Viewing 40 posts - 161 through 200 (of 207 total)
  • Interest Rates up again
  • matt_outandabout
    Full Member

    until the tenants in their BTL portfolio start defaulting…

    This.
    See the start of the pandemic and previous economic wobbles – both times we had tenants and fellow landlord tenants have real issues….

    super_12
    Free Member

    Sooner or later, you have to buy something in USD.

    If the currency markets know that you are actually devaluing your currency by creating more of it (which they will, instantly) then your £ buys less $ and the price of everything goes up because in reality the UK will always have to import something.

    The spin off theories from MMT have nothing to say about this. They all assume that the country’s economy is, or could be, a self-contained entity. The bigger the country’s economy and store of natural resources the more MMT could be thought to be applicable, but it cannot apply to the UK where our economy largely generates nice-to-haves and we import most of the essentials.

    super_12
    Free Member

    I’m sure those who are that bit older and we’re able to ride the equity wave will be able to sit smugly tutting about how people shouldn’t have overextended. however, if you wanted a home, its what you had to do.

    Up to a point, but an awful lot of people trade-up on houses to keep up with the Joneses and shout about their hot tub on Facebook too.

    dazh
    Full Member

    The spin off theories from MMT have nothing to say about this.

    Don’t know why people are obsessing about MMT in any case. The argument is not whether a government should print money or borrow to give people handouts, the argument is why working people should suffer from higher energy prices when energy and oil companies are making record profits. The solution to this problem of skyrocketing energy prices is obvious, but they won’t do that because, again, ‘the market’.

    5lab
    Full Member

    The solution to this problem of skyrocketing energy prices is obvious, but they won’t do that because, again, ‘the market’.

    what is that in your opinion? Buy oil in dollars and then subsidise drivers to keep the cost low to the end user, by borrowing money at the government level? some countries (particularly poor ones) do that, so its not unheard of.

    I wish I understood half this conversation. I’m not dim but I just don’t follow if people are really struggling mostly due to inflation driven by external pressures why you would then make it a good deal worse by raising rates and then making mortgages more expensive.

    it’s going to be horrible when people drop off their fixes. I’m sure those who are that bit older and we’re able to ride the equity wave will be able to sit smugly tutting about how people shouldn’t have overextended. however, if you wanted a home, its what you had to do.

    all recent mortgages have been priced based on your ability to pay when the rates went up. high inflation of basics really significantly affects some people, but on the whole they’re not the people with large debts or large savings – it impacts people on minimum wage more than any other. People or companies with large mortgages and debts can, generally, take the pain of higher interest rates by cutting other expenses. Yes, things will be tight, but the view is that if you’re rich enough to have a £200k mortgage (the cost of which will rise by £150 as mortgage rates double from 1.5 to 3%), you’ve probably got £150 of disposable somewhere along the line, as you’ll have needed to earn £50k to start with.

    Additionally, someone with £10k in savings who might today go “well I may as well spend it as I’m not getting any interest” might, when rates get to say 5% (I think they’ll stop around 4%, what we have now is nothing), consider saving it for longer, again reducing demand.

    so basically, by adding additional tightening to those who can afford it a bit, you’re reducing demand, and thus inflation for everyone, which stops inflation getting out of control. Interest rates are not meant to keep things comfortable for everyone, they’re meant to keep the overall economy ticking along as best it can. They’re a bit of a blunt tool, especially with longer mortgage fixes (if everyone fixes for 3 years the effect of a change aren’t really felt for ~2 years), but they do work.

    dazh
    Full Member

    what is that in your opinion?

    Price controls basically. By whatever mechanism. Either nationalise the energy firms and use govt funds to subsidise prices, or regulate to cap prices and/or tax the profits and channel those funds into direct support for consumers. Governments have the power to set prices, they should be using it. The only thing that stops it is ideology and the vested interests who lobby it.

    rone
    Full Member

    The spin off theories from MMT have nothing to say about this. They all assume that the country’s economy is, or could be, a self-contained entity. The bigger the country’s economy and store of natural resources the more MMT could be thought to be applicable, but it cannot apply to the UK where our economy largely generates nice-to-haves and we import most of the essentials.

    The USA runs with MMT too. MMT doesn’t assume a self-contained pot. MMT extends the deficit to trade sector balances too. It just becomes a third pot of money/deficit.

