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Times: Two Experts Break Ranks To Call For Cut In Rates.

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Am I living in a loony country??

Retail, on the back of the biggest ever credit bubble, has seen continued huge growth over the last decade.

With all of these supposed experts baying for a cut in IRs to help retailers I got to wondering what the hell they are thinking.

Do they really believe that growth can be infinite?

If you lower IRs now and retail gets better it will only be done by storing up more problems (debt) for later on.

To believe this cr*p you really need to turn your brain off.

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Am I living in a loony country??

Retail, on the back of the biggest ever credit bubble, has seen continued huge growth over the last decade.

With all of these supposed experts baying for a cut in IRs to help retailers I got to wondering what the hell they are thinking.

Do they really believe that growth can be infinite?

If you lower IRs now and retail gets better it will only be done by storing up more problems (debt) for later on.

To believe this cr*p you really need to turn your brain off.

I guess that's what Japan thought and look what happened there.

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Spot on. If cuts really are required (which I don't think is the case), then tighten the banks loony lending and tighten it to stop the debt!!!! People can buy with wages not further borrowings!

I think a rise is in order personally

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Guest Charlie The Tramp

They can cur rates by 1% and still it will make no difference to retail spending . Those who caused the fall are the lemmings maxed out with debt who no longer can spend, simple really. :rolleyes:

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As soon as the rates are cut all those people who have MEWed themselves to vast sums in the past 4 years will throw out all their new kitchens, bathrooms, etc, etc, and go buy new again! Simple - doh!!!

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LOL what on earth is it with these Newspapers setting up their own Shadow MPCs for ****** sake? What on earth are they playing at, it's none of their business what policy is set, they're supposed to report the news not make it.

Why not go the whole hog and have a Journalists Shadow Cabinet. :rolleyes:

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Spot on. If cuts really are required (which I don't think is the case), then tighten the banks loony lending and tighten it to stop the debt!!!! People can buy with wages not further borrowings!

I think a rise is in order personally

In the current situation I feel that we've moved away from conventional thinking on interest rates. Any move down will only serve to pump up the equity booms and create little added value to stimulate the economy. I believe that you can only keep interest rates below neutral (and by that I mean below the yield of equities) for so long before all money ends up in a asset liquidity trap resulting in deflation.

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LOL what on earth is it with these Newspapers setting up their own Shadow MPCs for ****** sake? What on earth are they playing at, it's none of their business what policy is set, they're supposed to report the news not make it.

Why not go the whole hog and have a Journalists Shadow Cabinet. :rolleyes:

Totally agree. News long ago failed to be that. They should be called 'half baked comment papers'.

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LOL what on earth is it with these Newspapers setting up their own Shadow MPCs for ****** sake? What on earth are they playing at, it's none of their business what policy is set, they're supposed to report the news not make it.

Why not go the whole hog and have a Journalists Shadow Cabinet. :rolleyes:

And how many btl properties do they have between them ;)

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Deflation in Japan

Deflation started in the early 1990s. The Bank of Japan and the government have tried to eliminate it by reducing interest rates, but despite having them near zero for a long period of time, they have not succeeded.

Systemic reasons for deflation in Japan can be said to include:

Fallen asset prices. There was a rather large price bubble in both equities and real estate in Japan in the 1980s (peaking in late 1989). When assets decrease in value, the money supply shrinks, which is deflationary.

Insolvent companies: Banks lent to companies and individuals that invested in real estate. When real estate values dropped, these loans could not be paid. The banks could try to collect on the collateral (land), but this wouldn't pay off the loan. Banks have delayed that decision, hoping asset prices would improve. These delays were allowed by national banking regulators. Some banks make even more loans to these companies that are used to service the debt they already have. This continuing process is known as maintaining an "unrealized loss", and until the assets are completely revalued and/or sold off (and the loss realized), it will continue to be a deflationary force in the economy. Improving bankruptcy law, land transfer law, and tax law have been suggested (by the Economist magazine) as methods to speed this process and thus end the deflation.

For the record from Wikipeadia.

http://en.wikipedia.org/wiki/Deflation_(economics)

Central banks have a duty to avoid asset bubbles or face the consequences of deflation. The short term CPI targetting does nothing to help this.

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They can cur rates by 1% and still it will make no difference to retail spending . Those who caused the fall are the lemmings maxed out with debt who no longer can spend, simple really. :rolleyes:

Or people like me. I have no debt at all. The reason I don't visit the high street very often is nothing to do with interest rates and everything to do with high energy bills, high water bills, high council tax bills, high petrol prices and low pay.

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Cutting rates will just mean the eventual crunch is bigger.

Worse, it will drive more industry and service sector jobs abroad to lower cost areas or areas where people can actually afford to do the jobs that companies want them to do.

Not only will the crunch be worse the ability to dig ourselves out of it will be further hampered by the effects fo the above + the extra burden of further debt growth. That is if it will be possible at all to do, go far enough and a generation or more will not be able to achieve a rebalancing.

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Worse, it will drive more industry and service sector jobs abroad to lower cost areas or areas where people can actually afford to do the jobs that companies want them to do.

Not only will the crunch be worse the ability to dig ourselves out of it will be further hampered by the effects fo the above + the extra burden of further debt growth. That is if it will be possible at all to do, go far enough and a generation or more will not be able to achieve a rebalancing.

It should read "Two Bankers/wa**rs break"

Edited by CrashCrash

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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