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Realistbear

Clash Of The Muppets As Sentance Squares Off Against Merv

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http://www.telegraph.co.uk/finance/economics/8331867/Interest-rates-Who-will-win-war-of-words-between-Mervyn-King-and-Andrew-Sentance.html

Interest rates:
Who will win war of words between Mervyn King and Andrew Sentance?
Andrew "Andy" Sentance's latest swipe at Mervyn King - and the other Monetary Policy Committee members who are still resisting an interest rates rise - was perfectly timed for maximum devastation.
Just 24 hours after the central bank's Governor had done his best to calm market talk that he had quietly signalled three rate rises are coming this year, his most "hawkish" colleague on the committee promptly laid out his case for interest rates to go up immediately.
What is more, he questioned the accuracy of the very forecasts that explain his colleagues' decision to keep the base rate, to which other lenders' rates are tied, at its record low of 0.5pc.

IMO, Merv will emerge the victor because Sentance fails to see (or acknowledge) the Elephant in the room--the teetering housing market. One gentle shove towards .75% base rate and its over--and a lot faster than Merv intends.

As goes HPI so goes UK Plc, Sterling, FTSE, Bonds, jobs, confidence..............................

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Isn't it quite insane that a gradual rise of just 0.75% would be cause of such consternation?

If they go from .5% to .75% the knock on effect may result in 5% mortgages going to 7.5%------quickly. Knock on effect through the various layers until you get to retail.

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The BoE are still in a tough position. There's zero growth at best, so keeping interest rates as low as possible is still in their best interests. The talk of the private sector filling in for the reduction of the public sector is nonsense. It's impossible for their to be growth over the next year or two.

The elephant in the room was QE. If they'd avoided this, inflation would be much lower and there'd be no talk of rate rises.

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You mean this?

0.jpg

Excellent!

My money is on Merv pulping Andy. The economy is as fragile as it has ever been despite all the outward signs of no effects from the decade of imprudence and LIAR LOANS. The BoE are the only thing spinning the plate now. A hike will cause the plate to drop--fast.

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If they go from .5% to .75% the knock on effect may result in 5% mortgages going to 7.5%------quickly. Knock on effect through the various layers until you get to retail.

And so be it.

Borrowers have had it easy at a great cost to savers.

Savers deserve above inflation rates.

7.5% is not a high rate anyway.

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And so be it.

Borrowers have had it easy at a great cost to savers.

Savers deserve above inflation rates.

7.5% is not a high rate anyway.

7.5% on a mortgage currently being paid off at 5% is quite a hike. However, the talk is of 3 hikes this year which will take us to 1.25% which may see retail rates at 10-12% which will lead to vast numbers of repos. Because rates have been held artficially low for too long the market has adjusted upward in any event hence the huge spread between bank rate and retail. Each increment will be exaggerated accordingly and this is why Merv cannot move. He will do anything to avoid crashing the housing market.

On the other hand if he does nothing and remains "vigilant" the bnd markets will price in risk and IR in relation to our debt will rise causing huge pain.

Bottom line: we will have to pay for the Brown years one way or the other. Merv can choose which pain he would prefer the result will be the same as the market will always find its own level.

Edited by Realistbear

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The BoE are still in a tough position. There's zero growth at best, so keeping interest rates as low as possible is still in their best interests. The talk of the private sector filling in for the reduction of the public sector is nonsense. It's impossible for their to be growth over the next year or two.

The elephant in the room was QE. If they'd avoided this, inflation would be much lower and there'd be no talk of rate rises.

QE enabled them to buy our own debt to force the yields down. Without QE rates would already be higher.

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If they go from .5% to .75% the knock on effect may result in 5% mortgages going to 7.5%------quickly. Knock on effect through the various layers until you get to retail.

The best mortage at the moment is appoximately 2% + base rate.

what is the rate when the base rate was 10% like 10 years ago. was it base rate +5% or base rate -2%?

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Merv probally has a few more places to sell before he lets the sh1t hit the fan.

Robert Leigh-Pemberton was governor (1983–1993) during the last housing crash, apparently now in the Lords - for sure.

During the last crash there was a photo of his house in the papers - some would say to demonstrate the hypocrisy. A truly massive gargantuan detached house in some top posh area.

