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laughing_goat

Bank Of England Faces Policy Headache

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I was a bit worried which way the article was going to go but, in the end, I think the conclusions were fair enough.

I think the most important thing is that, even if the BoE do take into consideration the state of economic growth, a cut in interest rates is only going to be a short-term fix anyway. If we want a healthy economy, we have to be more responsible about how much debt we encourage people to get into.

Spending financed by borrowing should only be used as a short term way of keeping things going. Afterwards, we need a bit of time to pay off the loans and save some money for the next rainy day or else we're going to head for a melt-down. Like we are at the moment!

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Guest Charlie The Tramp
After several years of strong consumer spending, consumers may decide to save more, causing a slowdown on the High Street and diminished growth. That's not a crisis or a failure - it is simply the natural counter to previous events.

Could be their debt levels are so maxed out Evan they have nothing left to spend. <_<

Why do these so called economic experts very rarely mention debt in their analysis?

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Could be their debt levels are so maxed out Evan they have nothing left to spend. <_<

Why do these so called economic experts very rarely mention debt in their analysis?

Charlie,

Very few involved want to mention the debt that was created as a policy to save the economy when it is the very thing that is responsible for putting the economy in such a problematic state. It was a one-eyed short term fix that has gone very badly wrong, like most short term fixes.

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Thought it explained things well in layman's terms.

I thought exactly the same.

Although, I was a little worried which way it was going in the first paragraph or so. But as usual Mr Davis produces balanced journalism, something others at the BBC can learn from.

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Guest Time 2 raise Interest Rates

Charlie,

Very few involved want to mention the debt that was created as a policy to save the economy when it is the very thing that is responsible for putting the economy in such a problematic state. It was a one-eyed short term fix that has gone very badly wrong, like most short term fixes.

I guess whatever it takes to keep the suckers MEWing and spending.

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I thought exactly the same.

Although, I was a little worried which way it was going in the first paragraph or so. But as usual Mr Davis produces balanced journalism, something others at the BBC can learn from.

yeah... anoyone remember his piece on why an HPC would actually be a pretty good thing? This was a couple of years ago an'all... it might have been less damaging then I suppose

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yeah... anoyone remember his piece on why an HPC would actually be a pretty good thing? This was a couple of years ago an'all... it might have been less damaging then I suppose

It's still on the BBC website.

Evan Davies

On the sidebar of that page, is a headline from Aug05, "prices set to flatline". In medical terms, flatline is not stable, it is a cardiac arrest that results in death unless emergency action is taken. :lol:

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I thought it was a fair article. Well done Evan!

What I still fail to understand is how many journalists are supposidly quoting experts (i.e. economists) who say rates will have to drop. I guess they have a vested interest in consumers still spending? But this can't be everyone!

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"And on one view, if it's oil price inflation that's the problem, we should ignore it. Oil price rises are not our fault - they tell us more about what is going on in China than in Chingford, and we shouldn't punish ourselves for them."

Not our fault? Well, we don't absolutely have to waste the stuff as we do. Every year the British alone drive the equivalent of fifty trips across the Solar System, that is, 5% of one light-year. And that's just us. What's it all for? I mean, yeah, it's nice to go for a drive, but why the manic fixation with it being some absolute necessity? It isn't. Driving in this country would be bearable once again - even enjoyable - if there was the exercise of a little restraint.

Whether we should ignore the possible early symptoms of Peak Oil or not is hardly open to doubt. Dr Davis is an economist, and from my knowledge of him, he is a pretty typical economist.

Edited by malco

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The latest government data show that although inflation isn't hitting consumers that hard now, it's likely to ramp up in the months to come

http://uk.biz.yahoo.com/051020/244/fuxey.html

The way I read this it makes me think that inflation is a bigger problem than the BOE let on. It will be in my opinion at least a year before inflation settles down – longer if there are nock on effects (i.e. Americans putting up prices / every one else putting up there prices so that the Americans put there prices up again)

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Haven't read the article or all of this thread, but I think Evan is far from the worst.

He is on record as saying it would be in everyone's interests if houses cost a tenner.

He was on working lunch today and commented that the slowdown in spending is a good thing if it lead to more people saving. He pointed out that we were saving at historically low levels. He also pointed out that the shops have had their best seven years ever and are a bit ungrateful now that people are tightening their belts.

Yep, he's not a bad lad.

NDL

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i like evan davis. for a bbc journalist he's pretty good, at least as far as the housing boom is concerned.

he clearly is trying to make the case for the mpc to concentrate on their mandate rather than pander to other pressures.

now, about the debt and low ir.

i get the impression that, at least on hpc, dotcom fallout combined with the events of 11-9-01 provoked an aggressive policy by us and uk to avoid serious economic repercusions at the expense, probably, of debt build up.

i think, at this point many acuse the respective govts of shortsightedness and stupidity. i for one am reluctant to believe this. i think, basically, given the powers and resources the govts have available to bring to bear, that they have a far better take than most on the overall situation and likely future events.

everything we know is surely known to the powers that be, plus one hell of a lot more besides.

what were the options?

i guess at the time they saw imminent financial meltdown without intervention - the scale of the dotcom crash was absolutely enormous! far far worse than 1929.

the central banks must have decided that the risk of deflation was sufficient to lower rates as aggresively as they did... and, a good few years on, it seems they did the right thing.

what would you have done?

what we are left to face now is the damage limitation scenario.

