Motoring1 min ago
Another Interest Rate Rise
Another one - great. Well thank you to all those people that live on loans and credit, you are screwing it up for those of us that just (would like to put just in inverted commas but don't know how) have a mortgage.
Why can't you control your spending?
There is a girl at work who has remortaged three times in as many years to eat into her equity to pay off loans and cards - she can't see that if the interest rate continues to rise house prices will have to fall and she could end up in neg eq.
Obviously those people that do not have a mortgage and have lots of lovely savings will be wanting people to continue to live beyond their means so rate continues to rise.
Is there an answer? (short of whacking the interest up to, say, 10% - although if they did that the number of repossessions would sky rocket).
My head hurts.
Why can't you control your spending?
There is a girl at work who has remortaged three times in as many years to eat into her equity to pay off loans and cards - she can't see that if the interest rate continues to rise house prices will have to fall and she could end up in neg eq.
Obviously those people that do not have a mortgage and have lots of lovely savings will be wanting people to continue to live beyond their means so rate continues to rise.
Is there an answer? (short of whacking the interest up to, say, 10% - although if they did that the number of repossessions would sky rocket).
My head hurts.
Answers
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On the other hand their loan based spending keeps people in jobs from the sales assistants, to the chief executives of high manufacturers, importers, lorry drivers even the burger bars selling cups of tea to the lorry drivers delivering the goods to the stores to be bought on tick!
Complicated isn't it? I think I'll stick to particle physics and not venture into economics
Complicated isn't it? I think I'll stick to particle physics and not venture into economics
Although interest rates have been used in the past to control spending it actually goes a little wider thatn that!
We live in a Global economy these days and the Bank will undoubtedly have taken many other factors into account. This is the advantage of having the Bank of England controlling the interest rate perhaps the only brilliant move our Gordon made.
We live in a Global economy these days and the Bank will undoubtedly have taken many other factors into account. This is the advantage of having the Bank of England controlling the interest rate perhaps the only brilliant move our Gordon made.
Rightly or wrongly, we have our interest rate fixed @ 6% for the next 5 years (we changed mortgage company).
Mr P is in the housing business and after a bit of thinking we decided to raise it and fix it ~ we can afford it, and there will be no nasty surprises for the next few years!
We were both stung in the late 80's/early 90's when interest rates sky rocketed practically overnight.
Mr P is in the housing business and after a bit of thinking we decided to raise it and fix it ~ we can afford it, and there will be no nasty surprises for the next few years!
We were both stung in the late 80's/early 90's when interest rates sky rocketed practically overnight.
There are fundamental problems with the economy of this country. The reasons are manifold but many of them stem from the wide disparity between the real inflation rate and interest rates.
As has been recently published, (and as everybody has known for years) the actual rate of inflation endured by this country is probably nearer to 10% as opposed to the ludicrous 2% or so that the Government continually insists on using. My schoolday economics taught me that interest rates should ideally be a point or two above the inflation rate. This ensures that those with savings see the value of their funds maintained. Those who need to borrow to fund either businesses or their lifestyles need to be prudent in that borrowing.
In Britain we have a situation where it makes economic sense to borrow as much as possible at the six or seven percent on offer because essential expenditure is rising at perhaps twice that rate. Throw into this pot the ridiculously over-inflated house market (largely fuelled by the availability of cheap money) and you have most of the ingredients for economic meltdown.
Low interest rates (in comparison to real inflation rates) encourage bad business management and personal financial ************. The evidence, certainly as far as the latter goes, can be seen in the high level of personal debt and bankruptcies now becoming apparent.
The blame for this lies firmly with the government. Their insistence on falsifying the inflation rate is understandable from their point of view, but in the long term it does the country no favours.
Increasing the interest rate to a realistic level is perhaps the only answer to this, and doing so gradually is somewhat better than a �big bang� that pippa describes. There are, however, bound to be casualties.
As has been recently published, (and as everybody has known for years) the actual rate of inflation endured by this country is probably nearer to 10% as opposed to the ludicrous 2% or so that the Government continually insists on using. My schoolday economics taught me that interest rates should ideally be a point or two above the inflation rate. This ensures that those with savings see the value of their funds maintained. Those who need to borrow to fund either businesses or their lifestyles need to be prudent in that borrowing.
In Britain we have a situation where it makes economic sense to borrow as much as possible at the six or seven percent on offer because essential expenditure is rising at perhaps twice that rate. Throw into this pot the ridiculously over-inflated house market (largely fuelled by the availability of cheap money) and you have most of the ingredients for economic meltdown.
Low interest rates (in comparison to real inflation rates) encourage bad business management and personal financial ************. The evidence, certainly as far as the latter goes, can be seen in the high level of personal debt and bankruptcies now becoming apparent.
The blame for this lies firmly with the government. Their insistence on falsifying the inflation rate is understandable from their point of view, but in the long term it does the country no favours.
Increasing the interest rate to a realistic level is perhaps the only answer to this, and doing so gradually is somewhat better than a �big bang� that pippa describes. There are, however, bound to be casualties.
Can you provide some details to justify your assertation that the government is falsifying the inflation rate please?
If you posed such an accusation in print against a specific individual it would be potentially libelous and I'm sure you wouldn't repeat something like that without a sufficient level of proof
So please share
If you posed such an accusation in print against a specific individual it would be potentially libelous and I'm sure you wouldn't repeat something like that without a sufficient level of proof
So please share
I really shudder when I see the level of debt that some people are living with. For those on low incomes I greatly sympathise, but for those who just have a Spend, Spend Spend philosophy without regard to living within their incomes, they will eventually reap what they sow.
I'm afraid I'm old enough to remember living under Harold Wilson's Labour Government when the Bank of England interest rate soared to 15% (yes, 15% !) during the liquidity crisis. Trying to meet your mortgage payments then when the rate rose every couple of months was a nightmare.
I'm afraid I'm old enough to remember living under Harold Wilson's Labour Government when the Bank of England interest rate soared to 15% (yes, 15% !) during the liquidity crisis. Trying to meet your mortgage payments then when the rate rose every couple of months was a nightmare.
It�s quite straightforward, jake. Simply calculate what you have spent on essentials over the previous twelve months and compare that cost with your expenditure the year before. Don�t forget to include things such as council tax, gas, electricity, fuel, rail and bus fares, and insurance premiums (to mention but a few). All of these things (which form a sizeable chunk of most people�s expenditure) have risen by many, many times the official rate of inflation.
I have carried out these calculations for the past three or four years, and I am hard pressed to arrive at a single figure inflation rate for any of those years.
It is ridiculous to suggest that because the prices of DVD players, i-Pods and washing machines have stayed flat or fallen that inflation is not on the increase. If these things go up in price consumers can adjust their spending accordingly. For the major items I have mentioned they usually cannot.
Perhaps you would have taken less umbrage if I had suggested that the inflation rate was being wrongly calculated rather than falsified. However, I believe there is a deliberate strategy for suggesting that inflation is lower than it is, hence my rather stronger term.
I have carried out these calculations for the past three or four years, and I am hard pressed to arrive at a single figure inflation rate for any of those years.
It is ridiculous to suggest that because the prices of DVD players, i-Pods and washing machines have stayed flat or fallen that inflation is not on the increase. If these things go up in price consumers can adjust their spending accordingly. For the major items I have mentioned they usually cannot.
Perhaps you would have taken less umbrage if I had suggested that the inflation rate was being wrongly calculated rather than falsified. However, I believe there is a deliberate strategy for suggesting that inflation is lower than it is, hence my rather stronger term.
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