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crashmonitor

Enough Is Enough -Interest Rates Must Rise

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I honestly don't think the Gov realise how many people will turn against them in the polls due to the virtual robbing the people who contributed nothing to the debt mountain of the irresponsible , in fact its pay back time now.

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Meanwhile, I doubt ''Jim'' Carney will heed these warnings for an immediate rate rise. He's got the economy into warp drive and assume he thinks he can hold the ship together.

Edited by crashmonitor

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Meanwhile, I doubt Jim Carney will heed these warnings for an immediate rate rise. He's got the economy into warp drive and assume he thinks he can hold the ship together.

Central Bankin' across the universe,

On the Bank of Engerprise under Captain Jim

Central Bankin' across the universe,

Only going forward 'cause we can't find reverse.

Lt. Uhura, report.

Rate rises on the starboard bow, starboard bow, starboard bow;

there's Rises on the starboard bow, starboard bow, Jim.

Analysis, Mr. Spock.

It's Growth, Jim, but not as we know it, not as we know it, not as we know it;

it's Growth, Jim, but not as we know it, not as we know it, Captain.

There's rises on the starboard bow, starboard bow, starboard bow;

there's rises on the starboard bow, starboard bow, Jim.

Central Bankin' across the universe,

On the Bank of Engerprise under Captain Jim

Central Bankin' across the universe,

Only going forward, still can't find reverse.

etc etc

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The economy as a whole isn't even close to ready for rate rises.

Esp. when EU is talking about starting QE soon. Our export gains will disappear overnight.

They have plenty of tools outside of IR to keep a lid on HPI. The most recent lending constraints may have already topped the market.

BOE have already said when the do start raising it will be in 0.1% increments.

2YR yields are still at 0.8%

Savers won't be voting Labour - so there is little electoral benefit from doing it now.

Not until there is a massive consumer boom and there are bidding wars for new hires again will IR start properly reverting to normal.

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they have allready lost my vote to ukip because of it

they need to put my rate now to make easier to save for depoist and to give the btl brigade somethink else to do with money.

also reducing housing benefit would help the defict and force the btl brigade to sell up.

i would like to stay in europe but not if it involves mass immigration and i cant get my own home because of it then we should leave now.

it is simple wrong they way they are running things

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Quick question. The B of E pay the banks 0.5% for money they hold for them. Where does the interest come from?

Is it printed or is it tax payers money?

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Interest rates can't increase as this will mean the govt paying a higher service cost for the money it's borrowing, which means either it provides less service or we have higher taxes or more likely both outcomes.

Low rates ensure we can pretend nothing is wrong and the economy can continue to grow. Increase interest rates and it will reveal the fake GDP, therefore it won't happen.

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Quick question. The B of E pay the banks 0.5% for money they hold for them. Where does the interest come from?

Is it printed or is it tax payers money?

do they?

Base rate is a target rate for borrowing...not rate that you can say any particular entity is paying, lending at or on emergency releif at.

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Interest rates can't increase as this will mean the govt paying a higher service cost for the money it's borrowing, which means either it provides less service or we have higher taxes or more likely both outcomes.

I had a think about this last night and came up witht eh question....

After world war 2 when the UK debt was MASSIVE by any measure.

What was the interest rate ?

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If predicted dates and targets come and go with no interest rate rises they lose the miniscule credibility they still have.

This is of no consequence especially once we are after next election, but what game do they play then to justify the low rates?

This all seems to come down to having to keep rates low to make debt affordable.

Its a race to the bottom by each, UK, EU, Fed etc., but the balance is precarious and each time QE or rate reductions take place the balance is unsettled.

Perhaps the article mainly illustrates how out of touch some commentators are in still commenting on the illusion painted by Carney and the puppets.

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do they?

Base rate is a target rate for borrowing...not rate that you can say any particular entity is paying, lending at or on emergency releif at.

Looks like I am wrong. I will do some more reading

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I had a think about this last night and came up witht eh question....

After world war 2 when the UK debt was MASSIVE by any measure.

What was the interest rate ?

http://books.google.co.uk/books?id=vF9jjxai5rYC&pg=PA78&lpg=PA78&dq=base+rate+in+1949+uk&source=bl&ots=KCmpLtL4LJ&sig=cYsmyGPpyC-hhilHVi4ct9uSDNw&hl=en&sa=X&ei=qfBxU96MH4HK0QWI5IDgDQ&ved=0CFMQ6AEwBQ#v=onepage&q=base%20rate%20in%201949%20uk&f=false

3%

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Interest rates can't increase as this will mean the govt paying a higher service cost for the money it's borrowing, which means either it provides less service or we have higher taxes or more likely both outcomes.

Low rates ensure we can pretend nothing is wrong and the economy can continue to grow. Increase interest rates and it will reveal the fake GDP, therefore it won't happen.

Why haven't interest rates always been 0.5% then, if it's so beneficial to the Government?

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Perhaps the article mainly illustrates how out of touch some commentators are in still commenting on the illusion painted by Carney and the puppets.

