Wednesday, June 29, 2011

Snake oil salesman trashes the pound and your savings

No interest rate rises until unemployment drops and the economy grows, says Mervyn King

''The Governor of the Bank of England Sir Mervyn King has suggested that interest rates would not rise until it was certain the economy was growing and there had been a drop in unemployment. He was giving evidence to MPs at the Treasury Select Committee along with other members of the bank. Sir Mervyn also indicated yesterday that a large cash injection directly into the economy to boost asset prices and spending was possible.''

Posted by hpwatcher @ 05:46 PM (3601 views)
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25 thoughts on “Snake oil salesman trashes the pound and your savings

  • Excuse me Sir Mervyn King, but the people of the United Kingdom will NOT accept unelected rulers [private Bankers] implementing national policy in a democracy.

    It may APPEAR that we have done that for quite a long time.

    But we can assure you that the PEOPLE of this GREAT nation, will NOT allow the unelected bankers, to create MONEY [deposits] out of thin Air. For much longer.

    The way our economy has existed is corrupt beyond belief.

    THAT, SIR WILL SOON BE CHANGING

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  • “Sir Mervyn also indicated yesterday that a large cash injection directly into the economy to boost asset prices and spending was possible.”

    Oh dear. Surely not more QE? If we want boost economic activity, we need fiscal policy decisions such as tax cuts at the lower income ranges not more accounting tricks with the DMO. I doubt there is much King can do now.

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  • Merv and the MPC will continue to make money hand over fist while most of the UK population suffers. As the £ drops surely imported food inflation rises?

    I’m getting the feeling that Merv and Bernanke will soon launch into more QE. After the mess, both will get seats on the boards of big banks.

    How about a few enterprise zones where jobs would be created and people will earn money to pay taxes…or do we prefer all those graphs the MPC so often refer to? Maybe even tax changes?

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  • QE to come before an IR hike?

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  • stillthinking says:

    What asset does propose buying to inject this money?

    I only see gilts as possible, and there isn’t much yield to push down. I find it hard to believe he is going to buy any other asset class without receiving valid criticism of just handing printed money out to a favoured few.

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  • – So very myopic..

    Do nothing until his inaction blows up in his face – at which point he will claim he didn’t see it coming ( – again…!)

    I’ve given this guy too much benefit of the doubt – he needs to be replaced with someone who is much more streetwise..

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  • Pilot hurtling down runway says ‘I will not take my foot off the accelerator until this car grows wings’

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  • “No interest rate rises until unemployment drops and the economy grows, says Mervyn King.”

    ~ Doublespeak…

    TREASON on behave of your masters SIR? Wake TF up!

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  • A tough call, reading this makes buying a house to be a sensible choice. Only yesterday the Bank for International Settlement BIS said rates mist go up to STOP asset price bubbles. Wasn’t Mervyn copied in on this.

    No wonder it’s hard to make decisions with opposing stories coming from the same direction.

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  • Ooo inflation is high, lets print some money.. LOL!

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  • ‘Behalf’

    Sorry, it must be the Hemp protein I had for lunch, that evil plant that America was built upon and the Constitution was written on.

    ~ RIP George Washington.

    Snake oil indeedy boyz.

    5. uncle tom said…he needs to be replaced with someone who is much more streetwise..

    Wake up tom!!!!! Do you really want for things to be even worse?

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  • I hope no-one’s surprised. I did warn this would happen.

    One of the terrible things about this is that even as recently as two years ago this situation where low interest rates become baked in was completely avoidable.

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  • “cash injection directly into the economy to boost asset prices”…

    They could have used the money to create employment, new businesss, productivity, but no, they want higher asset price!

    Higher assets price surpress productivity and business activity. Retards!

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  • The current financial problems in this country have been around for almost half a decade now and are progressively getting worse.

    I don’t think the MPC realise people in this country understand now that the easy spending days of the 90’s and early 00s are safely behind us (for the forseeable). The MPC are obviously very limited in their capacity to resolve the problems and I can’t believe they believe their continued 0.5% interest rate and some more QE will make any difference – it hasn’t so far and things are getting progressively worse! Presumably the MPC are just hoping to keep the ship afloat until some magical event occurs which makes everything all right again? Something tells me it won’t work out that way.

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  • What is the knock-on effect of suggesting to the market that interest rates will stay low ?
    Who gets to say that unemployment has gone down or that the economy is growing?

    It is merely suggestion isn’t it ; as if he can pull meaningful levers in a time of credit crunch and non-mark-to-market exposures ?
    And maybe sterling can be kept a little stronger because of it.

