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Central bankers have collectively lost the plot. They must raise interest rates or face their doom

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From Sober look Daily Shot email

 

'Elevated Saudi interbank borrowing rate (LIBOR equivalent) shows how these bank withdrawals ended up tightening liquidity.

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2. The Turkish lira hit another record low against the dollar on US rate hike expectations.

 

BN-QH995_Dshot_NS_20161017232023.png

Edited by Sancho Panza

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Wow, normally can't stand this bloke...is he suddenly speaking sense because he wants to nudge Hammond (and Carney) out? Can a peer be a chancellor?

Every point rings true. I have been mostly cash with a small mortgage for a year now because I know that bond and equity markets do not reflect value and are totally distorted by CB money, and that one day they will both collapse, possibly in tandem causing mayhem. Gold, land, commodities...real physical assets are about the only safe place to park money at the moment, but even these will get pulled down in a deflationary spiral, but not by so much I suspect.

Edited by HovelinHove

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Does raise the obvious question though, why has he been part of a government for 5 years that has not only kept interest rates at this record low, but also boasted that they were keeping interest rates under control?

Appreciate it is the BoE that set the rates and not the government, but as far as I am aware the Government and BoE have been on the same page in this.

So seems a bit rich for Hague to pop up now and tell everyone that maybe this is a bad thing.

Generally however, am not an economist, but I agree completely with the article's 10 points - the asset price bubble we have built seems insane, and likely to end in tears.

Edited by london_thirtythree
interest rates, not interesting rates! They are interesting though..

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3 minutes ago, london_thirtythree said:

Does raise the obvious question though, why has he been part of a government for 5 years that has not only kept interest rates at this record low, but also boasted that they were keeping interesting rates under control?

Appreciate it is the BoE that set the rates and not the government, but as far as I am aware the Government and BoE have been on the same page in this.

So seems a bit rich for Hague to pop up now and tell everyone that maybe this is a bad thing.

Generally however, am not an economist, but I agree completely with the article's 10 points - the asset price bubble we have built seems insane, and likely to end in tears.

Maybe there are people in the government that disagreed with low rates and printing but were encouraged to stay quiet. Perhaps they have a louder voice now. 

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The idea that Central banks can intervene massively in the system without being 'political' is laughable- what they do has direct redistributional effects and the issue of who gains and who loses is highy politcal.

All this supposed 'independance' does is shield them from being held responsible for the consequnces of their actions.

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15 minutes ago, HovelinHove said:

Every point rings true. I have been mostly cash with a small mortgage for a year now because I know that bond and equity markets do not reflect value and are totally distorted by CB money, and that one day they will both collapse, possibly in tandem causing mayhem. Gold, land, commodities...real physical assets are about the only safe place to park money at the moment, but even these will get pulled down in a deflationary spiral, but not by so much I suspect.

I think that's an example of Number 1 on Hague's list. Whilst gold, land or commodities are a sensible part of a diversified portfolio, the temptation to move heavily into these investments carries considerably greater risks. I certainly wouldn't describe them as safe, but then this whole situation has distorted things so far that I find it a challenge to keep any sense of perspective. Somehow I think that's the Central Banks' plan.

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Maybe he was told what to say by the squid, Cameron and Osborne.  Now he's in the Lords he can say what he likes as a Life Peer and likely at worst just be portrayed as another upper house eccentric.  

No matter - most of what he says is very true and accurate but apart from being a Life Peer he doesn't have much relative power now except to write newspaper articles and suchlike.

Mind you in the past he's often hit the spot in speeches when an MP - but so have the rest of them but only when they haven't been in a position to do something about it

 

Quote

 

Edited by billybong

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I often read about some stunning act of government craziness and wonder are they actually stupid - or do they know exactly what they are doing but the reason is not obvious to mere mortals such as myself. I think this article does actually rule out stupidity at least on the part of William Hague. Maybe they are all like that and understand our concerns perfectly well but don't choose to do what we would like to see happen.

