The great interest rate rip off part 1

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As I never started it's impossible for me to stop.

[meagain]

As I never started it's impossible for me to stop.

 

But you haven't answered the question. Yes or no - have you stopped beating your wife yet?

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BBC NEWS | Business | Inflation 'pushing up pay deals'

 

The number of UK pay deals above 4% is picking up as level of inflation rises, according to a report from Income Data Services (IDS). The median average pay deal held steady at 3.5% in the three months to April, the IDS survey found.

But the number of deals above 4% rose to more than a third, as against a quarter in the previous three months.

News of higher pay settlements may trigger further fears about inflationary pressures in the economy.

 

 

On Thursday, the Bank of England raised UK interest rates to 5.5% - the highest level in six years - in an effort to bring inflation under control.

 

Well done Mervyn, your increases to the cost of living via interest rate rises has merely created wage inflation. I'd quickly suggest putting up interest rates again as that will tackle the rising cost of living and stamp out this dammed inflation problem.

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As where all paying now roughly £2000 per £100,000 borrowed for lower inflation are we getting good value for money???

 

For £2000 I expect results and as consumers where not getting them, all what we can seem to expect is to get charged even more for the politicians and banking sector failings to control inflation and inept management.

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Higher interest rates expected to widen house price divide-Life & Style-Property-TimesOnline

 

The latest rise in interest rates is likely to accentuate the divide between house prices outside the capital and those in the most sought-after of London postcodes.

 

The haves (people who are merely rich) and the have-yachts (people who are rich beyond the dreams of avarice) are forecast to continue to drive up prices in Central London, the world’s most expensive residential zone, for the rest of the year.

 

 

Growth in Central London could be as high as 20 per cent this year, but elsewhere prices may falter as rate rises begin to bite. Only properties right at the top end of the market will retain their value, according to Yolande Barnes, of Savills, who said that the direction of the market was now all about which rung of the ladder you are on.

 

 

The seven-figure country house sector remains immune to more expensive borrowing as those who have already acquired a mansion in Mayfair or Belgravia still want their grand rural retreat.

 

 

Michael Fiddes, of Strutt & Parker, said: “There is an imbalance between the supply and demand, so buyers are still paying a premium for the right property.”

 

 

Outside the metropolis and country estate hotspots, however, the market’s temperature had already begun to cool before the base rate went up from 5.25 per cent to 5.50 per cent this week. A scarcity of property for sale and strong demand had been the driving forces behind the 10 per cent nationwide average price increase over the past 12 months, but demand was already slackening under affordability pressures. Larger mortgage bills are expected to test the market further.

 

It's good to know that the recent interest rate rises is curbing the spending of the super rich, well done Mervyn your on the ball as usual.

[meagain]

So, have you stopped beating your wife yet? Yes or no answer only, please.

 

Today's lesson: If you want someone to answer properly, you need to ask your question properly. Especially since it's becoming increasingly evident that you have no idea where the BoE's profits go. Anyway, methinks I've fed this troll enough.

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BBC NEWS | Business | Eurozone rates on hold at 3.75%

 

The European Central Bank (ECB) has maintained its benchmark interest rate on hold at 3.75%, as expected.

 

But many analysts think the European Central Bank will raise rates as early as June, to keep inflation in check.

The widely-expected move comes after the Bank of England announced that it would increase rates to 5.5%, the highest level in six years.

A day earlier, the US opted to keep its interest rate at 5.25%, amid fears over the cooling housing market.

The last time the ECB raised rates was in March, when it was increased by a quarter of a percentage point from 3.5%.

 

 

Interesting that we are in a single market yet we are denied lending at the ECB rate.

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All what the BoE said in a previous response was that it got split between savers and the Banks (although not mentioned they probably also meant the money markets).

 

However they still failed to answer the question of why it's in the economic interest of the country and more beneficial for any increase in the cost of borrowing to do this rather than pay off the debt.

 

I still can't see why this is a loaded question. In science if the theory is good it can cope with any question of attempt to undermine the theory. If the current theory can't deal with a legitimate question then the theory falls.

[meagain]

I still can't see why this is a loaded question.

 

Put some glasses on. You make at least four presuppositions in the question, many of which are objectionable.

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Which do you object to?

 

Clearly the current thinking is that rising the cost of borrowing via interest rates is of economic benefit?

 

Would you prefer an open ended question of which gives the greater economic benefit to the country when an increase in the cost of borrowing occurs should it clear the individuals/companies debt, go to profit, go to the savers, disappear into a great big black hole or pay for the war in Iraq or any other country that isn't flavour of the month??

