TheCountOfNowhere Posted January 24, 2014 Share Posted January 24, 2014 (edited) it gets better. http://www.bbc.co.uk/news/business-25877395 he is saying interest rates permanently low. is this some sort of sick joke? Edited January 24, 2014 by TheCountOfNowhere Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted January 24, 2014 Share Posted January 24, 2014 When you have got yourself here you are screwed. Rates can't go up because the GDP fraud is revealed. Keep rates low and the GDP fraud is revealed. His only option is to keep the GDP inflater going hopefully long enough for him to have left the building. Ideally one isn't stupid enough to get oneself in this position. Quote Link to comment Share on other sites More sharing options...
moneyfornothing Posted January 24, 2014 Share Posted January 24, 2014 it gets better. http://www.bbc.co.uk/news/business-25877395 he is saying interest rates permanently low. is this some sort of sick joke? there's no harm admitting the truth .. Interest rates are not going anywhere for a generation and then some ... Just ask yourself , at what point in the future are we likely to be significantly more prosperous and wealthy ? Interest rates will rise at that point.. Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted January 24, 2014 Author Share Posted January 24, 2014 i wouldn't mind so much if they didn't lie and didn't do everything to support the banks and try and drive up prices...not just of houses...of everything. Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted January 24, 2014 Share Posted January 24, 2014 “The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.” The Rothschild brothers of London writing to associates in New York, 1863. We have far too many troughers feeding on hubris. Quote Link to comment Share on other sites More sharing options...
Venger Posted January 24, 2014 Share Posted January 24, 2014 If they're going to keep them permanently low, and rest of MPC likely to follow whatever Carney says... http://www.bbc.co.uk/news/business-12997437 Then can only hope they trigger correction to stop the housing unfairness (hyperfinflated prices / too many overleveraged landlords being kept cosy) in some other way, where keeping low rates is justified. Or markets trigger it, but guess it might only test sterling, but hopefully in stress testing mortgages hard, and that HTB2 really needs to go. Just pain upon pain for non-owners / savings / patient upsizers. Those who made sensible decisions not to overborrow for a home, trying to avoid putting their families at risk of financial difficulties, thrown aside for those who did. All the associated doubt and anxiety that's been piled on those who did the right thing, when others rewarded and protected for being reckless. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted January 24, 2014 Share Posted January 24, 2014 it gets better. http://www.bbc.co.uk/news/business-25877395 he is saying interest rates permanently low. is this some sort of sick joke? Have you not read his CV? Canada 2012 Does Mark Carney know what he’s doing? On Oct. 23, Bank of Canada governor Mark Carney will set his target for the overnight interest rate. There will be no surprises. Carney will leave it at 1%, where it has sat for just over two years. What economists and businesses will watch for instead is guidance on where he will move rates in the future, hunting for any sign he’s preparing to raise them. Raising them is precisely what he should do. Some argue he should have done so already. In the history of the country, interest rates in Canada have never been this low for this long, and it’s putting us on shaky ground. Low interest rates were necessary to juice the economy during the financial crisis, but they are now, by many measures, doing more harm than good. Cheap credit has caused a host of problems: it has blown out household debt and inflated home prices in some markets to unsustainable levels. Meanwhile, laughably low interest rates are punishing individual savers—especially the ones who have been most careful and conservative. On top of that, with bond yields languishing, insurers and pension funds are finding it difficult to meet their savings obligations. “We’re in a seriously dangerous situation,” says Michael Parkin, professor emeritus at Western University. “We have no exit strategy from these low interest rates.” Combined with the loose-money policies at all the major central banks, high inflation is an increasing risk. “We are going to see serious inflation unfolding, and Canada is not going to escape it,” he says. Carney is admittedly caught in a difficult spot. The Canadian economy is still weak. Our major trading partners, the United States and Europe, are in dismal shape. If he moves too soon or too fast, he chokes off the supply of cheap credit to consumers that’s helping drive our economy. If growth stalls, we’re on the brink of another recession. The U.S. Federal Reserve has also backed him into a corner. Its recent commitment to keep rates low until employment improves substantially means Carney can’t raise rates without sending the dollar higher, bruising manufacturers. These are real concerns, but the price of hesitation may be even higher than acting too soon. “The bank has been too timid,” according to Thorsten Koeppl, an associate economics professor with Queen’s University. “We have to raise interest rates to get to a neutral level.” Given the bank’s goal of 2% inflation, a normal rate of interest would be at least 4%. That is a crazy proposition in today’s low-growth world, of course. A more reasonable level for Carney to reach over the next two years is closer to 3%, Koeppl says, to keep ahead of inflation and reduce the negative effects of low rates. The key is to do so slowly, gradually and with plenty of notice beforehand. “I actually don’t think the bank’s opinion is that different from mine of where the interest rates have to be,” he says. That seems to be true: Carney’s frequent warnings about debt and the housing market shows he is well aware of the