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GAL BEAR

Can One Of You Clever Guys Tell Me........

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I read today that inflation was nearly hitting 3%

Does that mean that BOE will have to raise interest rates

or have I got it wrong ? :blink:

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In theory they really should have raised them long since now as part of their remit is to keep infation in check and no more than 2%.

We are rapidly seeing the so called independant bank of england as the travesty that a lot of us have suspected for some time now.

They are no more than gordons little puppets and right now he is pulling every string he can to keep them from doing what everybody knows they damn well should.

As soon as the aggresive nature of the fed raising their rate went above 3% we should have started to raise them alongside theirs just to stop our currency from weakening too much.

At least the americans are making some effort to address their deficit whereas we just seem to want to sit with a bag over our heads economically and pretend all this will go away.

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Does that mean that BOE will have to raise interest rates

or have I got it wrong ? :blink:

Should inflation breach 3%, the Bank has to write a letter to Gordon Brown explaining the reason why they are so off-target.

The Bank should raise IRs, but I think there will be a lot of whingers who'll put pressure on them not to.

I wouldn't put it past Gordon Brown simply to change the inflation target, because he has a massive vested interest in preventing a house price crash.

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Should inflation breach 3%, the Bank has to write a letter to Gordon Brown explaining the reason why they are so off-target. 

The Bank should raise IRs, but I think there will be a lot of whingers who'll put pressure on them not to.

I wouldn't put it past Gordon Brown simply to change the inflation target, because he has a massive vested interest in preventing a house price crash.

Gordon will write the letter and say "ey merv put ya squiggle on this will ya".

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I have long suspected that if inflation was to get to high they would include house prices into the CPI calculations – therefore if house prices were dropping to fast it would bring the inflation right down so that mortgages would be very cheap to stop the decline- but they would only do this if they had to as it would work against them if house prices increased

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I can categorically say,inflation WILL not go above 3%(CPI) over the next 4 years!

UK domestically is up sh1t creek.

high oil price=less consumer spending

less consumer spending=less demand for imported goods

less demand for imported goods=slower growth in china etc.

the same holds true of the states.

...in fact,the consumer growth story really depends on how quickly the emerging markets,and the oldies like japan and germany...start to become westernised in their spending habits......US and UK are screwed!

...there has been a bit of research done on this and major stockmarkets work on about 30 year cycles(15 good,15 not so good)...guess which bit the US/UK are in now,and have been since 2000!

Edited by oracle

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Oracle,

Thing is retailer's costs will not be going down - unless they can renegotiate their rent/rates/council tax/all other costs. This will put pressure on margins to rise. With lower volumes will come lower discounts too.

China - well there are a few people that suggest many companies China is currently operating at a loss - feeding the consumption fire, but with their accounts shored up by investment capital. A reduction in volume will eek out any inconsistencies in the balance sheets of those companies.

Car prices in the UK plummeted when the UK was seen as a major sink point for European manufacture, the continental producers ramped up RHD suppply and prices fell. Watch to see if new car prices being to rise again as the tap is turned off.

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To The Chancellor of the Exchequer,

HM Treasury,

Dear Mr Brown

We have recently breached the CPI inflation measurement of 3%. This is because your appointees at the monetary policy committee have seen fit to lower interest rates under your instruction when they should be raising them. I hope this explanation meets with your approval.

Yours sincerely

Dr. M. King

Governor

Bank of England

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To The Chancellor of the Exchequer,

HM Treasury,

Dear Mr Brown

We have recently breached the CPI inflation measurement of 3%. This is because your appointees at the monetary policy committee have seen fit to lower interest rates under your instruction when they should be raising them. I hope this explanation meets with your approval.

Yours sincerely

Dr. M. King

Governor

Bank of England

Explains it nicely.

They should raise interest rates but won't. The 'stag-flation' that we are seeing presents this dilemna:

1. Raise interest rates to control inflation, but shaft heavily indebted consumers.

2. Lower interest rates to stimulate more spending, but allow inflation to get out of control.

Labour governments will always go for option 2. I'm pretty sure it's in their constitution.

Conservative governments always clear up the mess of previous Labour governments by pursuing option 1.

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I read today that inflation was nearly hitting 3%

Does that mean that BOE will have to raise interest rates

or have I got it wrong ? :blink:

I think rates will be cut again. It usually starts with ahint or two from MPC members.

The inflation target will be fudged on waffled away with Gordons double speak. Which may actually could make it a good time to buy if they are going to let inflation run off a bit.

Said it before, a small/moderate nominal dip the rest will be inflated away.

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Guest Charlie The Tramp
Labour governments will always go for option 2. I'm pretty sure it's in their constitution.

Past Labour Governments had high inflation coupled with high interest rates, they claimed they were clearing up the Tories mess. :)

The last time inflation was 3.4% as an example, still below IMO the true inflation rate, interest rates were on average 6.75%

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Oracle,

Thing is retailer's costs will not be going down - unless they can renegotiate their rent/rates/council tax/all other costs. This will put pressure on margins to rise. With lower volumes will come lower discounts too.