 

Who profits from higher interest rates? - Answer Desk - MSNBC.com

 

It’s that difference between long and short rates that makes the world go around for lenders. Banks traditionally make money by borrowing short-term money — from depositors (you and me), from other banks or from the Fed — and then lending it out at a higher rate to customers who borrow for the long haul. So their profit comes from the (usually) higher rates they charge borrowers compared to the bank’s lower cost of money.

 

That gap between short and long rates is stretching and shrinking all the time. You may have heard it referred to as the “yield curve” — which is often measured by the difference between the market rate on a 10-year Treasury bond and a 3-month T-bill. When that gap is big, the curve said to be is “steep;” when it’s small or non-existent the curve is “flat.” Occasionally, long rates fall lower than short rates; the yield curve is then said to be “inverted.” (At this point Wall Street usually freaks out because this often, but not always, means a recession is coming.)

 

 

 

Even this fails to give any sort of decent answer.

 

 

I know your not liking any of my comments but where has the £2000 extra in interest gone, surely in basic terms it's to buy low inflation otherwise what's the point??

 

Why didn't interest rate rises effect the oil price which was fueling inflation?

 

Why hasn't the rise in interest rates caused more houses to be built? The lack of housing is helping to fuel inflation in the housing sector, yet the logic of how interest rates combats a shortage problem is really beyond me.

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Thought I'd better make at least one post you couldn't object to:lol:

 

InfoWorld - Information Technology News, Computer Networking & Security

 

Windows XP systems are still locking up during patch update attempts -- even after users deployed the fix suggested by Microsoft.

 

Symptoms of the long-running problem -- which the Windows Server Update Services (WSUS) team dubbed the "svchost/msi issue" -- include 100 percent CPU usage by svchost.exe and its multiple processes during Automatic Updates scanning, update downloads, and sometimes even if AU is simply enabled on a machine.

 

"Of course, the computer is virtually unusable" when that happens, said a user identified as Foxy-Perth on the Windows Update support forum.

 

Every month at patch time, Microsoft's support boards fill with complaints from users. It was no different this week. "I have 6 (and counting) computers having issues with SVCHOST process running at near 100 percent CPU utilization," said TKovacs on Wednesday, one day after Microsoft unveiled seven security updates. "Disabling Automatic Updates resolves the issue. [What] did Microsoft just release?"

 

Download the hotfix

 

The new client and the WSUS update to version 3.0 will be available to WSUS on May 22. Like the hotfix, the client can also be downloaded manually and installed now. Instructions and a link to the download have been posted to the MSDN (Microsoft Developers Network) site.

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House prices keep on rising despite higher interest rates-Business-Industry Sectors-Construction & Property-TimesOnline

 

The pace of house price inflation picked up last month, despite a string of signals that the market should be slowing, chartered surveyors report today, in the latest surprisingly strong result for the sector. Property prices accelerated for the second month in a row in April. There were higher prices in every region, even though supply rose and demand appeared to fall, according to the Royal Institution of Chartered Surveyors (RICS).

 

 

Its headline net balance of surveyors reporting higher prices rose to 28.9 from 26.9. It was the eighteenth month in a row that the balance has been greater than zero, implying rising prices.

 

 

The pickup came despite a slight decline in the number of new buyer inquiries after the Bank of England’s series of interest rate rises. Rates have risen from 4.5 per cent to 5.5 per cent in only ten months.

 

Quick Mervyn you'd better put interest rates up again as they are quickly damping house price inflation, it's just such a good job there's such a strong link between interest rates and inflation???

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City expects Bank to raise rates again in spite of inflation fall-Business-Industry Sectors-Banking & Finance-TimesOnline

 

The first fall in inflation for six months has failed to dispel City fears that the Bank of England may indicate today that interest rates need to rise higher still.

 

As the Bank put the finishing touches to its quarterly Inflation Report, to be published this morning, official data showed yesterday that inflation has begun to fall from last month’s 15-year peak.

 

 

On the consumer price index (CPI), the Bank’s target measure, inflation dipped to 2.8 per cent in April, compared with a figure of 3.1 per cent the month before.

 

 

However, after the Bank’s statement last week that risks to inflation remain, many analysts gave warning that at least one more interest-rate rise probably would be needed to bring price expectations firmly under control.

 

 

April’s fall in inflation was driven by a long-awaited decline in gas and utility bills. Inflation is expected to continue to fall throughout the summer months as the effect of fuel bill rises last year drops out of the annual calculation.

