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Bank Of England Expected To Slash Growth Forecast

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http://www.telegraph.co.uk/finance/economics/8686263/Bank-of-England-to-cut-UK-growth-rate-again.html

The Bank of England is this week set to slash its forecasts for the UK economy once more and signal that interest rates are going nowhere in an attempt to safeguard the fragile recovery in the wake of the continued shock to global markets following America's credit downgrade.

king_1951508c.jpg

Library photo of clearly highly intelligent employee of the English central bank

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From the Comments section, 2 of my favourites from plenty of good ones:

steveandbetty

2 minutes ago

Yep!

Results of Kings lack of incisiveness in the past.......

........................the savers are paying for this 'so-called' attempt to restart an economy with no spark plug........

.... with non-existent savings rates so that HE can provide banks with bigger margins between saving and lending rates to build back their balances.

-and-

jackh

Today 12:20 AM

Three years of ultra low interest rates and quantitative easing: the result, an unprecedented slow level of recovery. Any link? Anyone at home in Threadneedle Street?

Devaluation has raised business costs more than the reduction in the IR has saved cash: oil, raw materials and finished imports cost more, and we in the UK simply can't replace many of these imports. Businesses are crashing because of rising costs, related to devaluation/5% inflation, and the low prices they need to charge in a post recessionary environment.

We have been here before: wake up, its not the 1970s and most of us don't want stagflation again. Adopt market economics, drop govt intervention, let the economy recovery through controlling inflation (through preventing devaluation) and promoting savings and investments, and we have a chance of recovery.

If we have two more years of crisis economics, then we will have a Milliband 'Old Labour' govt with Chancellor (later PM) Ed Balls in charge of our economy; and it will be up to the last sane person/business to leave the UK to turn the light out as our country will be over!

King is not helping the Conservatives by reducing the assets of savers! Why should I or anyone else vote Conservative when you are destroying our savings and investments? Who is protecting us from King and his printing presses???

Edited by inflating

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http://www.telegraph.co.uk/finance/economics/8686263/Bank-of-England-to-cut-UK-growth-rate-again.html

king_1951508c.jpg

Library photo of clearly highly intelligent employee of the English central bank

The Bank of England really don't want to raise interest rates for as long as they can regardless of inflation etc. The first suggestion by the media that they might and conveniently a report will suddenly come out to justify keeping rates the same. Rubbish.

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The Bank of England is this week set to slash its forecasts for the UK economy once more and signal that interest rates are going nowhere in an attempt to safeguard the fragile recovery in the wake of the continued shock to global markets following America's credit downgrade.

What a load of horse shite - there is no recovery and never was, we didn't take the medicine and still refuse to take it.

I'd have more respected for the clowns in power and the fools at the BoE if they simply told the people the honest truth that "we're fukced."

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What a load of horse shite - there is no recovery and never was, we didn't take the medicine and still refuse to take it.

I'd have more respected for the clowns in power and the fools at the BoE if they simply told the people the honest truth that "we're fukced."

I think the Telegraph's choice of library photo speaks volumes about what they really think, whatever the real reason for the interest rate slashed to near nothing it seems that savers ere robbed for this extra period needlessly - they could have been out spending and some shops would still be viable

Edited by inflating

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Mervyn has already priced in 5% inflation. All we need now is inflation to hit 6% then we have the perfect storm whereby he'll be forced to raise interest rates.

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Mervyn has already priced in 5% inflation. All we need now is inflation to hit 6% then we have the perfect storm whereby he'll be forced to raise interest rates.

To an extent i would say inflation figures are rigged, gdp figures are rigged what is real and what is not?

smoke and mirrors, what is real? Debt is, deflation will not be allowed at any cost in any western economy

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The whole thing is rigged. 2006/2007, cpi was just above target and both the fed and boe raised rates until they were high enough to catalyse the crash.

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The juncture we are now at it where the Powers That Be need to admit we need wage inflation. All this talk of maintaining competitiveness etc is it bit worthless as we have already devalued. We now need to get the cash piles sat in the fortune 500 companies out into people pay packets and also cut the banks of the equation in relation to business loans for small firms.

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The juncture we are now at it where the Powers That Be need to admit we need wage inflation. All this talk of maintaining competitiveness etc is it bit worthless as we have already devalued. We now need to get the cash piles sat in the fortune 500 companies out into people pay packets and also cut the banks of the equation in relation to business loans for small firms.

I like that idea, show me the money! Or maybe this as well quick everyone start spending interest rates are destroying your savings buy a house its for you pension?

