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Everyone; things are really expensive at the moment I’m worried about our finances and our ability to pay for the basics never mind a holiday new telly etc Bank of England; hold my pint
In the spirit of reconciliation and happiness at the end of the Banter Era (RIP) and as a result of promotion I have cleared out my ignore list. Look forwards to reading your posts!
Well there is an obvious and much discussed problem. The main lever the BoE has to fix inflation with is raising interest rates. Therefore making many even poorer. But it seems to be the only way -and trying to alleviate the costs some other way will most likely reduce the effectiveness.
As a struggling private renter I do tire of hearing quite so much attention being given to what it all means for home owners. Maybe stretching your budgets so much on your mortgage payments wasn't the best idea.
Well there is an obvious and much discussed problem. The main lever the BoE has to fix inflation with is raising interest rates. Therefore making many even poorer. But it seems to be the only way -and trying to alleviate the costs some other way will most likely reduce the effectiveness.
As a struggling private renter I do tire of hearing quite so much attention being given to what it all means for home owners. Maybe stretching your budgets so much on your mortgage payments wasn't the best idea.
[Post edited 22 Jun 2023 12:09]
And there are an increasing number who say raising rates will have sod-all effect on inflation
And it's going to be 6% by year end according to the markets
There's a guy that J2 has been posting a lot (Gary Stevenson) who has changed my view a bit on this. He's a former trader turned economist and he went over some of this. Originally I was with you and a few others but surely this is just making a bad problem worse for everyone, in that the issues weren't down to people having money to burn but that the inflation was more down to energy costs + knock on from the war.
He argued that it was more down to us pumping the economy with money over the Covid period which flowed into the wealthy (the properly wealthy) and now inflation is rocketing up. Whilst the Government should be focussing on trying to get some of that back, they're not doing a lot on the fiscal side that really caused it.
Meanwhile, BoE does the monetary side and really they only have this one lever to use, which they are doing. They aren't wrong to do it and it'll work but it is at the expense of the middle class and below whilst the wealthy are ready to hoover up even more stuff, increasing inequality which is already getting quite bad.
Well there is an obvious and much discussed problem. The main lever the BoE has to fix inflation with is raising interest rates. Therefore making many even poorer. But it seems to be the only way -and trying to alleviate the costs some other way will most likely reduce the effectiveness.
As a struggling private renter I do tire of hearing quite so much attention being given to what it all means for home owners. Maybe stretching your budgets so much on your mortgage payments wasn't the best idea.
[Post edited 22 Jun 2023 12:09]
The mortgage market is mad, but even as a homeowner I find the calls to help people out with seemingly financial help odd when there is no talk of it being done for private renters who are getting the costs passed onto them anyway
I'd love a bit of help with the mortgage, but don't see why I deserve it over anyone else who doesn't own a house
Well there is an obvious and much discussed problem. The main lever the BoE has to fix inflation with is raising interest rates. Therefore making many even poorer. But it seems to be the only way -and trying to alleviate the costs some other way will most likely reduce the effectiveness.
As a struggling private renter I do tire of hearing quite so much attention being given to what it all means for home owners. Maybe stretching your budgets so much on your mortgage payments wasn't the best idea.
[Post edited 22 Jun 2023 12:09]
I'm sure stretching budgets wasn't a decision a lot of people opted in to voluntarily, but a reflection of the market and ludicrous property prices in the UK. People need somewhere to live.
There's a guy that J2 has been posting a lot (Gary Stevenson) who has changed my view a bit on this. He's a former trader turned economist and he went over some of this. Originally I was with you and a few others but surely this is just making a bad problem worse for everyone, in that the issues weren't down to people having money to burn but that the inflation was more down to energy costs + knock on from the war.
He argued that it was more down to us pumping the economy with money over the Covid period which flowed into the wealthy (the properly wealthy) and now inflation is rocketing up. Whilst the Government should be focussing on trying to get some of that back, they're not doing a lot on the fiscal side that really caused it.
Meanwhile, BoE does the monetary side and really they only have this one lever to use, which they are doing. They aren't wrong to do it and it'll work but it is at the expense of the middle class and below whilst the wealthy are ready to hoover up even more stuff, increasing inequality which is already getting quite bad.
I think this was the video he went through it.
It's an interesting view.
It’s a long thread, but Richard has a very interesting view on it all
There's a guy that J2 has been posting a lot (Gary Stevenson) who has changed my view a bit on this. He's a former trader turned economist and he went over some of this. Originally I was with you and a few others but surely this is just making a bad problem worse for everyone, in that the issues weren't down to people having money to burn but that the inflation was more down to energy costs + knock on from the war.
