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Independent : Interest Rates On Hold Can't Be Right

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It will be interesting to see how they can excuse keeping interest rates at rock bottom whilst telling everyone that the economy is recovering strongly. The two are not compatible.

I'm sure they'll manage something though - and it's not like many of the debt loaded members of the public are going to complain about rates staying low.

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Lets face it, interest rates are never going up by design in a corporatist state. Lets hope these journalists follow the train of thought of just who exactly these interest rates and interventions in thre market are supposed to be helping. The economy is booming again, why are rates low? It's not to help hard working families that's for sure. But the answer might be a bit too unpalatable for the public and media. Barring the daily mail of course.

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Carney reminds me of one of those generals who will not be told what to do or make a change of decision. You know, like Custer, Haig or that boy in charge of the 1842 retreat from Afghanistan.

He really needs his own 'Downfall' Hitler in the bunker video doesn't he?

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What possible justification can there be for a credit tightening when Osborne is borrowing 7% of GDP every single year, and subsidising an already red-hot London housing market to boot, just to generate a meagre 2-3% of growth? So extended have our debts become that even a 25bp hike threatens to capsize the ship. Credit loosening is the only realistic outcome - a massive expansion of the existing QE program - but after the GE not before. The narrative of recovery is the only thing we'll hear until May 8th, 2015.

Edited by zugzwang

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From the link:


Economic View: The danger for the Bank is that it comes to be seen as full of clever people with poor judgement

Stupid people in other words?

"Comes to be seen" :lol: as if it's in the future.

More like full of incompetent people with poor judgement - but it's even more like they know exactly what they're doing filling their pockets and their banker chums' pockets with other people's money.

The article seems to be another one with the underlying message that the economy is healthy :rolleyes: so they could afford to increase interest rates - several media outlets are on that sort of bandwagon at the moment as it's only a week to the UK's eu and local elections.

Edited by billybong

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Sustainably raised rates is bonkers if we are #turningjapanese

I am looking forward to British women dressing up en masse like anime characters and the entire male population staying in their bedrooms playing computer games.

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They know most of the country is still in a depression.

The latest unemployment figures show that.The drop is almost all people going "self employed" simply to avoid the Jobcentre and claim tax credits.Nobody should be on the dole suffering the abuse you get at the Jobcentre.Far better go sole trader and claim tax credits.Thats the only reason unemployment is 10%+

The telling figure is the "in work benefits" bill.It keeps going up even though benefits have been frozen to 1% increases.

It looks like we are probably about to enter deflation as well.Food prices are pretty much falling now outside of certain categories.Energy looks pretty much level.

Southern house prices destroyed Northern Industry in the 80s and 90s.The interest rate levels used to try to cool them increased the pound and wiped out our industrial base.The Tories blamed wage demands of course even though wages only made up 12% of the manufacturing cost base back then.

What Carney is doing here (and i agree with him mostly) is saying i dont care about house prices in the south.People can get burnt for all i care.Im ignoring southern housing and looking at wages,living standards,inflation etc in the rest of the country.If southerners end up bankrupt because they paid too much for a house tough.

Interest rates will rise but youd have to think it will be June next year.Carney will want to know how much slack there is in the economy still compared to the level deficit spending.

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What Carney is doing here (and i agree with him mostly) is saying i dont care about house prices in the south.People can get burnt for all i care.Im ignoring southern housing and looking at wages,living standards,inflation etc in the rest of the country.If southerners end up bankrupt because they paid too much for a house tough.

And where does Carney and his MP/banker friends all live/own properties ?

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The telling figure is the "in work benefits" bill.It keeps going up even though benefits have been frozen to 1% increases.

Here is the problem, the govt needs to borrow this money to keep paying the "in work benefits", paying market rates for this money is going to sink business and the "recovery".

The recovery is not sustainable as it's based on cheap money, increase the cost of borrowing and we'll end up in a recession again. As recessions have been banned it will mean immediate QE to rescue the economy.

How long they can keep this charade going is anyone's guess, this could be the new normal for decades.

Big business now can't function without the tax payer subsidy.

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Southern house prices destroyed Northern Industry in the 80s and 90s.The interest rate levels used to try to cool them increased the pound and wiped out our industrial base.The Tories blamed wage demands of course even though wages only made up 12% of the manufacturing cost base back then.

It's a nice narrative but is it really true?

http://fx.sauder.ubc.ca/etc/GBPpages.pdf

The pound had a historical trend of losing value against the Deutschmark which continued through under the Conservative government of the 80s and 90s. As we know Germany has a strong industrial base so can that be the reason for issues in the North of England?

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What Carney is doing here (and i agree with him mostly) is saying i dont care about house prices in the south.People can get burnt for all i care.Im ignoring southern housing and looking at wages,living standards,inflation etc in the rest of the country.If southerners end up bankrupt because they paid too much for a house tough.

So you are saying that Carney is smarter than he is letting on!

And where does Carney and his MP/banker friends all live/own properties ?

