tag:blogger.com,1999:blog-32841798.post4206403355175718024..comments2024-03-28T22:45:51.014+00:00Comments on Capitalists@Work: Interest rate rise instead of unwinding QECityUnslickerhttp://www.blogger.com/profile/15929544047783163175noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-32841798.post-918421300385790552016-03-30T11:46:02.552+01:002016-03-30T11:46:02.552+01:00We should also be talking about fiscal tightening ...We should also be talking about fiscal tightening first, before monetary. Osborne would argue that the Plan already includes hefty fiscal tightening, but I want him to go much further before the monetary brakes are put on.<br />By the way thanks for share such a valuable post!Impressive! <br />What is crowdfunding? The full structure, classification & definitions of <a href="https://myfundnow.com/blog/what-is-crowdfunding" rel="nofollow">crowdfunding</a>. The most safest & reliable platform to donate or receive money online! Helen Fhttps://myfundnow.com/blog/what-is-crowdfundingnoreply@blogger.comtag:blogger.com,1999:blog-32841798.post-78029206882600435872014-08-16T07:29:45.379+01:002014-08-16T07:29:45.379+01:00You'll be able to notice the entire body of th...You'll be able to notice the entire body of the automobile move when you change course, making it normal and also instinctive to correct little 35mm slides and massive oversteer instances, particularly with a new tyre.Inventory highway autos am certain far more exciting now.During the past, they have been almost as rigid as the race vehicles, in GT6, it is possible to sense far more movements through these less-high-end equipment, specially when your nostril dives forwards underneath stopping.You can also feel the reduce of proper grip much more very easily on common avenue tires, that means you are able to extract much more functionality than usual coming from a few more slowly cars.<br /><br /><a title="Buy Fifa 14 Coins, Cheap Fifa Coins, Fut 14 Coins fast Online" href="http://fifa14.vipmmobank.com/" rel="nofollow">Fifa 14 coins</a><br><br /><a title="Buy Fifa 14 Coins, Cheap Fifa Coins, Fut 14 Coins fast Online" href="http://fifa14.vipmmobank.com/" rel="nofollow">Cheap Fifa 14 Coins</a><br>fifa14.vipmmobankhttp://fifa14.vipmmobank.com/noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-20631986334264117172014-06-25T18:28:21.209+01:002014-06-25T18:28:21.209+01:00The cause of the London house boom might not be ch...The cause of the London house boom might not be cheap money - and it's not a high average wage causing it either. Electro-Kevinhttps://www.blogger.com/profile/18073103431166273080noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-4830303634608713422014-06-25T16:02:56.841+01:002014-06-25T16:02:56.841+01:00CU I don't disagree but that is what Carney sa...CU I don't disagree but that is what Carney said. <br /><br />We should also be talking about fiscal tightening first, before monetary. Osborne would argue that the Plan already includes hefty fiscal tightening, but I want him to go much further before the monetary brakes are put on. Blue Eyesnoreply@blogger.comtag:blogger.com,1999:blog-32841798.post-55881347472406969212014-06-25T15:44:17.330+01:002014-06-25T15:44:17.330+01:00Bond prices have to fall as rates rise as the retu...<i>Bond prices have to fall as rates rise as the return increases. Whether the short or medium term markets reflect his is not the point. It's basic maths to calculate a yield curve</i><br /><br />But you were saying if bank rate goes up bond prices will fall. What zero-risk overnight bonds are you talking about?<br /><br />You might find that the yield curve simply changes shape a bit and other interest rates stay largely the same. Further, as consumers can't open reserve accounts at the BofE, who is to say banks will start paying more for deposits? Current accounts still paid 0.1% when bank rate was 5%. If gilt prices don't change much then neither will the yield on one, two or five year deposits surely?Steven_Lhttps://www.blogger.com/profile/05029437876479574883noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-60860872580376799852014-06-25T15:26:21.162+01:002014-06-25T15:26:21.162+01:00But that never makes any sense, it is an excuse to...But that never makes any sense, it is an excuse to not unwind QE in the event that it can be monetised in the next crash....US GDP -2.9% for example..CityUnslickerhttps://www.blogger.com/profile/15929544047783163175noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-83726121259760420662014-06-25T10:52:36.565+01:002014-06-25T10:52:36.565+01:00CU Carney explained the strategy in his speech yes...CU Carney explained the strategy in his speech yesterday. He said that QE will be unwound, but only when Bank Rate has risen so that if the unwinding goes wrong Bank Rate can be cut again.Blue Eyesnoreply@blogger.comtag:blogger.com,1999:blog-32841798.post-74918981543617493302014-06-25T10:05:28.081+01:002014-06-25T10:05:28.081+01:00Greenspan caused the the securitisation bubble by ...Greenspan caused the the securitisation bubble by holding rates low - financialisation was the way the bansk went to generate returns and that led to your problems Hovis. The original sin was cheap money and the imported deflation from China.