A big rate cut at last !!?? I hope........

[bobhope]

It's doing wonders for Sterling.

[Cyberman]

Much as though I am loathe to admit it, the CyberCretin is partly right. Lowering the interest rate in times of depression can get things moving BUT in this current market, it only makes sense to lend to people who can afford to pay it back.

The problems we're in at the moment are caused at least partially by low credit cost, and the banks lending to people who had no way of realistically paying it back.

In addition, lowering the interest rates will weaken the exchange rate, hopefully convincing people to buy more British stuff (domestically and Internationally). Of course the rest of the world is in recession too, so basically we're stuffed.

*DOOMED*

Very few people will want or even be able to afford to borrow at this time so low rates are not a problem at all. This is the real worry because it could make a depression out of a recession. I repeat, the main reason for low rates is to give businesses and consumers more disposable funds.

[Cyberman]

It's doing wonders for Sterling.

Sterling is falling because we are in a recession and interest rates must fall, so funds etc are withdrawing their investments. This means that they are selling pounds and thus it will push the exchange rate down.

This disaster could have been avoided by cutting rates much earlier.

[Bagpuss]

This was at the start of the credit crunch and moneymarkets drying up which was already building in the USA in June last year. The USA immediately made massive cuts to their interest rates. We ignored it!!

I think you are missunderstanding the problem here. We have 2 issues:

1/ How to maintain reasonable lending to business in order to keep the economy buoyant

2/ How to control the inflationary pressures of conspicuous consumption fuelled by a credit boom

You cannot simply reduce interest rates to solve both problems.

So, lets have your solution on how to contol both while adhering to the conservative principle of using interets rates as a tool to control inflationary pressures. You only seem to see this as a simple problem.

[HairyArsedBloke]

Sterling is falling because we are in a recession and interest rates must fall, so funds etc are withdrawing their investments. This means that they are selling pounds and thus it will push the exchange rate down.

This disaster could have been avoided by cutting rates much earlier.

Dollar is gaining as everyone is buying US Treasuries.

This disaster could have been avoided by raising rates even earlier to cut off the excessive borrowing/spending by individuals, companies, but especially government.

[zara_backdog]

Hope we get a massive rate cut, I'm on a full-term tracker mortgage

Me to at this rate we will be able to pay off the mortgage

[Cyberman]

I think you are missunderstanding the problem here. We have 2 issues:

1/ How to maintain reasonable lending to business in order to keep the economy buoyant

2/ How to control the inflationary pressures of conspicuous consumption fuelled by a credit boom

You cannot simply reduce interest rates to solve both problems.

So, lets have your solution on how to contol both while adhering to the conservative principle of using interets rates as a tool to control inflationary pressures. You only seem to see this as a simple problem.

In a recession people do not spend. They save because they are worried about their jobs.
HMG would love a spending boom now because it will help to secure jobs, but the fact is that it simply will not happen and a million plus people will lose their jobs.
You seem to be still worried about inflation. Petrol is now 95p today, from 1.20p a few weeks ago and commodity prices are dropping off a cliff because worldwide demand is falling due to RECESSION. It is you who seems to be under a misapprehension.

[shaunbhoy]

This disaster could have been avoided by raising rates even earlier to cut off the excessive borrowing/spending by individuals, companies, but especially government.

Possibly, but we could have left interest rates alone and ensured, through meaningful regulation, that the banks ceased using high-risk business models that were, in effect, highly irresponsible lending IMHO. We were left in a position where there was little or no risk to the top bankers that were rubber-stamping such practises as they were minted anyway as a result of their bonus scheme. It is the rest of us that are left picking up the pieces. HMG could and should have seen this disaster building and acted to shield us from the worst effects by giving the financial regulators some teeth. This they singularly failed to do, and for that they must be held accountable, and will be come the next Election.

[Cyberman]

Me to at this rate we will be able to pay off the mortgage

Have you read my earlier info regarding mortgage 'collars' ? Not all banks will reduce rates below about 3.5%.

[Bagpuss]

In a recession people do not spend. They save because they are worried about their jobs.
HMG would love a spending boom now because it will help to secure jobs, but the fact is that it simply will not happen and a million plus people will lose their jobs.
You seem to be still worried about inflation. Petrol is now 95p today, from 1.20p a few weeks ago and commodity prices are dropping off a cliff because worldwide demand is falling due to RECESSION. It is you who seems to be under a misapprehension.

You're talking about the fire again, I'm interested in you solutions to preventing the fire, what would you have done with interest rates 2003- 2007, had them lower? That is what you have suggested for some time.

Please then explain the effects on

1/ and 2/

as outlined before. I'm interested to know how lower interest rates would have controlled the credit boom and stopped us heading into recession