risks. But by talking instead of acting, he also runs the risk becoming another Alan Greenspan, the once infallible guru who infamously stuck to low interest rates and ignored the massive debt and housing bubble he helped create until it was too late. Greenspan’s legacy is now tarnished. It’s hard not to wonder if, a decade from now, we might look back at Carney in a similar way. Today, Mark Carney is the golden boy of international finance—and for good reason. He’s intelligent, genial, and has the rare ability to talk about monetary policy in terms people can understand. Most important, he made all the right moves during the financial crisis, slashing rates to prevent a crushing recession. His reputation is stellar overseas, too. Last year, he was named head of the international Financial Stability Board. Rumours later swirled that the Bank of England wanted to poach him from Canada. Back home, Liberal party members were elated when he was recently touted as a possible leadership contender (a notion quickly quashed by the central bank). Everyone, it seems, wants Carney to solve their problems. The infatuation is premature. The height of the financial crisis was the easy part for Carney. Cutting rates was a co-ordinated action by central banks around the world, and it was fairly obvious the Canadian economy would need stimulus. Carney arguably had an easier time than other central bankers because our financial system was stronger to begin with. The true test of his ability is yet to come: how does he get us back to normal? He’s left the overnight rate at 1% since September 2010, a level that even he has indicated is unusual. “The Bank of Canada doesn’t like being in this position. I’m sure they want higher rates,” says David Madani, an economist with Capital Economics. Carney was practically itching to raise them last April. His normally boilerplate explanation for his interest rate decision contained a new line: “Some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.” (This is what passes for strong language in the world of central banking.) Some economists were surprised at the time by his newly hawkish stance. But he’s since backed down again, in part due to uncertainty in Europe. Meanwhile, he is seriously worried about the side effects of low rates, repeatedly citing household debt as the biggest domestic risk to Canada. Households have an average debt load of 154% of income, according to Statistics Canada. Twenty years ago, that figure stood at only 95%. Canadians aren’t just using cheap credit to take on mortgages, either. The average non-mortgage debt reached $26,221 in the summer, the most in eight years, according to TransUnion. Car loans accounted for most of the recent increase. What’s particularly worrying is that since the financial crisis, more households are veering toward extremes. Benjamin Tal, an economist with CIBC, reported in a study earlier this year that heavy borrowers, those with household debt-to-gross income ratios above 160, accounted for 34% of all borrowers compared to 26% in 2007. That group now holds an astounding 70% of outstanding debt. Carney’s approach has been to bleat warnings about the perils of too much debt, a stance that lacks credibility so long as he keeps rates low. How can he tell Canadians not to borrow more when everyone knows he pushed rates down and kept them there in a deliberate effort to get Canadians to borrow more? Few households are listening, in any event. The longer Carney keeps rates low, the bigger the problem gets. The same is true of the housing market. Canadians are taking advantage of low rates to buy real estate, leading to a huge surge in home prices. Carney warned as early as last year that many cities in Canada are “severely unaffordable” and there is a “possibility of an overshoot” in condo markets. In a June 2011 speech in Vancouver, he pointed out that some real estate markets are at risk of being driven by not just supply and demand, but “greed among speculators and investors, and fear among households that getting a foot on the property ladder is a now-or-never proposition.” The federal government and the banks hold considerable sway over the housing market, of course; the central bank’s benchmark rate is a clumsy tool for trying to moderate volatile real estate markets. But low interest rates are still the catalyst for people to act on the very greed and fear that Carney railed against. Madani with Capital Economics is firmly predicting a hard landing, given how far the market has been allowed to overshoot. “When all the dust settles five or 10 years from now, I think we will look back on this and realize rates were too low for too long,” he says. Carney had room to tighten past 1% back in 2010, according to Madani. That may have reduced some, certainly not all, of the exuberance for debt and real estate. While the fate of borrowers and the housing market are concerns for the future, there are already people suffering today as a result of low interest rates: savers and retirees. The conservative investments, such as government bonds, favoured by baby boomers and retirees are producing virtually nothing, as today’s low rates demolish returns. The yield on a 10-year Canadian government bond is just 1.7%, compared to more than 5% a decade ago. Today’s returns can barely keep pace with inflation. Sun Life Financial CEO Dean Connor highlighted this problem at a speech in Toronto in October. Five years ago, a Canadian earning an 8% return on a portfolio would need to invest $180,000 to generate $20,000 a year for life after age 65, he noted. At 5%, which is more in line with today’s returns, that person would need to invest $230,000—30% more. “How does a retiree manage that?” he asked. “You can hope interest rates go up, put off retiring, scale back your retirement plans and spending, or take more investment risks. None of these are great options.” continues.... http://www.canadianbusiness.com/business-strategy/does-mark-carney-know-what-hes-doing/ Quote Link to comment Share on other sites More sharing options...