<br /><br />As for rates - I am not strongly in favour of them going up yet as BE and Hovis righly point out the London bubble is equity driven, so borrowing costs are immaterial. <br /><br />However, no one has chellenged the tenet that you should unwind the QE first before you raise rates. <br /><br /><br />SL - Bond prices have to fall as rates rise as the return increases. Whether the short or medium term markets reflect his is not the point. It's basic maths to calculate a yield curve.CityUnslickerhttps://www.blogger.com/profile/15929544047783163175noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-80265159572389440962014-06-25T09:33:23.904+01:002014-06-25T09:33:23.904+01:00Andrew: I think that the number and type baubles o...Andrew: I think that the number and type baubles on offer are increasing and enough people are getting them for the moment, but in trend terms i.e. how far are they spread, that is pointing towards increasing polarisation.<br />Your point at what then, implies you are questioning infinite growth?<br /><br />Personally I also think politically we are in bread and circuses territory, with a political system that is taking away freedoms and trying to use the baubles as a distraction.<br /><br />Nick: I agree Black Scholes is merely a formula, I was being opaque and thinking more of the aim of people like McQuown, Kealhoffer and Vasicek who took it further wanted to liberate the debt market and make it as liquid and tradeable as equities. Now I'm not blaming them, or that per se it's a bad idea, the execution however (especially some securitisations) introduced risks that were not understood and/or ignored.hovisnoreply@blogger.comtag:blogger.com,1999:blog-32841798.post-79723172793076313332014-06-24T22:39:26.154+01:002014-06-24T22:39:26.154+01:00I have why nations fail on my shelf.
But I've ...I have why nations fail on my shelf.<br />But I've still 200 odd pages of 1974-1979 to go.<br /><br />But it's next on the list. After a lighter novel. Stephen king or a Derek Robinson.Bill Quango MPhttps://www.blogger.com/profile/14861116614665461655noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-56696193260301104202014-06-24T21:30:44.616+01:002014-06-24T21:30:44.616+01:00If you actually do have interest rates of 0.0 or l...If you actually do have interest rates of 0.0 or less, weird things start to happen.<br /><br />QE sort of dodged that bullet and from what i have read, is less bad than negative rates.<br /><br />After all of the purpose of a bank (in social terms) is to efficiently allocate resource from savers to debtors, lending £100 with the promise of returning £96 in a years time works, but serves no purpose.<br /><br />i.e. when interest rates really are significantly negative, it actually means for all purposes they are 0.0 for you and me as we will just get cash, and as a by-product there is not much need for a bank - unless it is for secure storage of your cash.<br /><br />Some may say that that is what banks are really for and they should go back to that.<br /><br />Being a v.v.v. small time participant in the funding circle, i was fascinated to see that they are hooking up with santander to offer small business loans in a wide scale.<br /><br />the flip side of the QE or not QE issue is the general 'what is it being spent on' question.<br /><br />On page 33 of 'why nations fail'.<br />The basic thesis (and I may well be wrong as only on page 33 of 460 odd) seems to be that if a country's institutions are set so that any increase in that country's wealth is passed on to the majority of its citizens, that country tends to succeed. It the fruits of progress are kept to a too - small group, the country 'fails' - becomes relatively poorer over time.<br /><br />The question I sort of have is given you think this is correct (I think it is), and more and more money is passed to a wide group of people (although QE could be said to be doing the precise opposite), what then?<br /><br />When every flat has a big tele and an xbox and a wardrobe full of knock-off armani from the last hol in turkey (for that is where I am), even if the rewards of progress are 'fairly' shared by some definition of 'fair', what then?<br /><br />In previous generations, increasing income bought freedom (from serfdom), land, political freedoms, security, plumbing, electricity, cars (freedom of movement).<br /><br />What non-substitutable thing do people not have now that they are willing to struggle for?<br /><br />This may be a reason why income inequality looks to be rising - because there is nothing to buy with a small amount of extra money.<br /><br />But there are things that can be bought with lots of money (a ticket to orbit).<br /><br />Apologies for running somewhat o/t<br />andrewhttps://www.blogger.com/profile/07311993288675111834noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-64561426517174101022014-06-24T21:09:27.200+01:002014-06-24T21:09:27.200+01:00But as you raise interest rates, then the price of...<i>But as you raise interest rates, then the price of Bonds will fall</i><br /><br />Bollocks. Long term US bonds stayed yielding pretty much the same during the last phase of rising US rates in the mid naughties. <br /><br />Folk blame the global savings glut. What's the bet Cameron and co are trying to flog the Chinese gilts as we speak?<br /><br />As for all this mumbo jumbo about undermining the concept of money etc, pull the other one. Money, and the economy in general, is more centrally planned now than it has been in my lifetime. I heard on the radio today that a public sector bank is setting up a $1bn fund to 'invest' in windmills, presumably collecting the government mandated feedin tarriff or one of these cfd's ND was on about a few months back.Steven_Lhttps://www.blogger.com/profile/05029437876479574883noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-18402092346581586162014-06-24T18:26:50.150+01:002014-06-24T18:26:50.150+01:00Hovis and I agree on something!
