Sunday, Aug 13, 2006

Times' David Smith backpedalling

Times Online: Bank experiments with a 5% solution

David Smith proves again that he is even more out of touch than usual in his outlook of the economy. His appraisal of economic conditions is consistent - just consistently wrong. He seems to be trying to warn the Bank of England not to raise rates too much, or his house will fall in value. Let's hope they're not stupid enough to listen.

Posted by paul @ 03:00 PM (607 views)
Add Comment
Report Article


1. Thesqueeze said...

Well at least nobody can be surprised if they do raise the rate again in November, well nobody except the well paid and well educated economists it seems. I am still amazed that so many of these people found it a 'surprise' that rates were raised... I think the rise was long overdue and believed the reason it would not rise was not based on stats, but on the slowness of the MPC to react for a year. Merv is in the hot seat now, he was right to call for raise last year and the muppets around him realise this now. He's 'the daddy'....and they are his bitches....

My home town of Cheltenham is awash with 'To Let' and 'For Sale' signs at the moment. It's ridiculous. I expect the 'To Lets' to turn into 'For Sale's' as we go into autumn and people want to avoid the prospect of a winter of increased fuel bills, slow housing market and more rate rises.

Sunday, August 13, 2006 11:36PM Report Comment

2. kpjcomp said...

> Long-standing readers will be aware of my skip index...

Because he has 3 skips down his street, the economy is fine. I feel much better for the future of the UK now he's told us that!..

Monday, August 14, 2006 12:11AM Report Comment

3. denzil said...

Ah Smith, he of the "too early for a calming rate cut" about 2 months back.
The bloke is a laughing stock and is so consistently incorrect I feel faintly embarrassed for him.

Monday, August 14, 2006 09:07AM Report Comment

4. talking rot said...

Thing is Chaps, David Smith predicted that there would not be a house price crash in 2005. He also said that house prices would rise slowly, and that unemployment would remain very low. OK, it has risen but it is no where near the levels during the 1980s.

As barking as he seems, he hasn't yet been too far wide of the mark - it will be interesting to see how much longer his rose-tinted specs will be accurate. Past performance is no guarantee for the future.

Monday, August 14, 2006 10:13AM Report Comment

5. inbreda said...

> Long-standing readers will be aware of my skip index...

Maybe I should let him know about my "sink or float" index, whereby I can tell the future prosperity of the entire country simply by studying the results of my poor diet.

Muppet. Property fever is a very different think to a healthy economy. If anything, 4 skips on his street should indicate that everyone has gone 'Phil and Krusty mad', and that we are all soon to be doomed.

Monday, August 14, 2006 10:27AM Report Comment

6. denzil said...

>>As barking as he seems, he hasn't yet been too far wide of the mark -
Oil at $40 a barrel
Rates would fall not rise on the back of no rise in inflation.
Predicting a rate cut when the money markets has factored in a rise and the BoE actually raised rates.

Most Sun readers would have predicted no HPC in 2005 so it hardly qualifies Smith for the post of Economics Editor of the Times. I'd like to read anything from Smith that could be regarded as providing the insight one would expect from a man in his position.

Monday, August 14, 2006 10:57AM Report Comment

7. inbreda said...

Denzil - he is Economics Editor of the Times. I think his skip index is about the level of insight you'd expect from someone in his position.

Monday, August 14, 2006 11:18AM Report Comment

8. Rickyb said...

I think his skip index could be more influenced by the fact that it's currently cheaper to build an extension to your existing house than it is to attempt to move up the ladder. Also, he might not realise that houses deteriorate over time and occasionally need considerable expense to maintain.

Monday, August 14, 2006 01:30PM Report Comment

9. Rainbow said...

Those skips may be there for the repossesed to clear their crap out!

Last August when rates were cut, he wrote "It would be a stange rate cutting cycle that only consisted of one rate cut", notice he gave that sort of reasoning a swerve now that interest rates have been raised. He usually likes to quote like-minded third parties such as Jonathan Lyons who was recently spouting on about interest rates being as low as 3% by the end of 06.

Monday, August 14, 2006 01:36PM Report Comment

10. paul said...

He's not the Times economics editor AFAIK inbreda - Gary Duncan is.

His detachment and ignorance rubs me up the wrong way every time.

Monday, August 14, 2006 02:10PM Report Comment

11. uncle tom said...

I've just read his piece three times over to try to work out what he's actually trying to get over.

I'm still not much the wiser...

Rising energy and commodity prices will be absorbed for a while - but only a while. Margins will be rebuilt, and the chances of this being offset by a fall in core costs is not high.

He makes no mention of China, and the rapidly increasing cost of product from that country.

Indeed, across the board there are virtually no deflationary factors left, and an awful lot of inflationary ones. Inflation is back on the agenda, and the notion that it was somehow 'under control' will be shown to have been an illusion. It is my personal view that it will prove impossible to keep inflation on target for the next few years, and that there will be a fundamental rethink with regard to monetary policy. Pity those whose pension funds bought 50 year gilts...

His skip index seems to define the limit of his economic ability. About scaffolding, he is right on one detail - builders are now effectively banned from asking their employees to climb ladders I'm told - unless it's to ascend scaffolding...

Did anyone properly cost the consequences of this health and safety diktat? - I doubt it - and it will prove to be yet another (albeit small) inflationary factor to add to the rest...

Monday, August 14, 2006 04:22PM Report Comment

12. paul said...

"As barking as he seems, he hasn't yet been too far wide of the mark - it will be interesting to see how much longer his rose-tinted specs will be accurate."

tr, he's also been wildly inaccurate on some points. "Oil will soon slip back to under $40 a barrel" (April 2005), "Interest rates won't need to be raised until at least January next year" (July 2006), "Recent stock market falls are not the beginning of a downward trend" (July 2006), "Mortgage equity release is a form of wealth creation" (June 2006).

The man is a tunnel visioned twit.

Monday, August 14, 2006 06:09PM Report Comment

13. Pop said...

Smith is one of those people who prefaces every column with a retrospective vindication of some previous prediction. Usually from way back. I never feel as if he has been anything other than deliberately hedging his bets. Like AA Gill The Sunday Times should have the inner strength to fire them.

Monday, August 14, 2006 06:58PM Report Comment

14. bidin'matime said...

But he shares the same problem as all economists who have to serve their readership - he may even have the intelligence to know better, but if he was to tell the truth, he would get the sack - no one wants to employ an expert who upsets their customers by telling them the hard facts.

Monday, August 14, 2006 08:11PM Report Comment

Add comment

  • If you do not have an admin password leave the password field blank.
  • If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user's views and not the views of
  • Please adhere to the Guidelines
Admin Password
Email Address

Main Blog | Archive | Add Article | Blog Policies