade through their mess....they are NOT succeeding....theyve bought time...but the trade through is not happening....that will take 10 years or more IMPO...FROM HERE.

[libspero]

Anyone really think there won't be a massive hpc now?

Of course there will be, its all panning out exactly as the people who can add up expected.

Pay the price man, pay,pay,pay...

Looking at the graph on the front page, it is hard to believe that the second leg won't involve any nominal falls.. IMHO inflation would have to be a lot higher than 4-5% to absorb all of what is likely to come.

That said, I reckon 10%-15% may be our lot.. and that could be over 2 years.

[The Masked Tulip]

I think Cameron, Clegg, Osbourne and Cable will regret not firing King immediately in light of King's speech last night.

All King has done is rub the noses of the people in it last night.

He has basically admitted that his economic policies have failed and continue to fail.

He has basically admitted that all he has done is make life incredibly harder for hard-working people and small businesses whilst allowing the banksters to give themselves huge bonuses yet again.

I am not surprised by the angry reaction I am hearing online this morning, on the radio and in the work-place to what King said.

I think it will be a very naive politician who does not realise the growing anger in the UK over King's policies.

King has basically stuck 2 fingers up to the electorate IMPO - but what does he care I guess as he, unlike Cameron and Clegg, is not dependent upon being voted into office by the people.

Even worse, although King's policies have now clearly failed he seems intent on trying the same thing again. If at first you mess up then keep on making the same mistake appears to be his mantra?

[Peter Hun]

It is becoming academic (when your own central bank are intentionally defaulting on the value of your savings)

.

Indeed. EU nationals have the standard depositor protection they have with UK banks, its a fundamental EU law.

The probability of Polish banks going under? who knows, but they are not stretched financially and making increasing profits. Most are owned by Western banks, who are going to sell/merge them to raise capital to support their core businesses.

Other non-Euro banks are probably worth a look. Sweden for instance..any others?

[Peter Hun]

FTSE's response to Merv--- "Yeah right"

FTSE 100 5,967.35 +49.64 +0.84%

Future earnings propsects must be good--BUY BVUY BUY!!

Shares are a perfect inflation hedge, better than Gold (LOL)

[Traktion]

You post that as though they were mutually exclusive.

Good rates on savings and cheaper houses obviously go together - no need for explanation there.

However, what is perhaps less clear is the role of interest rates on price signals over the longer term and how it guides money to be invested towards the highest sustainable returns.

Ultra low rates give us all a sugar rush of cheap money and competitiveness. However, the competing on cost is a dead end street for us and activites start to be diverted towards malinvestments and speculative returns as yields tend to zero. After the period of ultra low rates wear off, we are all left worse off than we were before, as we are now all doing the wrong things again.

So I would argue that over the medium to long term that the 3 above are not mutually exclusive.

Don't get me wrong - the build up to this crisis could and should have been diverted long ago. However, we are where we are now.

We can say with some certainty, that those businesses who have based their models on cheap money are going to struggle if this changes drastically. Whether this short term pain is better in the long run, is a good question.

In an isolated economy, a degree of short term pain could be tolerated, but even the limited changes the government is trying to push now are being met with horror by many. Then we have to consider what choices the rest of the countries in the global economy will make - will they all take the foul tasting medicine or will others see this as a good chance to take advantage of a sleeping/suffering giant?

I have come to the conclusion that the economy has got to be talked down from the roof, rather than letting it jump. The latter will sure be over quickly, but it leaves quite a mess to clean up as politically unpalatable. The former means we have to wait longer for recovery, with less of a shock to the system.

[Bloo Loo]

Don't get me wrong - the build up to this crisis could and should have been diverted long ago. However, we are where we are now.

We can say with some certainty, that those businesses who have based their models on cheap money are going to struggle if this changes drastically. Whether this short term pain is better in the long run, is a good question.

In an isolated economy, a degree of short term pain could be tolerated, but even the limited changes the government is trying to push now are being met with horror by many. Then we have to consider what choices the rest of the countries in the global economy will make - will they all take the foul tasting medicine or will others see this as a good chance to take advantage of a sleeping/suffering giant?

I have come to the conclusion that the economy has got to be talked down from the roof, rather than letting it jump. The latter will sure be over quickly, but it leaves quite a mess to clean up as politically unpalatable. The former means we have to wait longer for recovery, with less of a shock to the system.

every day it is not talked down, the debt gets worse, the competitiveness gets worse.

the snake is eating its own tail.

Of course, there needs to be balance.

the public sector needs to decrease in size by at least 3 times the losses in the private sector.....assuming a private sector job produces 1/3 of its output in tax revenue. This is the new battle of Britain...we have to battle the expenditure..and we have to remove that expense by more that every job loss in the private sector, or the deficit will remain.

[R K]

to 'rebalance' requires trade policy measures . tarrifs etc.

everything else is p1ssing in the wind.

Nonsense.

Your're like a bean counter who lacks vision whose only thought is to cut costs not grow sales. Pathetic.

the public sector needs to decrease in size by at least 3 times the losses in the private sector.....assuming a private sector job produces 1/3 of its output in tax revenue. This is the new battle of Britain...we have to battle the expenditure..and we have to remove that expense by more that every job loss in the private sector, or the deficit will remain

Edited January 26, 2011 by Red Karma

[retz]

More or less he just went over old ground but I found the bit where he said something along the lines of "The BOE can no longer sustain the standard of living" or something, which I thought was his way of saying "Shits gonna get real, yo".

I was in the gym at the time, and from what I saw I was the only one not watching a scantly clad Cheryl Cole on television. Personally I think I got the raw end of the deal.

Edited January 26, 2011 by retz

[Dorkins]

to 'rebalance' requires trade policy measures . tarrifs etc.

everything else is p1ssing in the wind.

Good idea, let's become a modern day East Germany where there are no imports and everything is produced domestically. We'll be the richest country in the world faster than you can say "comparative advantage".

[scepticus]

So I would argue that over the medium to long term that the 3 above are not mutually exclusive.

Not surprisingly I disagree.

High wages and cheap houses means high rental yields, which leads to HPI.

The only way you wouldn't get HPI is if yields on other assets were better, in which case you get a bubble in that asset class, and then HPI after those yields have been crammed down.

One will only get high wages if there is a reset of the returns to labour vs capital. You can't have simultaneously high returns to labour AND capital, not in real terms. And if returns to capital are low, then returns on savings would have to be low.

Part of the ponzi dynamic is when returns to capital always outstrip returns to labour (e.g. return on savings grows faster than wages), which leads to loss of purchasing power among the proles, which is then followed by pain all round.

Of course they are mutually exclusive.