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spyguy

Boe To Raise Irs

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Not much to add:

http://ftalphaville.ft.com/2014/01/09/1736042/we-will-see-about-the-mpc/

There's a reference to some work by the Resolution Foundation who, in the main, I think are a bunch of shills:

'He also flags a report by the Resolution Foundation looking at the effect of a rate rise on Britain’s borrowers. In essence, the country has painted itself into a corner, debt wise (click to enlarge).'

Just as well we've not wasted the last 8 years propping up housing.

(I was going to put 5 years then I remembered the wheels came off the UK economy in 2006 - thats 8 f-cking years this year. That's an ecomomic cycle, bumping in and out of negative growth ).

Edited by spyguy

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A rate rise would = wage inflation

Wage inflation = affordable mortgage interest

This is a red herring until you get to the end of the business cycle, the curve's flattening again and consumption starts to tail off.

Really puzzled why this 'rates to rise' stuff keeps getting wheeled out every few months for the last 6 years. It's clearly nonsense.

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Bond Vigilantes singing the same tune:

http://www.bondvigilantes.com/blog/2014/01/08/should-the-boe-hike-rates/?utm_source=rss&utm_medium=rss&utm_campaign=should-the-boe-hike-rates

I can't see it at all, but if it does happen a lot of nasty traps will snap shut. Just can't see any reasonable way out of this - unless the wages route, but not holding my breath.

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Not much to add:

http://ftalphaville....-about-the-mpc/

There's a reference to some work by the Resolution Foundation who, in the main, I think are a bunch of shills:

'He also flags a report by the Resolution Foundation looking at the effect of a rate rise on Britain's borrowers. In essence, the country has painted itself into a corner, debt wise (click to enlarge).'

Just as well we've not wasted the last 8 years propping up housing.

(I was going to put 5 years then I remembered the wheels came off the UK economy in 2006 - thats 8 f-cking years this year. That's an ecomomic cycle, bumping in and out of negative growth ).

2006? The US housing market in places like Florida had begun to slide but the UK economy was still roaring ahead.

The UK has certainly painted itself into a corner debt-wise but that surely makes a rate rise less likely not more so.

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2006? The US housing market in places like Florida had begun to slide but the UK economy was still roaring ahead.

The UK has certainly painted itself into a corner debt-wise but that surely makes a rate rise less likely not more so.

NR went bus in 2007. Credit seemed disappeared in the UK at this point.

2006 is when someone I know from the pub got a 8times income IO mortgage.

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Govt debt and running a deficit of £100bn a year says that IRs won't be going anywhere.

Plus don't tell anyone there's an election due.

The debt and deficit means, in the medium to long term, that the UKGOV is a price-taker, not a price-maker.

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There has a been talk of a 5 BP change first - which would be 0.5% to 0.55% if my understanding is correct.

Which is why the 2YR yield has been sitting just over 0.55% I guess. I expect people think there will be a 5 BP increase - panic will happen and it won't get moved again until after election.

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http://

www.bloomberg.com/news/2014-01-09/draghi-holds-rates-as-ecb-bank-assessment-vies-with-growth-push.html

European Central Bank President Mario Draghi said officials have strengthened their pledge to keep interest rates low for as long as necessary to bolster the euro region’s economy.

Seeing as there's not much left in the UK economy apart from occasional opportunistic point scoring there's a good chance that there could be a opportunity to claim economic superiority by raising the UK base rate a bit and claiming that it was a result of the UK's dynamism compared to the eu - and even the rest of the world.

It wouldn't be the first time such short lived claims have been made especially as elections approach.

Then from that link:

Euro-area inflation was at 0.8 percent in December and has been below the ECB’s 2 percent ceiling for 11 months. While it’s forecast to continue to undershoot the target through next year, Draghi said in an interview with German magazine Der Spiegel released on Dec. 28, that “at the moment there’s no immediate need to act.” The last rate cut was in November.

Edited by billybong

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A rate rise would = wage inflation

Wage inflation = affordable mortgage interest

This is a red herring until you get to the end of the business cycle, the curve's flattening again and consumption starts to tail off.

Really puzzled why this 'rates to rise' stuff keeps getting wheeled out every few months for the last 6 years. It's clearly nonsense.

why would wages rise in a higher interest rate economy, where zombie companies are already sheilded from death by low rate?...higher rates would reduce profits straight off the top leaving less money for wages...

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18m 20s in Last night's Newsnight

Well yeah. Is it not completely obvious that rates need to go up? What is the counter argument, I don't think I've ever heard one. Why is everyone so concerned about the minority living in houses they can't afford?

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Well yeah. Is it not completely obvious that rates need to go up? What is the counter argument, I don't think I've ever heard one. Why is everyone so concerned about the minority living in houses they can't afford?

My concerns are that we already have the 1% that has most of the wealth. Lets face it it's a savers wet dream to be able to live off their interest. I would love to have money pouring into my bank account and not have to work for it.

I think too many people get too much unearned income and we need the balance to go back to work pays. I think it would be good if there was a maximum limit on how much unearned income you can receive but in a global economy I don't think it will ever happen.

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Well yeah. Is it not completely obvious that rates need to go up? What is the counter argument, I don't think I've ever heard one. Why is everyone so concerned about the minority living in houses they can't afford?

The counter argument is that the economy is still fecked. The recovery is an artefact of Osborne's excessive borrowing and Bernanke's QE and no more sustainable than Brown's original 'miracle' proved to be.

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My concerns are that we already have the 1% that has most of the wealth.

By definition, you might say.