I wish it was the 1970's all over, i think it can be if the whole global system moves in that direction but I can't see it going smoothly. If only that chap Gordon Brown was around to rescue us all in our hour of need.

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Someone called George from one of the major funds on Radio 4 yesterday said the crisis is far more likely to be deflationary than inflationary

Well, I'd like him to be correct. If I had bought a house he'd have made me feel a bit of a chump. Yet without a house, I feel equally ill at ease because I fear they may printy printy and inflate beyond where they already have which is bad enough

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Someone called George from one of the major funds on Radio 4 yesterday said the crisis is far more likely to be deflationary than inflationary

Well, I'd like him to be correct. If I had bought a house he'd have made me feel a bit of a chump. Yet without a house, I feel equally ill at ease because I fear they may printy printy and inflate beyond where they already have which is bad enough

the powers that be are not as i see it actively getting the housing market going they don't want people to buy now for some reason. We are sheeple and controlled at will.

I could be wrong though and maybe the people are smarter than the powers that be and really do think houses are overpriced and are being risk averse, its abit chicken and egg...

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the powers that be are not as i see it actively getting the housing market going they don't want people to buy now for some reason. We are sheeple and controlled at will.

I could be wrong though and maybe the people are smarter than the powers that be and really do think houses are overpriced and are being risk averse, its abit chicken and egg...

its nothing to do with the powers that be, it is fundamentally a social phsyche shift away from taking on debt, thats the whole cause of every recession/depression, the govts entire growth forecasts are based on ( private sector, be it business or mortgage) debt expansion. The reason for this social shift is fear, people dont want to spend to invest, and neither do businesses or banks because they have a perception of fear. The only ones willing to spend are govt, mainly because its not their money, eventually they will stop too. This is why this depression the same as every other in the past is completely unavoidable and will only end once most of the debt has been repudiated (private and govt) one way or tother.

Its a fundamental social shift, any govt can do what they want, they wont change the social dynamic of underlying fear, it will only become greater until it is eventually purged via massive debt default

Edited by Mary Cassatt

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its nothing to do with the powers that be, it is fundamentally a social phsyche shift away from taking on debt, thats the whole cause of every recession/depression, the govts entire growth forecasts are based on private sector, be it business or mortgage debt expansion. The reason for this social shift is fear, people dont want to spend to invest, and neither do businesses or banks because they have a perception of fear. The only ones willing to spend are govt, mainly because its not their money, eventually they will stop too. This is why this depression the same as every other in the past is completely unavoidable and will only end once most of the debt has been repudiated (private and govt) one way or tother.

Its a fundamental social shift, any govt can do what they want, they wont change the social dynamic of underlying fear, it will only become greater until it is eventually purged via massive debt default

Exactly and how will the purge this debt? default, inflation, or austerity? take your pick it all sucks but there are definitely some buying opportunities out there. If they wanted the powers that be could go all Ben Bernake on you and shove bags of Money out of helicopters and scare ppl into spending there useless fiat but they have not.... yet

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safeguard the fragile recovery

How does slashing a forecast do that? Changing your forecast is a sign that you weren't good at forecasting in the first place.

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The juncture we are now at it where the Powers That Be need to admit we need wage inflation. All this talk of maintaining competitiveness etc is it bit worthless as we have already devalued. We now need to get the cash piles sat in the fortune 500 companies out into people pay packets and also cut the banks of the equation in relation to business loans for small firms.

I agree totally we need wage inflation but the companies that are paying are wages and who hold all the money would rather have deflation. How do we force wage inflation with so many unemployed?

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We haven't recovered from the wage inflation we had in the 70's.

It's that what's destroyed our manufacturing because since then we can no longer produce anything cheaply enough compared to other countries.

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We haven't recovered from the wage inflation we had in the 70's.

It's that what's destroyed our manufacturing because since then we can no longer produce anything cheaply enough compared to other countries.

wrong

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I'm now expecting some free cash either from Mystic Merv or via tax cuts.

They can't give the banks free cash as it hasn't worked in creating growth and giving them even more free cash risks a massive backlash.

The next option is a direct drop of cash into the hands of the proles to stimulate growth.

Possible options are the total elimination of tax up to the higher rate tax threshold or everyone gets a cheque worth several thousand pounds.

Just watch inflation rocket then...

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S&P need to downgrade the UK too from its 3A star rating, that way the BOE might raise interest rates. We are defaulting on our debt in the same way the US is defaulting on its debt. We are defaulting in the way Ron Paul explains. We are defaulting by devaluing the pound.

Edited by caparn

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I'm now expecting some free cash either from Mystic Merv or via tax cuts.

