Wednesday, August 7, 2013

Low interest rates forever – Banks and UK Government insolvent with higher interest rates

Mark Carney has committed the Bank of England to its record low interest of 0.5pc for as long as unemployment remains above 7pc.

Carney says: He's emphasising that the 7pc unemployment rate won't be a trigger for raising interest rates, but rather a trigger at which the MPC will re-assess its monetary policy.'

Posted by hpwatcher @ 10:55 AM (5202 views)
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78 thoughts on “Low interest rates forever – Banks and UK Government insolvent with higher interest rates

  • More of the same, until currency crisis.

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  • With wages and salaries frozen for foreseeable future andinflation set to continue above target, how much longer will it be before Osborne is offering 25, 30, 40, 50 per cent deposits to would-be home buyers?

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  • It’s the only way to keep the national ponzi scheme…I mean growth going. But….I think that Japan / Europe will have blown up well before that.

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  • Markets’ immediate reaction: Sterling is falling, but gilt investors are disappointed and pushing yields higher, says FastFT.

    Not a vote of confidence in UK plc.

    Looks like in 2015, we’ll be voting against a backdrop of five years of wasted government, courtesy of the Eton Boys.

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  • FTSE on the slide… Carney’s not yet on message yet, unlike the Daily Mail, Express, Telegraph and Evening Standard which have all been repeating the Osborne mantra of how it’s Boomtime Britain

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  • mark wadsworth says:

    It’s the interest rate see-saw.

    If you set ’em too low at the short end (the only end over which the government has any sort of control) then they go up at the long end (the one that matters).

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  • Unemployment typically shrinks at a rate of about 0.45 percent per annum during an economic recovery (equivalent stage). The current rate of economic recovery is very slightly above historical trend, so we can expect to see the bank base rate rise in the first quarter of 2015. However preliminary reports suggest that the recovery has sharply accererated during the third quarter. It therefore seems likely that the base rate will increase in the autumn of 2014.

    However the BOE are unlikely to be able to keep to this ‘rule’. Premiums are now being paid for early delivery contracts on a range of commodities. This is a strong indication that worldwide demand (and prices) is set to increase. In this scenario long term rates will not play ball and the BOE will be forced to abandon their rule.

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  • Unemployment typically shrinks at a rate of about 0.45 percent per annum during an economic recovery (equivalent stage). The current rate of economic recovery is very slightly above historical trend, so we can expect to see the bank base rate rise in the first quarter of 2015. However preliminary reports suggest that the recovery has sharply accererated during the third quarter. It therefore seems likely that the base rate will increase in the autumn of 2014.

    Good point, but IS this a normal economic recovery in which the rate will decrease at 0.45%?

    Moreover, I wonder what the effect of migrants from eastern Europe will be on the unemployment figures? Hardly push it down…..Apparently, BoE have said that when unemployment falls below 7% – all they will do is to reassess the situation….doesn’t bode well….

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  • The unemployment figures are madeup/massaged through giving job seekers sanctions and sending them on 2 week toilet cleaning training courses etc,

    Labor force participation rate might have been a little better, but I think median wage with labor force participation rate targeting would be more objective.

    Oops silly me they don’t want objective they want a figure that they can control.

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  • Yes, this economic recovery is finally looking pretty normal.

    We actually have far more people in employment than ever before (since records began in 1971). The current ratio of employed to unemployed is really quite healthy by historical standards. This ratio goes some way to explaining some of the things that have mystified HPCers (like rising house price and positive growth numbers).

    I’ve identified two headwinds that may yet negatively impact house prices but I’ll save that for another day

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  • “UK interest rates held until unemployment falls … Carney has said the Bank will not consider raising interest rates until the jobless rate has fallen to 7% or below.”

    ……….and here’s the bit they keep quiet about, isn’t the school leaving age changing to 18 at some point soon. The unemployment figures will change dramatically if the school leaving age changes to 18, plus if the US raises its rates or the bond bubble deflates too fast I doubt they will have any choice but to raise rates.

    Its all about politics, the government is flooding the market with cheap mortgages again so people vote them back in at the next election, once they are back in, they will pull the plug and point the finger at other things around the world which has caused them to raise rates………………I feel sorry for all the people who will now buy a house thinking they’ve got at least 3 years of low interest rates to get themselves settled

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  • “they want a figure that they can control”

    Correct. So are the MPC/BoE independent? They don’t control the unemployment rate, IDS does.

