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View Full Version : Finally some truth!



AtW
3rd May 2011, 09:40
Speaking yesterday at the European Parliament in Brussels, Mervyn King warned that a rise in long-term interest rates would have “severe” consequences.

While he was addressing the subject of interest rates across Europe, his comments come ahead of this week’s Bank of England’s Monetary Policy Committee (MPC). They are likely to be interpreted as a signal that the MPC will leave UK interest rates unchanged at a record low of 0.5pc.

"The economic consequences of high-level indebtedness now would become more severe if rates were to rise,” Mr King said. “It is the main reason why interest rates are so low.”

He added it would take a number of years to repair the damage across Europe caused by the financial crisis. “The economic challenges will last for many years...The financial crisis is far from over,” he said in his capacity as deputy chair of the European Systemic Risk Board (ESRB).

The ESRB is responsible for identifying and combating threats to the financial system.

Source: Bank of England Governor Mervyn King warns on interest rate rise - Telegraph (http://www.telegraph.co.uk/finance/economics/8488547/Bank-of-England-Governor-Mervyn-King-warns-on-interest-rate-rise.html)

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So, no more bulltulip about "low" inflation that is about to get even "lower" somehow magically, finally he admits that the main reason rates are down is to bail out those who got in debt during the time of pretty low rates anyway - 5%.

This argument might have been acceptable if he resisted getting rates up to 10%+, however they dropped to near zero from 5% - the level most people borrowed, ffs, surely they should be able to afford to repay at least at the level they borrowed?!?!

:mad

TimberWolf
3rd May 2011, 09:47
Clearly the answer to a decade of too low interest rates is another decade of even lower interest rates.

gingerjedi
3rd May 2011, 09:53
Clearly the answer to a decade of too low interest rates is another decade of even lower interest rates.

Yes but restrict feckless lending, there's not much point in raising rates to a point where people simply can't afford to pay what they owe.

DimPrawn
3rd May 2011, 10:26
Gold as an investment - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Gold_as_an_investment)

HTH