    A banking system overhaul might be the way forward rather than playing with the dials on the existing system.
    I think that because the banks and the IMF are putting crazy burdens of debt repayment on people – either through interest only mortgages which won’t get repaid or through telling a whole European country that it has to be in servitude and have its assets stripped.
    We need some sort of presidential James Stewart sort of character to sort this all out for us.

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  • mark wadsworth says:

    I was knocked back by the official admission that they want higher asset prices (read: higher house prices).

    I second Peter 2008’s comment.

    Good news is, wanting and getting are two separate topics – see Japan. I checked Rightmove again today and the same old house have been on for six months, some down a token 5% or so but none of them are shifting and neither am I.

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  • general congreve says:

    @8 – Who gives a f4ck if higher asset suppress productivity, as long as your banking buddies still get their bonuses and hold the reins of financial power that is all that matters. F4ck the ignorant proles.

    Anyway, don’t know why I’m being all sarcastic about it. Personally I think Merv is doing a fantastic job of shifting wealth from paper to metal, keep up the good work old chap.

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  • 2. alan said…Merv and the MPC will continue to make money hand over fist while most of the UK population suffers. As the £ drops surely imported food inflation rises?

    I’m getting the feeling that Merv and Bernanke will soon launch into more QE. After the mess, both will get seats on the boards of big banks.

    How about a few enterprise zones where jobs would be created and people will earn money to pay taxes…or do we prefer all those graphs the MPC so often refer to? Maybe even tax changes?

    Absolutely bang on (sadly).

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  • letthemfall says:

    Yes, I’m surprised by the intention to maintain asset prices, one of our core problems.
    Alan has it right I think – maintaining the wealth of banks and there dependants is the unspoken goal, with many feints towards pensions and rumblings about Greece to distract everyone.

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  • Brightonrentfodder says:

    yep, he’s clinging onto straws, by implying that our situation is much better than the 90’s, repossessions may be down but at what cost to the country? we’re up to our necks in debt & the chinese want to lend billions more to Europe, why’s that then? cos they don’t want the party to stop either! Capitalism is seriously F*cked, no wonder the Greeks want the Drakma back!

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  • There seems to be a general consensus on this site that the UK produces too little and consumes too much.

    The only way to reverse this (obvious to me) is a weaker currency. Of course this would serve to impoverish in the short term, but in the hope that in the medium term once people are hungrier they will become more productive, and also in the hope that a cheaper work force draws in investment.

    It seems paradoxical therefore that so many on here complain both about a lack of productivity, yet in the next breath about policies that serve to make the currency weaker.

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  • cat and canary says:

    …yes, weakening the currency was also Brown’s argument for “boosting manufacturing”…

    ..which is a bit like buying a plant pot, filling it with soil and waiting for an apple tree to grow

    what a waste QE was. It could have been invested more wisely to fund start up ventures on a massive scale.

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  • C and C, like you I’ve no interest in what Gordon said or thought. I’m not sure what you mean by saying QE was a waste. However if you mean a waste of time I’d agree with that.

    State sponsonsored start up ventures have their place but without true demand there is a tendancy toward mal investment.

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  • general congreve says:

    @15 – Problem is that as a net importer, a weaker currency means that a lot of businesses that rely on imports will go out of business, because people won’t be able to afford the products any more. The result will be more empty shops, unemployment and more economic decline in the immediate term (obviously one the dust has settled it may be economically viable to set up sweat shops in the UK to make clothes for example and build the economy from there – but that takes time and pain). That means more negative pressure on ‘asset values’ (like commercial property and residential property) and therefore more negative pressure on bank balance sheets, so even less lending to businesses and even more business failure. A vicious circle.

    So, by ZIRPing and QEing (which will ultimately weaken the pound further) in an effort to put off the day of reckoning for ‘asset values’, all Merv is doing is applying pressure on the economy from a different direction, with the unwelcome side effect of putting more inflation/devaluation into the mix.

    The economy is damned if he does, damned if he doesn’t. However, at least down the QE and ZIRP route their is a chance he can recapitalise his banking buddies with tax payers wealth by stealing it through printing and inflation, so they can maintain the financial hegemony over the serfs.

    As you all know, I have opted out of their corrupt little game and it is paying me handsomely. I recommend you do the same, because the writing is on the wall plain as day with regards to the matter. Until they are hanging from lamp posts, their looting will not stop.

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  • To me this is great news, only hope it stays that way for another 12 months.

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