John Major - The Poster Boy For Economic Sanity!

[browneconomy]

Article in Telegraph:

http://www.telegraph.co.uk/news/politics/conservative/10439423/Increase-interest-rates-to-5-per-cent-to-help-prudent-pensioners-says-Sir-John-Major.html

Quote

Increase interest rates to 5 per cent to help prudent pensioners, says Sir John Major

Prudent pensioners who have saved carefully for their retirement all their lives are being punished by “cripplingly unfair” low interest rates, Sir John Major has said

By Christopher Hope, Senior Political Correspondent

6:00AM GMT 11 Nov 2013

The former Conservative Prime Minister urged the Government to do something “classically Conservative” and bring in measures to protect people’s savings.

Sir John urged the Bank of England to return interest rates - which banks say could be held at 0.5 per cent until 2017 - to “normal levels, say three to five per cent” to create a society that treats “the saver as fairly as it treats the debtor”.

Speaking to the annual dinner of the South Norfolk Conservative Association on Friday night, Sir John said: “For the moment, low interest rates are unavoidable to preserve companies and create jobs but there is another face to low interest rates.

“We should remember they are cripplingly unfair to people who have saved money for their retirement

“A lifetime of prudence and now the money they invest earns them almost nothing at all and their quality of life is diminishing as a result of that.

“No-one wants sky high interest rates, but frankly the sooner they return to normal levels, say three to five per cent, the sooner we will move towards a fairer society that treats the saver as fairly as it treats the debtor.”

Sir John urged the Tories to resist the Liberal Democrats’ “vindictive” plans for a “mansion tax” on expensive homes.

He said: “We should help people protect what they have built up through their lifetime, whether it be their home, their pension or their savings and that is why the threat of a mansion tax is so vindictive.

“Once established, it will creep down the value chain because everything does. Income tax was introduced as a short term palliative in the first place at tuppence in the pound.

“Once established a mansion tax would creep down the value chain. The Treasury would see a means of more money, more cuts to Local Government grants and money from the mansion tax going to Local Government.

“I can see it only too plainly and more and more people will be caught in it.”

Sir John, who last month called for a windfall tax on energy companies, also said Conservatives should not be afraid to intervene in the private sector when “people are maltreated” because their duty was to the electorate, not companies.

END QUOTE

Obviously John Major was speaking to and for a specific audience. And retirees/wealthy home owners are singled out as victims (more so than than denied-home owners or savers etc). But is this the start of a more public debate on the fairness/economic benefits of a return to economic sanity? Could John Major be the Churchillian 'Voice in the Wilderness' ?

IMHO interest rates should be set for the long term benefit of the British (UK) people and not the Banking/Political cabal who run this country as a kleptocracy..

Whilst we kid ourselves we have a free market - we don't - why not set saving rates as (untaxed) RPI compensation plus (taxed) 2% profit interest. And borrowing rates at the saving rate plus (say) 2%. Let previous mal-investment destroy those who borrowed / lent badly rather than continue the present policy of the prudent bailing out the reckless & feckless..

Edited November 11, 2013 by browneconomy

[WageWar]

I wonder if some of the old Conservatives will start waking up soon to the rampant criminality of their younger counterparts.

[R K]

Old Tory rentier says give money to old Tory rentiers.

[billybong]

Sir John, who last month called for a windfall tax on energy companies, also said Conservatives should not be afraid to intervene in the private sector when “people are maltreated” because their duty was to the electorate, not companies.

"...Conservatives should not be afraid to intervene in the private sector when “people are maltreated because their duty was to the electorate, not companies”"

- indeed.

However Conservatives (or any other MP etc for that matter) make no oath of duty or oath of any other sort to the electorate.

http://

www.parliament.uk/site-information/glossary/oath-of-allegiance/

Some would say they have no official duty whatsoever to the electorate.

Edited November 11, 2013 by billybong

[dances with sheeple]

Most sheeple don`t know or care who JM is, can`t really see any "debate" in the UK at sheeple level beyond "Strictly" and "X-Fartor". The interest rate shocks will come from outside events and they will be brutal and swift IMO. The numpties at the BOE are just going to sail on until they can`t, like the guys in "The Perfect Storm".

[Bruce Banner]

John Major was a proper Conservative Prime Minister.