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  • Sadly for Mr Carney, he can’t lower rates any further and the markets have already priced them in.

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  • @ flashman

    I’ll see your messianic myopia, and raise you 1 million zero hour contracts.

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  • I’ll see your messianic myopia, and raise you 1 million zero hour contracts.

    That’s true. In the US part time work is allowing absolutely huge increases in the employment figures – but part time work, is highly unlikely to provide the kind of growth to support the whole US economy. It’s all phoney!

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  • Since QE/ZIRP has no effect on economic growth – except probably the negative one of reducing income from interest, which in turn reduces consumption – there is a direct correlation between continuing QE/ZIRP and unemployment staying high or increasing. So Carney is on a winner with this policy. In the US the shadow stats of John Williams show that real GDP has declined for years if deflated by the traditional inflation measure. It’s probably the same here.

    If Carney can announce his own policy – er, ‘forward guidance’ – what is the value of MPC members’ monthly votes?

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  • mark wadsworth says:

    Icarus: “there is a direct correlation between continuing QE/ZIRP and unemployment staying high or increasing. So Carney is on a winner with this policy.”

    A very depressing thought indeed. It appears to me that these people don’t want the real economy to pick up, because if it did, interest rates would increase and then they’d all look very silly with their housing and share price bubbles.

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  • The idea of interest rates pinned to the floor was only supposed to be a short term policy….this is going to have lots and lots of unintended consequences.

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  • Meanwhile on planet earth, the Pound is up sharply against both the Dollar and the Euro. Construction is up, services are up, retail is up, manufacturing is up, car sales are up, house prices are up. Unemployment is down.

    Come on chaps, adjust. 2008 was a long time ago.

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  • mark wadsworth says:

    Incurable Optimist: “the Pound is up sharply against both the Dollar and the Euro.”

    ???

    GBP is trading pretty much in the middle of the range it has been for the past four years against USD, EUR or JPY. (The big falls were at the end of 2008 and beginning of 2009). In other words, it is bumping along the bottom, has been for four years.

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  • Is he saying that if inflation starts soaring and unemployment remains above 7% they will keep interest rates at 0.5%?

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  • @Flashman, 18

    You’re absolutely right, 2008 was 5 years ago and we are over mid way through a 7-10 year credit cycle. The next bust could be as early as 2015, with huge aggregate levels of debt, interest rates at 0%, and QE, so far, to support a deficit in revenue of about 12% (if that’s increased to over 20-30% we really will see much higher inflation, historical precedent suggests so).

    My prediction is for yet grander monetary lunacy in response to the next crisis/downturn in the cycle.

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  • …..Debt is up….

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  • Up more than 1% today. That’s a big move.

    If you want to talk historically, it’s been close to both 1:1 and 2:1 in recent history. Its current level is therefore pretty middling

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  • @18 you forgot to say that consumer spending was 2.4 per cent down, month-on-month for July.

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  • i remember the 90`s says:

    Flash came on this site years ago ,his posts have far more accurate than HPCers who actually want to be homeys ,perhaps you should listen and buy after all, so long as you can afford it at the end of the day its a home for living in not for profit.

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  • @stuartking

    It’s this constant search for out of context, barely understood, inconsequential bits of bad news that has caused the collective opinion of this site to be so consistently wrong for such an extended period of time (I think that’s why there’s only 5 or 6 regular contributors left).

    That July number is only down 0.1% year on year and was a consequence of the heat wave (recreation & Culture spending was down -5.4% as people took to the beaches, parks and gardens). It says it all that that you should single out July, a month that saw sharp growth in the three main sectors of the economy. The month of July was an absolute corker for the UK economy.

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  • mark wadsworth says:

    Eternal Optimist: “If you want to talk historically, GBP has been close to both 1:1 and 2:1 in recent history. Its current level is therefore pretty middling”

    Yes, that is what I said, there is no point delving too far back, it’s in the middle of where it’s been for the past four years.

    I Remember: “HPCers who actually want to be homeys…”

    Please do not confuse

    a) people who would prefer owning their home to being a tenant (which is most of us including me) with

    b) “Home-Owner-Ists”, people who subscribe to the insane belief that ever rising land prices and ever higher taxes on income which funnel wealth upwards to become more and more concentrated in an ever smaller number of hands is somehow “A Good Thing”.

