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Gene Pool Lifeguard

Oops, Boe Got It Wrong! - Says Bbc

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Too right it was a mistake. It gave a signal to speculators that the government / BOE were determined that property would be a one way bet - thats what sparked off the last leg of the bubble.

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Evan Davies says that the interest rate cut was a mistake for the economy.

http://www.bbc.co.uk/evandavis/

Business news on the BBC reads:

- Mortgage approvals hit year low

- Debt judgments hit 10-year high

This has to be a signficant change in sentiment for the majority of the news reading public!

Reading Evan's blog, you'd think he was a secret lurker here, wouldn't you?

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I liked this bit in particular:

"my words on the subject at the time, which were a bit equivocal (as they would be from a BBC journalist)."

He can be subtly amusing when he wants to be.

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I liked this bit in particular:

"my words on the subject at the time, which were a bit equivocal (as they would be from a BBC journalist)."

He can be subtly amusing when he wants to be.

Yes, loved that. I'm becoming a bit of an Evan fan these days. If you're reading Evan. Keep it up!

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"The signal provided by that cut in August 2005 sent people back out into the shops and estate agents, and made them far too relaxed about the natural limits of the economic cycle.

It made them think 4.75 was the highest rates needed to go. And in unwittingly sending that message, the lower rate enticed people to borrow amounts that now seem incautious....."

so true :(

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Hindsight is an easy thing.

The rate cut was obviously a mistake. The next BoE mistake will be to go too far with the rate rises or not to make the next rate cut in time. This is obviously some way off as there will be one or two rises at least first but the fact that the last rate cut was a mistake will make them too cautious when the time comes.

Edited by harris

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Hindsight is an easy thing.

The rate cut was obviously a mistake. The next BoE mistake will be to go too far with the rate rises or not to make the next rate cut in time. This is obviously some way off as there will be one or two rises at least first but the fact that the last rate cut was a mistake will make them too cautious when the time comes.

The next rate cut will be when inflation is under control. 2010? 2012? It isn't going to be any time soon, there is just too much money out there and too many things are working against them at the same time - resources running down so prices sky-rocketing, the Yanks deciding fuel is more important than food, insurance costs, etc etc etc etc.

Inflation is well and truly here to stay for at least the next few years. Question is how bad is it going to get...

Edit: And yes, he's definitely a lurker - I reckon that remark was a nod to the people he'd really like to be speaking for - ie, most of the people on here!

Edited by House of Lords

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Yes, loved that. I'm becoming a bit of an Evan fan these days. If you're reading Evan. Keep it up!

Yes, and keep up the good work with the blog as well!

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Yes, loved that. I'm becoming a bit of an Evan fan these days. If you're reading Evan. Keep it up!

I wonder if he sued Popbitch for what they said about him?

Did anyone hear him on R5 last Thursday afternoon? He was being a touch naive/dovish about lenders' fixed rates.

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I didn't have the benefit of hindsight, but knew that it was a bad mistake at the time.

On the contrary, Evan Davis got positively excited as he did his piece to camera that night back in 2005, spouting something along the lines of 'now that rates are on a downward trend...'

Perhaps Evan should accept that he might have been part of the problem by broadcasting such a misguided assessment.

....Maybe the thought-police in the beeb wouldn't allow him to say it,under pain of being sent to gulag,or channel 5(or into that dark,unknown place that Greg dyke frequents these days...it was all still raw then,so nobody in the meeja would stand up for themselves.

at least him and jeremy vine are willing to bite back,the economy is going tits-up,public opinion is shifting and now the hounds have scented blood!! :lol:

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I didn't have the benefit of hindsight, but knew that it was a bad mistake at the time.

On the contrary, Evan Davis got positively excited as he did his piece to camera that night back in 2005, spouting something along the lines of 'now that rates are on a downward trend...'

Modern monetary policy is 99% slight of hand and 1% action, for example we now have higher rates but no tightening of reserves or lending standards (quite the opposite).

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Guest vicmac64

They will allow inflation to go up - they do not care if they debase our currency - many of our politicians have purchased on the basis that inflation will nullify their debt!!!!

Thats all that is NEW about New Labour

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It's so dam obvious that Aug05 cut was a mistake. Many wrote the BoE to say it was wrong.

Merv knows the collective decision was a disaster, that's why he keeps saying they don't look at past decisions but focus on the next one. He likened this to a football team never looking back at old matches, rather focusing on the next one.

Bullturd. Football managers look back at old matches to see players weaknesses, as should the BoE look back to see why they were wrong.

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It's so dam obvious that Aug05 cut was a mistake. Many wrote the BoE to say it was wrong.

Merv knows the collective decision was a disaster, that's why he keeps saying they don't look at past decisions but focus on the next one. He likened this to a football team never looking back at old matches, rather focusing on the next one.

Bullturd. Football managers look back at old matches to see players weaknesses, as should the BoE look back to see why they were wrong.

I don't think Merv likes to look back at recent form yet he highlights the success( pre 2006) of sticking to the target for the first eight years.Rather like the manager of Leeds United pointing at past Championship success even though they are now bankrupt and are relegated again to League One.Leeds' attitude like Merv was to let the good times roll on debt.

It's amazing that Merv had the nerve to talk up the success of the MPC this year just as we were about to be bottom of the league table from everything from personal debt to the rate of CPI.

Edited by crashmonitor

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The comments added to this post are unanimously bearish, and are well argued and informed.

(anyone here claim ownership ?)

Evan has also speculated today about the effect of fixed rate mortgages expiring.

There is definitely a mood swing in the BBC economics dept. It feels like it's just sitting on the fence, waiting for some unequivocal data - like nominal falls in land registry prices ...

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