Thursday, January 08, 2009

Interest in the Economy

Despite the significant losses documented yesterday and in earlier notes, I don't claim poverty. Particularly compared to most in my home town, I'm doing ok.

However worse times are coming. News today: The Bank of England has cut interest rates to 1.5%, the lowest level in its 315-year history, as it continues efforts to aid an economic recovery. The Bank of England is shafting us.

Manufacturers' association EEF said the move was "too timid", and that the Bank should have cut rates further. Self-serving poppycock . The reduction of interest rates is not the only weapon in the arsenal of weapons available to tackle stagnation of demand. Whatever happened to the direct fiscal stimulus? Investing in the infrastructure of the country?

There are seven times as many net savers as net borrowers in this country, though overall saving rates are overall about zero as average borrowing is about seven times average saving. But all these ridiculous cuts will do is encourage more borrowing. Madness. That is exactly what got us into this mess in the first place.


Faisal said...

The madness is in thinking that they will do anything remotely sensible. It's all short-sighted self-serving nonsense. Those at the top will still benefit and still work for their benefit, no matter what it's disguised as. Economic stimulus? Please! It's an utter disgrace.

Rana Banerjee said...

Up to last year, despite the odd dumb investment, things were broadly ok on the economic front, both for me and for the nation - but in the last few months, reserves have slightly collapsed. However my objection to the current panic is the assumption that the only way out of an economic recession (personal or national) is to borrow more. That's completely wrong. Just going into more debt will fix nothing. Excessive borrowing was the source of the problem, not a solution.

Vancouver realtor said...

Citizens (=voters) are asking "do something!" their governments, because we simply can't realize we have to survive the crisis, nothing else can be done. So the officials are sitting in their offices, pushing furiously "lower rate" on their PCs, "look, we are acting, we are saving you!"

Ann said...

The trouble is....

The trouble is so many things but one of the main issues imho is the complete reliance on personal borrowing.

(And I know this makes me sound like I'm 180 but...) Whatever happened to saving up for things before you bought them?

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