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Guest muttley

Debtors Feel Cold Hand.....

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Guest muttley

An interesting article regarding oil prices, IRs and debt.

Savers smile, but debtors feel cold hand on the shoulder

There could well be another piece of good news to come - a rise in interest rates.

Perhaps that statement is a little too provocative, especially for a nation that is famously awash with debt. But remember, there are about six savers in the UK to every one debtor so a rise in interest rates will be welcome news to many households who have avoided the worst of this latest conspicuous consumption boom.

For those helplessly mired in debt, on the other hand, the message that was coming from the money markets yesterday was not a happy one.

The relatively upbeat economic news and strength of sterling was accompanied by the futures market raising expectations for year-end interest rates, to 4.75pc.

When you are already struggling to make debt repayments, as so many people are in the UK, the prospect of even higher interest rates must feel like a cold hand on the shoulder.

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there are about six savers in the UK to every one debtor so a rise in interest rates will be welcome news to many households who have avoided the worst of this latest conspicuous consumption boom

Interesting!

It's a great counter to the idea that "the government won't let house prices drop".

frugalista

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Guest muttley

Interesting!

It's a great counter to the idea that "the government won't let house prices drop".

frugalista

I'm glad you picked up on that, frugalista. It was the point of my post.

How to restore the "feel good factor"?

Time to raise the interest rates!!

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It's a great counter to the idea that "the government won't let house prices drop".

While direct intervention is unlikely, there could be another flood of tax credit money and other sweeteners to deaden the pain.

I am increasingly of the opinion that the erroneous/fraudlent tax credit payments (exceeding £2 billion written off in two years) were wholly intentional, in so far as it is an effective way of injecting additional cash into the system with the additional bonus of it being chalked up as a special entry in the accounts. Need more liquidity? We'll just arrange a little 'accidental' over payment. Sorted!

While it may sound conspiratorial, one cannot help but think that similar mechanisms have been developed so that governments can keep their accounts looking kosher while still achieving what they want. Consider subsidies to various industries - now frowed upon by the WTO and EU competition authorities. Rather than handing over a bung you simply allow the PFI/PPP project to run over budget or develop mysterious IT problems and collapse. Voila! You can cough up tax-payers money as much as you like and not have to worry about the PSBR or illegal subsidy. You'll get a slap on the wrist from the PAC and/or NAO but that's it.

Now, where's my tin-foil hat ?

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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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