[Finance] BoE Interest Rise

[Lower West Stander]

Except …. economists have not been as one in backing Bailey/the MPC.

R4 and other media outlets have interviewed highly critical economists, who felt they were asleep at the wheel 9 months ago. Arguing that incremental interest rate increases at that time would’ve ameliorated the post Covid spending boom and reduced the damaging shock now.

As the old joke goes: If you put 10 economists in a room, you'll get 11 opinions.

Indeed.

Quite the opposite in fact. Bailey got slammed back end of last year and his rhetoric has been worse than Carney.

There is a general consensus now though on the path of rate rises and where they finish up. That’s why equities have been rallying.

Till something changes of course…..


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[Lower West Stander]

Watch C4 News from 7.17 tonight on C4+1.

David Blanchflower (you’ll like him, at the time he was highly critical of Tory Chancellors from 2010, very anti Brexit ), took the BoE apart. “Most of the stuff that the Governor said today was poppycock ….”.

Danny Blanchflower is clickbait.

Always use him in the media for the contra view - he was always the dissenter when he was on the MPC.

Wheel out Sentance next…


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[Weststander]

Danny Blanchflower is clickbait.

Always use him in the media for the contra view - he was always the dissenter when he was on the MPC.

Wheel out Sentance next…


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I first remember him as the dissenting MPC member who always voted for rate rises many moons ago, always outvoted and then he seemed angry about it in the media. Plus the only one who seemed openly party political, a devout Tory hater. He ended up in New Hampshire, it was never going to be a college in Mississippi!

 

[cheesy77]

Other than people with savings/no debt who seem rather excited, or the folk bizarrely enjoying the ‘punishment’ on JCL’s born in the 80’s/90’s who’ve bought their first home.

I agree, some odd comments on here from those who seem to oddly be enjoying that people will suffer. The 'I'm alright Jack' brigade.

There are lots of young families who in a desperate attempt to get on the joke of a housing market in this country will have borrowed to their limit, 4.5 times their income or even more.

"Oh but interests rates were 13% in the 90s", well guess what times have changed. For a start you can no longer buy a 5 bed detached house for £50....





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[Weststander]

I agree, some odd comments on here from those who seem to oddly be enjoying that people will suffer. The 'I'm alright Jack' brigade.

There are lots of young families who in a desperate attempt to get on the joke of a housing market in this country will have borrowed to their limit, 4.5 times their income or even more.

"Oh but interests rates were 13% in the 90s", well guess what times have changed. For a start a 5 bed detached house no longer costs 50 quid....


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I paid those interest rates, it was difficult for a couple of years, people lost their homes. But Sussex house prices were 1/7th of where there are today.

First time buyers don’t have it easy now, unless rich parents have paid a huge deposit.

 

[cheesy77]

I paid those interest rates, it was difficult for a couple of years, people lost their homes. But Sussex house prices were 1/7th of where there are today.

First time buyers don’t have it easy now, unless rich parents have paid a huge deposit.

Yeah exactly, and sure as hell wages are not even close to 7 times higher to keep in line with house prices, not even close...

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[Paulie Gualtieri]

Watch C4 News from 7.17 tonight on C4+1.

David Blanchflower (you’ll like him, at the time he was highly critical of Tory Chancellors from 2010, very anti Brexit ), took the BoE apart. “Most of the stuff that the Governor said today was poppycock ….”.

More here

https://www.newstatesman.com/quickfire/2022/08/david-blanchflower-bank-of-england-uk-recession


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[Weststander]

Yeah exactly, and sure as hell wages are not even close to 7 times higher to keep in line with house prices, not even close...

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Median UK household income has doubled since the mid 80’s.

[No specific figures for the South East].

 

[Weststander]

More here

https://www.newstatesman.com/quickfire/2022/08/david-blanchflower-bank-of-england-uk-recession


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Thank you.

 

[Wardy's twin]

Other than people with savings/no debt who seem rather excited, or the folk bizarrely enjoying the ‘punishment’ on JCL’s born in the 80’s/90’s who’ve bought their first home.