zugzwang Posted January 24, 2014 Share Posted January 24, 2014 If they're going to keep them permanently low, and rest of MPC likely to follow whatever Carney says... http://www.bbc.co.uk...siness-12997437 Then can only hope they trigger correction to stop the housing unfairness (hyperfinflated prices / too many overleveraged landlords being kept cosy) in some other way, where keeping low rates is justified. Or markets trigger it, but guess it might only test sterling, but hopefully in stress testing mortgages hard, and that HTB2 really needs to go. Just pain upon pain for non-owners / savings / patient upsizers. Those who made sensible decisions not to overborrow for a home, trying to avoid putting their families at risk of financial difficulties, thrown aside for those who did. All the associated doubt and anxiety that's been piled on those who did the right thing, when others rewarded and protected for being reckless. But Osborne is having to borrow at £120bn every single year to maintain this fiction. By 2017/18 the interest on our national debt will be at least £80bn/yr, and probably more! Soon he'll have to start borrowing to cover even that... Quote Link to comment Share on other sites More sharing options...
plummet expert Posted January 24, 2014 Share Posted January 24, 2014 If they're going to keep them permanently low, and rest of MPC likely to follow whatever Carney says... http://www.bbc.co.uk/news/business-12997437 Then can only hope they trigger correction to stop the housing unfairness (hyperfinflated prices / too many overleveraged landlords being kept cosy) in some other way, where keeping low rates is justified. Or markets trigger it, but guess it might only test sterling, but hopefully in stress testing mortgages hard, and that HTB2 really needs to go. Just pain upon pain for non-owners / savings / patient upsizers. Those who made sensible decisions not to overborrow for a home, trying to avoid putting their families at risk of financial difficulties, thrown aside for those who did. All the associated doubt and anxiety that's been piled on those who did the right thing, when others rewarded and protected for being reckless. Yes! Carney was always going to be the wrong man for the job. He has no clue and left Canada with a housing crisis. He has already signalled end of his 'Forward Guidance Target' policy, little more than 6 months after trunpeting its appearance. He has already started to back away from his 7% target for unemployment to consider rate rises. He is a lightweight. Frankly I would do better. I would control the banks with sensible regulation and befoe long the long term price of Land would be control itself. Before long the mal-investment of land speculation would be mostly replaced with investment in productive industry. Before long we would not be worrying that derivatives could sink us, but only sink a few investment banks in any future crisis. Why are we letting a wave of foreign investors pump up London's house market ? Other countries do not automatically allow non residents to purchase! Quote Link to comment Share on other sites More sharing options...
Dorkins Posted January 24, 2014 Share Posted January 24, 2014 ZIRP didn't stop HPCs in Japan, Ireland, Spain, the Netherlands... Quote Link to comment Share on other sites More sharing options...
Ah-so Posted January 24, 2014 Share Posted January 24, 2014 I feel like a bit of a party pooper here but he did not say permanently low rates. That is a gross misreporting from the BBC. He said low for the medium term. This means about three to five years. And by low he means about three percent. However that is unless the economy grows more quickly than expected and inflation rises because then choice is taken out of the MPC's hands. Quote Link to comment Share on other sites More sharing options...