He argued that it was more down to us pumping the economy with money over the Covid period which flowed into the wealthy (the properly wealthy) and now inflation is rocketing up. Whilst the Government should be focussing on trying to get some of that back, they're not doing a lot on the fiscal side that really caused it.
Meanwhile, BoE does the monetary side and really they only have this one lever to use, which they are doing. They aren't wrong to do it and it'll work but it is at the expense of the middle class and below whilst the wealthy are ready to hoover up even more stuff, increasing inequality which is already getting quite bad.
I think this was the video he went through it.
It's an interesting view.
One thing you need to remember in this context is, governments like inflation as it pushes up their tax returns amongst other reasons. You say “it’ll work”. When?
In the spirit of reconciliation and happiness at the end of the Banter Era (RIP) and as a result of promotion I have cleared out my ignore list. Look forwards to reading your posts!
The mortgage market is mad, but even as a homeowner I find the calls to help people out with seemingly financial help odd when there is no talk of it being done for private renters who are getting the costs passed onto them anyway
I'd love a bit of help with the mortgage, but don't see why I deserve it over anyone else who doesn't own a house
Indeed. Add to that the problem of landlords with rising mortgage costs either raising the rent or cutting out and selling up, renters are not in a great position here either.
But governments approach for pretty much my entire life has been to protect homeowners and to support ever increasing house prices.
Well there is an obvious and much discussed problem. The main lever the BoE has to fix inflation with is raising interest rates. Therefore making many even poorer. But it seems to be the only way -and trying to alleviate the costs some other way will most likely reduce the effectiveness.
As a struggling private renter I do tire of hearing quite so much attention being given to what it all means for home owners. Maybe stretching your budgets so much on your mortgage payments wasn't the best idea.
[Post edited 22 Jun 2023 12:09]
There was a woman in a beeb story saying she'd have to sell her home because of these rates, which is obviously tragic for her. She was very cross with the Govt. But reading on, it turned out she's 49 and on an interest only variable rate mortgage - not to be harsh, but is it really the govt (or Bofe)'s faults that she's in trouble?
Has anyone ever looked at their own postings for last day or so? Oh my... so sorry. Was Ullaa
Not a loaded question, but how can inflation be brought down?
All I've seen is the odd bod on twitter suggesting price controls but hasn't that been tried and failed before?
By addressing those issues that are causing "core inflation". People lavishly spending money is not the issue.
The BoE has basically signed up to the policy that the only way to bring down inflation is to cause a recession so we all have less money.
As I understand it, because of where this inflationary pressure is coming from, increasing borrowing rates filters through the economy, which in turn raises prices of the goods we buy, which drives up inflation.
There's a guy that J2 has been posting a lot (Gary Stevenson) who has changed my view a bit on this. He's a former trader turned economist and he went over some of this. Originally I was with you and a few others but surely this is just making a bad problem worse for everyone, in that the issues weren't down to people having money to burn but that the inflation was more down to energy costs + knock on from the war.
He argued that it was more down to us pumping the economy with money over the Covid period which flowed into the wealthy (the properly wealthy) and now inflation is rocketing up. Whilst the Government should be focussing on trying to get some of that back, they're not doing a lot on the fiscal side that really caused it.
Meanwhile, BoE does the monetary side and really they only have this one lever to use, which they are doing. They aren't wrong to do it and it'll work but it is at the expense of the middle class and below whilst the wealthy are ready to hoover up even more stuff, increasing inequality which is already getting quite bad.
I think this was the video he went through it.
It's an interesting view.
it was down to energy costs and the war etc, but it's now down to the uk labour market. somehow heat needs to be taken out of the labour market - particularly the service sector - by reducing consumer spending. i don't see what other instruments are available to achieve that. the problem is that the impact of interest rate rises is now so much narrower and unequal than it was 15 years ago.
And so as the loose-bowelled pigeon of time swoops low over the unsuspecting tourist of destiny, and the flatulent skunk of fate wanders into the air-conditioning system of eternity, I notice it's the end of the show
There was a woman in a beeb story saying she'd have to sell her home because of these rates, which is obviously tragic for her. She was very cross with the Govt. But reading on, it turned out she's 49 and on an interest only variable rate mortgage - not to be harsh, but is it really the govt (or Bofe)'s faults that she's in trouble?
