Jump to content
House Price Crash Forum

B O E Must Be `pre-emptive', Lomax Says


Guest wrongmove

Recommended Posts

Guest wrongmove

Bank of England Must Be `Pre-Emptive', Lomax Says

" Feb. 24 (Bloomberg) -- The Bank of England may need to raise its benchmark interest rate in the coming months to contain inflation fuelled by a rebound in consumer spending, Deputy Governor Rachel Lomax said.

``We need to be pre-emptive, to head off trouble at the pass, even at the risk of sometimes taking the wrong decision,'' she told executives in Liverpool, north-west England, today. ``Any weakness in consumer spending is likely to be temporary.'' Interest-rate futures and the pound rose after her comments. .."

The full speech: http://www.bankofengland.co.uk/speeches/speech239.pdf

Thanks to KingofNowhere, TMF

Link to post
Share on other sites
Bank of England Must Be `Pre-Emptive', Lomax Says

" Feb. 24 (Bloomberg) -- The Bank of England may need to raise its benchmark interest rate in the coming months to contain inflation fuelled by a rebound in consumer spending, Deputy Governor Rachel Lomax said.

``We need to be pre-emptive, to head off trouble at the pass, even at the risk of sometimes taking the wrong decision,'' she told executives in Liverpool, north-west England, today. ``Any weakness in consumer spending is likely to be temporary.'' Interest-rate futures and the pound rose after her comments. .."

The full speech: http://www.bankofengland.co.uk/speeches/speech239.pdf

Thanks to KingofNowhere, TMF

Or you could say

Listen here suckers, if you dont keep your credit cards in your pockets or start any of that HPI nonsense again and we will bleed you dry

Link to post
Share on other sites
There doesn't seem anything pre-emptive about a possible interest rate rise. It has been obvious for months that spending is still way out of control.

To my mind it would be more like SHUTTING THE STABLE DOOR.

Er, it's been obvious for years that spending is out of control. But whilst there are suckers who will take on debt, and governments who aren't concerned enough to do anything about it, it's allowed to carry on. Hence the over 1 Tillion quid of debt this country is now in.

Still, the chosen few at the top of the UK's Banks are doing alright. What was RBS's profit today - £7billion? All of it financed by debt suckers - who in turn make life unaffordable for the rest of us...

Nomadd

Link to post
Share on other sites

If the BOE feel their rate rises have fallen on deaf ears , what would the odds be on a 1/2 point rise in the near future to shock people into thinking we should pay attention

A half point ,people listen alter spending,( short term pain) ,BOE leaves in place for 3-4 months , then drops 1/4 point to say well done ,you listened.

Any thoughts ??

Link to post
Share on other sites
All the BOE have done pre-emptively is created the biggest credit bubble in UK history.

If you think ours is big you should take a look at the credit bubble forming on the other side of the Atlantic-it's HUGE!

olume 29, No. 17, December 4, 2002

The average American family has fifteen credit cards.  More importantly, they are using them.  Today, the average credit-card balance is $8,562, compared with an $2,985 average in 1990,  according to the National Foundation for Credit Counseling.

Unlike past recessions when consumers tightened their belts, many card holders have continued their spending patterns throughout the current downturn.  This is helping the economy, but it also is contributing to a dramatic rise in credit card debt.  According to Financial Times Information Ltd., “Almost two out of three people would not start worrying about debt until the situation had spiraled out of control.â€Â  This research is about British debt, however, it also can be applied to the American situation.

Already, many are paying the consequences.  Personal bankruptcies rose 20 percent in 2001, and things have not slowed this year.  For example, at Cambridge Credit Counseling Corp. telephone call volumes have doubled from a year ago, to about 40,000 per day from 20,000.

Breadth of Debt

Debt is international.  The alarming increase in Japan’s public debt has prompted talk in Tokyo about cutting government borrowing.  British consumers’ record-breaking borrowing binge in September took their total debt over 800 billion pounds for the first time.  Goldman Sachs is predicting Australia’s household debt will rise to 130 percent of income by the end of 2002.  This will make it the highest debt-to-income level in the English-speaking world.

The breadth of debt includes state governments.  The National Conference of State Legislatures now thinks that this fiscal year the states will be $17.5 billion in the red.  All states except Vermont are constitutionally required to run balanced budgets.  Next year will be a bloodbath of cuts.

Corporations also have debt problems.  The average corporation has debt that is 6.1 times its cash flow, based on an analysis of Federal Reserve data.  The situation has brought a surge in debt downgrades.  Rating agencies have roughly 14 percent of all corporate bond issuers under review for downgrade.  In the mid-1990s the norm was 3 percent.

