Comments on: Interest rates - the Fed and the Bank of England weigh the risks of boom and bust http://www.johnredwoodsdiary.com/2007/07/05/interest-rates-the-fed-and-the-bank-of-england-weigh-the-risks-of-boom-and-bust/ Conservative Party Member of Parliament for Wokingham Wed, 19 Nov 2008 13:31:07 +0000 http://wordpress.org/?v=2.6.2 By: Steven_L http://www.johnredwoodsdiary.com/2007/07/05/interest-rates-the-fed-and-the-bank-of-england-weigh-the-risks-of-boom-and-bust/#comment-3878 Steven_L Mon, 09 Jul 2007 20:43:03 +0000 http://www.johnredwoodsdiary.com/?p=347#comment-3878 Sounds like doom and gloom either way. I might learn to speak Spanish, there's more to life than money anyway. But thanks for the replies. Sounds like doom and gloom either way. I might learn to speak Spanish, there’s more to life than money anyway. But thanks for the replies.

]]> By: Steven_L http://www.johnredwoodsdiary.com/2007/07/05/interest-rates-the-fed-and-the-bank-of-england-weigh-the-risks-of-boom-and-bust/#comment-3848 Steven_L Sat, 07 Jul 2007 00:43:12 +0000 http://www.johnredwoodsdiary.com/?p=347#comment-3848 All savers? We're globalised, people can get their saving in any currency, even fine wine, art etc. As for negative equity, I told all my homeowning mates when oil hit $78/barrel last summer that they would see 5.5 - 6% interest rates this year and they dismissed me as jealous. Now a couple of them are panicking about selling and have convieniently forgotten I warned them. My family home is owned outright. If the B of E don't control inflation then this also puts my job at risk, as my employer might decide to scale back UK operations and concentrate on French/German markets instead. If people prefer to read the Sun and watch Big Brother than read the financial news and look things up, talk to people who know what they're on about and think for themselves is that my problem? I want inflation under control more than anything. As for the property/finance bubble, bubble's burst. Would you rather we build up the debt pyramids even more, and that property keeps inflating at 15-20% per year? Will interest rates allow this even? Surely the longer we continue this borrow and spend nonsense the more risk there is of doing a 'Japan'. I think they'll peak at 6-6.25 then fall maybe 0.5 then further inflationary pressures will kick in from the world economy (probably the dollar rising and oil prices creeping higher) and by 2010 we'll have hot more like 7.5/8%. Reply: I did not express my view on what the authorities should do. I set out three possible scenarios. If they opt to deflate all the debt structures All savers? We’re globalised, people can get their saving in any currency, even fine wine, art etc. As for negative equity, I told all my homeowning mates when oil hit $78/barrel last summer that they would see 5.5 - 6% interest rates this year and they dismissed me as jealous. Now a couple of them are panicking about selling and have convieniently forgotten I warned them. My family home is owned outright. If the B of E don’t control inflation then this also puts my job at risk, as my employer might decide to scale back UK operations and concentrate on French/German markets instead.

If people prefer to read the Sun and watch Big Brother than read the financial news and look things up, talk to people who know what they’re on about and think for themselves is that my problem? I want inflation under control more than anything. As for the property/finance bubble, bubble’s burst. Would you rather we build up the debt pyramids even more, and that property keeps inflating at 15-20% per year? Will interest rates allow this even? Surely the longer we continue this borrow and spend nonsense the more risk there is of doing a ‘Japan’. I think they’ll peak at 6-6.25 then fall maybe 0.5 then further inflationary pressures will kick in from the world economy (probably the dollar rising and oil prices creeping higher) and by 2010 we’ll have hot more like 7.5/8%.

Reply: I did not express my view on what the authorities should do. I set out three possible scenarios. If they opt to deflate all the debt structures

]]> By: Steven_L http://www.johnredwoodsdiary.com/2007/07/05/interest-rates-the-fed-and-the-bank-of-england-weigh-the-risks-of-boom-and-bust/#comment-3836 Steven_L Thu, 05 Jul 2007 21:49:27 +0000 http://www.johnredwoodsdiary.com/?p=347#comment-3836 Looks like rate rises have kicked in at work, they've just revised the bonus scheme (which basically amounts to a pay cut). Not all bad news though, to sweeten the deal and not lose a load of staff they've dropped all their silly battery hen 'targets'. Too damn right! I aint no multi-tasker, when their accountants sort out some decent software for me I might spend less time in 'call work'. If higher interest rates mean I'm not expected to use 5 different outdated and overworked software packages at once whilst trying to have a conversation with someone then roll on higher interest rates! Seriously though, aren't interest rates supposed to be set in order to control inflation, not commercial debt markets, unemployment etc? I thought inflation was supposed to be the biggest threat to our economy? That's what city-types used to tell me when I lived in London. Just because they've borrowed too much cheap money, bought too many credit derivatives with it and might get a bad bonus next year surely doesn't mean the Bank of England should ignore inflationary pressures. I see oil prices are headed up again. Looks like rate rises have kicked in at work, they’ve just revised the bonus scheme (which basically amounts to a pay cut). Not all bad news though, to sweeten the deal and not lose a load of staff they’ve dropped all their silly battery hen ‘targets’. Too damn right! I aint no multi-tasker, when their accountants sort out some decent software for me I might spend less time in ‘call work’. If higher interest rates mean I’m not expected to use 5 different outdated and overworked software packages at once whilst trying to have a conversation with someone then roll on higher interest rates!

Seriously though, aren’t interest rates supposed to be set in order to control inflation, not commercial debt markets, unemployment etc? I thought inflation was supposed to be the biggest threat to our economy? That’s what city-types used to tell me when I lived in London. Just because they’ve borrowed too much cheap money, bought too many credit derivatives with it and might get a bad bonus next year surely doesn’t mean the Bank of England should ignore inflationary pressures. I see oil prices are headed up again.

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