Sales Rebound On The High Street

[Gone baby gone]

Retail sales in the UK bounced back more strongly than expected in February, rising at the fastest rate in more than two years.

http://news.bbc.co.uk/1/hi/business/6478733.stm

Get them rates a'risin'!

[REP013]

Fastest rate in 2 years after 3 IR rises in 6 months ..... maybe, just maybe (as I wake from my long dream) we could see a .5% or more rise?

I'll go back to sleep now.

[Johnny Cash]

Fastest rate in 2 years after 3 IR rises in 6 months ..... maybe, just maybe (as I wake from my long dream) we could see a .5% or more rise?

I'll go back to sleep now.

When was the last time that rates moved by 0.5% in one go (in either direction)?

[Realistbear]

The more Merv hikes the more the sheeple borrow. Restrict credit and problem solved.

In a miracle economy IR have no meaning. The little percentage sign that follows the IR might as well be an Egyptian hieroglyphic for all the meaning it has to a sheeple. I was in a House of Fraser store a few weeks ago and noted the frenzied buying as in-house credit cards were feverishly handed over to sales clerks. On the wall was a large poster of a Fraser credit card offering revolving credit at only 24.99%. Such IR do not slow buying as the numbers have no meaning. Spending addicts cannot be stopped by pushing up the price of the drug. Take away the supply and see what happens.

Merv--wake up man and forget your pathetic IR hikes they are powerless in Gordon's world. Look to see how much spending has "slowed" since your last 3 hikes and learn from that. Einstein said that the definition of madness is to try the same thing over and over again expecting a different result. In miracle economies the usual rules do not apply.

[REP013]

Johnny Cash Posted Today, 11:12 AM

When was the last time that rates moved by 0.5% in one go (in either direction)?

08th November 2001 DOWN from 4.5 to 4.

But the pidly .25% doesn't seem to be doing anything

Posties asking for 27% increase

Nurses getting 1.9% increases

Retail sales rising at the highest rates since 2005

Who knows how the MPC are going to work, the already admitted to creating this farcical economy and can break it, if they so wish, whenever they want to.

[nohpc]

Have to disagree with you there Realist Beat. Interest rates definately have an effect on spending. They are still very low at the moment. I agree that you can't stop a spending addict from spending unless you cut them off at the source but all these house of fraser card numpties are not big earning, low risk borrowers. They will be lucky to get extremely high interest credit cards with very low limits and nice people coming around to collect the deb

[Guest The_Oldie]

The more Merv hikes the more the sheeple borrow. Restrict credit and problem solved.

In a miracle economy IR have no meaning. The little percentage sign that follows the IR might as well be an Egyptian hieroglyphic for all the meaning it has to a sheeple. I was in a House of Fraser store a few weeks ago and noted the frenzied buying as in-house credit cards were feverishly handed over to sales clerks. On the wall was a large poster of a Fraser credit card offering revolving credit at only 24.99%. Such IR do not slow buying as the numbers have no meaning. Spending addicts cannot be stopped by pushing up the price of the drug. Take away the supply and see what happens.

Merv--wake up man and forget your pathetic IR hikes they are powerless in Gordon's world. Look to see how much spending has "slowed" since your last 3 hikes and learn from that. Einstein said that the definition of madness is to try the same thing over and over again expecting a different result. In miracle economies the usual rules do not apply.

I agree to a point, but interest rates of 50% would kill it stone dead. Something between 5.25% and 50% would do the job .

[Fancypants]

I agree to a point, but interest rates of 50% would kill it stone dead. Something between 5.25% and 50% would do the job .

The crash is inevitable (as we are already way beyond fair value). Even if rates were cut to 0% it could not stave it off indefinately. The level of rates simply dictates when HPC starts and how long it will take to unwind.

[Rakno]

I agree to a point, but interest rates of 50% would kill it stone dead. Something between 5.25% and 50% would do the job .

You chaps are forgetting, the BoE has been bought and these signals mean nothing. If they can help it, they will not slow the economy down, even if it means higher infaltion. They are and will fiddle the inflation figures to fit.

Our only hope is in the fundemantals, whish will catch up with us sooner or (unfortunatly for those without a home of thier own), later.

[Johnny Cash]

The more Merv hikes the more the sheeple borrow. Restrict credit and problem solved.

How are we to do that then?

In a miracle economy IR have no meaning. The little percentage sign that follows the IR might as well be an Egyptian hieroglyphic for all the meaning it has to a sheeple.

How can this be the case? If you are in debt or taking on a debt then the interest rate has a direct effect on how much you will have to pay back each month.

Merv--wake up man and forget your pathetic IR hikes they are powerless in Gordon's world. Look to see how much spending has "slowed" since your last 3 hikes and learn from that.

I thought we had an explicit admission from an (albeit ex) policymaker a couple of days ago that the policy was deliberate to keep the boom going at the expense of stable house prices and the indebtedness of the nation.

Do you really think Merv doesn't know what he is doing?

[dnd]

The crash is inevitable (as we are already way beyond fair value). Even if rates were cut to 0% it could not stave it off indefinately. The level of rates simply dictates when HPC starts and how long it will take to unwind.

Eddie's already admitted they were just staving off a recession around 2000

It's just a case of how long they can keep this 'smoke and mirrors' going (till the next election?)

