Even lower base rates.

[crankedup]

swerni said:

Art0ir said:

WeirdNeville said:

Art0ir said:

He may be selfish in his motivations, but poor saving habits are why much of the current crisis had unfolded in the way it has. This is not good news for the economy in the mid to long term.

Why bother saving when you get no returns and your cash fund is eroded by inflation?

I completely agree and that is the crux of it.

The point of saving, is to have a cushion if it all goes horribly wrong.

Liquidity matters

Thankfully there are some brains in the house. Its people who moan about savers who are generally those that have over reached themselves financially and now depend upon low interest rates for survival. These rates can't last forever, then what?

[Art0ir]

swerni said:

Art0ir said:

WeirdNeville said:

Art0ir said:

He may be selfish in his motivations, but poor saving habits are why much of the current crisis had unfolded in the way it has. This is not good news for the economy in the mid to long term.

Why bother saving when you get no returns and your cash fund is eroded by inflation?

I completely agree and that is the crux of it.

The point of saving, is to have a cushion if it all goes horribly wrong.

Liquidity matters

I think we're crossing wires here, that's the point I was trying to get across initially. The problem, as I see it, is that no one is being encouraged to save.

[crankedup]

Getragdogleg said:

crankedup said:

anonymous said:

[redacted]

He blurts out after looking up his mortgage statement. Why shouldn't I moan? guess you would enjoy handing over your money to some tt who has over mortgaged him/herself.

If that is in any way aimed at me then I think you can fk right off. The problem is not "over mortgaged" it is pay not going up to cover the rises in bills, I have been in this house for 10 years and am still on the same money as when I bought it. Lucky to have a non seasonal job down here even if it is driving trucks.

Steady down fella, its not aimed at you. Previously you described your personal situation currently and I did acknowledge that and also said I have been there and done it. So no, its not aimed at you at all. Its aimed at the people who have gone out of their way to grab the largest possible mortgage, way over their head to fund a purchase hopelessly to expensive for the income. This goes back to the pre 2008 crash, when stupid money was being thrown around like confetti. It is this group of mortgage holders who are now reliant on the super low interest rate part funded by savers. The value of the house has not risen and they are unable to sell at the profit they wrongly anticipated. These are the ones that get up my nose.

[McWigglebum4th]

crankedup said:

anonymous said:

[redacted]

He blurts out after looking up his mortgage statement. Why shouldn't I moan? guess you would enjoy handing over your money to some tt who has over mortgaged him/herself.

So how does this fit in with your moan that I should be paying for you garden to be pumped out?

P.S. i have a HUGE mortgage

[toppstuff]

crankedup said:

toppstuff said:

anonymous said:

[redacted]

I think this is the crux of the matter.

Stunning top analysis. Little people huddle together for strength.

Oh dear..

[Derek Chevalier]

Crafty_ said:

Derek Chevalier said:

Crafty_ said:

We have a housing shortage,

If we repeat something enough times, does it become true?

http://www.bbc.co.uk/news/uk-18416365

http://www.housing.org.uk/campaigns/housing_crisis...

http://www.theinformationdaily.com/2013/03/13/how-...

http://www.nytimes.com/2013/03/01/greathomesanddes...

There are hundreds more, including an article about turning old public toilets into a home.

http://en.wikipedia.org/wiki/Moon_landing_conspiracy_theories

http://www.davidicke.com/forum/showthread.php?t=76...

[Crafty_]

Well you've got me convinced Derek.

In totally unrelated news: Drugs are bad kids, don't touch them.

[anonymous-user]

crankedup said:

He blurts out after looking up his mortgage statement. Why shouldn't I moan? guess you would enjoy handing over your money to some tt who has over mortgaged him/herself.

Not all beneficiaries of the low rates have overmortgaged themselves.

[Derek Chevalier]

anonymous said:

[redacted]

Millions have

[toppstuff]

anonymous said:

[redacted]

But it's much bigger than this. Businesses are struggling to get access to finance. Making it more expensive to get when they are successful, is hardly a recipe for growth.

The OP's myopic perspective fails to take into account that the last thing the economy needs is for the cost of money to increase. Business investment would suffer if it did.

[Art0ir]

toppstuff said:

But it's much bigger than this. Businesses are struggling to get access to finance. Making it more expensive to get when they are successful, is hardly a recipe for growth.

If businesses cannot survive with the interest rates as defined by the market, they are not viable.

[Mermaid]

Art0ir said:

If businesses cannot survive with the interest rates as defined by the market, they are not viable.