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As Jean Claude Junker said, " We all know what to do, we just don’t know how to get re-elected after we’ve done it".

His solution was to do away with the requirement for elections altogether, and then not do what needed to be done anyway.

It's worked out for him. So far.

 

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1 hour ago, 999house said:

Maybe there are people in the government that disagreed with low rates and printing but were encouraged to stay quiet. Perhaps they have a louder voice now. 

Aye - that's probably true.

Bit infuriating though.. would have been nice to see more discussion of this over the years instead of the scripted messages we did get.

Was this the endpoint of the '5 year economic plan' and if so, was the plan rubbish then..

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1 hour ago, 999house said:

 

Number 5 is rings true with me. 

Number 5 is key. By increasing the price of the asset, ie the property, people save harder and for longer, and spend nothing on anything else. 

This is what the scumbags don't comprehend. Its a vicious circle and props aren't going to help. By increasing rates the houses become more affordable, due to prijce drops and more is spent on cars and wide-screen TVs.

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6 minutes ago, GreenDevil said:

Number 5 is key. By increasing the price of the asset, ie the property, people save harder and for longer, and spend nothing on anything else. 

This is what the scumbags don't comprehend. Its a vicious circle and props aren't going to help. By increasing rates the houses become more affordable, due to prijce drops and more is spent on cars and wide-screen TVs.

They certainly do.  Who is it that has received most largess in recent years?

  • Pensioners -- while they moan about low savings returns, they just spend what money they have; they don't actually save any more.
  • Welfare -- The lower the income, the less sense saving makes, the more likely they are to just spend.

There isn't any sense in giving tax breaks etc to middle class people, because they'll only save it (apart from property -- anything to make them spend on property).

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Good to see this in print ,but all the politicians have know this for a very long time just like most on this site have

,Call me cynical but it just sounds like pandering to the havenots ,which the numbers have been growing by the years (are the have`s and havenots demographics about to swing in favour of the havenots ?)  .....promises of even more jam tomorrow 

But i do think he has nailed it @10 so i could be wrong 

Edited by long time lurking

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2 hours ago, GreenDevil said:

Number 5 is key. By increasing the price of the asset, ie the property, people save harder and for longer, and spend nothing on anything else. 

This is what the scumbags don't comprehend. Its a vicious circle and props aren't going to help. By increasing rates the houses become more affordable, due to prijce drops and more is spent on cars and wide-screen TVs.

Ditto..

I think I would be spending money like it was going out of fashion if freed up from the crippling need to save a £100k+ deposit to buy a 2 bedroom flat in London.

Making the cost of housing increasingly expensive does nothing to promote the real economy for anyone who does not already own.

(that and presumably once you have finally bought a place, all your spare cash goes into funding the overly expensive mortgage?)

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I read somewhere today that when the economic collapse came it took all the banks by surprise, and that is why we needed an emergency economic stimulus.

Well, if it came as a surprise to most of them I suggest they are in the wrong job. They knew exactly what they were doing, they just didn't give a toss, and still don't. 

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Good to see a former Conservative leader quoting stuff we've all known for years. 8 years late (should have raised rates to 15%, let the banks fail and flushed the patient of poison), but still.

Next up, John Major to go on newsnight and read out the key points of our classic 'What can be done to not support the current rotten system' thread.

Stranger things have happened.

 

 

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2 minutes ago, Frugal Git said:

Good to see a former Conservative leader quoting stuff we've all known for years. 8 years late (should have raised rates to 15%, let the banks fail and flushed the patient of poison), but still.

Next up, John Major to go on newsnight and read out the key points of our classic 'What can be done to not support the current rotten system' thread.

Stranger things have happened.

 

 

I suspect the Tories have looked at the demographic of their vote and realised they'll have no political advantage at all 15 years from now if things don't change. 

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