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interest rates dropped today (almost globally) by half a percent


An interesting reaction by the Bank of England (amongst others) and it will be interesting to see if this plus the economic packages offered to the fianancial sector is enough to stave of full blown recession (rather then the not quite a full recession we seem to be in now)


Questions for debate


1. Is half a percent enough or should it be more over the next few months

2. Will it turn the lending market between financial institutions around again (i.e. stimulate lending)

3. Will it affect you or are you stuck with a company that doesn't respond to market changes (lucky people who have trackers one feels)

4. Will it encourage you to go out and spend again, or will small businesses see no tangable benifit from a package designed to help them



a very interesting day today and one that opens up discussions that one feels that will only be verified over the next 6 months.

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https://www.eastdulwichforum.co.uk/topic/4320-half-a-percent-shock-rate-cut/
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is it not the excessive amount of credit available to us a major part of the problem? People living way beyond their means? Surely a rise in interest rates would be better. It would mean people would continue to save and put more of their money into savings, thus funding the banks.

I understand that banks need to lend to each other (or do they?) but as far as the rest of us go wouldn't it be better to encourage judical living?


grammar edit

The major problem is


all the money going to China and India for their cheap products,


because we no longer produce anything (as we are not competitive)


to sell abroad to bring in money.



To right those wrongs we would have to match their hourly rates of pay,


work as hard and for as many hours.


They will bend double for 12 hours a day, knee deep in cold water and plant paddy for a handful of rice..............


As we have lost the discipline in schools and work place, plus we have a welfare system to save us from starving.


I cannot forsee a time when things will change for the good of the country.


The politicians know all this but say and do little about it, as their main concern is to get re-elected.


If politicians do accidentally tell the truth, they may get sacked if it upsets the party line.

Er, everyone was widely predicting a 0.5% cut...the only shock was that it was done today rather than at the MPC meeting tomorrow and that it was part of a wider international cut...it will make bugger all difference, it should have been 1% (and that probably wouldn't have worked but would have looked like a proper gesture rather than a bunch of politicians tinkering)

Asset Wrote:

-------------------------------------------------------

> is it not the excessive amount of credit available

> to us a major part of the problem? People living

> way beyond their means? Surely a rise in interest

> rates would be better. It would mean people would

> continue to save and put more of their money into

> savings, thus funding the banks.

> I understand that banks need to lend to each other

> (or do they?) but as far as the rest of us go

> wouldn't it be better to encourage judical

> living?

>

> grammar edit



An interesting point of view Asset, however there is a risk that if we encourage savings rather then allowing people a little flexability to spend, then small businesses will feel a drop in income/ customers, which may lead to more of them closing, resulting in more job losses which leads to less money in the economy to spend (spiraling downwards)

Equally for every small business, there are suppliers, logistic companies, farmers and so on behind them, if small businesses close, it makes business harder for the supporting companies, and potentially leads to them closing down, job losses and the magnifying the downward spiral above.


I agree that there needs to be the option for people to save, but there also needs to be people spending at the same time... and whilst the downwards movement of the interest rates is good for spending, it doesn't also help savers...


I would say that there needs to be a two pronged attack from governments, lower interest rates (down by another 1/2 to 1 percent) and also government issued savings bonds (high return of interest) that allows people to put money into savings at a decent rate whilst also ensuring that the economy doesn't nose dive further with spiralling job losses because small businesses (and ultimatly bigger ones) aren't able to survive....


I guess that regardless of what package is put on the table now and over the next year, not everyone will be happy


Personally, my mortgage rate tracks the interest rate so a lower rate means I have more money to spend or save so I am semi happy but as pointed out above, the package needs to cover spenders and savers to ensure we keep the country stable...


got to say I was fascinated to see that safe sales have gone up by 40% recently....

Lower interest rates boost the price of stocks, which is probably the biggest factor here.


I agree with Asset, in that lower interest rates encourage borrowing and discourgage saving. But it's the lesser of two evils, I think the priority at the moment is to stop the slide in the stock market. Setting interest rates is a tricky balancing act...

Not surprised to hear safe sales have gone up!


Physical gold dealers are short because of demand.... People are starting to lose faith that the wheels are going to come off the 'miracle' economy and we'll have to print a ton of money and massively inflate, devaluing sterling (already happening).


That appears to be the chosen solution - inflate away the staggering debts accumalated by the public and government over the past 5+ years.

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