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apom

Interest Rates To Rise.

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America has predicted that Interest Rates there will rise for at least the next three decisions to about 5%

so why will ours rise?

Okay.

Parity.. if we have the same IR's rates as america it would be very easy to invest not in the pound but in the dollar, why is this attractive?? The american economy is larger and more stable then ours, investments in the pound need to yield higher returns then the dollar. If there is to be more risk there has to be higher returns.

The move from the pound to the dollar would cause a run on the pound, devaluing it against the dollar.

The run on the pound would cause it to deflate in value against the dollar.

Why is this bad???

The pound becomes less and less an attractive investment and as people move away from it... investing in it makes financial suicide. At this point the pound collapses.

The exports to the usa make up about 40% of all of our international exports and imports. A pound devaluing creates massive problems here.

Oil is bought in dollars, we don't want to loose much ground against the dollar.

So interest rates here need to move ahead of the dollar.

If they don't and the above happens the only way to combat the pound crashing would be to have massive IR's similar to those of 1989.

IR's need to rise for internal reasons too, and those I have grasped before.

The international ones now make sense.. (Thanks to an economist I was speaking to.. ) thought I would share..

the moment that marks the crash...?

Was it Mervin King saying "House prices are a matter of opinion, but debt is real" a year ago.

It should have been.. But the lemming effect as people pursue the chance of free and easy money was too strong.

I think it was the american announcement about IR's yesterday.

Edited by apom

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On the nail apom - agree totally.

The BOE and the Treasury are shafted.

Without extreme consumption and indebtedness the economic numbers Gordon Brown requires don't add up, yet the BOE can do nothing to help him.

Decrease rates and the pound collapses and inflation grows unabated.

Raise rates and consumer spending collapses further, the housing market goes into freefall and bankruptcies and business failures top the headlines.

Ouch!

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On the nail apom - agree totally.

The BOE and the Treasury are shafted.

Without extreme consumption and indebtedness the economic numbers Gordon Brown requires don't add up, yet the BOE can do nothing to help him.

Decrease rates and the pound collapses and inflation grows unabated.

Raise rates and consumer spending collapses further, the housing market goes into freefall and bankruptcies and business failures top the headlines.

Ouch!

but without rising them now.. we have to have much higher later..

Therefor.. its going to hurt.. all we have left is some control about how bad.

There is no choice now. it is fixed and tied.

Our economy is moving back to balence. As is the world economy.

Remember, what you paid for your house is just what you paid for it. its worth is that what someone else will pay.. and that is decided on the moment.

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A spot on brief summary. What I find amazing is that there are some very well educated people out there impressed by Brown's economic miracle. When people stop over analysing things they are normally very simple. Brown's economic miracle is the mutant result of a burst stock market (dot.com) quickly followed by a fiscally flawed reaction to terrorist attacks on 9-11. That's it , it's no more complicated than that. The thing is now, the Americans realise their errors and are afraid of oil prices whilst we are still largely in denial. Give it another 3 months, max.

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Pound up 1 cent against the dollar today.

remember.. things are in flux right now.

I only talk about the economic certainties as i see them.

I think I am right.

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Guest muttley

remember.. things are in flux right now.

Remind me.

The Fed have raised interest rates FIVE times in a row,with no effect on the pound.Why should we get excited about this one?

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APOM spot on :)

A poll of 1000000000000000000 economist :lol:

Like stated before opinions are like @rseholes, every @rsehole economist has got one.

The next 12 months will be very interesting B)

Rates up, HPI down, divorce rates up its payback time

Mr Brown the magician, how Tony is going to watch from the sideliones and lauuuuuuuuugh :P

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Remind me.

The Fed have raised interest rates FIVE times in a row,with no effect on the pound.Why should we get excited about this one?

Coz there's will soon be higher than ours? Because they're evidence of growing global inflationary pressure?

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I think the MPC are too in bed with GB to do what they need to do, and I think GB would rather see high inflation which he can blame on external influences like Oil etc than see a house price crash which would inevitably be blamed on his mismanagement.

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America has predicted that Interest Rates there will rise for at least the next three decisions to about 5%

so why will ours rise?

Parity.. if we have the same IR's rates as america it would be very easy to invest not in the pound but in the dollar, why is this attractive?? The american economy is larger and more stable then ours, investments in the pound need to yield higher returns then the dollar. If there is to be more risk there has to be higher returns............

The move from the pound to the dollar would cause a run on the pound, devaluing it against the dollar.

The run on the pound would cause it to deflate in value against the dollar.

So interest rates here need to move ahead of the dollar.

I think it was the american announcement about IR's yesterday.