What I was getting at is increasing IR is a shotgun approach , it's themonied areas that need to be looked at and I don't just mean the ultra rich.

 

[Gwylan]

Danny Blanchflower is clickbait.

Always use him in the media for the contra view - he was always the dissenter when he was on the MPC.

Sound bloke Danny Blanchflower, he's the only famous person who follows me on Twitter so I have to say that. A Brighton boy too ( but a Spurs fan)

 

[Weststander]

What I was getting at is increasing IR is a shotgun approach , it's themonied areas that need to be looked at and I don't just mean the ultra rich.

I did get that.

The constraint here is that the UK (everyone seems happy with it) has an independent BoE, and it’s one tool for dealing with inflation is setting base rates. Whether they get it right or wrong.

So, based on that, politicians now have to provide that nuance you want, through fiscal policy.

 

[Weststander]

Danny Blanchflower is clickbait.

Always use him in the media for the contra view - he was always the dissenter when he was on the MPC.

Wheel out Sentance next…


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Spuds best ever captain?

 

[knocky1]

Is there anybody on NSC who actually knows what they are talking about in terms of economics - an actual "economist"?

Instead of a load of failed a-level students who have a vague recollection of something they might have studied (badly) several decades ago and promptly forgot as soon as the exam was over.

I didn't do economics a-level so can approach the issue from a platform of complete ignorance.

The interest rate on my savings account went up yesterday

6 posts have been spot on, in my eye.
Economics is an art not science. I have the O and A Level, Degree and Economics PGCE.
However, how the world economy is hanging on baffles me.

 

[LamieRobertson]

I paid those interest rates, it was difficult for a couple of years, people lost their homes. But Sussex house prices were 1/7th of where there are today.

First time buyers don’t have it easy now, unless rich parents have paid a huge deposit.

View attachment 150600

As I understand it the majority of peeps are on fixed rate mortgages, perhaps currently protected from rate increases…but when they end..ouch!
Spoke with a couple today who will be in that position early next year…currently they will be £400 a month worse off purely through the increase in mortgage payments as of now (further rate increases to come), let alone increases in gas/electricity bills etc

 

[Comrade Sam]

Raising interest rates is an old tool to make the poor pay for economic problems. Creates unemployment and helps lower pay.

 

[Weststander]

As I understand it the majority of peeps are on fixed rate mortgages, perhaps currently protected from rate increases…but when they end..ouch!
Spoke with a couple today who will be in that position early next year…currently they will be £400 a month worse off purely through the increase in mortgage payments as of now (further rate increases to come), let alone increases in gas/electricity bills etc

1.3 million fixed rate deals are to end this year, 1.8 million next.

Plenty of work for @Uncle to get fixed, before fixed deals feature yet higher rates.

 

[Weststander]

6 posts have been spot on, in my eye.
Economics is an art not science. I have the O and A Level, Degree and Economics PGCE.
However, how the world economy is hanging on baffles me.

On that very last point (and this would be true for 2008 to 2010, 2019 to 2021), my complete guesswork theory is that 95% of business and therefore jobs/income is a recycling of money, that will always be there, oiling the wheels. Buying groceries, coffees, buying essentials for the home, spending on family, car fuel, repairs, some leisure. Plus the rich are in a good position, they consume and use services.

Recessions affect the rest - holidays, luxury items, expensive meals out. As well as the poor not making ends meet.

Preventing a complete collapse.

 

[Randy McNob]

Just imagine how worse things could be under Corbyn / labour / Milliband etc

Thank your lucky stars for the Tories, after all they are always the best at running the economy....

 

[WATFORD zero]

For over 6 years we have been warned that a significant hit to the economy was coming and over the last few that it has been building in intensity as Brexit, Covid and the Ukraine have hit (and continue to hit) our economy. Meanwhile our Government, instead of addressing this, have spent their time lying, breaking laws, International and domestic, lying, negotiating unimplementable international agreements, lying, handing out dodgy contracts to their mates, lying, covering up their lies and stoking culture wars.

Is anybody REALLY surprised that we are now up shit creek