 

Nothing to do with interest rates raises then the current drop in inflation rate!!! Very strange good job interest rates 100% affect inflation. Please take some more money off me so we can get this dammed inflation problem under control.

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Bank of England warns of further rates hike | the Daily Mail

 

Borrowers look set to face another rise in interest rates if inflation is to hit the Government's 2% target, the Bank of England suggested today. A key quarterly inflation report from the Bank indicated that interest rates may need to rise by another quarter point to 5.75% for inflation to be kept under control.

 

 

The Bank predicted that the Consumer Prices Index (CPI) - the official measure of inflation - would narrowly miss the 2% target if rates were kept at 5.5%.

 

 

The forecast will be bad news for homeowners who have already seen four interest rate rises since last August, hit by another quarter point rise earlier this month.

 

 

CPI hit 3.1% in March - its highest level since records began 10 years ago, forcing the Bank's Governor to write an unprecedented letter of explanation to the Chancellor.

 

 

Yesterday's inflation figures from the Office for National Statistics revealed a sharp drop to 2.8% in April.

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Bank talks tough on inflation | | Guardian Unlimited Business

 

Interest rates may need to head higher in the next few months if inflation is to come down to target in two years, the Bank of England said today.The central bank's Inflation Report revealed that interest rates are likely to rise one more time in the near future if inflation is to hit the Bank's 2% long-term target.

The quarterly publication, which comes a week after the Bank's Monetary Policy Committee raised interest rates by a quarter-point to 5.5% - the fourth hike since August, said medium-term inflation risks were still on the upside.

 

...............

 

 

Meanwhile figures today showed that earnings growth - an area that policymakers have been concerned may fuel inflation - has been muted.

But Bank of England governor, Mervyn King, said that inflation pressures still remain in the economy, and that the danger has not passed on wage deals.

"The main risks to CPI stem from inflation expectations, energy and import prices and spare capacity," he said. "The MPC will take whatever further action needed to bring CPI to target."

 

 

The recent data has shown continued strength of core inflation. Cuts in the price of clothing and footwear slowed and food prices rose at a hefty annual rate of 6% last month, the sharpest rise for nearly six years.

A key fear for the MPC is that prices rise on the high street as retailers attempt to rebuild profit margins from high energy costs by passing them onto their customers.

"Indicators of pricing pressure are particularly important at the moment," said Mr King.

 

 

 

Surely if the bank has the consumer interest at heart over prices than companies who are exploiting consumers should pay the price (for example higher taxes on profits) and not the consumer with higher interest rates???

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http://www.thestar.co.uk/business?articleid=2880731

 

ANTI-inflation interest rate policies, widely credited with fuelling Britain's economic success, have come under attack from a leading South Yorkshire industrialist.

 

 

Future Master Cutler Gordon Bridge told business leaders and financiers from the UK and abroad, gathered in Sheffield for the 371st Cutlers' Feast: "We, in the UK, have an obsession with controlling inflation.

 

"I acknowledge many say 'Rightly so.' As a manufacturer and exporter, I say, what use is it if we eliminate inflation and, in the process, eliminate large parts of our manufacturing and producing industries?"

Mr Bridge, chief executive of world-beating Rotherham mechanical seal manufacturer, AESSEAL, and Cutlers' Company Senior Warden, launched his attack in a detailed critique of the impact of Government policies.

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Bank says another rate rise needed -Business-Economics-TimesOnline

 

The Bank of England made clear today that another interest rate rise looked very likely despite yesterday’s drop in headline inflation.

Presenting the Bank’s quarterly Inflation Report, Mervyn King, the Bank’s Governor, said that the main risks that could force rates to rise again came from higher inflation expectations and businesses becoming increasingly confident of their ability to raise prices.

The report showed that inflation would stay on track in two years’ time only if market expectations of another rate rise this summer are fulfilled by the Bank’s Monetary Policy Committee.

However, he said, “the main downside risk is that there could be more slack in the labour market which would slow pay growth further.”

Data published separately today suggested that the labour market was becoming looser. Unemployment climbed by 13,000 over the three months to March to hit 1.7 million, according to the Office for National Statistics’s survey-based measure.

The ONS added that headline average earnings growth fell in March to 4.5 per cent from 4.6 per cent the previous month.

Mr King said that inflation would fall this summer as gas and electricity bills fall compared to last year’s rises.

But the “crucial question” for monetary policy was where inflation was likely to be once energy prices have settled down, he said.

