Why are they still cutting interest rates ? It don't work...
Discussion
anonymous said:
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What I don't understand is how they can get people spending without inflation going up?Most of our goods are imported, some from the far east, where everything is priced in dollars, and some from Euroland priced in Euros.
If we suddenly start spending huge amounts of money in these two currencies then we expose ourselves to the full devaluation that has happened on the forex markets - prices can therefore only go up.
Once inflation starts to take hold interest rates will have to rise again to control the spending, leaving us with increased interest rates & high unemployment.......what a f*ck up!
digger_R said:
anonymous said:
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My only question is how do you hedge against it?anonymous said:
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Baked beans?You hit the nail on the head earlier, dropping the base rate is pointless, we're not in a recession caused by credit affordability, but one of credit availability.
I think there's an arguement that dropping the base rate is actually going to compound the problem; by dropping the rate, credit is NOT being made more freely available. What is happening is that people with savings are seeing jack all return. They are therefore beginning to look at other areas to put their money in order to acheive the returns they want.
On the face of it, this is good, it might get people spending. However, it could be suggested that those who are prudent enough to have savings, faced with the current climate, won't be looking to spend, but to protect.
The flip side of this is that we'll see money being withdrawn from Banks. This is the Banks worst nightmare. The reason they won't lend is they've now realised that they haven't got a clue what liabilities they might be sat on. With the UK sinking deeper into the mire by the day, the reality that they might end up facing some of these liabilites looms larger. Until they work out what their expsoure is, they'll simply hoard money to cover themselves. If people take money out it weakens their protection and will simply make them more averse to lending.
Where do we go now? Well, that's the million $ question isn't it?
What is the symptom? - Lack of spending & investment.
What is the cause? - Lack of available credit.
So the answer therefore, has to be to get the credit lines open and distributing again, however i don't see how this can happen. GB can't force the banks to lend. (Well he can, but that could end in an almighty mess).
I really don't know what the answer is?
smack said:
digger_R said:
anonymous said:
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My only question is how do you hedge against it?anonymous said:
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Here here! You shouldn't rebuild a building on the crumbling foundations of the old one. It will just fall down again in the not to distant future - a waste of time. No different with the situation the country / most of the world is in. Clear away the rubble of what is in falling down, and start with a good solid foundation.Fittster said:
anonymous said:
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Weren't you in favour of bailing out the financial sector just a couple of months ago?Normal Lamont was just on the news and said something along the lines of "its time to stop with the rate cuts and wait to see if what is being done is taking effect".
Couldn't agree more! They're panicking! Tunring around an economy doesnt happen overnight, give it some time. If you panic, the media make a meal of it and the whole country panics!
Couldn't agree more! They're panicking! Tunring around an economy doesnt happen overnight, give it some time. If you panic, the media make a meal of it and the whole country panics!
anonymous said:
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Whats worrying is that you're not the only person to think that....but it seems no one in the Govt is prepared to acknowledge that and take the apin, choosing to try and prop up the economy to save their own faces, leaving a legacy that anyone with any self respect would be ashamed of.anonymous said:
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Pointless explaining this to the masses - i had to explain to a BANK EMPLOYEE this morning that banks didn't borrow at the BANK(OE) RATE of 1.5%, and were typically paying 12% upwards to secure their own debts! And he didn't believe me at first, so god knows how much what the average brainwashed idiot on the street thinks ..Edited by fido on Thursday 8th January 22:19
anonymous said:
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If you consider the UK to be a business, which in effect it is, then as a business you can borrow money because you have a product to sell in the future, and therefore make a profit, unfortunatley UK Plc has already borrowed the money but has nothing left to sell!All our business is service based and this is also being shipped abroard, no manufactuaring of any substance, how will the money be paid back? Taxes I believe, but with nothing to sell we are facing meltdown, and s
t times.As soon as they cant lower rates any further they will start printing money. Deflation is their worst enemy and will do anything they can to stop it. I think central bankers see themselves as on some sort of precipice at the moment. I agree with the pain argument too. There is no point in continued personal spending if it is borrowed money (credit cards etc) - it just draws the problem out.
Interesting read this: http://en.wikipedia.org/wiki/Economic_history_of_J...
The modern bits obviously.
The similarities are quite scary.
The modern bits obviously.
The similarities are quite scary.
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