NOPE!!!......What I'm expecting to happen is pretty much the death of the high street as we know it.

gone are the days of the the shopping mall in town.....most companies realise they have to cut costs and will do so by cutting the high street store in favour of online distribution centres....like a remote-argos!

they know people are less dependant on the touchy-feely aspect of shopping than they used to be(hence the boom in online shopping),and will exploit it......probably having one large demo-shop per region and the rest controlled from a big mutha of a warehouse(in place of a myriad of small stores with higher per capita overhead)

......it certainly costs a lot less to do it like that,they just have to get the physical contact with goods aspect correct.

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Guest Riser

News at ten BBC - Brown admits UK Growth will be lower than his predictions

It has been obvious to us here for months but it is significant that the clown has finally come clean. Lastnight Miliband admitted the Council tax delay was a vaulting 100% fully fledged U turn. Honesty from two labour ministers in as many days the sh1t must be just about to hit the fan.

Edited by Riser

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Interesting thoughts, Oracle.  Can you imagine how many people could lose their jobs?

yes,a lot.

tesco will survive and expand for sure...as will asda.They have been very quick off the mark at spotting the trend for cheap everything.

dixons,curry's,the link etc are all owned by the same group so don't be surprised if you see a bit of consolidation happening(with the 3 stores per town being rolled into one with a loss in headcount/rent/overhead costs)

...I'm surprised tesco hasn't started doing basic computer gear yet...that would decimate PC world!!!!

but the real victims are going to be the small operators.They simply don't have the buying power to compete.They had better find a niche market and quickly.

I actually admire tesco for what they have done....they are simply providing goods that people want at a good price and good location.It's a really good business model....but they can't be allowed to mow down the competition too much,or it will be a monopoly and prices will go up again.

...if they diversify and take on the likes of Dixons/B+Q/BT/POWERGEN/BG,then so much the better.

Edited by oracle

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yes,a lot.

tesco will survive and expand for sure...as will asda.They have been very quick off the mark at spotting the trend for cheap everything.

dixons,curry's,the link etc are all owned by the same group so don't be surprised if you see a bit of consolidation happening(with the 3 stores per town being rolled into one with a loss in headcount/rent/overhead costs)

...I'm surprised tesco hasn't started doing basic computer gear yet...that would decimate PC world!!!!

but the real victims are going to be the small operators.They simply don't have the buying power to compete.They had better find a niche market and quickly.

I actually admire tesco for what they have done....they are simply providing goods that people want at a good price and good location.It's a really good business model....but they can't be allowed to mow down the competition too much,or it will be a monopoly and prices will go up again.

...if they diversify and take on the likes of Dixons/B+Q/BT/POWERGEN/BG,then so much the better.

Oracle, I’m also pretty impressed with Tesco, but I don’t admire the company. Or indeed I am not a fan of any of the supermarkets - though I do love the prices. Here are excerpts from Nick Louth’s article (MSN Money) comparing Tesco to the Mafia. (Nick Louth - top man, journo and professional investor – talks a lot of sense writing for the FT or MSN Money).

“Omerta

Omerta, the Sicilian oath of silence is taken very seriously. Among the Mafiosi honour demanded that you never squeal or snitch to the authorities - whatever the reason. Those that do, like the late Tommaso Buscetta, the former Mafia boss who spilt the secrets of the Sicilian gangs, are marked out for death.

It might sound like a long way from any business practice. Yet the suppliers to supermarkets, despite seething about the terms of business extracted from them, are too terrified to complain. However, last month one did. Yorkshire-based mushroom packer Greyfriars lost its contract with Tesco for refusing to pay “listing fees” allegedly demanded by the retailer for selling Greyfriars’s products.

Code of practice

Bravely, Greyfriars wrote to the Office of Fair Trading saying that Tesco practices were in breach of a voluntary code put in place a year to stop suppliers being squeezed. Tesco denies that its practices are in breach of the code, and accuses Greyfriars of sour grapes because it lost the contract. Certainly, the firm is unlikely to get big new supermarket contracts easily.

Whatever the truth in this case, similar practices are used right across the supermarket industry. One of the reasons that Wm Morrison made a profit-warning last week was that it had failed to extract £40m worth of expected payments from suppliers to Safeway during the takeover period.

Protection money

Up and down Italy, shopkeepers, restaurateurs and other businessmen have to pay monthly protection money or face having their businesses damaged. If that sounds unique to criminal gangs, think again.

If your company supplies a supermarket, you will be expected to fund the special offers (buy one, get one free or 50% extra free) that supermarkets decide to make. Frequently, demands to fund promotions are not just couched in terms of free produce, but are for cash, sometimes thousands of pounds per product line. Then there are ‘overriding discounts’, which are cuts in contract prices paid as soon as volumes reach certain thresholds.

In other words, the more you sell, the less you get paid. However, if sales fall short of expectations, supermarkets usually expect compensation too. Head they win, tails you lose. Refuse to pay, and you lose your contract. For most suppliers loss of such huge volume is too damaging a prospect to consider. They pay up.”

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  • 302 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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