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  • @ Flashman,
    “Come on chaps, adjust”.

    I believe I need to adjust severely because of the level of debt in the West. The UK is particularly vulnerable.

    Use whatever UK Debt comparison you like vs GDP. Government Debt or Government, Corporate and Private Debt.

    It’s a big wave. (Even ignoring the Eurozone and the leverage of Eurozone banks). IMHO when it goes it could make 2008 seem like walk in the park.

    As Osborne said “QE is the last resort of a desparate government”. I think we will watch it happen. The £ may well drop badly, longer term. People could move to commodities soon. Cash in bank accounts will inevitably get knocked as more QE ensues, distrust of the £ could easily follow – just following the current policies to their logical conclusion, of course.

    Drops in pensions could also happen soon, Gilts are at risk, including mine. Think of how much the UK government has borrowed. Could the Gilt bubble pop on us?

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  • Guys, relax. Rates are not going to increase, so take a leaf out of the chancellor’s book and … “borrow with confidence”. mwahahahaaaaaaa! I wonder if he was stroking a white cat when he said that?
    N

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  • mw: I don’t think i remember the 90`s has confused anything. You’re an ex BTL landlord who would dearly like to own a home (if memory serves, your wife would really, really love to own a home). You don’t currently own a home because you decided to speculate that prices would fall. Your speculative gamble didn’t work out and now you devote a large portion of your life slagging off anyone who does own a house.

    I’ve often wondered why you are so prepared to throw stones when you could easily be described as an ex-landlord, speculating homey

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  • Flash,
    Good to have you back, but is this a place to trade insults?
    N

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  • I suspect the recent much touted fall in unemployment is largely down to people being put on reduced hours. As I recall the numbers in part time employment have been at record rates for some time. Anyone update on these? So those part timers are pumping far less wages into the economy than the same numbers of full timers would. Also in the latest ONS release the long term claimant count increased by a chunky 5% year on year, That is a funny kind of recovery. reference: table 11(1) Claimant count.
    N

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  • nickb, I hope you don’t mind me saying but you are thrashing around for crumbs of bearish comfort. The economy is growing, period. The economy and our society is going through a period of transition. There will always be people who suffer in a period of transition and these people are likely to be cynical about economic growth because it’s not their personal experience. However all over Britain their are entrepreneurs and businesses working feverishly on new projects, services and products. I know this because I talk to them and read about them almost every day. Does anyone ready The Economist? It is very good at reporting the sort of thing I’m talking about.

    I am actually worried about one thing and that’s the energy ceiling. The world is about to enter into a boom phase but the energy supply is not quite ready for it. It will be ready in a few/several years time (yet more new projects) but that will be a little late. I think there will soon be an almighty spike in energy prices. I anticipate the spike being big enough to cause the property market some serious bother. Many people could experience heating bills as large or larger than their mortgage

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  • Flash,

    I trust life is treating you well. All now that is needed is a return from General Congreve . He can explain his disastrous bet on gold, which cost/inflation adjusted is underwater 5 years on.

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  • flashman said…Meanwhile on planet earth, the Pound is up sharply against both the Dollar and the Euro. Construction is up, services are up, retail is up, manufacturing is up, car sales are up, house prices are up. Unemployment is down.

    Um wages simply aren’t going up….so where is the money coming from? Artificial stimulus, low interest rates and FLS.

    flashman said…Yes, this economic recovery is finally looking pretty normal.

    I seem to remember you calling a ”recovery” back in 2009/2010. However, for my money, there is absolutely no way anyone can call this a normal recovery, with interest rates at 300 year low etc. If there was a real recovery, all commodity prices would be rising and there would be serious inflation – none of these are happening.

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  • Hi bellwether,

    Yes life is good thanks. You ok? Has the general gone? That’s a little sad. This site must have filled a large chunk of his life.

    Hpw, thanks for reminding me that I called the recovery so early. Bullseye! It started growing almost immediately after my call. This recovery has been unusually slow and a little faltering but as I said above it’s finally looking more normal. It’s too early in the cycle to expect high inflation and higher commodity prices but as I said a few posts ago, I expect a large energy spike at some point.

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  • Hpw, thanks for reminding me that I called the recovery so early. Bullseye! It started growing almost immediately after my call.