    And yes we’re at the mercy of other factors – you are just spreading MMT to include every possible scenario.

    I would spend a bit more time reading about it.

    rone
    Full Member

    but it cannot apply to the UK where our economy largely generates nice-to-haves and we import most of the essentials.

    It does apply to the uk. It says the government must spend on what’s available / resourced.

    It’s a description of the UK (and other central bank basedsystems, Australia, Canada etc) monetary system for about the 20th time.

    rone
    Full Member

    I wish I understood half this conversation. I’m not dim but I just don’t follow if people are really struggling mostly due to inflation driven by external pressures why you would then make it a good deal worse by raising rates and then making mortgages more expensive.

    You understand 100%

    rone
    Full Member

    Those saying that current inflation is not caused by money supply is forgetting the amount of money printde during Covid.

    Money supply needs to match economonic growth. Print more and it’s inflationary. Lots more was printed than the economy was needed and ended up as withdrawals from tje economy (in the economic sense).

    Correct. That’s why it was capped at 80% furlough.

    And no we didn’t forget it was 400+billion to effectively pay people to stay at home.

    One again when the government isssues money it does EVERY time it spends.

    It’s a normal operation.

    Don’t confuse what happened with Q/E versus normal governmant spending. Q/E was used in the pandemic to make it look like the government needed to borrow. It borrowed from itself.

    rone
    Full Member

    There may of course come a point where the markets are only willing to lend in a hard currency (ie someone else’s).
    Then the argument changes.
    And significant inflation has caused this with other countries and massive borrowing tends to be inflationary.

    There’s always hugh demand for bonds.

    What if. What if.

    They don’t borrow. They swap bonds/gilts for reserves in sterling which have entered the private sector by government spending in the first place. This matches the spending taken place already.

    They don’t need to ‘borrow’ though it’s a mechanism to drain reserves. They could do it a different way too.

    The government doesn’t rely on bonds to spend. It spends first. Every time.

    rone
    Full Member

    correct, its not backed by anything, its valued simply by the market. in an extreme case, if the goverment simply produced an extra, say, £100,000 per individual, and mailed everyone a cheque, what do you think would happen? assets, as priced in GBP would immediately climb in value, effectively devaluing the money you have in your bank account.

    No one suggested that they should do that.

    That is helicopter money.

    So much whataboutery there.

    Once more – government SPENDING has to match the real DEFICIT in the economy. Desperate for a bridge – build a new bridge if you can get the resources and the labour force. MMT says that wouldn’t be inflationary.

    Political will chooses what is needed. Not MMT.

    Think about this: Furlough was a way of keeping the economy temporarily moving and stop the disease spreading and putting extra cost on the NHS/wages etc.

    We could argue how successfully it was implemented but it was generally a good choice. And most modern economies took a similar route.

    If the economy had just been left to the private sector and no furlough can you imagine the carnage?#

    You know sometimes I just wish we operated a genuinely free-market: the world would be in Mad Max tatters by Friday.

    DT78
    Free Member

    Assuming those with large mortgages will be able to easily tighten the belt doesn’t account for all the other increases going on at the moment. It’s not just another “£150” a month at 3% (and it’s not 3% it’s going to be more). It’s also the impact of food and energy taking its toll too. Most who took out recent mortgages were means tested at 7% (I think, and aren’t they getting rid of that too?!). That means testing didn’t account for xx% inflation on essentials.

    Sure a degree of belt tightening can be done, but whether it will be enough will remain to be seen. Many “well off” people could well find themselves loosing their homes and worse case in negative equity and owing a whole bunch for a situation made worse by the government when they should be stepping in and doing their best to prevent such damage.

    dazh
    Full Member

    Sure a degree of belt tightening can be done, but whether it will be enough will remain to be seen.

    I reckon by the time October and January’s energy price hikes kick in and my fixed mortgage rate expires at the end of next year I’ll be paying close to an extra 1k per month more than I was at the beginning of this year, and that doesn’t even include food, petrol etc. This problem is not going to be solved by ‘belt tightening’.

    andrewh
    Free Member

    the argument is why working people should suffer from higher energy prices when energy and oil companies are making record profits. The solution to this problem of skyrocketing energy prices is obvious, but they won’t do that because, again, ‘the market’.