ADDED ps drunk again but i think i this is more or less clear.

Edited by Losing Faith

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i like evan davis. for a bbc journalist he's pretty good, at least as far as the housing boom is concerned.

he clearly is trying to make the case for the mpc to concentrate on their mandate rather than pander to other pressures.

now, about the debt and low ir.

i get the impression that, at least on hpc, dotcom fallout combined with the events of 11-9-01 provoked an aggressive policy by us and uk to avoid serious economic repercusions at the expense, probably, of debt build up.

i think, at this point many acuse the respective govts of shortsightedness and stupidity. i for one am reluctant to believe this. i think, basically, given the powers and resources the govts have available to bring to bear, that they have a far better take than most on the overall situation and likely future events.

everything we know is surely known to the powers that be, plus one hell of a lot more besides.

what were the options?

i guess at the time they saw imminent financial meltdown without intervention - the scale of the dotcom crash was absolutely enormous! far far worse than 1929.

the central banks must have decided that the risk of deflation was sufficient to lower rates as aggresively as they did... and, a good few years on, it seems they did the right thing.

what would you have done?

what we are left to face now is the damage limitation scenario.

ADDED ps drunk again but i think i this is more or less clear.

Me a bit drunk too.

But not too much to ask you, why your touching faith in Governments?

Do you not appreciate that any Government only wants to stay as such and will manipulate anything it can to ensure this?

They did the right thing?

How so, asset bubbles, record debt, record balance of trade deficits, public sector liabilities way into the future.

Do these all mean nothing?

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Me a bit drunk too.

But not too much to ask you, why your touching faith in Governments?

Do you not appreciate that any Government only wants to stay as such and will manipulate anything it can to ensure this?

They did the right thing?

How so, asset bubbles, record debt, record balance of trade deficits, public sector liabilities way into the future.

Do these all mean nothing?

i accept what you are saying. govts do have a VI to stay in power for as long as they can.

what i wanted to do was open up a discussion over what the alternatives were at the time.

given that in the two - three years after 9/11 and dotcom crash we have had economic stability more or less (barring some asset classes, yes!).

we might conclude that we faired better than in 1929, at least for the time being.

i am just trying to be open minded about this and talk about what the medium term possible consequences of two MAJOR consecutive incidents in modern history might have been)

does this explain my position better?

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i accept what you are saying. govts do have a VI to stay in power for as long as they can.

what i wanted to do was open up a discussion over what the alternatives were at the time.

given that in the two - three years after 9/11 and dotcom crash we have had economic stability more or less (barring some asset classes, yes!).

we might conclude that we faired better than in 1929, at least for the time being.

i am just trying to be open minded about this and talk about what the medium term possible consequences of two MAJOR consecutive incidents in modern history might have been)

does this explain my position better?

I see what you're saying.

Up to a point there is some logic in that.

If, and this is an important if, this response to traumatic events had been better handled and controlled.

It's akin to "Cry havoc and let slip the dogs of war".

We've had "Cry slump and let slip the dogs of uncontrolled credit".

Both, once unleashed, are difficult to get back under control.

You must look at the fundamentals of the countries involved.

For many they are not good.

Maybe the medium term was helped but, in truth, the long term looks to be severely compromised.

It is future generations who wil have to deal with that.

Many of those future generations here are not too happy about that.

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I see what you're saying.

Up to a point there is some logic in that.

If, and this is an important if, this response to traumatic events had been better handled and controlled.

It's akin to "Cry havoc and let slip the dogs of war".

We've had "Cry slump and let slip the dogs of uncontrolled credit".

Both, once unleashed, are difficult to get back under control.

You must look at the fundamentals of the countries involved.

For many they are not good.

Maybe the medium term was helped but, in truth, the long term looks to be severely compromised.

It is future generations who wil have to deal with that.

Many of those future generations here are not too happy about that.

agreed.

with some hind-sight now, we could devise something to manage the situation better but at the time, it looked SERIOUSLY grim!

i only wonder, would inaction have resulted in worse? after 1929 the us suffered terrible consequences for a decade the long lasting effects were purely self-inflicted through negative sentiment (worse than a short term recession and hpc - of course, it may be much worse than this, we don't know yet)

this suggests that one of the most helpful things that a govt can do is maintain as positive an outlook as possible in the economy?

it's a tough one. i am pleased that i had no part to play in the decision making myself (like that'd happen!)

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1929 and all that followed was all about one thing - debt, simple as that, a very badly run economy with people spending tomorrow's money so that when tomorrow arrived there was nothing left.

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  • 301 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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