Pretty sure Carney doesn't own any properties in the UK. He was, and likely still is, getting his London rent paid for by the government as part of his contract. But he must care somewhat about house prices as a huge crash would have a massive effect on the wider economy, which makes it strange that no action has been taken to cool the market, if rates are not going to be raised?

Or rather you screw unsophisticated savers. Wise ones think of something else – anything else – to do with their money.

Like buy houses! I really would like to know what these so called sophisticated savers are doing? Any ideas anyone?

Edited by renting til I die

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Like buy houses! I really would like to know what these so called sophisticated savers are doing? Any ideas anyone?

Leaving the country.

Edited by TheCountOfNowhere

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Broadbent makes his feelings known and he is not concerned about house prices.

http://www.theguardian.com/business/2014/may/15/no-alarm-over-house-price-rise-bank-england

Reuters also running this, it's clear the MPC don't want to stop the party now it is in full swing.

http://uk.reuters.com/article/2014/05/15/uk-britain-boe-housing-idUKKBN0DV09D20140515

Edited by crashmonitor

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duuuh.

the whole pint of the low rate rises for a prolonged period of time is to keep the methodone coming.(OR THE PARTY PUNCHBOWL..go on, just another mint mr creosote...., it's only wafer thin.......etc etc)

then to raise RAPIDLY, causing horrific withdrawal symptoms.

these people are not your friends.they are drug dealers/pimps rolled into one.

once the rate rises happen they fully intend to foreclose...but will out of the goodness of their hearts allow you to live in the property, on the most punitive terms.(ie total intrusion into how you live your life,what you eat/drink)

the name of the game is CONTROL.

oh and another point, some of this is being religeously driven(ie the previous pope using his agenteur to clandestinely drive domestic/international policy...you see they can't take the blame for being babylon.

....ie he was ultra conservative/fascist, and believes that he has the authority to confiscate property from heretics., they have to lay the crap at somebody elses doorstep, knock the door, and hope the homeowner goes and steps in it)

..yes, the idea is to f*** the country up economically,and then play he who smelt it dealt it.

problem with that approach is, there is also a very hardline faction within islam who believes christendom is pagan, therefore heretic(and plays by the same rules via the jizya)

popey wants to set off the reformation against the mad mullahs and not be seen to be doing dirty deeds behind the scenes.

Edited by oracle

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Carney will want to know how much slack there is in the economy still compared to the level deficit spending.

Is there any evidence that keeping money cheap will in any way address this 'slack'? Sure in theory it makes investment in new business ventures more appealing- but in practice the cheap money is simply being used to speculate and blow bubbles.

I think Carny understands this very well and this narrative of 'slackness' is just another pseudo metric like the unemployment figures- just a toy to keep the children amused while they desperately hope for enough of a recovery to allow some rate rise that will not bring down the whole house of cards.

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Read that earlier. The guy is a f**king idiot.

Broadbent's testimony is plainly dishonest by virtue of what he chooses not to discuss: Osborne has ensured that mortgage risk is now being borne squarely by the UK taxpayer rather than the lenders themselves. Only in this respect is alarm over house price rises misplaced. When prices crash for a second time there is unlikely to be a systemic failure of the banking system as in 2008, the bill to repair the damage will be paid in full long before that happens.

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Broadbent's testimony is plainly dishonest by virtue of what he chooses not to discuss: Osborne has ensured that mortgage risk is now being borne squarely by the UK taxpayer rather than the lenders themselves. Only in this respect is alarm over house price rises misplaced. When prices crash for a second time there is unlikely to be a systemic failure of the banking system as in 2008, the bill to repair the damage will be paid in full long before that happens.

Agree, but my comment was about the fact they he doesnt want to raise IRs as he sees no property bubble, but will use it to cool a return to high LTV. What he missed is yes HtB1&2, is giving lower LTVs, but not without government backing.

Its an admission of a totally 100% rigged market.

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Read that earlier. The guy is a f**king idiot.

They can get away with it when so many hpcers trying to make out all borrowers are victims, had no option but to invest in BTL for it's not earning anything in the banks and such buyers need to be protected, and questioning whether people should pay back what they borrowed from magic credit.

Perhaps his meaning on 'no alarm' over house price rises, and "What really matters is not just house prices per se but whether there is a lot of credit growth on the back of that. Currently there isn't a great deal," as being entirely from the exposure and health of banks' perspective. He may not be anti-crash, or he or one of his superiors ready to welcome it eventually. Lower house prices may lead to a surge in credit growth.

I note one large US EA group (also owning a well-known UK brand it seems) doesn't appear to be doing so well, just on high house prices alone, at lower volume. Unless the losses are from big salaries, bonuses, dividends and buying out other firms to get losses.

May 5, 2014. The company reported a net loss of $46 million, compared with a loss of $74 million in the same period last year.

http://www.latimes.com/business/realestate/la-fi-mo-big-brokerage-predicts-slow-home-sales-20140505-story.html

Can't find or open an associated story on the page: Higher home prices aren't making up for fewer sales

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