    9
    Because we as a nation did **** all to reduce energy consumption when the only impending danger was climate change, but now its getting expensive people are actually starting to think about how to use less. Again, a blunt tool but it’s working.
    If only the government would ditch this stupid idea of subsidies for energy, bill discounts, whatever you want to call them. Imagine if all that money was instead poured into properly insulating houses, grants for double glazing, building wind and solar, etc, etc.
    Subsidising people’s gas bills makes it a bit more bearable this year, it does nothing to reduce demand, quite the opposite in fact. If they decide they need to do it again next winter the it would have been cheaper to give every household £1k to replace their draftiest windows, much bigger win in every respect, keeping people warm, climate, not funding Russia, jobs for window makers and fitters…

    matt_outandabout
    Full Member

    Price controls basically. By whatever mechanism. Either nationalise the energy firms and use govt funds to subsidise prices, or regulate to cap prices and/or tax the profits and channel those funds into direct support for consumers. Governments have the power to set prices, they should be using it. The only thing that stops it is ideology and the vested interests who lobby it.

    While I kind of agree, I have some concerns about nationalisation being a Good Thing.

    (For the record, I’m glad that Scotrail and Scottish Water are govt. owned)

    dazh
    Full Member

    Again, a blunt tool but it’s working.

    No it’s not. The end result of people being ‘punished’ for their energy use will be a growing campaign to bin green taxes and abandon net zero. Farage and the rest of the nutcase populists in the tory party have already latched on to this. You can’t use free market ideology to solve a problem like climate change. It needs government intervention and support to insulate households from the impact of moving away from fossil fuels.

    molgrips
    Full Member

    While I kind of agree, I have some concerns about nationalisation being a Good Thing.

    Nationalisation of essential services and infrastructure has to be a good thing, because essential provisions should not be at the whim of capitalists. Sure, nationalised businesses might’ve been badly run in the past, but the solution is better run nationalised companies, not privatised ones. How much more evidence do you need that privately run companies aren’t always well run?

    You know those lovely European countries with great railways? State run. Maybe, just maybe, it’s not state run things that are the problem – maybe it’s our state.

    andrewh
    Free Member

    No it’s not. The end result of people being ‘punished’ for their energy use will be a growing campaign to bin green taxes and abandon net zero.

    I couldn’t find figures for gas but for road fuel (UK Govenrment figures)
    Jan-Mar 2020 (ie before Lockdown) average weekly sales per filling station 17,740 litres
    Last four week, average weekly sales per filling station 15,520 litres, 13% drop.
    We can shout about climate change until we are blue in the face but a hit to the wallet is the only thing whcih actually works.

    DT78
    Free Member

    you need to compare like for like months. loads of people are abroad, it’s summer holidays

    dissonance
    Full Member

    You know those lovely European countries with great railways? State run.

    Yeah they are also the ones running ours.

    gauss1777
    Free Member

    Molgrips +1

    Rich_s
    Full Member

    We can shout about climate change until we are blue in the face but a hit to the wallet is the only thing whcih actually works

    This.

    I did a degree in Environmental Management in the mid 90s and it was made very clear to us then that this was the case.

    matt_outandabout
    Full Member

    You know those lovely European countries with great railways? State run. Maybe, just maybe, it’s not state run things that are the problem – maybe it’s our state.

    And I think that sums up my concerns.

    I agree state owned is good – see Scottish Water, Calmac and now Scotrail (none perfect, but all good). I think a lot more should be nationalised and used to meet the needs of the state and the people, not just share holders

    dazh
    Full Member

    I did a degree in Environmental Management in the mid 90s

    I’m not sure mid 90s academics could have predicted a return to populism. In a world where working people are routinely ripped off by unaccountable corporates’, they’re not going to accept another drain on their shrinking incomes. Especially when fossil fuel companies are making record profits.

    gauss1777
    Free Member

    When do we think the rioting will start?

    DT78
    Free Member

    Maybe not riots maybe just people huddling together to keep warm in winter

    trail_rat
    Free Member

    £1k to replace their draftiest windows

    How many windows does 1k buy…..

    dudeofdoom
    Full Member

    You know those lovely European countries with great railways? State run.