I find this very interesting. Where does the State end and personal responsibility begin? We have seen huge state intervention in the economy since Blair came to power really. 08, austerity, covid, and whatever they’re going to do about this because you just know they’re going to do something. Can an individual inoculate themselves from that in any meaningful way? Or is it therefore the responsibility of the State to protect *all* individuals from financial discomfort?
In the spirit of reconciliation and happiness at the end of the Banter Era (RIP) and as a result of promotion I have cleared out my ignore list. Look forwards to reading your posts!
There's a guy that J2 has been posting a lot (Gary Stevenson) who has changed my view a bit on this. He's a former trader turned economist and he went over some of this. Originally I was with you and a few others but surely this is just making a bad problem worse for everyone, in that the issues weren't down to people having money to burn but that the inflation was more down to energy costs + knock on from the war.
He argued that it was more down to us pumping the economy with money over the Covid period which flowed into the wealthy (the properly wealthy) and now inflation is rocketing up. Whilst the Government should be focussing on trying to get some of that back, they're not doing a lot on the fiscal side that really caused it.
Meanwhile, BoE does the monetary side and really they only have this one lever to use, which they are doing. They aren't wrong to do it and it'll work but it is at the expense of the middle class and below whilst the wealthy are ready to hoover up even more stuff, increasing inequality which is already getting quite bad.
I think this was the video he went through it.
It's an interesting view.
Absolutely agree the relentless printing of money is the biggest factor behind inflation. But it's too easy to do, government is addicted. We've been at it since at least 2008/9 credit crunch. Covid, Ukraine, energy prices all exacerbating factors of course.
One thing you need to remember in this context is, governments like inflation as it pushes up their tax returns amongst other reasons. You say “it’ll work”. When?
I don't think they like this much, especially when they're in lots of debt. Just means they can't spend money on anything and we've already cut everything to the bone so the easy option is out the window now.
It'll work after much more pain, but again only at our expense. The wealthy are going to get away with it because increasing taxes on the truly wealthy seems to never be on the table.
I find this very interesting. Where does the State end and personal responsibility begin? We have seen huge state intervention in the economy since Blair came to power really. 08, austerity, covid, and whatever they’re going to do about this because you just know they’re going to do something. Can an individual inoculate themselves from that in any meaningful way? Or is it therefore the responsibility of the State to protect *all* individuals from financial discomfort?
Yeah, I think the lines have been blurred a lot, but ultimately, we all need to do what we can to take responsibility for ourselves don't we? For instance, I have no pension - that's completely and utterly on me.
At the risk of sounding harsh, I think many people took a risk and borrowed more than they could sensibly afford (ignoring the warnings you get on mortgage applications about what happens if rates are 5% or 10%). For years, thats turned out to be more than a safe bet - a better than safe bet - they've made money on rising prices through leverage - but now things have changed.
Personally, I;d say blame the govt and BofE for mismanagement, but look inward too for not buying that smaller house or that house in the cheaper area..
(hard hat on)
Has anyone ever looked at their own postings for last day or so? Oh my... so sorry. Was Ullaa
There's a guy that J2 has been posting a lot (Gary Stevenson) who has changed my view a bit on this. He's a former trader turned economist and he went over some of this. Originally I was with you and a few others but surely this is just making a bad problem worse for everyone, in that the issues weren't down to people having money to burn but that the inflation was more down to energy costs + knock on from the war.
He argued that it was more down to us pumping the economy with money over the Covid period which flowed into the wealthy (the properly wealthy) and now inflation is rocketing up. Whilst the Government should be focussing on trying to get some of that back, they're not doing a lot on the fiscal side that really caused it.
Meanwhile, BoE does the monetary side and really they only have this one lever to use, which they are doing. They aren't wrong to do it and it'll work but it is at the expense of the middle class and below whilst the wealthy are ready to hoover up even more stuff, increasing inequality which is already getting quite bad.
I think this was the video he went through it.
It's an interesting view.
Credit to the original poster who posted his stuff. Think it might have been noggin. Apologies to whoever it was if it wasn't noggin.
Edit: Anyone remember the poster who argued that we should just keep printing because we've printed loads and there hadn't been any inflation? That aged well.
These interest rate rises will inevitably help with inflation to some degree, despite it not being consumer demand led, but there's always a consequence in terms of the economic impact, labour market participation, growth, the property and travel sectors etc. The list goes on. Weighing up the least worst option is always going to be hard. I don't really think the BOE has much alternative right now though. Inflation clearly isn't falling fast enough, but the expectation is that it will start to over the next 6 months and return to the target 2% in 2024.
