Thursday, March 3, 2011

What sets our mortgage rates? Apparently, Chinese savers

Whither UK house prices? Look closely at Chinese savings rate

Mervyn King: The Chinese savers recycle their money into the UK mortgage market. If rates go up, it's because they're not savings as much. Note: we need them to spend more (and not save as much) so that the world economy can rebalance. Hence: UK house prices are likely to fall. You heard it from the man here!

Posted by notyethomeless @ 11:36 AM (1821 views)
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7 thoughts on “What sets our mortgage rates? Apparently, Chinese savers

  • another excuse from the liar and Bullsh&tter Mervyn King on why he should keep his job

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  • Merv is doing a splendid job in keeping the balance just right.

    He’s keeping the pot simmering nicely, not too hot, not too cold.

    All the signs are that the upturn is well on it’s way.

    Nice one Merv, keep up the good work.

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  • the number cruncher says:

    I thought it was a good article, not too sure about the extent of causality, the truth is never simple, but simple sells newspapers.

    But it does show you how powerless Merve is, if he had tried to do anything about it he would have been shown the door very quickly.

    Its the miss-allocation of capital that is the killer for western economies, our Chinese friends are starting to experience that with their own excess of big business liquidity and property boom. This will all play out like in the west unless their efforts at Land Value Tax come off.

    Merve will keep his job just as long as he is useful to the ConDems

    Anecdote:

    A while back spent the day playing with Merve’s predecessors’ but one, Robin Leigh-Pemberton’s private miniature railway, its marvellous fun. Nice chap but steered me away from any interesting gossip on the inner workings at Threadneedle Street.

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  • waitingfor hpc says:

    is smugdog on drugs?? because he seems dillusional! or blind or maybe both! The downturn in the economy is well on its way and will be headline news in 3 months…..

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  • Yes, it is a good article – and views from outside the country are perhaps more dispassionate than those within. The influence of China has been widely observed before but it is significant if MK has reason to believe the effect of China – which loans us the cash to buy up their stuff – is to be unwound.

    The comment about v low IRs maintaining house prices is also interesting in the light of the discussion a couple of days ago.

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  • mark wadsworth says:

    I hate to say it, but Merv has a point here. We just have to hope that the Chinese government allows its subjects to start spending more of what they earn…

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  • But China is putting it’s IR’s up encouraging more saving. I’m telling ya, it’s time to learn to speak Mandarin…

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