    Ah so all the months of recession in 2011 and 2012 must have been my imagination! 😉

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  • The economy grew in 2010, 2011 and 2012. It was pretty crap growth but there we are. It’ll grow at a faster rate this year which is why I said that the recovery is finally looking normal

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  • A sobering perspective on flashy’s ‘everything’s up’ message. UK new car sales 2007 – 2.4m, 2012 – 2.0m.

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  • Mark Wadsworth says:

    Eternal Optimist: “mw… now you devote a large portion of your life slagging off anyone who does own a house”

    That was exactly my point which you have not understood properly, so I will repeat it…

    Please do not confuse

    a) people who would prefer owning their home to being a tenant (which is most of us including me) with

    b) “Home-Owner-Ists”, people who subscribe to the insane belief that ever rising land prices and ever higher taxes on income which funnel wealth upwards to become more and more concentrated in an ever smaller number of hands is somehow “A Good Thing”.

    The big difference, in case you hadn’t noticed, is that group a) wants house prices to go down and group b) wants house prices to go up. They are opposites.

    The fact that I think housing is wildly overpriced does not mean that I do not like owner-occupiers or those who would like to be owner-occupiers as I myself would like to be an owner-occupier.

    Glad to have cleared that up, or are you one of these people like Piddly who wastes a lot of time accusing me of having said things I never said and then slagging me off for it?

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  • Projected car sales for 2013: 2.21m.

    2007 was a crazy year for car sales with abundant credit and a champagne feel good factor. It’s amazing that we’ll get so close to that this year with tighter credit and a more somber atmosphere. July was a bumper month for car sales. Beep beep.

    Hi Icarus, I have some hazy memory that we exchanged car sales numbers a few years back? I haven’t got the data to hand but I think 2013 is now forecast to set a record for global car sales. Hope you’re well

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  • @Flashman

    Welcome back! Since you seem to be unusually chatty today, I was wondering if you would care to offer any opinions about the ‘Help to Buy’ scheme? I would be interested to hear your opinion of it.

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  • Higher car sales = more debt to be paid back = slower growth.

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  • Hello flashy, damn your eyes, where’ve you been eh? Trading spices and porcelain in the East Indies? a spell in debtor’s prison?

    I’m in rude health, thanks, apart from a broken ankle a few months ago that’s mending now. At least it wasn’t the bloody flux or the French pox. I don’t remember exchanging car sales numbers – must be the lead in the rum that’s getting to the brain. How are you?

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  • I think it’s a genuine attempt to help some people to buy a house. The govt were getting pretty frustrated with the banks preference for landlords and people with large deposits and this is their response. I think it’s not sufficiently significant (statistically) to make much of a difference to the housing market or to an election result. I doubt most people even know what it is. I think that governments get themselves into a pickle with these cobbled together sticking plaster policies.. They upset far more people than they help and they give their opponents ammunition. I’m writing this in a taxi so I hope it makes sense.

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  • Icarus, it’s as if GMF were still still with us. Did you find that post in Leicestershire sale room? Sorry to hear about your ankle. It’s time to put on my Cherrypickers and go to dinner, so I’ll say goodbye for now.

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  • Hi Flash. Good to hear you sounding typically optimistic. On the one hand I agree with you; I think a lot of people on this site are convinced an almighty crash is inevitable, firstly because it’s what they want to believe, and secondly because they read this site all the time and if you read the same stuff all the time you become convinced it’s true.

    On the other hand, look at IR’s and the amount of cash that’s been pumped into the economy through QE. The economy is on life support and if that support were removed I think it’s fair to say that growth would turn negative pretty sharpish. The symptoms have subsided but the root cause remains. I don’t doubt your predictions of energy price spikes, but to me the real problem in this country is debt. Yes, 2008 was a long time ago, and if we were in genuinely good shape we’d have IR’s somewhere around normal, and the BoE wouldn’t have needed to ignore it’s main purpose. Question is, which of these will happen first – will we get sufficient growth for IR’s to return to normal, or will something happen to force IR’s up (Or is this the new “normal”)?

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  • sibley's b'stard child says:

    Welcome back Flash, if nothing else you make the blog a more interesting read.

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  • sibley's b'stard child says:

    Welcome back Flash, if nothing else you make the blog a more interesting read.

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  • Flash,
    Rather an own goal on your part on the energy front then. But not to worry, Caudrilla is riding to the rescue, you will be able to fill your car with tap water pretty soon.
    N

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  • @nickb – I look forward to paying £1 per litre in water tax.