Wurzel Of Highbridge Posted January 24, 2014 Share Posted January 24, 2014 Do you ever get the feeling that Goldman Sachs has planted him in the UK to deliberately blow it up, so the UK has to be bailed out by the Troika when GBP goes to shit? Quote Link to comment Share on other sites More sharing options...
frederico Posted January 24, 2014 Share Posted January 24, 2014 Its long been time to stop believing anything projected at is through the media, the best thing would be to try and second guess the next stage and their reaction. Obviously unless they do actually cut the deficit at some point, the country will eventually go bust. Currently the Tories are trying to fool the country so they can win an election, that's all. House price rises and low rates, stop the banks going bust for the time being. Quote Link to comment Share on other sites More sharing options...
wonderpup Posted January 24, 2014 Share Posted January 24, 2014 I have a question- if low interest rates don't matter what is the rationale for an independent central bank controlling interest rates? I ask because I saw the Prime Minister of the United Kingdom on bloomberg this morning explaining to the world why he could not be trusted to control his nations interest rates- I presume because he would lack the integrity not to lower them in order to create an election winning boom by flooding the economy with cheap credit. But given that it's apparently no problem at all to keep interest rates at record low for five years plus why would this matter? We gave control of interest rates to the BOE to protect us from the irresponsible creation of reckless debt- anyone feel some irony coming on at this point? Quote Link to comment Share on other sites More sharing options...
long time lurking Posted January 24, 2014 Share Posted January 24, 2014 Its long been time to stop believing anything projected at is through the media, the best thing would be to try and second guess the next stage and their reaction. Obviously unless they do actually cut the deficit at some point, the country will eventually go bust. Currently the Tories are trying to fool the country so they can win an election, that's all. House price rises and low rates, stop the banks going bust for the time being. I have been trying to do that for the best part of a decade ..been wrong almost every time apart from putting some of my money into nsi at the right time From where i'm sitting it looks like we're turning Japanese other than that it will be the markets that forge our destiny Quote Link to comment Share on other sites More sharing options...
FallingAwake Posted January 24, 2014 Share Posted January 24, 2014 Best to think of the Bank of England working for (1) the Banks, and (2) the Government... in that order. The question then becomes, what interest rate is in the best interest of (1) the Banks, and (2) the Government? While Banks are still recovering from the crisis, low interest rates suit them because it means the mortgages, upon which quite a lot of the Bank's balance sheet is based, are still paying steady monthly dividends. Low interest rates suit the Government, as it means the national debt is cheaper to service. This won't really change until it becomes in the interest of (1) the Banks, and (2) the Government, to have it changed. Or they're "forced" to do so, say, by their inflation measures (so-called) spiralling upwards. Quote Link to comment Share on other sites More sharing options...
okaycuckoo Posted January 24, 2014 Share Posted January 24, 2014 I don't care what he says. Neither should you. Quote Link to comment Share on other sites More sharing options...
BananaMan Posted January 24, 2014 Share Posted January 24, 2014 I have been trying to do that for the best part of a decade ..been wrong almost every time apart from putting some of my money into nsi at the right time From where i'm sitting it looks like we're turning Japanese other than that it will be the markets that forge our destiny And being as pretty much the entire western world is in the same position i can't see them going against Britain in a big way. Its look like there will be no crash and Gordon was half right when he said there will be no boom and bust. Quote Link to comment Share on other sites More sharing options...
Hold Fast Posted January 25, 2014 Share Posted January 25, 2014 I have a question- if low interest rates don't matter what is the rationale for an independent central bank controlling interest rates? Great question, I'm sure there's a perfectly good explanation they just haven't quite got around to giving it yet what with all the vigilance over asset prices that they aren't concerned with. If five years of ZIRP isn't harmful why haven't we done it before? It's BS and everyone here knows it, but as per the Rothschild quote by interstate, the majority can't (dont want to) get their head around it. For extra comedy value we seem to now be getting forward guidance on the forward guidance Quote Link to comment Share on other sites More sharing options...