    Yeah they are also the ones running ours.

    TBH aren’t the railways are already nationalised but owned by other countries. 🙂

    intheborders
    Free Member

    Sure, nationalised businesses might’ve been badly run in the past, but the solution is better run nationalised companies, not privatised ones. How much more evidence do you need that privately run companies aren’t always well run?

    And now we’ve had enough evidence that it’s the same folk – whether it’s at the top of the companies or in Govt.

    super_12
    Free Member

    We can shout about climate change until we are blue in the face but a hit to the wallet is the only thing whcih actually works

    Yes – but this also ignores the need for whatever action is taken to be done on a co-operative basis across large areas of the globe. The UK opted out of a bloc where environmental concerns placed a certain onus of cost and effort on businesses and also one that has some clout (limited admittedly) when it comes to levying tariffs against cheaper imports that have a high carbon footprint.

    We all know that we were being trolled when the Brexiteers said that we could adopt higher environmental standards than Europe, we all knew that it was going to be carte blanche for companies wanting to maximise profits and dividends to drop ‘onerous’ environmental requirements. Cue the upsurge in untreated sewage being dumped in the rivers and seas whilst the companies that do it still fail to invest in infrastructure repairs whilst paying exec bonuses and dividends.

    With the rise of populism it makes me even more convinced that mankind is going to dig up every last molecule of fossil fuels and burn them before taking climate change seriously.

    dazh
    Full Member

    With the rise of populism it makes me even more convinced that mankind is going to dig up every last molecule of fossil fuels and burn them before taking climate change seriously.

    The only way to curb the rise in populism is to bring back some form of democratic government which acts in the interests of working people rather than a tiny few people and corporations at the top. We lost that long before brexit happened. Only governments can solve the climate change problem, and governments can only do that with the consent of the people. If they load the financial burden onto working people whilst allowing fossil fuel companies and the rich to avoid their responsibilities, then people will understandably react against it and walk straight into the hands of anti-environmental populists like Farage and the ERG (or is it CRG now?).

    andrewh
    Free Member

    How many windows does 1k buy…

    Two, maybe three. Or probably one decent door. You can insulate a loft for a lot less than that
    Anyway, the point was that if we accept the taxpayer should be stepping in here (and that’s likely the consensus on a very lefty forum) then that is a far better use of their money than subsidising fosil fuel consumption

    dovebiker
    Full Member

    They’re quite happy to hand-out grants of £5K to subsidise the costs of a new boiler or ASHP regardless of whether the house is well-insulated or draft proof. There’s no money though if you’d like to better insulate or fit replacement windows or doors. I guess the double glazing industry ought to hire better lobbyists, or maybe get a few Tories on their payrolls?

    rone
    Full Member

    “Capitalism is eating itself.”

    Recent podcast about BoE/inflation stuff with Richard Murphy and co.

    No pay-wall

    finephilly
    Free Member

    The great railways of the world may be state owned, but a lot of the services which run on them are in the hands of companies, chasing a profit. There are 16 in Japan alone. There is a place for private enterprise in any economy. As i’ve said before, we really need to identify the difference between public goods/services and private.

    rone
    Full Member

    As i’ve said before, we really need to identify the difference between public goods/services and private.

    Yes I agree there are obvious choices to me.

    The mistake is to slam it in and out of the public sector when it’s doing well.

    On a separate note I’m expecting some sort of support similar to furlough in its breadth for energy bills if Truss gets her job. Although the roll out is looking way behind now so expect it to be a mess.

    Keeping an eye on that one.

    piemonster
    Full Member

    How many windows does 1k buy…..

    For me, less than one.

    Courtesy of the local authorities definition of a conservation area. Go **** yourself Fife Council for making energy efficient glazing a thing for the wealthy whilst the many inside that area cant afford to replace or repair said windows.

    In a way, im kinda hopeful its something that gets dropped in favour of people being allowed to install affordable windows that arent drafty AF, especially as the proximity of the exposed coastline means any timber frames get ****ed in double time.

    nickc
    Full Member

    Recently looked to replace a couple of bedroom windows and for regular plastic encased double glazing, quote was £1700.

    DT78
    Free Member

    look online for supply only and organise your own fitting. significant savings to be had. (I’m getting our builder to fit)

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