What a slap in the face to savers

[xoggoth]

Aren't we just following the American model, allowing people who can't really afford a house to acquire mortgages that really long term they are not going to have the savings to weather any future shocks to the world economy

Quite. What triggered the last global crash according to some. Certainly a factor anyway and it will be again according to some who should know:

Startlingly, the imf says the looming economic crisis is a direct result of how authorities tried to solve the last one. The decision to slash interest rates to such unprecedentedly low levels has encouraged the massive debt buildup—a problem for which there is no painless solution

https://www.thetrumpet.com/article/1...matter-of-time

[Zero Liability]

Quite. What triggered the last global crash according to some. Certainly a factor anyway and it will be again according to some who should know:



https://www.thetrumpet.com/article/1...matter-of-time

Yup... more here:

US interest rate rise could trigger global debt crisis - Telegraph

The thing is, the benefits to governments for the time being are immense; it keeps stock markets goosed up (and therefore GDP and tax receipts elevated), debt artificially cheap, credit cheap (to the extent that o/n borrowing makes its way into consumer lending rather than carry trades abroad; this actually saps domestic credit availability, compounding the "zero bound" problem central banks fear) and depresses artificially high wage costs in regions like the Eurozone, where these render it uncompetitive. Therefore, eliminating this drug/stimulant will cause massive short-term harm, but keeping it on-going is going to cause long term damage as it funds unproductive, wasteful malinvestments, like uninhabited ghost cities in China, stock buybacks etc.

That said, I don't think merely targeting the upper bound of the range they currently target is going to make a huge difference. Meaningful rate rises will, though.

It's nice to see that the IMF is taking a break from telling OECD economies to load up on debt.

[Andy2]

The shock to people when interests finally rise again is going to be huge, can you imagine if we hit 15% again now there would be an awful lot more bankruptcies

USA, UK and a whole lot of other countries will go bankrupt if interest rate rises too much because they are in debt upto the eyeballs ,
for that reason it will never be allowed to happen.

[MicrosoftBob]

USA, UK and a whole lot of other countries will go bankrupt if interest rate rises too much because they are in debt upto the eyeballs ,
for that reason it will never be allowed to happen.

They never want it to happen, doesn't mean it won't though

[d000hg]

The shock to people when interests finally rise again is going to be huge, can you imagine if we hit 15% again now there would be an awful lot more bankruptcies

I was only a nipper back then, I opened my first building society account (including a cheerful money box and nice little book they printed your balance in) when rates were ~10% and thought it was amazing. I think by then my parents were at the point they were savers rather than borrowers so they loved it, but it must've had a similarly drastic effect back then is it would now? Who CAN cope with 15% mortgage payments?

[SueEllen]

I was only a nipper back then, I opened my first building society account (including a cheerful money box and nice little book they printed your balance in) when rates were ~10% and thought it was amazing. I think by then my parents were at the point they were savers rather than borrowers so they loved it, but it must've had a similarly drastic effect back then is it would now? Who CAN cope with 15% mortgage payments?

I know people who did.

They worked 7 days a week in two jobs. Others gave up and handed their keys in.

Doing both this time round would be difficult due to change in the nature of work e.g. poorly jobs don't have fixed days anymore, and the fact you would still owe the lender the loss on the property.

[SpontaneousOrder]

Quite. What triggered the last global crash according to some. Certainly a factor anyway and it will be again according to some who should know:



https://www.thetrumpet.com/article/1...matter-of-time

No. It was the free market & capitalism's fault.