Damik Posted January 25, 2014 Share Posted January 25, 2014 it gets better. http://www.bbc.co.uk...siness-25877395 he is saying interest rates permanently low. is this some sort of sick joke? what about permanently low taxes instead ??? Quote Link to comment Share on other sites More sharing options...
Venger Posted January 25, 2014 Share Posted January 25, 2014 But Osborne is having to borrow at £120bn every single year to maintain this fiction. By 2017/18 the interest on our national debt will be at least £80bn/yr, and probably more! Soon he'll have to start borrowing to cover even that... That's why they need to get fresh debt written on all those homes outright. Possibly fewer than 2 in 5 houses having a mortgage on one reading. Worry less about all the debt they're masking on their books with bad mortgages, cut the SMI (or make it secured at least), and trigger some supply. Of the 14.4million homeowners in England, the largest number - by a considerable margin - are people aged 65 and over, equal to a record 30 per cent of the total. There are 4.3million homeowners in this age group, which is more than a million higher than the total number for any other age group. By comparison, there are just 2.6million ‘owner occupiers’ in the 35 to 44 age group, the age at which parents are raising a young family, with many desperate to do so in their own home. And the number between the age of 25 and 34, also with young families but likely to have had to pay an even higher price for their home, is nearly half this number at just 1.4million. Markets are self-balancing/self-correcting, unless you break them entirely with VI policies year after year. Allow crash, ride out period of little sales value, then bottoms and say houses that had been valued up at £450,000 height of HPI-VI, with market to stand by itself, (eg no FLS/stress-testing/no SMI)... sold at £235,000 post crash, say with £220K mortgages @ 5% over 25 years = bank books a £185,297 profit. 1 million sale transactions at that level, is profit on each mortgage to UK banking system of = £185297000000 (what's that in money?). And with Gov having big stake in banks, it's got to surely help them, helps velocity in economy, + cushions their losses on earlier dud mortgages at stupid high transaction prices. And market levelled out for many associated healthy longer term benefits, including Gov not having to underwrite market, so sales transactions balance up high for many years into the future, young given opportunity, and just many positive synergies released from allowing the crash. Quote Link to comment Share on other sites More sharing options...
crashmonitor Posted January 25, 2014 Share Posted January 25, 2014 (edited) The MPC is repeating the same mistakes of 2002-2006 after a turning of the commodities super cycle which accommodates zirp and target inflation as we import deflation but it escapes into assets. Remember Europe is already in deflation. Meanwhile our economy is already overheating at almost 3% annual GDP* (if you ignore the 4 quarter rolling official data which is smoothed and lags when you get sharp increases in GDP from a flat-liner). HPI is at 7% to boot. Hardly conditions that warrant QE to remain (in full) on balance sheet, ZIRP and HTB2. * Q1 0.3% Q2 0.7% Q3 0.8% Q4 1.0%? (Q4 preliminary out on Tuesday) Edited January 25, 2014 by crashmonitor Quote Link to comment Share on other sites More sharing options...
silver surfer Posted January 25, 2014 Share Posted January 25, 2014 All other things being equal I'd like interest rates to be low too (and I'm a debt free saver). I'd prefer that house prices were brought down via the supply side of the equation with more housebuilding, and that rentiers weren't rewarded at above inflation levels just for putting cash on risk free deposit. Quote Link to comment Share on other sites More sharing options...
crashmonitor Posted January 25, 2014 Share Posted January 25, 2014 (edited) All other things being equal I'd like interest rates to be low too (and I'm a debt free saver). Me too, if you can't manage 2% to keep pace with inflation then something is badly wrong unless you are a 40% tax payer. Current offerings......... Leeds 3% (2,4% net) , Principality 3% (2.4% net), Virgin 3% (2.4% net) not to mention all the unexpired bonds and rolled over NS and I index linkers +. Who wants 5% inflation and 4% interest rates. Edited January 25, 2014 by crashmonitor Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 25, 2014 Share Posted January 25, 2014 there's no harm admitting the truth .. Interest rates are not going anywhere for a generation and then some ... Just ask yourself , at what point in the future are we likely to be significantly more prosperous and wealthy ? Interest rates will rise at that point.. except this is wrong....there is only one way rates can stay low, and thats via printing...and rates stay low then because money is worthless. Quote Link to comment Share on other sites More sharing options...
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