There are simila...Hovis and I agree on something! <br /><br />There are similar property booms happening in the desirable bits of Canada, Australia, New Zealand and so on. Not all of those places have had low bank rates and QE.Blue Eyesnoreply@blogger.comtag:blogger.com,1999:blog-32841798.post-34089598866692236702014-06-24T17:43:38.190+01:002014-06-24T17:43:38.190+01:00please don't blame Black-Scholes !
it's j...please don't blame Black-Scholes !<br /><br />it's just a calculation, & it's not rocket science<br /><br />oh hang on, actually, it <i><b>is</b></i> rocket science ...Nick Drewhttps://www.blogger.com/profile/13670594203660051701noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-13402288901641296942014-06-24T16:33:22.442+01:002014-06-24T16:33:22.442+01:00CU I'd agree that cheap money leads to misallo...CU I'd agree that cheap money leads to misallocation, but essentially it didnt cause the crisis of itself. Banks runs are a feature, not a bug of FR banking surely? The inherent lack of trust given the the securitization of debt, saw risk couldn't be quantified, prices nosedive and panic ensue, prices asset valuations nosedive, Mark to Matrket rules and more banks [should've] gone under. Blame securtization, blame Black-Scholes, blame central banks, blame non enforcement of regulation, not just cheap money ...<br /><br />As an aside most commercial lending has been at normal rates as banks have used the cheap mopney they can get their hands on to re-build tgheur balance sheets. Any rate raise will be passed on, any "cheap money" has only been for those withs special access (Crony Capitalism anyone?)hence the asset price bubbble in equities. <br /><br />Whilst it might seem contradiactory I'd agree with BE the London bubble isnt driven by cheap money, but a confluence of other factors, including the lest dirty shirt in the laundry basket rather than inherent value or attractiveness of London.<br /><br />hovisnoreply@blogger.comtag:blogger.com,1999:blog-32841798.post-1967076151530877002014-06-24T16:25:32.406+01:002014-06-24T16:25:32.406+01:00I don't disagree, but whacking rates up premat...I don't disagree, but whacking rates up prematurely will just push us into Eurozone-style depression. Getting out of a depression is much harder than not getting into one in the first place.<br /><br />If anything the government should be setting a higher inflation target, say 4% on the old RPI measure. Blue Eyesnoreply@blogger.comtag:blogger.com,1999:blog-32841798.post-49549507435514393032014-06-24T15:27:51.787+01:002014-06-24T15:27:51.787+01:00BE - Fair points, normalising the economy to rates...BE - Fair points, normalising the economy to rates around 5% has to happen though. Over a long period, but the long-term effect of cheap money are devastating - its how we got to 2008 in the first place.CityUnslickerhttps://www.blogger.com/profile/15929544047783163175noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-67425794179790303782014-06-24T11:43:42.985+01:002014-06-24T11:43:42.985+01:00Kaletsky says that QE may have simply created mone...Kaletsky says that QE may have simply created money that was actually needed, i.e. that it is possible that the crash caused a step change in the need for cash in the economy.<br /><br />I agree that it surely makes sense to slowly unwind the bond purchases instead of raising rates. I am still not convinced we are ready for tightening, though. The economy is not booming. Wages are still stagnant and prices for manufactures goods, food etc. are not rising. The only reason people are talking about rate rises is the London property market, and that is not going to be affected by a per cent or so on the base rate.<br /><br />Rates should be held down until there is a genuine risk of inflation. The London property market should be looked at in context. If it's too hot (lots say it has already peaked) then look at the causes. I doubt it is too cheap money.Blue Eyesnoreply@blogger.comtag:blogger.com,1999:blog-32841798.post-48992312927088404132014-06-24T10:36:49.908+01:002014-06-24T10:36:49.908+01:00"It welfare for arseholes who cannot manage t..."It welfare for arseholes who cannot manage their own finances"<br /><br />You mean the banks.hovisnoreply@blogger.comtag:blogger.com,1999:blog-32841798.post-90550587033556010632014-06-24T10:26:35.442+01:002014-06-24T10:26:35.442+01:00QE should never have been instigated in the first ...QE should never have been instigated in the first place.<br /><br />It welfare for arseholes who cannot manage their own finances.<br /><br />The real interest rates in the real economy are about 17% (standard car finance rates) up to 400% (payday lenders).MyUsualNamenoreply@blogger.com