[IMHAL]

Eddie's already admitted they were just staving off a recession around 2000

It's just a case of how long they can keep this 'smoke and mirrors' going (till the next election?)

Eddie said that he thought that personal debt was under control???? In the same breath he said that they had created a medium to long term unsustainable situation (i.e. ramping HPI and debt, and that the problem is still with us and needs to be resolved.

So how do they cure teh situation - people in debt, people getting further into debt, house prices rising past any notion of fair value and IR's still accomodative - I can't see what they are doing to put the situation right!!

All I see is the same old, same old - they are just hiking IR's very gradually and hoping the wheels don't fall off - and at the same time the situation is getting worse - seems like they are not sorting it out to me.

To correct the problem they have created would mean that the saving rate would have to go up - but they can't do that with out putting us into a recession (i.e. consumers stop spending and start saving).

They are in a catch 22 situation of their own making. We and they are fooked.

HAL

[Realistbear]

I agree to a point, but interest rates of 50% would kill it stone dead. Something between 5.25% and 50% would do the job .

I also agree with you in part. In order for Merv to slow borrowing and spending he must get ahead of the spending and borrowing curve. His puny .25% "hikes" are not keeping up with the growth of credit--they are actually expanding it. The higher the IR the more that is owed. Each time Merv hikes the borrowing increases commensurately and will continue to do so all the time credit is unrestricted.

As of today, IR are accommodative being well below the rate of real inflation. Merv would have to hike rates beyond the curve to have any effect. At today's rate of inflation at around 6% he needs to move IR sufficiently above that rate to curtail spending. 7% might possibly work as that will raise rates far enough ahead of inflation that the spendaholic inflationary economy would be shocked into reality. A bit like the dying patient has to be administered "lethal" doses of electricity to bring back life!

A far less painful method would be for a future Chancellor who was interested in ending boom and bust to introduce a series of mandatory measure to make sure borrowing did not exceed prudent levels. 3 X income for example for those with high credit scores. No subprime for the purchase of houses. With credit restricted there would be no need to endanger the rest of the economy with IR hikes that would cause recession.

IMO, Merv's next hike, or three hikes will do nothing.

[MarkG]

So how do they cure teh situation

As far as I can see, they can choose one or more of:

a) massive wage inflation.

major recession.

c) civil war and reboot of British society.

Right now we seem to be heading towards option c as prices rise much faster than wages... but they've got a few years left to pick option b first.

[Realistbear]

How are we to do that then?

How can this be the case? If you are in debt or taking on a debt then the interest rate has a direct effect on how much you will have to pay back each month.

I thought we had an explicit admission from an (albeit ex) policymaker a couple of days ago that the policy was deliberate to keep the boom going at the expense of stable house prices and the indebtedness of the nation.

Do you really think Merv doesn't know what he is doing?

I think Merv does what he told to do. A HPC ends Gordon's career.

[IMHAL]

As far as I can see, they can choose one or more of:

a) massive wage inflation.

major recession.

c) civil war and reboot of British society.

Right now we seem to be heading towards option c as prices rise much faster than wages... but they've got a few years left to pick option b first.

What is clear is that there is currently no will in the BoE to correct the situation that they have admitted getting us into - what is not clear is when they will have the will.

What is the BoE hoping for? What is it that they think would correct the situation? My guess is that they are waiting for something else to come along and drive the economy (instead of consumers) - I see nothing on the horizon.

What would they consider to be the point of no return? - their backstop position - the point at which they have to admit that their experiment has not worked and what would they do in that situation?

What level of debt do people have to get to before they say this is not working?

It seems obvious that by doing something/anything to re-allign the current scenario they will precipitate a crash - otherwise they would do something.

There seems to be no logic and no plan on their part - I do not trust them - politicians should be asking these question of the MPC - afterall we are in a whole lot of trouble and its not getting better.

HAL

[MarkG]

There seems to be no logic and no plan on their part

There is. It's called 'do nothing and hope someone else will end up taking the blame'.

Standard bureaucratic behaviour when things go tits up: 'Wasn't us mate, it was the US housing crash/Yen carry trade/Gordon Brown losing the election'.

[IMHAL]

There is. It's called 'do nothing and hope someone else will end up taking the blame'.

Standard bureaucratic behaviour when things go tits up: 'Wasn't us mate, it was the US housing crash/Yen carry trade/Gordon Brown losing the election'.

Sadly, I think you are right - I could see from the faces of the MP's who were interviewing Lord George that they did not understand how the MPC made their decisions. They were scared to ask questions - even apologising for asking them - yet they needed to as the questions which were put onto their agendas by ordinary folk.

MP's kept on asking why the CPI did not reflect reallity? and if there would be any merit to a non-technical person being allocated to the MPC - the answer by Eddie was the computer says no. They want to keep the whole thing unfathomable.

The MPC thing seems to be cloaked in a mystery that even our MP's cannot understand. This is dangerous - and as you said - I think its going to turn into a blame game when at some point a wheel falls off.

HAL

[MarkG]

The MPC thing seems to be cloaked in a mystery that even our MP's cannot understand.

They seem to want to be inscrutable so the markets can't predict what they're going to do. But that's precisely backwards: for people to make sensible long-term decisions, they need to be able to predict future economic conditions with a reasonable degree of accuracy.

I suspect the real issue is that if they operated in a simple and objective manner -- e.g. inflation goes up, rates go up -- then there'd be no need for the MPC.