 

 

 

I think it's more like Dead cat theory, a dead cat thrown from a great height will bounce but it will still be dead. If you rise interest rates high enough you will kill inflation but that doesn't mean that interest rates are efficient and robust enough to control inflation.

 

If the BoE employed enough muggers you could reduce the supply of money and have the same effect.

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I have a simple question, why should any increase in the cost of borrowing go to the banking sector bottom line, rather than paying off the debt owed? Why is it in the economic interest of the country for the money to go to the banking system rather than reducing the level of personal debt?

 

Is this question loaded?

 

It depends on how you dissemble and read the question.

 

I have a simple question:

This depends on how one wish’s to interpret the question, if you wish to take a literal view then the question may not be simple although for an economist the following propositions may be easy to dispel and challenge so indeed it may be a simple question.

 

2nd part

 

Why should any increase in the cost of borrowing go to the banking sector bottom line, rather than paying off the debt owed?

 

A example of who to respond would be:

 

Any increase in the cost of borrowing does not improve or benefit the banking sector bottom line (profits) 100% of the increase in the cost of borrowing goes directly to the saver in the bank etc….. Therefore allowing it to pay off the debt could raise difficulties in generating new savings.

 

Or the increase in the cost of borrowing goes directly to the treasury and helps to pay for the war in Iraq, therefore the assumption that the money goes to the banking sector bottom line is incorrect. I shall address the question should the money pay off the debt within my answer to the second part of the question.

 

3rd part

 

The reason why it is in the economic interest for the money to go into the banking system rather than clearing personal debt is that……

 

The assumption that the money from an increase in interest rates goes into the banking system is indeed a fallacy as it goes to buy me hundreds of bottles of lager for me to drink myself stupid with…….

 

It seems that I can address the question without too much trouble even if it is loaded and full of presuppositions.

 

If you so wished you could address it by:

 

The presupposition that interest rates have any effect on inflation is false, it doesn't matter where the money goes to pay off the debt, increasing the bonus of banking execs, giving all the money to savers it will still fail to address the under lying causes of inflation...... Until you tackle these then a interest rate only policy of controlling inflation is doomed to failure........

 

Would the following make it any easier?

 

If the increases in interest rates where used to repay the debt owed rather than the current status quo, would greater economic advantage be gained?

 

My original question was phrased because I’m miffed, I’m paying the BoE or whoever £2000 extra a year for low inflation, that isn’t happening.

 

If I buy a product and it doesn’t work I expect my money back/a replacement etc… Yet when the BoE fails to do it’s job it’s only response is sorry we need more money it’s not working yet. Sorry still not working can we have some more of your money, oops it’s still not working can we have more of your money.

 

There isn’t any product that anybody buys where you suddenly start getting charged more after you’ve bought it. I don’t buy a car and 2 years down the line get a letter from the manufacturer stating that the cost has gone up and now I owe them a extra £400 etc….

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Shining a light on the true cost of our ‘free’ banking-Business-Columnists-TimesOnline

 

Andrew Tyrie, the backbench Tory MP who has been a perpetual thorn in the side of the Government over the cash-for-honours affair, has a new target: banks. In a paper for the Centre for Policy Studies today, he proposes that the banks should be compelled to provide every account-holder with an itemised statement showing all charges, both explicit and hidden. Crucially, that would include a figure for the interest forgone on current account balances, defined as the difference between the actual interest paid (0.1 per cent for most people) and base rate (5.5 per cent and rising).

It would also include the cost of any “excess” interest paid on loans, mortgages and overdrafts, defined by Mr Tyrie as any charge over and above base rate. Hidden charges levied through, for instance, foreign exchange translations would also be calculated and spelt out.

Customers would for the first time discover what they really pay for their banking services, says Mr Tyrie, who was an adviser to chancellors Lawson and Major. The increased transparency would give account-holders a much clearer idea of how much they were really paying for individual services, while shining light on some of the more weaselly terms and conditions. It would also enable customers to shop around more easily and make valid price comparisons.

Mr Tyrie does not do the sums, but a typical household could easily be paying bank charges, by his definition, of £500 to £1,000 a year or more. That will shock those who mistakenly believe they enjoy free banking in Britain.

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BBC NEWS | Business | Zimbabwe inflation up at 3,713%

 

Zimbabwe's rate of inflation surged to 3,731.9%, driven by higher energy and food costs, and amplified by a drop in its currency, official figures show. April's inflation rate jumped up from the 2,200% recorded last month, the Central Statistical Office (CSO) said.