Total Debt

To put all this debt information in perspective, total debt has averaged less than 150 percent of GDP for most of the last century.  But, Americans have gone on a couple of debt binges in the past 100 years.  First, debt spiked up to 260 percent of GDP in 1929.  And lately, debt has gone over 300 percent.

The Fed

To help ease the debt burden, the Federal Reserve has consistently lowered the cost of money.  With cheaper money, particularly cheaper mortgages, people’s payment of debt has slowed while total debt has increased.

A story told by a trader on the stock exchange is apropos:

In the 1960s, during the bowling craze, one bowling alley in a Western U.S. town required a two-hour wait to get a lane.  A second bowling alley was built and the average wait-time diminished to a few minutes. A third alley created a losing situation when empty lanes appeared in all three bowling facilities.  If the third bowling alley were to go out of business, the other two would return to profitability.  Inexpensive loans, however, were provided  to the “weak†third alley and all three continued to lose money.

The Federal Reserve’s creation of easy credit does not solve the current debt problem, it prolongs it.

Volume 30, No. 2, January 9, 2003

FOLLOW-UP COROLLARY

In our Debt Binge probe we cited a broad anomaly:  During the current recession, debt increased.

Some specific anomalies:

· A phone call to the Free Press Real Estate department came from a young couple overwhelmed by debts.  They didn’t own a house, but thought it would help to buy one.  “ I know you can buy a house and borrow 125 percent of its price.  Can you tell me how to do that?  I need the extra 25 percent .â€

http://www.williamsinference.com/Reports/2917debtbinge.htm

"Today, three out of five U.S. households are responsible for the approximately $560 billion in outstanding credit card debt. Among these 'revolvers,' credit card debt averages over $11,000 per household."

"Most Americans would be surprised to learn that total consumer debt, including home mortgages (over $6.5 trillion), exceeds the cumulative U.S. national debt ($5.7) trillion. And, like the sharp increase in federal borrowing that augmented the modest growth of federal revenues over the last 20 years consumers have become increasingly dependent on unsecured or 'revolving' credit to compensate for stagnant real wages, increasing employment disruptions, and higher costs for big ticket items such as automobiles, college tuition, insurance, housing, and health/medical costs. Although the finance charges on the national debt have grown substantially (from $292.5 billion in 1993 to $362.0 billion in 2000), accounting for over 12% of the current federal budget, heavily indebted consumers are facing a more serious financial burden since their loans are more likely to be in the form of higher interest credit cards (average of over 18% APR) versus more modest Treasury bonds (5%-6%)."

" the recent decade of economic growth and falling unemployment has featured a perplexing phenomenon: personal bankruptcy rates in the late 1990s (peaking at 1.4 million in 1998) soared to nearly ten times the rate of the Great Depression."

Manning cites "the dramatic decline in the U.S. personal savings rate (from nearly 8.5% in the early 1980s to less than zero today)" as well as "a huge increase in unsecured credit card debt: from $292 billion in 1992 to $654 billion at the end of 2000. A remarkable trend since credit card debt was only $50 billion in 1980."

http://www.creditcardnation.com/media/2004..._motleyfool.php

http://www.amazon.com/exec/obidos/tg/detai...9173978-3832719

http://www.creditcardnation.com/media/20040225_tompaine.php

Link to post
Share on other sites
Guest Charlie The Tramp
After all they could reduce them again after two  months when the message has hit home.

According to the National Consumer Council one in five people are borrowing money just to pay household bills, and one in four are struggling to meet bills and credit repayments.

Link to post
Share on other sites

If the BOE really wanted to help the economy they'd write a letter to Gordon adivising him to stop scumbag lenders ripping off people already mired in debt paying absurd charges and 10-70% interest on their short term credit.

While the BOE fiddles, Rome burns and the banks walk away with £10Bn's.

Link to post
Share on other sites
If the BOE  feel their rate rises have fallen on deaf ears , what would the odds be on a 1/2 point rise in the near future to shock people into thinking we should pay attention

A half point ,people listen alter spending,( short term pain) ,BOE  leaves in place for 3-4 months , then drops 1/4 point to say well done ,you listened.

Any thoughts ??

cant see it.. they're bank managers, not rock stars, dont think merv wants to create any shocks.

sllloooowww and steady...

Link to post
Share on other sites

Flick ,,

know what you are saying and admit ,I dont think it is particularily likely ,

BUT at some point the BOE may think the Great British public just aint changing there habits

.VIs keep talking it up, in a way its not what Joe Bloggs thinks , its what the establishment thinks and publishes.

any thoughts?

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

  • 439 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.