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arkitect
Jan 8, 2009, 06:30 AM
Lowest in 315 years… sigh… where do we go from here? Actually, no need to answer. :o

The Bank of England has cut interest rates to 1.5%, the lowest level in its 315-year history, as it continues efforts to aid an economic recovery.

The half percentage point reduction brings interest rates below 2% for the first time since the Bank of England was founded in 1694.

Manufacturers' association EEF said the move was "too timid", and that the Bank should have cut rates further.

The Bank has now reduced rates four times from October's 5% level.

http://newsimg.bbc.co.uk/media/images/45356000/jpg/_45356188_boe_jan09_gr226_15pc.jpg

Link (http://news.bbc.co.uk/1/hi/business/7817453.stm)…

SpaceMagic
Jan 8, 2009, 07:23 AM
It's insane. 1.5%. Great for Home buyers but what about Savers! What about Pensions?

As a student I'm waiting for the Government to cut my mortgage with them...

Queso
Jan 8, 2009, 07:28 AM
It's insane. 1.5%. Great for Home buyers but what about Savers! What about Pensions?
Pensioners are basically knackered. AFAIC this is a cut too far. Borrowers will not get any benefit from the banks as the rate is now lower than the floor rate in most mortgage contracts. At the same time savers have seen the interest they receive cut by around 70% since September.

There comes a point where rate cuts just take money out of the economy. I think we passed that last month.

SpaceMagic
Jan 8, 2009, 07:40 AM
I constantly get the impression the Government is looking for short term fixes. Or rather, shock factors which will make people happy but will probably hurt in the long run.

As there's very little to invest in at the moment, this rate cut is probably for the big banks so they don't have to pay out so much to investors/savers.

I am definitely centre-right when it comes to the economy and politics, but I think the best thing to do right now is to think about the future. We are basically b*gger*d in 2009 so instead of bailing out so many banks, why don't we just pile money onto the things that have needed doing for so long - transport, hospitals, education. We may be poor for 2009, but our future will be brighter.

arkitect
Jan 8, 2009, 07:43 AM
I constantly get the impression the Government is looking for short term fixes. Or rather, shock factors which will make people happy but will probably hurt in the long run.

And we all know what is coming next…

No plan to print money - Darling

Link (http://news.bbc.co.uk/1/hi/uk_politics/7817623.stm)…

Never believe anything until it has been officially denied.

SpaceMagic
Jan 8, 2009, 07:47 AM
Oh god. Get them out! Get them out now! Didn't see that. Have they just gone mad?

Let's just be poor for a year. It's got to be better than destroying our currency.

dalvin200
Jan 8, 2009, 07:49 AM
i don't mind them printing more money as long as it's just for me :D

arkitect
Jan 8, 2009, 07:52 AM
i don't mind them printing more money as long as it's just for me :D

That is a slippery slope no one should get on to…

http://growabrain.typepad.com/photos/uncategorized/2008/08/06/zimbabwe_dollars.jpg
A banknote with a "Use by" date.

Blue Velvet
Jan 8, 2009, 07:55 AM
Let's just be poor for a year. It's got to be better than destroying our currency.

That's a bit simplistic. UK exporters will like this. People will tend to spend more at home than spending elsewhere... the Government are doing exactly as they should and are coordinating this with other large economies. The Tories would be doing exactly the same in the same position.

Banks won't lower their own lending rates until they can recoup some losses.

Dejavu
Jan 8, 2009, 08:00 AM
How is low interest rates a bad thing? Usury could be considered as thievery.

SpaceMagic
Jan 8, 2009, 08:06 AM
That's a bit simplistic. UK exporters will like this. People will tend to spend more at home than spending elsewhere... the Government are doing exactly as they should and are coordinating this with other large economies. The Tories would be doing exactly the same in the same position.

Banks won't lower their own lending rates until they can recoup some losses.

I'm have no doubts the tories would be doing the same. In fact, from my life time, experience would say the tories would be doing it possibly worse. However, printing money is a serious step no doubts about it.

UK exporters may like it. But how many UK exporters are left. We produce very little. Tertiary sector was our main source of income and since Sep 15th that's just going downhill too.

Nothing is that simple, I know. I just have issues with the whole lack of common sense in the UK. We should have been spreading our risk in the first place, investing in every sector. We shouldn't have let our manufacturing disappear in favour of big money banks and professional services. I am proud of London being a financial capital, but London is only one city, the rest of the UK should have been producing too.

SpaceMagic
Jan 8, 2009, 08:07 AM
How is low interest rates a bad thing? Usury could be considered as thievery.

Indeed. Usury was a crime until more recently than many think!

Low Interest rates also means less money for savers, pension funds... Pension funds... oh wait, do they even exist anymore?

Blue Velvet
Jan 8, 2009, 08:15 AM
We shouldn't have let our manufacturing disappear in favour of big money banks and professional services. I am proud of London being a financial capital, but London is only one city, the rest of the UK should have been producing too.

Absolutely. As I recall, wrecking manufacturing to weaken unions started with the Conservatives and continued under Tony Blair's government. They weren't called New Labour for nothing. All this triangulation has got us nowhere and of all people in government, I'm fairly sure Gordon Brown now understands that. A lot of rule books are being rewritten, and a lot of much older ones are being dusted off again. We'll see how things pan out.

SpaceMagic
Jan 8, 2009, 08:28 AM
Absolutely. As I recall, wrecking manufacturing to weaken unions started with the Conservatives and continued under Tony Blair's government. They weren't called New Labour for nothing. All this triangulation has got us nowhere and of all people in government, I'm fairly sure Gordon Brown now understands that. A lot of rule books are being rewritten, and a lot of much older ones are being dusted off again. We'll see how things pan out.

We shall. We shall. I am staying in education. Graduation is this year but finding a job has been quite difficult. That's a whole other story however. Converting to Law - something I should have done in the first place :D

stomer
Jan 8, 2009, 09:23 AM
Lowest in 315 years… sigh…
Sigh? Surely you mean Woot! ?

I've just saved another bunch of money on my mortgage, which I can then spend on luxury consumer devices :)

arkitect
Jan 8, 2009, 09:29 AM
Sigh? Surely you mean Woot! ?

I've just saved another bunch of money on my mortgage, which I can then spend on luxury consumer devices :)

Nope. I meant *sigh*…

:o

trule
Jan 8, 2009, 11:30 AM
How is low interest rates a bad thing? Usury could be considered as thievery.

If low rates were a good thing then they would be permanently set to 0% :mad:

Lets wind the big clock all the way back to 2002/2003...low interest rates, people borrowed lots, and then lots and then lots more...and about 12 months ago someone figured out that those people had borrowed too much and it all came crashing down.

Now our great leaders are trying the same trick again, because they really do have a clue, but we the people aint buying it....we can't afford it no more!

The technical term is "pushing on a string".

Blue Velvet
Jan 8, 2009, 11:33 AM
Lets wind the big clock all the way back to 2002/2003...low interest rates, people borrowed lots, and then lots and then lots more...and about 12 months ago someone figured out that those people had borrowed too much and it all came crashing down.


Little to do with interest rates, more to do with loose lending practices, the packaging of debt as an asset and the inevitable bubble. You can still have low interest rates with tighter lending restrictions and increased regulation as we soon shall see. ;)