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Guest wrongmove

Memo To Bank: Don't Make Sudden Movements

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Guest wrongmove

Memo to Bank: Don't make sudden movements

"Imagine a brick attached to a piece of elastic. You give the elastic a little tug. Nothing happens. You pull a bit harder. Still the brick doesn't budge. Then just when you think the brick is never going to move, one last yank on the elastic brings it smashing into your face.

If the British economy is the brick, interest rates are the elastic. On four occasions since last summer, the Bank of England has pulled and nothing has happened. The economy is growing at an annual rate of about 3% a year; house prices are booming; companies, to judge by yesterday's CBI survey, are a lot more confident about passing on price rises.

The Bank is now being urged to give the elastic not one but two more tugs, pushing up interest rates to 6%. A tightening of monetary policy of this order will be accompanied by something else that will eat into disposable incomes: a steady increase in petrol prices. With crude nudging $72 a barrel last night, industry experts say it is a matter of when, not if, the average cost of unleaded goes over £1 a litre.

Could this be the moment for the brick finally to go flying through the air? It most certainly could. Discretionary incomes have been growing slowly for some years; only the fact that consumers have been able to use their homes as cash machines has allowed spending to continue growing at about 2.5%.

But the downside of rising house prices and equity withdrawal is that houses are less affordable in the UK than at any time in 15 years and household debt is at extremely high levels. All the conditions are in place for a sharp slowdown in the housing market and belt-tightening by the consumer. Watch out for that brick............"

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I wonder how much petrol has to rise before we get another "Petrol Crisis" circa 2000. The sheeple thus far have taken the increases rather well. But then again the sun's captain cash and Mr Angry have not told the sheeple to rebel yet

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But the downside of rising house prices and equity withdrawal is that houses are less affordable in the UK than at any time in 15 years and household debt is at extremely high levels. All the conditions are in place for a sharp slowdown in the housing market and belt-tightening by the consumer. Watch out for that brick............"

Elastic bands, once overstretched, never repair themselves or regain the same degree of elasticity.

Gordon has already done the damage. There is always a price to pay for folly.

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Stretching the analogy a little further maybe it is time to confiscate all elastic bands form the BOE.

Rather than using elastic bands to pull bricks they have spent most of the last few years flicking them at the arses of FTB's and consumers trying to herd them into borrowing and spending money at a rate and level beyond all previous historical comparisons.

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That sermon is a bit rich, coming from the newspaper which (along with the BBC) is the principal mouthpiece for the government which has played a big part in getting us into this mess.

I guess that, in true Pravda style, The Guardian is reporting Brown's party line, namely that all possible strings (elastic or otherwise) must be pulled in order to stave off an HPC, at least until after the next general election. Oh, and also that any member of the MPC who is reluctant to play his game and advocates further rate rises is not likely to stay there very long.

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I wonder how much petrol has to rise before we get another "Petrol Crisis" circa 2000. The sheeple thus far have taken the increases rather well. But then again the sun's captain cash and Mr Angry have not told the sheeple to rebel yet

I reckon it'll be the psychological £1/litre this time round, but people may be a bit more apathetic this time round. I also suspect that this may lead to nothing but a few stories on BBC Breakfast that begin "with petrol now over £1 a litre, what are the prospects for blah blah blah", before prattling on about renewable energy.

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I wonder how much petrol has to rise before we get another "Petrol Crisis" circa 2000. The sheeple thus far have taken the increases rather well. But then again the sun's captain cash and Mr Angry have not told the sheeple to rebel yet

There won't be protests this time round. The world of 2000 is gone forever. We live in an age of summary justice, arbitary lawmaking, all encompassing arrest powers and crackdowns on peaceful protest. Those same lorry drivers would get a criminal record in the blink of an eye today - it ain't worth the risk.

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There won't be protests this time round. The world of 2000 is gone forever. We live in an age of summary justice, arbitary lawmaking, all encompassing arrest powers and crackdowns on peaceful protest. Those same lorry drivers would get a criminal record in the blink of an eye today - it ain't worth the risk.

Agreed. Any more of that kind of action would result in summary judgement as terrorists, and the news laws passed will be used to send in the SAS to wipe em out.

OK the last part is a bit of a stretch but you know what I mean.

There is someone at the doo......

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MEMO TO THE BANK : Do your job

Once Gordon has ascended they might be given more leeway to hike as the blame for the crash will then fall on someone else. The Brown Balls team should prove to be delightful spectacle in the weeks ahead with Balls blaming Brown and Brown blaming Balls. What will it be --a Balls-up or a Brown-up? I wonder who will be Brown's stand-in for question time?

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"No more boom and bust"

The last 10 years have been the biggest fake boom this country has ever seen. Artificially low interest rates have generated a green light for reckless lending. We've had the good times, the brick in the face will mark the beginning of the bad times.

Despite pretending to target inflationery pressures two years in the future, the MPC are clearly reactionary and are in danger of pulling that elastic too hard.

Bring it on!!

Xil.

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A representation of the housing market now.

coach1.jpg

[Gordon Brown to cabinet] Hang on a minute lads... I've got a great

idea.. err...

great_idea.jpg

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A representation of the housing market now.

coach1.jpg

[Gordon Brown to cabinet] Hang on a minute lads... I've got a great

idea.. err...

great_idea.jpg

:lol: Yeah, close eyes, stick fingers in ears and sing another verse of the "self-preservation society"

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Yep,the picture sums up housing as investment.Property is such a highly geared vehicle that investor's future is either going to be paved with gold or they are going to lose the lot.There isn't much middle ground and the whole thing is presently teetering on the edge.

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A representation of the housing market now.

coach1.jpg

[Gordon Brown to cabinet] Hang on a minute lads... I've got a great

idea.. err...

great_idea.jpg

I compute the weight of that gold to be around 100 tons. Would that work in a bus like that?

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A representation of the housing market now.

coach1.jpg

[Gordon Brown to cabinet] Hang on a minute lads... I've got a great

idea.. err...

great_idea.jpg

We could start a caption competition.

A couple of others I thought of

[all BTL investors] Remember lads, were in it for the long haul

[Gordon Brown again] I told you I could engineer a soft landing, didnt I?

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