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  • Khards,
    Aren’t they bringing that in in Ireland anayway?
    N

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  • stillthinking says:

    If you can change the inflation target rules then there aren’t any rules. So Carney has just announced the BoE will do as it pleases, which is what it has been doing anyway.

    The pound is down against the yen, through 150. The pound is losing value against a currency with a central bank that just adopted a spray and pray policy.

    The exporting nations are currently in the process of restructuring specifically to export less to debt laden countries like the UK, amongst others and as I mentioned before, the Japanese cannot and have not been able to hold onto manufacturing despite having running costs that are about half that of the UK and a mind set against the service sector and totally in worship of manufacturing for export. The UK is certainly not rebalancing towards exports.

    I think the UK is in the middle of an ongoing devaluation and that real prices in the UK are still falling. Does this constitute a recovery?
    Does the sudden appearance of government guaranteed housing debt credit constitute a recovery? This is money that’s going to be substantially spent abroad. A lot of money will appear but the economy will be exactly the same.

    I do hope so don’t get me wrong but I still see the UK falling flat on it’s face. Deficit spending, trade deficit, looming power issues, extremely high taxation, falling real income, busted pension schemes, huge debts everywhere needing to be rolled over, zombie households and companies we don’t even know the extent of.

    Carney just said he will ignore inflation up to 5% probably because he thinks it will fall down afterwards, and there is sufficient financial restrictions to prevent people from borrowing from anything similar to the BoE rate to take advantage. There is also in the UK press a social meme that is in the process of abandoning structured pensions as savings vehicles.

    If the central bank needs to announce abandoning of inflation control that’s not a good sign at all.

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  • Hi Timmy t, thanks for the welcome back. That’s right they wouldn’t have all these supportive policies if the recovery had been ‘normal’. However as I said earlier, the recovery is finally starting to look normal and there is now a very slight upward pressure on interest rates. It’ll be a while yet but it’s there. That’s one of the reasons for this announcement. They are worried that the market will front run them (long term rates) so they are making it clear that a base rate rise is not super imminent.

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  • flashman said…I think it’s a genuine attempt to help some people to buy a house.

    Hmmmm not prop up house prices, or win an election then? I bet you thought you’d been wrong about the recovery these past few years, so you were bound to be a bit right sooner or later. The problem you have is that this ‘recovery’ is debt fueled and government funded – so it’s not likely to last long. But we shall see about that….possible not before too long.

    The main thing is that UK house prices still need to correct, which they haven’t properly done for 20 years – it’s probably the only country in Europe where house prices are rising so fast – all thanks to UK Government support.

    timmy t said…will we get sufficient growth for IR’s to return to normal, or will something happen to force IR’s up (Or is this the new “normal”)?

    BoE are probably terrified of a big recovery, but they know that won’t really happen as nothing is happening with wages. Most of the money coming into the economy is borrowed – so more debt. That’s why they aren’t worrying about interest rates – there is not likely to be any significant growth.

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  • To be honest, I think the memories of some people on here so short.

    Do you remember the situation at the beginning of this year? It looked like the UK was heading for a triple dip – also in the US the data was so bearish – many were saying that there would be no recovery this year. Then UK government announced they were going to ‘turbo-charge- FLS….and now look what’s happening?

    The FLS is now around 80 billions (George Osborne is expected to expand his flagship £80bn lending scheme – http://www.theguardian.com/business/2013/apr/23/george-osborne-funding-for-lending-scheme) so it’s easy to see where this ”recovery” is coming from.

    Give me £80 billions and I’ll show you a good time.

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  • Nickb: “that’s rather an own goal on your behalf” (regarding my predicted energy price spike)

    You do know that I’m not personally responsible for global energy policy and that I don’t run the world economy? I think there will be a large energy price spike that will hamper the economy, so I say it.