Lets face it it's a savers wet dream to be able to live off their interest. I would love to have money pouring into my bank account and not have to work for it.

I think that is usually more to do with preserving the purchasing power of your cash.. is it not reasonable to expect that your days pay buys you the same next year as it did when you earned it? One ought not to face financial penalty for squirrelling some money away for a future large purchase or to keep you in food in times of less available work.

Also a persons savings are used for investment capital, and for making that capital available a person is paid a dividend. All perfectly reasonable and sensible I believe.

And isn't 'living off their interest' called retirement?

I think too many people get too much unearned income and we need the balance to go back to work pays. I think it would be good if there was a maximum limit on how much unearned income you can receive but in a global economy I don't think it will ever happen.

That depends what is meant by 'unearned'. Should you invent a technique for some manufacturing process for example and licence its use you can provide yourself with a passive income. A manufacturer benefits from the improved efficiency with a saving greater than the licence cost and the inventor shares in the wealth they created. It also provides an incentive for such inventions.

There are many other passive income types that it would be a mistake to deprive society of.

I think this 'fair days work for a fair days pay' thing is what has been drilled into many by those that benefit from this taught moral imperative to slave your guts out for someone else's benefit.

Something to ponder I think.

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The counter argument is that the economy is still fecked.

Yep. And requires higher rates to unfeck. The answer is, I think, that the choice we face is short term pain for longer term sustainability versus longer term pain. As in, forever. Japan. The choice has been made with the election in mind rather than the good of the economy. Pain now, whilst the better option economically is the worse option so far as a looming election is concerned.

So politicians put their own re-election desires ahead of the good of the country. Whodathunk.

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Well yeah. Is it not completely obvious that rates need to go up? What is the counter argument, I don't think I've ever heard one. Why is everyone so concerned about the minority living in houses they can't afford?

Exactly. Equity rich owners are concerned, because values are set at the margin. When distressed sellers sell for lower prices, it lowers the values of their own homes. That's the main reason there is such concern about it.

Then there's many do-gooders social-cause-champions on how everyone is a victim of advertising, manipulated reality, what they're parents told them about house prices always doubling... when they've made reckless decisions.

They also like to protect the minority, keep prices high, and block opportunity for millions of of non-owners who were prudent, and the young coming through who won't inherit and don't have bomad, but who have to make their own way.

gf3, anyone who has liquid wealth, right now in this moment, good for them. Especially when it's come from enterprise, and when they're not over-extended to any market/asset position. Wealth is needed for investment, and to create jobs. What "living off the interest" are you talking about? Perhaps the wealth is waiting for opportunity, suffering policies to help debtors and VIs. Too much of the "wealth" is in possession of those with over-inflated asset values. That's what needs to change. Asset value downward readjustment.

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My reading of today's weaker surveys construction, manufacturing, and retail (, caution on one month) is that the recovery is stalling. There are also hints in EU zone. It's all on the housing market though the halifax data thread makes an interesting read.

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2006? The US housing market in places like Florida had begun to slide but the UK economy was still roaring ahead.

The UK has certainly painted itself into a corner debt-wise but that surely makes a rate rise less likely not more so.

The wheels of the housing market had started to fall off in 2004. They managed to reignite something in London and a few favoured ares which gave the housing cycle a double top. Certainly 2004 was the top for the areas I was following at the time, they may have been marginally higher prices in 2007 but certainly not on an inflation adjusted basis than was the case in 2004.

So I agree with the previous comment about eight years of trying to prop the market up. More like ten in the Midlands.

Should have just had price discovery and we would not still be messing about with artificial props a decade later.

Edited by crashmonitor

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My reading of today's weaker surveys construction, manufacturing, and retail (, caution on one month) is that the recovery is stalling. There are also hints in EU zone. It's all on the housing market though the halifax data thread makes an interesting read.

December is always very variable because of which day in the week Christmas falls on.

I know several business doing relatively well where they have had proper traditional shutdown because they haven't been worrying about every last little bit of business. Also a relatively easy way to reward workers.

The weather will hamper construction for a while to come due to delays on existing work but with an extra bounce down the line.

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18m 20s in Last night's Newsnight

Fascinating.

Not so Iong ago anyone on the flagship tv news prog expounding higher rates as well as the thrust of the piece would have had at least dozens of excited comments.

Now - 3.

HPCers are so despondent and depressed. We must be close, he wonders.

Edited by Killer Bunny

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Fascinating.

Not so Iong ago anyone on the flagship tv news prog expounding higher rates as well as the thrust of the piece would have had at least dozens of excited comments.

Now - 3.

HPCers are so despondent and depressed. We must be close, he wonders.

The reason I'm despondent is nothing to do with the housing market, no one in their right mind would buy a house in the UK right now ( unless you were buying with Singapore or Hong Kong dollars perhaps ).

My despondency comes from the disbelief of what has occurred over the last 5 years, the governments collusion/support with/of the bankers, the unelected BoE setting policy to suit the bankers, the media's support of these policies, the way the savers/workers are being treated, the ongoing bankers bonuses, the fact that there seems to be nothing joe-blogs can do so change these policies, the use of my money/life to support the bankers, the amount of UK taxation, the public sector spending ( on themselves ) the lack of real cuts, my future and my families future being destroyed for the bankers...generally, the dishonesty and corruption that is the UK.

This has gone way beyond the housing market and the 2007 collapse has shown the banking system and the supposed British democracy for what it is, a sham and we are forced to live under it and support it.

For these reasons I'll be off, the the right opportunity arises.

Edited by TheCountOfNowhere

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