So, why is the euro not collapsing?

muttley

Pound up 1 cent against the dollar today.

:D

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Hi,

The relationship with the dollar and the US economy has always been the 'achilies heel' of sterling. The scenario you described is not to far from scenario Sorenson used in the sterling attacks of the early ninetees (anyone remember the ERM?). It needs to be watched carefully now because, well, bugger house prices for a minute, it would cause a pretty hard knock onto the general economy for a year or two.

Boomer

Edited by boom_and_bust

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Remind me.

The Fed have raised interest rates FIVE times in a row,with no effect on the pound.Why should we get excited about this one?

Not excited.. its going to push people into debt..

we have to stay ahead of them.. and they have just confirmed that they will overtake us

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So, why is the euro not collapsing?

:D

The euro is not collapsing as it is a big stable economy. It trades with itself..

One currency, different banks holding each little bit of it..

Little diddy fluctuating economies like ours will have higher interest rates..

Trust me..

This is the way it has always been..

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What I find amazing is that there are some very well educated people out there impressed by Brown's economic miracle.

Because

1) Compared to recent history a stable economy- however it is achieved - is better than recession, depression, stagnation etc etc.

2) Most people have a very short term view of things - the real money don't give a sh1t about how economic stability is achieved, how it impacts on first time buyers, if low paid workers really are better off etc etc

They make a fast buck while things are good and move on when things are bad.

Let's get real here. There is no 'big plan' - there is no point second guessing what GB or TB are going to do next - why they do it or what the impact will be.

There is no big plan - they are not that clever and don't care that much either.

They will do what they have to do in the short term to keep the voters happy. When they are fed up playing politics they will leave a mess behind them and sod off to earn a living giving lectures or sitting on the boards of companies.

The only thing NL will deliberately leave behind is a chain of policies that are so radical in their impact that they can not be easily changed by another incoming government.

This is exactly what the tories did and is exactly what the next government will do.

This is about poltical power - not representing citizens

Look at the big picture.

Think about it.

How many people in the tory government (who were in power during the last recession) lost lot's of money? lost their homes? lost their jobs? have spent years recovering from it financially? ehhm.

We live in a world of greed - a moral desert devoid of social responsibility, accountability, self discipline and traditional values.

If there is one thing we should all be concentrating on now it is how to gain economic independence so when it all goes wrong (again) we won't be dragged down with the rest of them

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So interest rates here need to move ahead of the dollar.

If they don't and the above happens the only way to combat the pound crashing would be to have massive IR's similar to those of 1989.

IR's need to rise for internal reasons too, and those I have grasped before.

Short sterling is here:

http://www.futuresource.com/quotes/quotes.jsp?s=LSS

Yes, they do see rates going up, but only marginally.

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America has predicted that Interest Rates there will rise for at least the next three decisions to about 5%

so why will ours rise?

Okay.

Parity.. if we have the same IR's rates as america it would be very easy to invest not in the pound but in the dollar, why is this attractive?? The american economy is larger and more stable then ours, investments in the pound need to yield higher returns then the dollar. If there is to be more risk there has to be higher returns.

The move from the pound to the dollar would cause a run on the pound, devaluing it against the dollar.

The run on the pound would cause it to deflate in value against the dollar.

Why is this bad???

The pound becomes less and less an attractive investment and as people move away from it... investing in it makes financial suicide. At this point the pound collapses.

The exports to the usa make up about 40% of all of our international exports and imports. A pound devaluing creates massive problems here.

Oil is bought in dollars, we don't want to loose much ground against the dollar.

So interest rates here need to move ahead of the dollar.

If they don't and the above happens the only way to combat the pound crashing would be to have massive IR's similar to those of 1989.

IR's need to rise for internal reasons too, and those I have grasped before.

The international ones now make sense.. (Thanks to an economist I was speaking to.. ) thought I would share..

the moment that marks the crash...?

Was it Mervin King saying "House prices are a matter of opinion, but debt is real" a year ago.

It should have been.. But the lemming effect as people pursue the chance of free and easy money was too strong.

I think it was the american announcement about IR's yesterday.

Apom you remain the most economically senseless buffoon on this forum. Your grasp on economics is as loose as your grasp on reality and you are completely wrong again. Please please please read an economics book and think before you write. It will help you in the long run

A weak economy does not want a strong pound !!!!!!!!!! This is because a weak economy wants to kick start its economy by improving its manufacting and get our exports going to improve our cash flow. This is why the US supported a weak dollar the last few years when its economy flirted with depression and why they almost actively encouraged it to fall against the euro and sterling. Prior to this the dollar was very strong when the economy was strong, dont' you remember reading about the strong dollar that clinton was promoting in the 1990's?