    You then go on to reference fracking. I am not interested in being dragged into an emotional bun fight about fracking. Maybe someone else will oblige? I did not invent fracking and I did not personally green light any of the projects. Fracking is far from the only energy development but if you are casting about looking for someone to blame, then start with the people who campaigned successfully, for decades, against existing technologies. We consequently have a short/medium term gap that needs closing and fracking has been selected as the emergency solution. It’s the law of unintended consequences or something like that. It’s not my fault and I’m not interested in discussing it further (here).

    hpw: No, I didn’t think I was wrong at any stage and fortunately I wasn’t. The economy grew slowly in 2010, 2011 and 2012. I fully expected the growth to eventually accelerate and now it has. I publicly (and often) predicted that this acceleration would begin in late 2012 and fortunately it did. I also predicted that house prices would not crash unless unemployment reached 2.75 to 2.85 million. All of my predictions were based on hard data and well established analysis techniques. Doing it that way (as opposed to using emotion and will) liberates the predictor from doubt and angst. It’s not very gracious of you to say “ah but I bet you had doubts”. Why are you picking on my correct predictions? Why not pick on people who actually got it wrong? You also seem to be saying something like “ah but we only got growth because of the government’s policies”. What did you expect? That’s what governments are for and I for one was absolutely certain that they would ‘do something’. In a way it’s like saying that Usain Bolt wouldn’t run so fast if he didn’t train so hard

    sibleysbastardchild: You had so little to say, you said it twice? I remember you following me around last time, commenting on me personally, without ever contributing to the debate. It is because of people like you that I decided to quit this blog. Well done, you’ve persuaded me again. Enjoy your debates with libertas and crew. Apologies to everyone else and thanks for the debate.

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  • Actually id like to reserve judgement until ive read / watched the report / press conference.

    There was a bit of Carney carnage on cable yesterday as longs and then shorts both got squeezed. I know since an alert pinged on my mobile for my short GBP position going into enough profit to take some and then move the stops to MBG only for the stop to be hit and with some decent follow through to the upside.

    So yes initially the pound went lower but then re-e-versed and went higher,about a 3 cent range. Enough for alot of people to feel quite queasy me thinks. Lots of money made and lost.

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  • Flashy it was nice to see you back if only for a brief time. I understand your point of view. Its very difficult to argue or debate soundbites. I like to see some well reasoned points of view. As for being right or wrong im not really sure anyone is consistently right or wrong. More right than wrong on balance yes.

    I have nothing much to add to this debate at the moment. I actually think we are a bit of a bit part player in this so for me its all down to the septics, a la what FRB did next.

    I am interested to see if Carney said anything about extending QE in his forward planning statement, because otherwise isnt he giving the market a nudge in the tightening direction anyway. Again apologies for not having read what he said! (will do later).

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  • @techieman – I looked at the GBP charts yesterday and saw that in action. It looked like manipulation by the big boys to me. Why would you sell off, then go full in?

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  • Khards – I doubt it was manipulation. I think you are partly right the move was exaggerated both ways by (possibly) thin volumes and stop running, but i think the market reacted to the downside first (i.e. low IRs to remain) and then probably snapped back on improving fundamentals (as Flash says) but again i dont know as i was otherwise disposed yesterday, and was quite lucky to remain unscathed.

    Unless when you say you, you mean me rather than the market – if you see what i mean :). Is that what you mean?

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  • Hi techie, good to see you’re still around. Yes, all we can ultimately hope for is being more right than wrong.

    As if I need to tell you but the bounce alluded to above has been seen a billion times before. If you look at the right resolution, it’s a perpetual and permanent feature of every chart. That bounce is the essence of markets and it’s how they mechanically function. It’s just a game of who takes from whom. Sometimes it happens big and quick, sometimes it happens small and slow. No need to always assume there’s a bogey man involved

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  • A bit like the old days – quarrelsome and looking for points.

    Is the economy recovering? I think that depends on one’s position. For some people, especially the asset-rich, it probably is. For the rest I’m not so sure. Certainly accommodation costs are very high for those who don’t own a house with fairly low borrowing. We’ve had the worst financial crisis since the 30s and it’s not clear to me that it has been resolved – the very low interest rates.

    For me, as always, the fundamental problem is rising inequality, and in the face of that any arguments on whether or not the economy is recovering look rather otiose.

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  • It is all very depressing.

    It would seem nothing has been learned from very recent economic turmoil and we are destined to steam-roll straight into the next cyclical downturn not having resolved the last one.

    Market dislocation is going to grow….record low interest rates…soon to be sky-high inflation driven by soon to be sky-high energy costs and rocketing debt levels.

    The next economic cycle will not only kill house prices it will kill the consumer economy.

    The government at that time will print like there is no tomorrow.

    Welcome to Weimar UK.

    After holding on I have decided to emigrate. Everywhere will be affected but some countries are more resilient than others.

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  • I’m rather fond of scotch eggs. In this so called recovery they’ve gone up so how could it possibly be a recovery?