[toppstuff]

Art0ir said:

toppstuff said:

But it's much bigger than this. Businesses are struggling to get access to finance. Making it more expensive to get when they are successful, is hardly a recipe for growth.

If businesses cannot survive with the interest rates as defined by the market, they are not viable.

Huh?

Cost of money rises, prices rise. Inflation grows. A fragile economy doesn't need this.

There are times in the economic cycle when rates should be higher. This is not now. Economics basics.

[mondeoman]

Art0ir said:

toppstuff said:

But it's much bigger than this. Businesses are struggling to get access to finance. Making it more expensive to get when they are successful, is hardly a recipe for growth.

If businesses cannot survive with the interest rates as defined by the market, they are not viable.

Enjoy your Tesco life...

[Ozzie Osmond]

toppstuff said:

Cost of money rises, prices rise. Inflation grows. A fragile economy doesn't need this.

There are times in the economic cycle when rates should be higher. This is not now. Economics basics.

The only people benefitting in any material fashion are the banks. QE and 5% additional VAT have stoked inflation for the man in the street in any event.

Putting base rate back to 2.5% would barely affect individuals and would have the key benefit of starting to restore confidence in the value of money.

[toppstuff]

swerni said:

toppstuff said:

Art0ir said:

toppstuff said:

But it's much bigger than this. Businesses are struggling to get access to finance. Making it more expensive to get when they are successful, is hardly a recipe for growth.

If businesses cannot survive with the interest rates as defined by the market, they are not viable.

Huh?

Cost of money rises, prices rise. Inflation grows. A fragile economy doesn't need this.

There are times in the economic cycle when rates should be higher. This is not now. Economics basics.

Sounds like this business you're talking about is walking a fine line and therefore sounds like a high credit risk.
No wonder it can't borrow money cheaply.

I don't understand your point.

Increasing rates is useful to cool down a fast growing economy and to reduce asset price bubbles,

A slow growing or contracting economy needs lower rates. It's got nothing to do with your point. This is basic economics.

[toppstuff]

swerni said:

Banks get slated for high risk lending so stop lending to high risk companies.
Banks then get slated for not lending.


Sounds like catch 22 to me.

You are conflating discussion about lending criteria and the cost of money. They are quite different issues.

[Lotusevoraboy]

Willy Nilly said:

It does annoy me somewhat. We cannot possibly have people loosing money on their speculation on the property market. It's fine for people to loose money on any other financial gamble, but not their house. They must make money on their house, it's written in law, somewhere.

But it's fine, savers don't mind being paid half of fk all so people can buy a "property" (what a stupid word, it's "a house" not "a property") they can only afford if they get subsidy in the form of low interest rates.

All low interest rates do is keep individuals in houses they can't really afford and it keeps businesses going that should have gone to the wall. Interest rates might as well increase ten fold when lenders aren't lending at any rates, at least it would be worth saving.

If the UK economy is so dependant on people making a paper profit on a house then we really should have a rethink on how the country is run. Here you are treated like a second class citizen if you don't own (the mortgage lender actually owns it) your own house.

It's all bks.

Lose not loose...loose is what your backside is after a curry.

If you have enough in the bank to be massively effected by low interest rates then you don't need to worry about money...it makes far more sense to keep housing affordable than it does to ensure those with tens or hundreds of thousands in the bank get 3% instead of 2% interest! The whole point of low interest rates is to encourage savers to spend, or invest in enterprises for a better rate of return, thus helping the economy as well instead of sitting on a wad of cash like a lazy ass and raking in the interest. Buy some houses, rent them out, get a 10% return on your capital, if you don't like what the bank gives you.

[Murph7355]

swerni said:

Banks get slated for high risk lending so stop lending to high risk companies.
Banks then get slated for not lending.


Sounds like catch 22 to me.

But while you are conflating discussion, have a read back through some of the OPs previous posts as this particular conundrum is also well versed.

[Crafty_]

Ozzie Osmond said:

The only people benefitting in any material fashion are the banks. QE and 5% additional VAT have stoked inflation for the man in the street in any event.

Putting base rate back to 2.5% would barely affect individuals and would have the key benefit of starting to restore confidence in the value of money.

2.5% would barely affect individuals ?
I beg to differ, for people who are battling inflation in energy and food prices on low incomes thats quite a bit of extra money to find for the interest payments on the mortgage, even if its at a low rate and has a small amount remaining. Could easily be another £100 a month that they don't have right now.

Besides the previous poster is correct, the idea is you go spending money instead of sat with it in the bank.