No doubt Mervyn King is equally heavily invested in property.

Edited by billybong

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And so be it.

Borrowers have had it easy at a great cost to savers.

Savers have been bailed out by promises made on behalf of those too young to vote and those not even born yet.

Savers deserve above inflation rates.

7.5% is not a high rate anyway.

Bizarre statement.

Why do savers deserve anything at all?

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Forex factory are forecasting that another MPC member joined Sentance and Weale in voting for a rise at the Febuary meeting.

Do you think it was Merv?? :lol:

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Merv thinks it's the global imbalance that are doing it. He wants us to be all in it together.

In 2009, demand in the world’s major economies fell, relative to its pre-crisis trend, by around USD 2.5 trillion

or 5 per cent of GDP. The financial crisis damaged virtually every country. Global imbalances helped

to fuel the financial crisis. And today they threaten the sustainability of the recovery in global demand.

Global imbalances are a reflection of today’s decentralised international monetary and financial system.

All the main players around the world are rationally pursuing their own self interest. But the financial

crisis has revealed that what makes sense for each player individually does not always make sense

in aggregate. These actions had collective consequences. The main lesson from the crisis is the need

to find better ways of ensuring the right collective outcome. Improved financial regulation will help to

intermediate the flows associated with global imbalances. But the global economy will remain vulnerable

to the risks associated with imbalances if they are not tackled at source. Two principles should underpin

the way ahead. First, discussions should focus on the underlying disagreement about the right speed of

adjustment to the real pattern of spending and hence the reduction in these imbalances. This discussion

should be informed by countries’ ability to follow that path in a sustainable way. Second, many policies,

in addition to changes in exchange rates, will be needed to reduce imbalances. If agreement is not

reached on these two principles, at best there will be a weak world recovery; at worst, the seeds of the

next financial crisis will be sown.

http://www.bankofengland.co.uk/publications/speeches/2011/speech473.pdf

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Global imbalances are a reflection of today’s decentralised international monetary and financial system.

So it's not ALL caused by the US then. If everybody is affected differently it reflects fault on individual countries.

Mervyn King is a wanting his cake and eat it kind of governor.

Edited by billybong

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Guest sillybear2

It's all orchestrated by their press office :-

http://www.bankofengland.co.uk/publications/news/2011/009.htm

Actions speak louder than words, so ignore these muppets and their endless speeches and mixed messages, they count for nothing.

The elephant in the room was QE. If they'd avoided this, inflation would be much lower and there'd be no talk of rate rises.

If they didn't do QE and asset purchases then the financial sector wouldn't have its £6bn bonus pot, they'd still be reporting crushing write downs. Merv is simply doing his masters' bidding. The BoE is not there to serve the public interest or the wider economy, remember that. By trying to save the insolvent household sector (and therefore the banks) they'll end up blowing up the gilts market, the government will have to roll over debt at increasingly higher yields.

If all else fails blame the Chindians.

Opps, it looks like we've been going a bit Greek :lol:

Edited by sillybear2

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Savers have been bailed out by promises made on behalf of those too young to vote and those not even born yet.

Bizarre statement.

Why do savers deserve anything at all?

And you think my statements are bizarre. Who bailed out savers and when?

I didn't STR, I have never owned a house. We saved the other halfs wage and lived on my average salery in anticipation of a crash for 7 years. We pinch every penny because it counts towards our future. It's been hard!

As a saver I would expect to have at least the same amount of money in my bank account (in terms of value) at the end of the year as I did at the start. Providing I havn't spent any. In the same way you would like to get an inline with inflation payrise. Because its fair.

It seems to me alot of people on here want cheaper houses and low interest rates.

Cake and eat it too?

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7.5% on a mortgage currently being paid off at 5% is quite a hike. However, the talk is of 3 hikes this year which will take us to 1.25% which may see retail rates at 10-12% which will lead to vast numbers of repos.

If you really think that, you are the biggest bear I have ever Known.

I believe if that is even remotely possible we would have seen a violent reaction already. 1.25% and we might see 7.5% mortgages. We all know rates go up and down and sensible people factor this in when making huge financial decisions.

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  • 312 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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