Saturday, Aug 19, 2006

Why Interest Rates Are Rising

BBC News: Q + A: Why are interest rates rising

Interesting article that explains why global interest rates are rising and why it wont be a flash in the pan event, it also mentions directly how central banks have woken up to the fact that property value to earnings ratios are wrong.

Posted by rimmer @ 09:12 AM (461 views)
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6 Comments

1. sebastian said...

Interesting, I like the fact we see words like:

"over-borrowed"
"over-stretched"
"borrowed too much"
"underestimate risky investments"

Seems like quite a fair article, I like how it points out this all benefits savers.

Perhaps we should get a group of savers outside parliment begger for more rate rises!

Saturday, August 19, 2006 10:28AM Report Comment
 

2. uncle chris said...

I'm still waiting for Intelligent Finance and A&L to put my savings rates up 0.25%. Shame they don't react as fast with savings as they do with mortgage rates - oh, I forgot ... fairness and doing the right thing aren't in the modern buisiness philosopy.

Saturday, August 19, 2006 11:02AM Report Comment
 

3. The Bald Man said...

One of the underlying problems is that too much money has been borrowed against assets (houses) that by any objective measure are over-valued. When assets values fall the balance sheet of banks will look extremely streched.
I worry that the reaction in raising rates is too late and that there will be a severe credit crunch on the way. I also notice that buy to losers are still investing heavily in property. When the crunch comes these will be the first to bail out (probably involuntrily) leaving the banks with large holes in their balance sheets when the asset value does not cover the debt.

Saturday, August 19, 2006 11:26AM Report Comment
 

4. Ticktock said...

I do wish that they would state that the inflation figure given here is CPI. CPI is now systematicly being presented as THE inflation figure, rather than just a mix of carefully selected prices.

'They' Musn't be allowed to get away with such deliberate deception, as this potentialy has suge huge implications for so many future economic decissions and outcomes.

Other than that, pretty fair I thought.

Saturday, August 19, 2006 12:36PM Report Comment
 

5. Alexinrent said...

..savers have yet to see the so called benefit... i wonder why..

Saturday, August 19, 2006 02:13PM Report Comment
 

6. indiablue19 said...

The BBC calls this "news" do they? I suppose they are ignoring the notion that a government now in power campaigned on "no more boom and bust" so apparently did have some prior schooling on the dynamics of economics and banking. And now we have a BBC commemorative observance of a time honoured cycle of crisis economics that is suddenly "news worthy?" Where have they been forever? The BBC should hire some HPC contributors to provide a reasonable commentary to economic events and THEN they'd have a story.

To actually publish this stuff as though it has occurred without eons of warning and now requires some timely corrective action from the international financial community is nearly as irresponsible and self-serving as the people who created this crisis. One sometimes wonders if the internationally banking executive will have enough intelligence to choose matching footwear let alone act fiscally responsibly. And one wonders even more what journalism has become except an inflated and gigantic waste of time and paper dedicated to political pandering.

Undaunted by continued iterations of their own extraordinary impotence as a journalistic force, the BBC further speculates that current developments relative to increasing interest rates from the Central Banks will encourage savers? How terrifyingly stupid. Why on earth should it? They may have noticed if they'd opened one eye that savers benefit not at all from the machinations of high level banking. Besides the obvious disparities in rates offered to savers versus borrowers, I have found so many inexplicable and downright fraudulent "charges" and withdrawals from my current account, which have become so routine they don't even bother to apologize anymore when confronted and forced to return their ill gotten gain. Many I've spoken with have similar experience of their own banks, which leaves me feeling there is a whole tendancy among the banking community to skim off further "profits" whenever they aren't caught.

Does anyone besides me remember the time when legitimate bankers shunned a usurious rate of lending and there was an equitable ratio between lending and savings rates? No more. Now we have credit cards ranging in average from 17% to 40% while the banks can still borrow from Japan for .25% Perhaps the retort "let 'em eat cake," should be officially revived for the occasion as a forthright banking slogan, rather than merely implying the sentiment in every transaction.

Dribble on BBC, if you're assuaging your guilt for having become a rubberstamp and mouthpiece for politics, or if your merely pleasing yourself by publishing this pablum. You have an appreciative readership of one so far as I'm concerned: yourself.

Saturday, August 19, 2006 04:20PM Report Comment
 

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