Thursday, February 16, 2012

ZIRP is not special help for debtors apparently

Mervyn King: helping savers would push Britain back into recession

“I have deep sympathy with those who are totally unconnected with the origins of the financial crisis who suddenly find that the returns on their savings have reached negligible levels,” he told a press conference. "These are consequences of the painful adjustment prompted by the financial crisis and the need to rebalance our economy." The Bank could respond by increasing Bank rate from its current level of 0.5 per cent to 4 or 5 per cent, he said. But that would push up the exchange rate, depress investment and consumer spending “and we would go back into a recession.” “All groups in society are suffering from the financial crisis,” Sir Mervyn said, insisting that there can be no special help for particular groups.

Posted by quiet guy @ 12:11 AM (2431 views)
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11 thoughts on “ZIRP is not special help for debtors apparently

  • Whilst it would be very nice of you to increase bank rate to 4 or 5 per cent and make life easier, I’m still beating the banks and you Merv, you t*sser.

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  • The bank’s target has been unofficially changed from 2% inflation targeting to x% NGDP targeting. Under the latter system, savers always lose out; and they lose the most when the economy is performing poorly. By contrast landowners and gold owners always win.

    It might not be right, but that’s the world we live in. Now I’m up early to go house viewing.

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  • Don’t like to sound self-righteous about such an abysmal outcome but I did predict that this would happen some time ago between boughts of QE and moved in to my first house exactly a year ago today.

    The line about no special help for particular groups is especially grating. He has been the main architect of helping out one particular group – property speculators.

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  • Easily led, easily bled.

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  • As one of the comments under the article said, bad money driving out good money is now Central Bank policy.

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  • I think there’s a lot of misplaced anger towards King on this site better directed at Mr George.

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  • Well yes, but when you understand that the boom was the problem, that we need a recession to purge misallocated debt.

    But Mervin cannot halt the tide. The economy goes in cycles and will favor savers in time.

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  • Tom101: “I think there’s a lot of misplaced anger towards King on this site better directed at Mr George.”

    Possibly so, but Labour were just as determined in their attempts to keep house prices going up, they won three elections on the basis that they’d be better at keeping house prices going up, and only lost once house prices started going down. That’s a tough act to follow, so little Georgie has done the electoral logic and decided that the only way forward is to keep going with the madness.

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  • so little Georgie has done the electoral logic and decided that the only way forward is to keep going with the madness.

    Of course, and because of the high cost of living – i.e. high house prices & rents – the UK will continue in it’s failure to compete with the rest of the world in almost every sector. The long drift down will continue.

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  • Paul @ 3,
    Merv’s help seems directed at banks. No help for pensioners with savings.

    Banks threatened with a downgrade?…..here you are, guys. Just give me some worthless rubbish in exchange.

    Worked all your life? …..Acted responsibly, but need some help in later years…yes, sell your house first. No help from us till you beg.

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