[Gigantic Purple Slug]

Article in Telegraph:

http://www.telegraph.co.uk/news/politics/conservative/10439423/Increase-interest-rates-to-5-per-cent-to-help-prudent-pensioners-says-Sir-John-Major.html

Quote

Increase interest rates to 5 per cent to help prudent pensioners, says Sir John Major

Prudent pensioners who have saved carefully for their retirement all their lives are being punished by “cripplingly unfair” low interest rates, Sir John Major has said

By Christopher Hope, Senior Political Correspondent

6:00AM GMT 11 Nov 2013

The former Conservative Prime Minister urged the Government to do something “classically Conservative” and bring in measures to protect people’s savings.

Sir John urged the Bank of England to return interest rates - which banks say could be held at 0.5 per cent until 2017 - to “normal levels, say three to five per cent” to create a society that treats “the saver as fairly as it treats the debtor”.

Speaking to the annual dinner of the South Norfolk Conservative Association on Friday night, Sir John said: “For the moment, low interest rates are unavoidable to preserve companies and create jobs but there is another face to low interest rates.

“We should remember they are cripplingly unfair to people who have saved money for their retirement

“A lifetime of prudence and now the money they invest earns them almost nothing at all and their quality of life is diminishing as a result of that.

“No-one wants sky high interest rates, but frankly the sooner they return to normal levels, say three to five per cent, the sooner we will move towards a fairer society that treats the saver as fairly as it treats the debtor.”

Sir John urged the Tories to resist the Liberal Democrats’ “vindictive” plans for a “mansion tax” on expensive homes.

He said: “We should help people protect what they have built up through their lifetime, whether it be their home, their pension or their savings and that is why the threat of a mansion tax is so vindictive.

“Once established, it will creep down the value chain because everything does. Income tax was introduced as a short term palliative in the first place at tuppence in the pound.

“Once established a mansion tax would creep down the value chain. The Treasury would see a means of more money, more cuts to Local Government grants and money from the mansion tax going to Local Government.

“I can see it only too plainly and more and more people will be caught in it.”

Sir John, who last month called for a windfall tax on energy companies, also said Conservatives should not be afraid to intervene in the private sector when “people are maltreated” because their duty was to the electorate, not companies.

END QUOTE

Obviously John Major was speaking to and for a specific audience. And retirees/wealthy home owners are singled out as victims (more so than than denied-home owners or savers etc). But is this the start of a more public debate on the fairness/economic benefits of a return to economic sanity? Could John Major be the Churchillian 'Voice in the Wilderness' ?

IMHO interest rates should be set for the long term benefit of the British (UK) people and not the Banking/Political cabal who run this country as a kleptocracy..

Whilst we kid ourselves we have a free market - we don't - why not set saving rates as (untaxed) RPI compensation plus (taxed) 2% profit interest. And borrowing rates at the saving rate plus (say) 2%. Let previous mal-investment destroy those who borrowed / lent badly rather than continue the present policy of the prudent bailing out the reckless & feckless..

Bonkers. How does raising rates to 3% protect the value of peoples homes ? It would trash the housing market instantly.

How does taking money from the economically productive through extra interest rate charges and giving it to the economically unproductive help the economy ? Are the cruise boomers going to spend so much of that interest in the UK that it re-inflates the economy ? What are they going to spend it on ?

You can have high house prices and low interest or high interest and low house prices, but not high house prices and high interest.

Sir John has the luxury of preaching to the blue rinse brigade with popularist policies without having to deal with the consequences.

IMO the government will only raise rates in response to some external economic crisis, or because of rampant inflation. Neither of which are present at the moment.

[billybong]

Speaking to the annual dinner of the South Norfolk Conservative Association on Friday night, Sir John said:..

It's always interesting to know the context of a speech.

Major used to be a banker and it's just possible he's forewarning them of something in the wind (other than gas) - or maybe not of course

Maybe he has nothing much to say except for stating the obvious about people's savings and helping to explain one reason why they likely won't win either the eu elections or the general election.

Conservative canvassers could lie of course (I hear the call - no no unheard of ) and suggest savers situation will improve under the Conservatives - like Cameron and his promise to remove tax on savings' income before the last general election.