Although I agree with the general proposition, I don't think I've come across a more garbled justification.

IRs at too low a level for too long undermine the element of risk that is inherent to the succesful operation of capitalism and result in dangerous asset bubbles.

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Although I agree with the general proposition, I don't think I've come across a more garbled justification.

IRs at too low a level for too long undermine the element of risk that is inherent to the succesful operation of capitalism and result in dangerous asset bubbles.

Like many other markets, the game becomes one of who can do it cheapest...out goes the little guy trying to earn, in come the mega corps selling volume, direct sales and 2% mark ups.

So it is with IT, Banking, cars, whatever....and the endgame is a high street the same as the next towns, small business unable to thrive, and soylent green on Thursday...

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Of course interest rates are going up. And there's a good and growing chance that they'll even go up this year.

But the real issue is that they won't go up by very much, and it'll be two steps forward one step backward, because at the first sign of economic headwinds they'll be back down again.

We're right at the end of the 0.5% bank rate period, but we're just at the beginning of a protracted 1-2% bank rate period.

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That then begs the questions:

1 ) Why not 0.5%

2 ) What's different this time ? ( excuse the pun )

The difference is the music is still playing and participants are still dancing. The government still has buyers at that rate.

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Quick question. The B of E pay the banks 0.5% for money they hold for them. Where does the interest come from?

Is it printed or is it tax payers money?

You've got that back to front, it is the rate the BoE charge banks for overnight secured borrowing. If a bank needs to balance its books it can go to the BoE and borrow the difference provided it has assets to cover the loan.

Edited by davidg

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The difference is the music is still playing and participants are still dancing. The government still has buyers at that rate.

The BANKS still have buyers. I do not doubt for 1 minute everything that has happened over the last few years is to suit them and keep them solvent. The great British people sheeple have bought into a massive back door bailout of the banks.

Them bankers and politicians were more sneaky/lucky/intelligent/corrupt that most gave them credit for.

Edited by TheCountOfNowhere

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Japan tried raising twice and they cam straight back down again. That could well be what we experience, for the next 2 decades

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Interest rates can't increase as this will mean the govt paying a higher service cost for the money it's borrowing,

Can you explain how?

Debt prior to 2008 is costing let's say 5.5%. Govt. can borrow short term now for virtually nothing and 10yr for about 2.6% which in real terms is also nothing. Both far less than the debt being rolled over.

Help me understand what you mean?

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Can you explain how?

Debt prior to 2008 is costing let's say 5.5%. Govt. can borrow short term now for virtually nothing and 10yr for about 2.6% which in real terms is also nothing. Both far less than the debt being rolled over.

Help me understand what you mean?

Maybe it's just wishful thinking on the part of the people who owe a vast amount of money ( and conversely the savers ).

For me, if interest rates could sit at 3% post WW2 and no one can tell me what's different between then and now then I can see no reason for rates to stay where they are. The MSM is putting out plenty of warnings and I'd expect that was being influenced strongly from them in the know.

If rates don't go up by mid 2015 I think it's purely because the banking system is in worse shape than we are being told and to be frank all of us here should be leaving the country with our cash while we can. I wont have a penny in the UK by 2016 if it stays like this.

2 things I am sure of.

1 ) People who bought 10 years ago have not seen wage inflation eat away at their mortgage.....as their parents had and they most probably expected. Past performance is NO guarantee of future !!! I don't see this changing any time soon.

2) Nothing stays the same forever....there is a tiny minority in the UK who will be in financial trouble when interest rates go up...the country is not being run for their benefit, it's for the banks. When the bankers want higher interest rates...you know what the bankers will get ? Maybe the question should not be when will interest rates rise but when will it suit the bankers to have higher interest rates? If their balance sheets will withstand a 35% drop in housing wiping out all those lovely BIG deposits and taking advantage of the governments generosity with our money ( aka HTB) then I suspect that time is coming soon, especially if HTB2 is dying a death and the pool of the greatest of the greatest morons the world has every seen is running out.

Imagine someone now with a 500K cash in the bank buying a £1M house with a 3.59% mortgage. ( first direct 2 year fixed 25 year mortgage )

Stamp duty 40,000.00, so need to borrow £540K

( The tax man aka the British government will be very happy ).

Monthly payments: £2730 + fees etc.

Mortgage rates go up to 5%: £3157

If we then see that joyous day when we see another 35% drop in house prices in the next 3 years, that £1M weight round your neck would be worth £650K...less selling fees, so maybe you'd be left with £640 K and still a £540K mortgage.

Loose you job, how long can most of the country keep up with £3K a month interest payments ?

No wage inflation, that £3K a month will always be a struggle if you loose you job...will you keep your high flying well paid job for the next decade years ?

Your precious £500K could drop easily to £100K in the space of 2 years.

Get your house repo'd that £500K will become £0K.

How much have the banks lost ?

Buying a house now at the insane prices we see is a massive risk. All those people buying £1M terraces in London would be better cashing in and jetting off somewhere else.

Edited by TheCountOfNowhere

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