The announcement came after Zimbabwe's government created a commission charged with finding a way to curb the country's spiralling cost of living.

There is high unemployment, and fuel and food shortages across the nation.

 

Strange how this wouldn't actually be sorted by increasing the interest rate!!!!

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Signs emerge that UK housing is off the boil-Business-Economics-TimesOnline

 

The rising interest rate is finally putting the brakes on the UK housing market after mortgage lending fell by 9 per cent in April and the average house price showed its smallest gain since the beginning of 2007.

In April, gross mortgage lending reached £28.8 billion - an 18 per cent increase on the same month last year but a 9 per cent fall compared with March.

The Council of Mortgage Lenders said that buyers would borrow 4 to 5 per cent more this year than in 2006 but the market was now beginning to stabilise.

In May the average price of a house increased by 0.4 per cent from £236,490 to £237,361, the smallest gain since the beginning of the year. Annual house price inflation is slowing from 15 per cent in April to 13.1 per cent in May, according to rightmove.co.uk, the UK property website.

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Germany takes exception to dire warnings-Business-Columnists-TimesOnline

 

I have to admit it: I was wrong about Europe. After a year of deflationary increases in taxes, interest rates and exchange rates, I had expected a severe slowdown in Europe by now. The eurozone did weaken a bit in the first-quarter GDP figures, as revealed in the figures produced by Eurostat last week. But the slowdown in growth to 0.6 per cent in the first quarter, from 0.9 per cent in the fourth quarter of 2006, was hardly the drama that I had been expecting. Worse still for my reputation as an economic pundit, there has been no sign of the plunge into near-recession that I had been predicting for Germany after the three-percentage-point increase in VAT in January.

In fact, Germany was, despite the tax increases, again the strongest economy among the eurozone’s big three, with a calendar-adjusted growth rate of 0.5 per cent in the latest quarter, much better than the market’s consensus forecast of 0.3 per cent growth.

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BBC NEWS | Business | Nigeria attack sends oil over $70

 

Oil prices have risen above $70 a barrel after a fresh attack on oil installations in Nigeria belonging to France's Total. A spokesman for Total said the oil well that had been sabotaged was disused and that there had been no injuries.

The attack followed the kidnapping by gunmen at the weekend of two Indian employees of a petrochemical company in Port Harcourt.

London Brent crude oil peaked at $70.29 a barrel in early trading.

Attacks on the oil industry and kidnappings of foreign oil workers have become common in Nigeria and have halted almost one third of the output of the world's eighth biggest oil exporter.

 

Perhaps an interest rate rise will stabilise the oil price???

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Surprise fall in mortgages raises fears of an imminent slowdown-Business-Money-Mortgages-TimesOnline

 

A sudden drop in mortgage approvals recorded by building societies has sparked fears that the long-awaited correction in the housing market is about to begin.

The value of new approvals by members of the Building Societies Association (BSA) fell to £3.9 billion in April, its weakest level for nearly two years. The fall from March’s figure of £4.6 billion was the sharpest drop since September 2004.

Mortgage approvals are widely seen as a pointer to the next step in house prices, and the data yesterday was the clearest sign yet that the Bank of England’s four interest-rate rises since August are taking their toll on homeowners.

However, hopes that a housing market correction could mean that rates will not rise beyond 5.5 per cent were dashed yesterday with the publication of worrying new figures on the money supply.

M4, or broad money, grew by 13.3 per cent in the year to April, up from 12.8 per cent the previous month. The Bank tracks the money supply as one indicator among several of the underlying scope for inflation in the economy.

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Bank members considered a half point rate rise for first time to cut inflation | the Daily Mail

 

The Bank of England considered hitting homeowners and borrowers with a 0.5 per cent interest rate rise for the first time in 10 years of independence, it was disclosed today.

The Bank's Monetary Policy Committee (MPC) meeting two weeks ago showed that all nine members voted for a smaller 0.25 per cent rise to 5.5 per cent, - the fourth rate rise in 10 months.

But the committee considered lifting rates by 0.5 per cent as some members were concerned over "upside risks" to inflation and a "buoyant outlook for growth and demand".

The MPC eventually agreed on the smaller rise because of uncertainties over the impact of previous rate hikes.

The minutes said members ruled out the hike as they "preferred to wait for more data to assess the impact of past increases".

The continued: "Other members were concerned that any excess movements in rates could create downsize risks to growth."

The MPC is charged with keeping consumer price index inflation within a 1 per cent range of the bank's 2 per cent target.