Edited November 11, 2013 by billybong

[browneconomy]

Most sheeple don`t know or care who JM is, can`t really see any "debate" in the UK at sheeple level beyond "Strictly" and "X-Fartor". The interest rate shocks will come from outside events and they will be brutal and swift IMO. The numpties at the BOE are just going to sail on until they can`t, like the guys in "The Perfect Storm".

Unfortunately you might well be correct. But..........

The Fact is John Major Prime Minister for longer than Gordan Brown and David Cameron combined and unlike GB & DC actually won an election to that office! So he is worth listening to. He has the 'right' sort of connections, in political and economic terms, far more so than any of us knobs on HPC. So isn't it 'good' that there has at least been some political debate about the issue? Not that I'm holding my breath......

I don't subscribe to the view that raising mortgage rates to inflation plus 2% plus (say) 1% would trash the housing market. Yes the over-indebted would go under but people coped with 15% mortgages in the early 90's. And all those forced to rent now might be in a better position to buy in the near future, so stabilising the market at a more natural level (loans to income)..

[thecrashingisles]

Sir John has the luxury of preaching to the blue rinse brigade with popularist policies without having to deal with the consequences.

He also has a record in government of not taking the politically easy option of avoiding short term pain. He has more right to be listened to than most.

[the_duke_of_hazzard]

Bonkers. How does raising rates to 3% protect the value of peoples homes ? It would trash the housing market instantly.

How does taking money from the economically productive through extra interest rate charges and giving it to the economically unproductive help the economy ? Are the cruise boomers going to spend so much of that interest in the UK that it re-inflates the economy ? What are they going to spend it on ?

You can have high house prices and low interest or high interest and low house prices, but not high house prices and high interest.

Sir John has the luxury of preaching to the blue rinse brigade with popularist policies without having to deal with the consequences.

IMO the government will only raise rates in response to some external economic crisis, or because of rampant inflation. Neither of which are present at the moment.

Exactly.

[Frugal Git]

What I find particularly wonderful about all these sort of statements is the portrayal that savers == pensioners. Yes, the feckless youth would never, ever save....

[dances with sheeple]

It's always interesting to know the context of a speech.

Major used to be a banker and it's just possible he's forewarning them of something in the wind (other than gas) - or maybe not of course

Maybe he has nothing much to say except for stating the obvious about people's savings and helping to explain one reason why they likely won't win either the eu elections or the general election.

Conservative canvassers could lie of course (I hear the call - no no unheard of ) and suggest savers situation will improve under the Conservatives - like Cameron and his promise to remove tax on savings' income before the last general election.

Wouldn`t really need inside connections in the banking community to guess what could be coming though? The rate spikes (when and if they come) will be a shock to many of them probably as well?

[The Knimbies who say No]

The tension between housing wealth and interest rates is interesting, as I guess many people in his audience want both, however inconsistent that position is.

[thecrashingisles]

The tension between housing wealth and interest rates is interesting, as I guess many people in his audience want both, however inconsistent that position is.

If they're mortgage free then the two are not in opposition. Their house wouldn't get any smaller if rates go up.

[dances with sheeple]

Unfortunately you might well be correct. But..........

The Fact is John Major Prime Minister for longer than Gordan Brown and David Cameron combined and unlike GB & DC actually won an election to that office! So he is worth listening to. He has the 'right' sort of connections, in political and economic terms, far more so than any of us knobs on HPC. So isn't it 'good' that there has at least been some political debate about the issue? Not that I'm holding my breath......

I don't subscribe to the view that raising mortgage rates to inflation plus 2% plus (say) 1% would trash the housing market. Yes the over-indebted would go under but people coped with 15% mortgages in the early 90's. And all those forced to rent now might be in a better position to buy in the near future, so stabilising the market at a more natural level (loans to income)..

Not sure the economic connections matter so much now, a kid in their bedroom has as much access to economic knowledge and data as anyone working in the city? (maybe not insider stuff, but the general materials are out there to educate yourself) Not convinced that someone who was PM so long ago has their finger on the pulse of banking or the Conservative party anymore? He is just making obvious statements that anyone who is half awake could figure out? Agree about the housing market, I thought they would have had a crash to get new lending going by now, but maybe the banks are way more sc*rewed than we think?

[The Knimbies who say No]

If they're mortgage free then the two are not in opposition. Their house wouldn't get any smaller if rates go up.

