Guest 697- Registered: 13 Apr 2010
- Posts: 622
19 January 2011
19:1589593I appreciate that to raise interest rates too soon could have an impact on the recovery. However, I think some policy measures need to be taken to reward savers and those who were prudent with their money. By cutting interest rates to a historic low, the real beneficiaries were those people who have overstretched themselves with credit and mortgages they couldn't afford. The very people who, with the help of irresponsible bankers, got us in the mess in the first place. If the next generation is to learn anything from this economic mess, it should be a return to saving. I fear, however, that the consumer society we live in means that is a distant dream.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
19 January 2011
19:3189595You are 100% right about the need to return to a savings culture Kevin but some points on your other comments.
Businesses depend on the low interest rates for more than one reason:
1/ It helps exports because it kepps the £sterling lower than otherwise
2/ Corporate borrowing including overdrafts and for investment in cheaper - all very important to businesses trying to survive in a recession and to those who, despite the recession still want to grow.
As for the bankers, getting us into the mess, sorry that is not correct. They have merely served as a convenient scapegoats. Downturns are cyclical and are as certain as night following day. Brown thought he had abolished 'boom and bust' and ran the economy accordingly. Yes, the bankers are not innocent but it was Brown who changed their regulation in 1997 and encouraged them to take risks (Mansion House). They cashed in on the US credit boom (Clinton's beast) as a result and that went belly up. We also have to allow for the failure of Brown in the terms he st for the BoE for inflation, ignoring the levels of debt in the economy causing the housing and debt bubbles.
Guest 671- Registered: 4 May 2008
- Posts: 2,095
19 January 2011
20:2189599Yes, All points taken, it was rather silly of me.
No BarryW, I have no wish to shut you up or limit your views, they are limited enough as they are.
"My New Year's Resolution, is to try and emulate Marek's level of chilled out, thoughtfulness and humour towards other forumites and not lose my decorum"
Guest 697- Registered: 13 Apr 2010
- Posts: 622
19 January 2011
20:3489600Agree with your comments on the need to keep interest rates low for business investment, BarryW. Let's hope it works, not least in attracting some new business here to Dover!
I think it was a combination of government policy and bankers who are to blame. Not sure I'd refer to them as convenient scapegoats, and even if they are, the bonus culture shows just how out of touch they were then and still are now. Don't get me wrong, I fully accept the important role that the banks play in our economic success, but their failure to change staggers me.
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
19 January 2011
22:1089607The Daily Mail today reports that Barcly's must refund 59 million pounds to investors who lost out in 2009. The paper suggests that some of this money should come from the 8 million pound bonus of the head of that bank. (bonus for one year that does not include the basic salary.)
I find it hard to understand Barry's point that there is too much money in the system. My personal experience is that there is not enough of it! Unless, of-course, one gets bonuses of 8 millions a year!
In which case, even interest-rates are irrelevent.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
19 January 2011
22:4489614Alexander - something called quantative easing is what used to be called 'printing money'. This was done to prevent 'de-flation', the opposite to inflation. The more of any commodity that you have available the lower the price of that commodity, it is exactly the same for money.
QE is not an exact science and in preventing one problem it looks as if another problem is arising.
The bank bonuses and the Barclays mis-selling scandal is totally irrelivant and peanuts by comparison to the problems of money supply.
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
19 January 2011
22:4889615barry
the people see this as rewarding failure.
barclays have let down investors but the head honcho walks away "holding folding".
does he bear no responsibility for what he is paid to control?
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
19 January 2011
22:5489617I was talking about interest rates and QE. Not Barclays, Alexander introduced that, a total red herring.
I could talk a lot about the Barclays matter, banks are among the very worse places to get investment advice from. But that is not the subject of this thread.
Guest 698- Registered: 28 May 2010
- Posts: 8,664
20 January 2011
00:0489621We are in the early stages of a major programme of fiscal tightening after ten years of loose fiscal policy. To tighten monetary policy significantly at the same time is a sure-fire recipe for a double-dip recession. Hiking interest rates now would also skew the yield curve to such an extent that public borrowing costs would rise substantially. The indirect tax rises already implemented (and not yet in the inflation figures) together with planned cuts in public spending will cause consumer demand to slacken later in the year, achieving the same effect as a major rise in interest rates.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Brian Dixon
- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
20 January 2011
07:2789623all banker bonuses should be handed to goverment over the next 5 years,intreast rates should be raised to 2.5% now with small bonuses paid to savers as ongoing compensation.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
20 January 2011
09:1489635Thankfully no-one sensible will take that seriously Brian.
Peter, you are quite right in what you say, a major rise in interest rates would be an economic disaster. The argument for a small rise now, of just 0.25% from a low base, is increasingly compelling given the risks we now face of run-away price rises.
Brian Dixon- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
20 January 2011
18:3389681whatever barry be sensable
Guest 698- Registered: 28 May 2010
- Posts: 8,664
20 January 2011
18:3589683Banker bonuses should be put in a pool for lending to SMEs. The bankers get paid out as and when the loans are repaid with interest.
My point about monetary tightening is this: the debt markets follow trends. A quarter-point hike in base rates will imply further tightening down the road. People will bet on further rises and the yield curve will steepen, causing an increase in borrowing costs for everyone. Believe me, I traded debt and capital markets from 1975 till 1999 and it happened every time. Put rates up by 1.5% and the markets will think that is it. Put them up a quarter and they will price much more into the yield curve. This might sound arcane but analysing money markets is one of the ways big businesses manage their borrowing and investment strategies. Unfortunately no politician has ever grasped that and few in policy-making roles in government have either.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Guest 696- Registered: 31 Mar 2010
- Posts: 8,115
20 January 2011
18:4089684Personally I think the city-bankers earn enough as it is without needing bonuses.
Yearly bonuses add up, as too do the savings that remain from their basic salaries.
We're talking here of multi-millionaires (the high-ranking bankers). I wouldn't give a toss if they lost their bonuses.
Jan Higgins
- Location: Dover
- Registered: 5 Jul 2010
- Posts: 13,894
20 January 2011
19:1689690As we are talking about bankers bonuses,
1. Why do they get a bonus just for doing a job they are already well paid for? I am fed up hearing they need an incentive so they stay with the bank, let them move to somewhere else there will always be someone else to take their place. Nobody is indispensible even if we think we are.
2. If they are entitled to a bonus why is it worth hundreds or much more likely several thousands of pounds. Other workers might get an extra weeks wage or a bottle of booze if they are lucky.
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I try to be neutral and polite but it is hard and getting even more difficult at times.
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Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
20 January 2011
19:5889697The bonuses are up to the employers and it is nothing to do with government. The banks and the City must remain competitive and attract the best talent in their field. Mess around too much and we will lose a massive profitable industry and all the tax that derives from it. These bonuses relate to a large extent to performance, some will have been derived from the success of investments they manage or the success of their profit centre.