    We all have our hobby horses but it’s a bit silly using them to question a recovery. All we can do is the maths.

    In a way we have rising equality in that the relatively unskilled are seeing their wages align with those of competing foreign workers.

    Now I’m sure that there are still some people who would like to correct that with higher taxation but it’s never worked for us in the past.

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  • Flash,
    where else is the energy going to come from? On the one hand you say all is well on the other that maybe the energy supply will be temporarily disrupted. Well, as you may be aware, a lot of rather credible petroleum geologists have been saying for a rather long time that conventional oil will peak in the early part of this century and that there are no shoe-in substitutes that don’t come with environmental horrors like fracking does, not to mention the fact that they are not attractive on a net energy basis. So I’d be interested to know the grounds for your assertion that this is just a temporary problem.
    In case I inadvertently hinted otherwise, I am not accusing you of being responsible for the energy situation or economic woes (!!) – merely wrong about these matters.
    N

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  • So if inflation targeting is going out of the window what exactly is replacing it ?

    To me it looks like high house prices and low interest rates. In which case all the government has to do is keep unemployment high …?

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  • sibley's b'stard child says:

    That was actually intended as a compliment Flash, though it’s reassuring to see your ascerbic wit hasn’t dulled in your absence.

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  • How do you measure a recovery? The published GDP figures. Fine, but a single number is very limited in what it says about an economy. As for defining equality as a global equality of poverty – that is silly. I think old Osborne would like that one though.

    Here we go again.

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  • Flash – sorry for delayed response…

    How can you say the recovery is starting to look normal? The QE and ZIRP that have led to an increase in GDP have never been done before – ever. To my mind, GDP figures going up a bit might make it APPEAR normal, but if that has only been enabled by something that’s never been done before then that’s far from normal. If it were “normal”, IR’s would have gone up when inflation went mad, but that couldn’t happen because the whole city would have gone pop. Normal? Don’t think so.

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  • Timmy t: you are looking at the past. The central banks are now working out exit strategies. Focus on the first two words of the phrase ‘starting to look normal’. By the way inflation never ‘went crazy’.

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  • letthemfall, so you want world peace and prosperity for all? So does the girl who won the East Hampshire beauty pageant. Everyone wants that but only beauty queens and poseurs lecture the rest of us without offering a viable plan.
    Assuming you don’t have a magic wand, what’s your solution? Tax and spend? Seizure of assets? Jail for anyone with a Jag? Smallholdings for all? Create a master race of wealthy socialist Scandinavians? Something more subtle? Come on let’s hear it. Promise not to laugh.

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  • Seems you’ve found your old charm flashman, not to say facetiousness. You are capable of more serious discourse so I’m not sure why you’ve burst back upon this site in your old aggressive style. Anyway, I have better to do than return your scorn, so I’ll leave you to carry on your pointless diatribes. A wise head here once called you a bully. He was right.

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  • You are also capable of better than your pointlessly provocative entry to this debate (first sentence). I do have an acerbic wit as pointed out earlier but I think what really drives some crazy is their inability to win an argument or reply to their bluff being called. I developed my protocols and style in the old days of university debating contest. In those days one was lauded for winning an argument and points were awarded for skillful put-downs and insights into an opponents mindset. It is an art lost to sites like this where the loser sulks for years on end and accuses their opponent of the behavior they themselves are repeatedly guilty of.

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  • You are also capable of better than your pointlessly provocative entry to this debate (first sentence). I do have an acerbic wit as pointed out earlier but I think what really drives some crazy is their inability to win an argument or reply to their bluff being called. I developed my protocols and style in the old days of university debating contest. In those days one was lauded for winning an argument and points were awarded for skillful put-downs and insights into an opponents mindset. It is an art lost to sites like this where the loser sulks for years on end and accuses their opponent of the behavior they themselves are repeatedly guilty of.

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  • You are also capable of better than your pointlessly provocative entry to this debate (first sentence). I do have an acerbic wit as pointed out earlier but I think what really drives some crazy is their inability to win an argument or reply to their bluff being called. I developed my protocols and style in the old days of university debating contest. In those days one was lauded for winning an argument and points were awarded for skillful put-downs and insights into an opponents mindset. It is an art lost to sites like this where the loser sulks for years on end and accuses their opponent of the behavior they themselves are repeatedly guilty of.

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