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Observer: King Has Just Woken Up To Debt

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Guest Charlie The Tramp
What has King been doing for the past few years? His own organisation produces monthly statistics showing the level of debt - and last August it showed that we in the UK owed a massive £1.12 trillion. Yet somehow it was a good time to cut the base interest rate by 0.25 per cent. Not surprisingly, just nine months later, we owe £60bn more.

Now that`s a good question. :)

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Do you detect the irony?????

BoE say they are worried about the nations debt level....so what do they do....RAISE IR's and screw people over with yet more debt!!!!!!!

I'm lovin it!! :lol::lol::lol::lol::lol:

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it isn't merv's problem - his remit is inflation

he is actually stuck between the proverbials and i am sure if he had a free reign then IRs would be considerably higher now than they are

i think he would make a much better chancellor than the present encumbant

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i think he would make a much better chancellor than the present encumbant

That's just it though - why would this Government be interested in appointing someone who NEW how to run the Economy.

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Journo's are a bit thick aren't they? The job of the central bank is to print money and inflate like there's no tomorrow whilst simultaneously calming public FEARS over inflation using smooth words and even smoother statistics. It's the ultimate confidence trick.

"If you want to be slaves of the bankers, and pay the costs of your own slavery, then let the banks create money. The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of slight of hand that has ever been invented. Banking was conceived in iniquity and born in sin."

The bankers own the world. Take it away from them, but leave them the power to create money and control credit, with a flick of the pen they will create enough money to buy it back again. . . . Take this power away from bankers and all great fortunes like mine (he was the second richest man in Great Britain) will disappear, and they ought to disappear, for this would then be a happier and better world to live in. My sons should not object. They are well educated, and should be willing to take their places in the business world and forge their own fortunes. . . But, if you want to continue to be slaves of bankers and pay the cost of your own enslavement, then let the bankers continue to create money and control credit. . . However, as long as governments will legalize such things, a man is foolish not to be a banker."

- Lord Josiah Stamp (1880-1941), former director of the Bank of England

Edited by BuyingBear

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Didn't King vote against the rate cut?

Billy Shears

True - but I think you need to take a look at the story from further out. there's a raft of stories in the sundays this week about economy going t/u. These don't happen by accident journalists only write what's in the press releases they are spoon fed with, or they write the stories they've been given "off the record".

How's this for a hypothesis - There are only Two factions of note in UK in politics at the moment, - top dog and the one who wants to be top dog......one is briefing journos with the line - "look this miracle economy is not all it's cracked up to be - you'd be mad to trust this buffoon to run the whole country"....the other is briefing along the lines of - "well if it does go pear shaped it's not my fault" - that second faction appears to have found a scapegoat in the Governer "Big Merv"...the fact that the BOE commitee was was stuffed with political appointees and King voted against the cut was probably left out of the conversation by Deep Throat...and research is so tiresome...especially when it may antagonise a source who may be well placed to help one's journalistic career in the future.

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it isn't merv's problem - his remit is inflation

he is actually stuck between the proverbials and i am sure if he had a free reign then IRs would be considerably higher now than they are

i think he would make a much better chancellor than the present encumbant

Interest rates only there to govern inflation??

the as house price inflation has not generated any money, but merely gained a higher price this means that ,,,,,,,,,,,,,,,,,

Oh good god... what do you think that level of debt was? deflation..

Increase..

can't even be bothered to.. argue...

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Didn't King vote against the rate cut?

Billy Shears

I think he did, but the damage was already done by then. As for King just waking up to the debt problem, I doubt it, he's known about it for ages but it ain't his job to lecture people on how much they take on. Although I'm certain he knows well about the problems it will cause.

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Interest rates only there to govern inflation??

the as house price inflation has not generated any money, but merely gained a higher price this means that ,,,,,,,,,,,,,,,,,

Oh good god... what do you think that level of debt was? deflation..

Increase..

can't even be bothered to.. argue...

You're wrong... here.. Apom..

Their..remit is to...control inflation as measured by... CPI.

Damn it, you've .. nearly... used up all the.. punctuation marks..

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Interest rates only there to govern inflation??

the as house price inflation has not generated any money, but merely gained a higher price this means that ,,,,,,,,,,,,,,,,,

Oh good god... what do you think that level of debt was? deflation..

Increase..

can't even be bothered to.. argue...

their remit is (very briefly) to keep inflation at 2% over a 2 year view according to the official rate of inflation - not control levels of debt

everything else is directed by Gordon through manipulation e.g. what the official measure of inflation is

many of us feel that the rate of inflation is significantly higher than reported, and I believe even Merv himself has alluded to not being convinced by the official figures - but as it stands, inflation is forecast to be around 2% - if the level of borrowing should double to over £2T but inflation looks like only being 1% 2 years out, then in theory the BoE should CUT rates to get inflation up

i'm not saying I agree with it or that it's good for the country, just saying what the rules are

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Guest Charlie The Tramp

Their..remit is to...control inflation as measured by... CPI.

From the BoE`s website. They also have a remit to maintain financial stability something many overlook.

One of the Bank's two core purposes is to maintain the stability of the financial system. The Bank has to make sure the overall system is safe and secure and that threats to financial stability are detected and reduced. By monitoring and analysing the behaviour of participants in the financial system and the wider financial and economic environment, the Bank aims to identify potential vulnerabilities and risks, with a view to making the system stronger. The Bank's role includes oversight of payment systems - a crucial part of the financial system, which facilitate transactions between individuals, businesses and financial institutions.

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I just did a quick sum of total debt divided by the working population

taking out the morgage debt in proportion - as listed in this guardian article

http://business.guardian.co.uk/story/0,,1763113,00.html

Leaves you with just over £4,000 of unsecured debts per worker, thats a manageable rate but if it keeps increasing on current trends that could change.

the mortgage debt is ~ 1/3 of property value - so we could have a huge crash of 2/3rds without the average person seeing negative equity.

Of course devil is in the detail, we all know that about 10% of people dont have any personal/CCard debt - it probably follows an 80/20 curve. My guess is that there is a significant minority with over 10K in debts and a mortgage and a not very secure job.

Perhaps charting the growth in borrowing would be a better stab at true inflation?

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the mortgage debt is ~ 1/3 of property value - so we could have a huge crash of 2/3rds without the average person seeing negative equity.

Of course the vast majority of properties were bought before the boom, and quite a number are free of mortgages... however going forward your stats would be totally skewed, the LTV for properties sold within the last 3 years would be utterly different, it wouldn't take much to push them into negative equity.

Also, if all new property and existing properties have to be eventually 'churned' at current market values the mortgage pile would be huge. So going forward this is unsustinable, the majority of people could not reafford their own homes.

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Of course the vast majority of properties were bought before the boom, and quite a number are free of mortgages... however going forward your stats would be totally skewed, the LTV for properties sold within the last 3 years would be utterly different, it wouldn't take much to push them into negative equity.

Also, if all new property and existing properties have to be eventually 'churned' at current market values the mortgage pile would be huge. So going forward this is unsustinable, the majority of people could not reafford their own homes.

good point - it's hard to extrapolate anything from a simple average, but I guess if the average worker has 4K in non-mortgage debt, then the average worker isnt in much of a position to move up the ladder.

it's not like they will just pay off that much at the end of the month - so basically the average worker is skint - I did a quick straw poll at the office today - and everyone was basically saying "apart from the house we dont save anything"

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  • 338 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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