If only life was so simple. You're quite correct of course, but the power of imaginary equity that may never be accessed is quite high, even more so if it is actually earmarked to pay for stuff like care home fees etc.

[Gigantic Purple Slug]

If they're mortgage free then the two are not in opposition. Their house wouldn't get any smaller if rates go up.

Hmmm.

And do you think that if he had added at the end of his speech, "Oh yes, and by the way, if we do raise interest rates to 5%, your house will be worth much less" then that would have gone down a storm ?

Why didn't he ?

[WageWar]

What I find particularly wonderful about all these sort of statements is the portrayal that savers == pensioners. Yes, the feckless youth would never, ever save....

I agree. Which is what I think they mean by "Classically Conservative". In other words he's talking about principles and a return to a situation where work is valued, not speculation and gambling. He's also come out and attacked the extent of the middle and upper class elite's control over British society. Perhaps I'm taking his words at face value too much and really there's more conniving going on behind the scenes. Who knows.

[dances with sheeple]

Hmmm.

And do you think that if he had added at the end of his speech, "Oh yes, and by the way, if we do raise interest rates to 5%, your house will be worth much less" then that would have gone down a storm ?

Why didn't he ?

Because he assumed that the audience could work it out for themselves?

[swissy_fit]

For whatever reasons, they may not have been as honourable as it appears, his government didn't traitorously sell us all to the banks as Blair's, Brown's and Cameron's have done, they allowed a housing crash and banking losses. Though perhaps one could argue he was party to and aided the beginnings of the City's plutocracy.

Anyway he has a certain credibility which is perhaps unjustified.

[Democorruptcy]

Bonkers. How does raising rates to 3% protect the value of peoples homes ? It would trash the housing market instantly.

How does taking money from the economically productive through extra interest rate charges and giving it to the economically unproductive help the economy ? Are the cruise boomers going to spend so much of that interest in the UK that it re-inflates the economy ? What are they going to spend it on ?

You can have high house prices and low interest or high interest and low house prices, but not high house prices and high interest.

Sir John has the luxury of preaching to the blue rinse brigade with popularist policies without having to deal with the consequences.

IMO the government will only raise rates in response to some external economic crisis, or because of rampant inflation. Neither of which are present at the moment.

Halifax peaked at £199,970 in 2007 when the base rate was 5.75%

http://www.housepricecrash.co.uk/indices-halifax-national.php

http://www.housepricecrash.co.uk/graphs-base-rate-uk.php

[Gigantic Purple Slug]

Halifax peaked at £199,970 in 2007 when the base rate was 5.75%

http://www.housepricecrash.co.uk/indices-halifax-national.php

http://www.housepricecrash.co.uk/graphs-base-rate-uk.php

As with the speech, simplistic.

In 2007 petrol prices were 40p a litre less than they are now.

[Frugal Git]

Halifax peaked at £199,970 in 2007 when the base rate was 5.75%

http://www.housepricecrash.co.uk/indices-halifax-national.php

http://www.housepricecrash.co.uk/graphs-base-rate-uk.php

The rampant presence of Self-Cert Liar Loans at that time might have something to do with that of course.

Today's ones are of course liar loans too - you're lying to yourself if you think it's genuinely worth 25 years @ 50% of your income for a 1 bed flat. And the media etc are lying about it being all about 'the monthly payements', but it has a veneer of looking reasonable to those who got a D in GCSE maths.

[dances with sheeple]

For whatever reasons, they may not have been as honourable as it appears, his government didn't traitorously sell us all to the banks as Blair's, Brown's and Cameron's have done, they allowed a housing crash and banking losses. Though perhaps one could argue he was party to and aided the beginnings of the City's plutocracy.

Anyway he has a certain credibility which is perhaps unjustified.

Didn`t he grow up on a housing scheme is south Landan and have a brickie dad or something, gives him an air of knowing about the real world and the value of money, the Eton set have the air of disconnect which riles a lot of the ordinary punters? I would have to say though that the sheeple sold themselves to the banks, willingly, Brown was just a mouthpiece on the sidelines, lets not give too much credit to these muppets for their ability to sway the behaviour of a whole nation. The sheeple were gagging for the free money teat, Brown just rode the wave on their expensive credit purchased coat tails.