Interest Rates
Discussion
How long is a piece of string?
Look at Japan!
Rates are totally dependant on govt policy.
Fiscal stimulus = more likelihood of increasing rates.
Austerity = low rates for longer.
IMO in the next year, not much will happen.. after that who knows time to take another view in 12 months time.
Look at Japan!
Rates are totally dependant on govt policy.
Fiscal stimulus = more likelihood of increasing rates.
Austerity = low rates for longer.
IMO in the next year, not much will happen.. after that who knows time to take another view in 12 months time.
Of course, just passing on an opinion from someone within the sector.....
The same conference highlighted the fact that the predictions for our recovery are being tapered back year on year, as the economy struggles to hit the figures that so called experts expected us to by now.
The 'Lost Decades' of Japan make a startling comparison for our on economy and where it is heading....
The same conference highlighted the fact that the predictions for our recovery are being tapered back year on year, as the economy struggles to hit the figures that so called experts expected us to by now.
The 'Lost Decades' of Japan make a startling comparison for our on economy and where it is heading....
fid said:
Cheib said:
Rates aren't going anywhere for a good while....QE or no QE.
You think, you hope, or you know?Rates are low to reflate the banking system and help banks repair balance sheets. The reality is that the transmission mechanism for the low central bank rates to the end user i.e. business and individuals is still broken i.e. the banks will only lend competitively to companies or individuals that don't really need it.
Here's an article about Rolls Royce (aero engines not cars!) who are lending money to their suppliers because the banks won't finance them. Clearly these are companies that are going concerns!
http://www.supanet.com/rolls-royce-forced-to-lend-...
Here's a quick article about the impact on the markets of QE in the US. As you would expect each iteration has less and less of an effect
http://www.zerohedge.com/news/2012-10-29/incredibl...
I understand that the banks are spooked but surely it's in their best interests to get the money moving again as they make money by lending money. Besides it's a bit late for prudence now isn't it? Talk about closing the barn door after the horse has bolted.
Cause the problem by irresponsible lending in the first place and then prolong the agony by closing up shop, they really do have a lot to answer for.
Cause the problem by irresponsible lending in the first place and then prolong the agony by closing up shop, they really do have a lot to answer for.
Guvernator said:
I understand that the banks are spooked but surely it's in their best interests to get the money moving again as they make money by lending money. Besides it's a bit late for prudence now isn't it? Talk about closing the barn door after the horse has bolted.
Cause the problem by irresponsible lending in the first place and then prolong the agony by closing up shop, they really do have a lot to answer for.
Trouble is when banks lends money they have to put aside what is known as regulatory capital and the riskier the lending the more capital they have to commit. What that means in terms of say the mortgage market is that loans under 50% LTV they are very happy to lend on but once it gets over 75% it's really not very profitable to lend money and over 90% the margins are tiny. Cause the problem by irresponsible lending in the first place and then prolong the agony by closing up shop, they really do have a lot to answer for.
It's a double edged sword as the more money they lend they can retain those earnings and replenish their capital base but if you don't have enough capital in the first place you can't lend the money.....
These rules have changed post the financial crisis and are going to get more onerous in a few years.
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