Regarding the US we are actually closer to the eurozone in terms of trade so are more in-line with them.

THE US HAS A GROWING ECONOMY THAT NEEDS HIGHER RATES, WE HAVE A WEAK ECONOMY THAT NEEDS LOWER RATES, THIS IS SIMPLE ECONOMICS, PLEASE GET THIS INTO YOUR HEAD. That is why all the economists are talking about a need for lower rates, not higher ones. AAAaaaaaaaaaaaaahhhhhhhh why can't you understand this???

The rubbish you spout consistently flies in the face of what the economists actually believe, thank god our Bank of England policy members are a bit more clued up than you and i pray that people don't take what you say as the trust.

Please please read these links to actually understand what you are trying to talk about

http://www.chicagofed.org/consumer_informa...weak_dollar.cfm

http://www.unitednorthamerica.org/dollar.htm

Trust me..

Not in a million years!!!!!!!! I have never know someone get it so consistently wrong. I just thank god that our economy is in the hands of intelligent men

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A weak economy does not want a strong pound !!!!!!!!!! This is because a weak economy wants to kick start its economy by improving its manufacting and get our exports going to improve our cash flow

We've had a strong £, a strong £ that leapt every time the bozos spruced up the property market with a bit more jiuce.

You can forget a manufacturing rebound, a lot of it is so decimated now that it hasn't got the critical mass to compete, neither does it have the money to expand when faced with some of if not the most expansive land ccsts in world, neither can it afford to recruit and attract good staff at the right wage due to living costs. Moreover the next wave of potenital new startups will be from a group of people saddled with huge debt and with such a hurdle to face in terms of gaining independent shelter that starting up a risky business that could cost them the savings that they have will be a total non-starter.

Expand or die, we've chosen the die route, expanding the money supply is not growing the economy, in fact some times it can mean quite the reverse.

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Are you an economist ES - or are you just another informed " expert " ?

Not trained but i write about it on a daily basis and read what real economists talk about on a daily basis. Hence why the rubbish some spout on here gets my blood up a bit too much sometimes :)

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Not trained but i write about it on a daily basis and read what real economists talk about on a daily basis. Hence why the rubbish some spout on here gets my blood up a bit too much sometimes :)

Economists have there faults ES; I did study economics although I wouldn't claim any statements that I make are sensational.

A chief fault of Economists is to build a model upon a foundation of assumptions. A favourite is that of the rational consumer.

What I'm getting at is that sometimes the rubbish spouted by economists gets my blood up.

Edited by bandylegs

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Not trained but i write about it on a daily basis and read what real economists talk about on a daily basis. Hence why the rubbish some spout on here gets my blood up a bit too much sometimes :)

Thanks for clarifying that. Perhaps you could change your name to "Economic Eavesdropper" rather than purporting to know what you are talking about.

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Not trained but i write about it on a daily basis and read what real economists talk about on a daily basis. Hence why the rubbish some spout on here gets my blood up a bit too much sometimes :)

ah - so do you write for peer-reviewed academic journals? if so, perhaps you would care to supply some references.

no? - well supply some of your writings anyway as i'm sure the forum would be very interested. :)

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ah - so do you write for peer-reviewed academic journals? if so, perhaps you would care to supply some references.

no? - well supply some of your writings anyway as i'm sure the forum would be very interested. :)

:) Nice try but i am not about to let you know who i am. I work for a city broker and write a daily report that covers the markets, including energy and forex that goes out to over 2,000 people a day. If i give you my report you will know who i am, which i can't risk for the sake of this forum. Suffice to say i know what i am talking .

Bandylegs i couldnt' agree more, i think a lot of economists do spout rubbish, as with anything we all purport to be experts. The difference is that you go with the ones that you believe. Major economists like Roger Bootle at Capital Economics have been caught out with the movement in house prices. I remember going to see him a couple of years ago and he predicted a house price crash then, despite the fact that prices were still going up. He was half right but he was calling for 30%, and now has egg on his face.

I made my name Economic Sensation because i read some truly outrageous claims from guys like Apom who obviously don't have the smallest clue about economics and how they work and tend to just write in capitals a lot to bully people into believing the market is going where they want it to. I don't purport to be good enough to be an amazing economist, but i do know what makes the markets work and know enough to be believed.

The important thing is to go with the winners, and more importantly the ones who actually make a difference such as the BoE members and guys like Alan Greenspan. We can all conjecture, but they will actually alter the rates that will have the impact on the house prices afterwards.

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  • 338 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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