Interest Rate Cuts?

Jorumian

Facilitator
Sep 1, 2008
347
3
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Birkenhead
I found this quite an interesting article, arguing for large interest rate cuts in the base rate to try and bring us out of the slew of recession.

The Bank of England's folly will send us into depression

I am no financial whizz, but to me this seems to me to make the most logical sense... A sharp cut in rate frees up money for a great many mortgage payers, who will then have more to spend each month in the shops. You can argue it is just the boom & bust cycle all over again though and I'd be hard pushed to find any argument against that.

What is telling is supposedly 4 Million unemployed by 2010 as well some experts reckon... There's a cheery thought on a Monday evening...
 

greatscotuk

Facilitator
Sep 1, 2008
31
0
0
It makes sense. Something definately needs to be done regarding employment. Two of my closest friends have been made redundant, and several other friends and family. Do they not realise that if things continue, the 4m unemployed will be more of a burden than [even] a temporary cut in interest rates?
 

barbarp

Facilitator
Aug 20, 2008
55
4
0
Dorset
I think they do realise but the trouble is who has the greater voice? the unemployed or the big buisnesses who don't want the interest rate cut because it will loose them money and foriegn investors ?
It continues to be the case that those in charge are more prepared to listen to the short sighted wishes of the rich than consider the needs of the many:mad:
 

Paul Carcone

Facilitator
Jun 22, 2008
141
7
0
South Coast
www.carconeconsulting.com
Interest Rate Cuts

Here's what happens when interest rates are cut...

First...consumers spend more on credit...which leaves them financially crippled when the rates rise on large balances held on credit cards. It also means that people save less as the likely returns are not favourable.

Second...foreign investment in sterling dries up which means that less sterling is being bought on the market, which means that our exchange rate worsens dramatically. It also means that imports become more expensive...and remember that we get a substantial amout of our energy supply from Europe. Moreover, as imports become more expensive, this means that it is increasingly difficult for British companies to compete against foreign ones, which leads to greater unemployment and a worsening trade imbalance.

As for unemployment as a whole, what really needs to be done is to make being unemployed less comfortable so that the people who can work, but choose not to because the benefits are so good, actually start feeling the pinch and then try to go out and do something constructive.

Unemployment is only truly helped by a buoyant private sector...and simply altering the interest rate is a reckless thing to do for a nation that is already so badly in debt.

The financial markets are not as simple as the media like to portray them to be...there are a lot of complex interplays and consequences that are not immediately apparent.
 

Tony

What Consumer Founder
Apr 7, 2008
18,307
3
38
Bolton
The financial markets are not as simple as the media like to portray them to be...there are a lot of complex interplays and consequences that are not immediately apparent.
It is clear that nobody really knows what is going on or what to do about it. :)