I think that's exactly right, but some things need to happen first. The sequence goes something like this:

1) Governments around the world heed "calls for austerity" from the 'market' and deficits start being reduced everywhere.

2) Far from releasing a pent up wave of entrepreneurship and investment, this results in demand being totally destroyed and everything tanks. The rich are hit with fees on deposits and horrible things happen at the short end of the bond market.

3) There is a serious crisis in emerging markets and australia as all the hot money flees. The rich actually start getting poorer. Terrible crisis in swiss banks removes CHF from the roster of safe havens.

4) By this stage the inflation hawks and advocates of fiscal austerity have been thoroughly discredited in the eyes of everyone but themselves since their actions have subjected savers to negative nominal rates and made the rich poorer , and in fact a few of them actually publicly switch sides. The negative nominal rates arise in this instance because money from bond purchases doesn't flee to EMs but tries to crowd into safe havens in the developed world. Everybody is desperate to get rid of the negative nominal rates problem. Republicans lose the US election.

5) Tax cuts to proles are now implemented while the squeeze on fiscal spending remains. This is the only solution that left and right can agree on so this is what happens. After, inflation begins to return and markets recover, at which point there is much fear of hyperinflation and rates are raised by the FED. Gold, having reached perhaps $3000 by this point, suffers an appalling crash followed by crazy volatility. Its status as safe haven is badly damaged and it continues to gyrate wildly thereafter.

6) a few months after rates are raised there is another major crash, rates go back to zero and then negative nominal rates and deflation return once again. But this time they are much better organised, and having tried all the other options (austerity and cash gifts to proles) they stick. If SDRs are going to happen, this would be my guess as to when they finally get implemented.

The interesting thing about SDRs is that they force balance in exports/imports and capital flows, which means that nations with deficient domestic demand would have to be able to cope with negative nominal rates otherwise SDRs wouldn't work.

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S&P need to downgrade the UK too from its 3A star rating, that way the BOE might raise interest rates. We are defaulting on our debt in the same way the US is defaulting on its debt. We are defaulting in the way Ron Paul explains. We are defaulting by devaluing the pound.

Perhaps the ratings people will do it but only after they return from their British remote woodland walks holiday

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I think that's exactly right, but some things need to happen first. The sequence goes something like this:

1) Governments around the world heed "calls for austerity" from the 'market' and deficits start being reduced everywhere.

2) Far from releasing a pent up wave of entrepreneurship and investment, this results in demand being totally destroyed and everything tanks. The rich are hit with fees on deposits and horrible things happen at the short end of the bond market.

3) There is a serious crisis in emerging markets and australia as all the hot money flees. The rich actually start getting poorer. Terrible crisis in swiss banks removes CHF from the roster of safe havens.

4) By this stage the inflation hawks and advocates of fiscal austerity have been thoroughly discredited in the eyes of everyone but themselves since their actions have subjected savers to negative nominal rates and made the rich poorer , and in fact a few of them actually publicly switch sides. The negative nominal rates arise in this instance because money from bond purchases doesn't flee to EMs but tries to crowd into safe havens in the developed world. Everybody is desperate to get rid of the negative nominal rates problem. Republicans lose the US election.

5) Tax cuts to proles are now implemented while the squeeze on fiscal spending remains. This is the only solution that left and right can agree on so this is what happens. After, inflation begins to return and markets recover, at which point there is much fear of hyperinflation and rates are raised by the FED. Gold, having reached perhaps $3000 by this point, suffers an appalling crash followed by crazy volatility. Its status as safe haven is badly damaged and it continues to gyrate wildly thereafter.

6) a few months after rates are raised there is another major crash, rates go back to zero and then negative nominal rates and deflation return once again. But this time they are much better organised, and having tried all the other options (austerity and cash gifts to proles) they stick. If SDRs are going to happen, this would be my guess as to when they finally get implemented.

The interesting thing about SDRs is that they force balance in exports/imports and capital flows, which means that nations with deficient domestic demand would have to be able to cope with negative nominal rates otherwise SDRs wouldn't work.

Sceppy old bud, interest rates can't rise without every bank in the western hemisphere going pop - and every state as well.

it's much easier than this - the BoE opened in 1694 and has been inflating every since. It won't stop, ever.

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Mervyn has already priced in 5% inflation. All we need now is inflation to hit 6% then we have the perfect storm whereby he'll be forced to raise interest rates.

Why do we, the public and the government expect the BOE to do The Right Thing when they presided over the cause of the situation we find ourselves in ?

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  • 334 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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