What will be interesting is when interest rates inevitably have to coming down to kick start the economy. Probably not as quickly as they've gone up, but it's certainly an obvious lever that will be triggered in say 12-36 months. My nervousness at that point is what that will do to the property market. You'll have a couple of years of pent up demand from people sitting on their hands, at a time when housebuilders will slow output further increasing the supply : demand disconnect, we'll have had wages catching up (albeit slowly) with house prices (assuming a dip) and then we'll have what will feel like cheaper debt again if people can get a mortgage in something starting in a 3. I can see a bun-fight and another spike in property prices which is only going to make life hard for those looking to get on the ladder.
By addressing those issues that are causing "core inflation". People lavishly spending money is not the issue.
The BoE has basically signed up to the policy that the only way to bring down inflation is to cause a recession so we all have less money.
As I understand it, because of where this inflationary pressure is coming from, increasing borrowing rates filters through the economy, which in turn raises prices of the goods we buy, which drives up inflation.
The BoE have dropped a b0llock basically
Thats fair, but this govt or the next won't be going back on Brexit, which seems to be at the root of many inflationary pressures, so what to do after that?
I gather that only 30% of homeowners have a mortgage, so how do you get the other 70% to stop spending money?
Has anyone ever looked at their own postings for last day or so? Oh my... so sorry. Was Ullaa
Yeah, I think the lines have been blurred a lot, but ultimately, we all need to do what we can to take responsibility for ourselves don't we? For instance, I have no pension - that's completely and utterly on me.
At the risk of sounding harsh, I think many people took a risk and borrowed more than they could sensibly afford (ignoring the warnings you get on mortgage applications about what happens if rates are 5% or 10%). For years, thats turned out to be more than a safe bet - a better than safe bet - they've made money on rising prices through leverage - but now things have changed.
Personally, I;d say blame the govt and BofE for mismanagement, but look inward too for not buying that smaller house or that house in the cheaper area..
(hard hat on)
i think the state has a role in providing a safety net when individuals take what are standard financial risks. we all benefit from an economy in which people take on reasonable debt and mortgages etc and people shouldn't be punished for that. in this case the safety net should involve regulating the mortgage market to ensure that when monetary policy is tight alternatives to mortgage default are available and people don't lose their houses because of relatively short-term factors.
And so as the loose-bowelled pigeon of time swoops low over the unsuspecting tourist of destiny, and the flatulent skunk of fate wanders into the air-conditioning system of eternity, I notice it's the end of the show
Well there is an obvious and much discussed problem. The main lever the BoE has to fix inflation with is raising interest rates. Therefore making many even poorer. But it seems to be the only way -and trying to alleviate the costs some other way will most likely reduce the effectiveness.
As a struggling private renter I do tire of hearing quite so much attention being given to what it all means for home owners. Maybe stretching your budgets so much on your mortgage payments wasn't the best idea.
[Post edited 22 Jun 2023 12:09]
"Maybe stretching your budgets so much on your mortgage payments wasn't the best idea"
That's not a very charitable statement when interest rates have gone from 0.1% at the start of Dec 2021 to 5% 18 months on. Nobody would have foreseen this rapid rise over a 2 year fixed rate term. It's going to leave a lot of very sensible, prudent people struggling, let alone those that genuinely overstretched with whopping mortgages.
Thats fair, but this govt or the next won't be going back on Brexit, which seems to be at the root of many inflationary pressures, so what to do after that?
I gather that only 30% of homeowners have a mortgage, so how do you get the other 70% to stop spending money?
Think it's 30% mortgage, 40% rent and 30% own outright which were quoted this morning.
Private renters will get hit as landlords push up rents to compensate, so that's that 40% dealt with.
The latter 30% tend to be older, which is of course the Tory target market and they care more about savings rates than debt. So they and they Tories won't give a toss.
And then a deep recession caused by less money being around will stop spending to a degree. They called out the service industry this morning as a contributory factor to inflation. That will be decimated like during Covid over the next 12 months.
"Maybe stretching your budgets so much on your mortgage payments wasn't the best idea"
That's not a very charitable statement when interest rates have gone from 0.1% at the start of Dec 2021 to 5% 18 months on. Nobody would have foreseen this rapid rise over a 2 year fixed rate term. It's going to leave a lot of very sensible, prudent people struggling, let alone those that genuinely overstretched with whopping mortgages.
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