Sterling recovers

[Cyberman]

It seems to me in this case it would have been much better if rate decisions were not made after undue influence from single Govt. I'd rather have euros here and euro central bank policy - this may well shaft people who overindebted themselves but it was their own choice and they should pay for it in full even if that is only going to serve as a warning to future generations about staying away from debt.

Rate decisions were not made by HMG but by the MPC, and this has been the crux of the problem. Fine when things were going well, but the MPC was fixated by inflation up until 2 months ago. Rates should have been drastically reduced a year ago, and a competent government would have done it.
If we were in the Euro our recession would be much worse because we could not act in our own best interests by lowering or raising our interest rates. I repeat....Joining the Euro would be a massive mistake for this reason.

[AtW]

Rate decisions were not made by HMG but by the MPC

That's a lot of bull. I never bought this "independence" carp because HMG is appointing people there and one can be damn sure those appointed people are, ummm, all "sound men" as one would imagine in terms of civil service.

[Doggy Styles]

Rates should have been drastically reduced a year ago, and a competent government would have done it.

I don't know what your reasoning is - rates should have gone up years ago, not down.

If they'd done that, we'd have had less borrowing, more saving, and more inward investment, all of which would have left us with more money/less debt in the coffers.

[PM-Junkie]

I don't know what your reasoning is - rates should have gone up years ago, not down.

If they'd done that, we'd have had less borrowing, more saving, and more inward investment, all of which would have left us with more money/less debt in the coffers.

If interest rates had been cut, personal debt would have rocketed and the credit crunch would have been even worse because toxic debt would be bigger.

If interest rates had been raised, government debt would have rocketed because the economy would have been throttled, and tax revenues would have been reduced as a result.

Hence the elementary need to build up a surplus when tax revenues are strong. Doesn't impact the consumer and doesn't stress the economy. If you don't, monetary policies don't work when a downturn hits because taxpayers pull up the drawbridge and stop spending no matter what you do. And fiscal stimuli don't work because the government has to borrow to provide the funds, and that weakens the underlying economy further and investors run for the hills, so the pound drops, and inflation rears its ugly head again - which makes it inevitable that the next recession is even worse unless public spending is cut drastically and/or taxes are increased over the next economic cycle.

It really isn't rocket science...

[Cyberman]

If interest rates had been cut, personal debt would have rocketed and the credit crunch would have been even worse because toxic debt would be bigger.

If interest rates had been raised, government debt would have rocketed because the economy would have been throttled, and tax revenues would have been reduced as a result.

Hence the elementary need to build up a surplus when tax revenues are strong. Doesn't impact the consumer and doesn't stress the economy. If you don't, monetary policies don't work when a downturn hits because taxpayers pull up the drawbridge and stop spending no matter what you do. And fiscal stimuli don't work because the government has to borrow to provide the funds, and that weakens the underlying economy further and investors run for the hills, so the pound drops, and inflation rears its ugly head again - which makes it inevitable that the next recession is even worse unless public spending is cut drastically and/or taxes are increased over the next economic cycle.

It really isn't rocket science...

So your reasoning is that rates should not be at all time lows. You do not make sense. Low rates are necessary to put more disposable income into people's pockets, increase bank liquidity and to cut costs to businesses, all in order to stimulate the economy out of this crippling recession. This should have been done a year ago as soon as liquidity dried up, but because of the MPC, rates were kept too high to fight inflation, exacerbating current problems.

[Cyberman]

I don't know what your reasoning is - rates should have gone up years ago, not down.

If they'd done that, we'd have had less borrowing, more saving, and more inward investment, all of which would have left us with more money/less debt in the coffers.

No need to put rates up. Sensible Credit Controls would have achieved the same results, but of course HMG wanted a boom so this would never have happened.

[PM-Junkie]

So your reasoning is that rates should not be at all time lows. You do not make sense. Low rates are necessary to put more disposable income into people's pockets, increase bank liquidity and to cut costs to businesses, all in order to stimulate the economy out of this crippling recession. This should have been done a year ago as soon as liquidity dried up, but because of the MPC, rates were kept too high to fight inflation, exacerbating current problems.

I realise you are not the brightest of people, and you have clearly not twigged some if not most of the problems inherant in the UK economy are due to borrowing - both personal and government. Low interest rates encourage personal borrowing, so if you had your way we would be an even bigger mess than we are now because people would have borrowed even more because they couldn't see the storm coming.

This problem has been 15 years in the making.

[Doggy Styles]

This problem has been 15 years in the making.

7, when Gordon Brown took over supervision of the banks.

[PM-Junkie]

7, when Gordon Brown took over supervision of the banks.

Wrong. Secured personal debt and government debt as a proportion of GDP, yes - but unsecured debt and the housing bubble (amongst other things) go back further than that.

[Doggy Styles]

Wrong. Secured personal debt and government debt as a proportion of GDP, yes - but unsecured debt and the housing bubble (amongst other things) go back further than that.

Wrong. 2001 was the last year that borrowing and saving with banks balanced. That was one of the things the BoE supervised.

If you are referring to the recovery after the recession of the early 1990s, that's what it was, a recovery, not a bubble.