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Inflation

Just cant get my head round whats being said and whats going on!

Today they are warning that utility bills will be going up by 40% thats on top of food prices fuel etc. The Bank of England warns it will be puting up ontrest rates to "curb inflation ". Now hold on a mo here ----------- intrest rates up , means people wont be spending more as morgages and loans go up. less cash in the market place means people out of work and even less cash going into the economy, and the economy is what they want to grow ????????

HM Gove sits on its hands and says "not our problem it a world thingy". The UK fishing fleet anounced this week that they would have to stop fishing as their fuel costs have gone up 100% in 0ne year, and they are fishing at a loss. they asked for emergancy aid as the fleets of France and spain have received HM Gov said no !!!

Me and my family are lucky Mum has enough in the bank not to worry to much about the price of gas etc. I have paid our mortgage off and get a good screw if i feel like working---------------------------- but what about thise millions of old folks who aint got the wedge and the familys who are just keeping the heads above th high tide mark ? big big big problem and i dont hav 1 % belief this Goverment have clue what to do-- heads are firmly in the sand and hoping it will all go away.

It must have an affect on crowds next season,mainly away support i would think.
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Comments

  • if they dont put interest rates up then inflation will get even worse. but they sacrifice economic growth. its a problem, but its not the govt controlling interest rates but the bank of england.
  • another cope out lets all blame the B of E and not the people in charge of the country who were elected to GOVERN
  • the government set the rate they want to have inflation at though, which governs the bank of Englands decisions, bit narrow in my view.
  • [cite]Posted By: matt896[/cite]if they dont put interest rates up then inflation will get even worse. but they sacrifice economic growth. its a problem, but its not the govt controlling interest rates but the bank of england.


    If you really think the government have nothing to do with interest rates then I'm stunned....

    GH. The point of putting rates up is to dampen spending and rein in the economy. They want it to grow but at a steady pace. Unfortunately this mornings retail spending data has made an interest rate rise almost certain within the next month or two. The problem they have is that rate rises will only dampen domestic spending, i.e. retail, but will do nothing to curb the huge impact of the cost of oil, gas etc.
  • If oil and gas prices are such a problem why don't the USA (as the world's peace keepers) invade some oil rich countries to ensure that the price stays low.
  • [cite]Posted By: Henry Irving[/cite]If oil and gas prices are such a problem why don't the USA (as the world's peace keepers) invade some oil rich countries to ensure that the price stays low.

    Invading them makes the price go up. They are actually trying diplomacy at the moment and finding they are not very good at it.
  • [cite]Posted By: Brunello[/cite]
    [cite]Posted By: Henry Irving[/cite]If oil and gas prices are such a problem why don't the USA (as the world's peace keepers) invade some oil rich countries to ensure that the price stays low.

    Invading them makes the price go up. They are actually trying diplomacy at the moment and finding they are not very good at it.

    Dip, diplo, Diplomacy? Sorry Brunello no idea what you are talking about.
  • They were saying two months back in line with Kensian economic theory "we have more poeple working and paying tax and investing in the market place" the big "havnt we done well the point being WE. Now though the whels fall off and its all someone elses fault and f**k all we can do. Watch in the next 4 months the numbers of people out of work will rocket.


    Anyone who also looks at shares i suggest you take a gander at copper,steel,iron ore and aluminuim. They will rocket in price for abour 5 years as China is out there seting up huge mega deals for this stuff. Just when the UK needs steel and aluminim for the Olympic mega sites "o f**k its all gone east" they of course will get it at a hugely inflated price and the costs to you and me for the Olympics will be higher and higher and higer.
  • and nuking them (like Iran) thats bound to help the price of Oil, he he he
  • [cite]Posted By: Goonerhater[/cite]They were saying two months back in line with Kensian economic theory "we have more poeple working and paying tax and investing in the market place" the big "havnt we done well the point being WE. Now though the whels fall off and its all someone elses fault and f**k all we can do. Watch in the next 4 months the numbers of people out of work will rocket.


    Anyone who also looks at shares i suggest you take a gander at copper,steel,iron ore and aluminuim. They will rocket in price for abour 5 years as China is out there seting up huge mega deals for this stuff. Just when the UK needs steel and aluminim for the Olympic mega sites "o f**k its all gone east" they of course will get it at a hugely inflated price and the costs to you and me for the Olympics will be higher and higher and higer.


    Not just stadiums in East London either : - (
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  • and Gold too, who was the bloke on here or NA kept harking on about gold, apparently its risen year on year and was great investment, just after Brown flogged half of our gold reserve.
  • [cite]Posted By: razil[/cite]and Gold too, who was the bloke on here or NA kept harking on about gold, apparently its risen year on year and was great investment, just after Brown flogged half of our gold reserve.

    Two Sheds.

    He also said house prices would fall.
    Dont we all look stupid now.
  • edited June 2008
    The oil companies, our government and the financial instiutions are taking the pee not OPEC with the oil prices. The Iranian president is quite correct its the middle man that is making these prices go up for there profits.
  • Still, at least this Government has promised no more 'boom' and 'bust' economics, so there's no need to worry
  • they should threaten to windfall tax any profiteers
  • edited June 2008
    The economy needs a huge hike in interest rates to dampen consumption and steady a pound that's threatening to go into freefall. As far as i'm concerned f*ck those who didn't see this coming, if you've over borrowed you've made a decision and you need to live by it even if it puts you out on the street. If interest rates don't rocket up we're all in it not just the terminally stupid. I'm fed up with a society that seems unable to allow people to stand and fall by the decsions they make and politicians who constantly look for soft options when it's those very same decisions that are destroying our prosperity.
  • is consumption that high?

    I am no expert but the increase in inflation is not consumption based its lack of supply and increased demand from the developing world. A weaker pound will boost our manufacturing sales abroad. Can't really see that raising interest rates is gonna help.
  • A hike in rates has got nothing to do with the relative strength of the pound. It has actually been reasonable stable for a while and thats fine. Its volatility in a currency that is a problem. Strength and weakness has its own merits. Regarding consumption I think its the prevalence of cheap monies that is and has been the problem. People are hiding behind the credit crunch or the US as an excuse but this would have happened anyway in the UK because we were vastly over leveraged. I totally agree with Santa Claus that if people thought they were rich because they had positive house equity and went and spent it all then they have to have responsibilities for the consequences.
  • If consumption wasn't out of kilter with our ability to finance it our currency wouldn't have taken a hit in the last few months. Can you imagine what would happen to cost of essentials like food and fuel if the pound is allowed to depreciate further. The cancer in all this is the housing market and the debt tide up in it. Interest rates have been kept low so as to forestall a crash (politics innit) but that political meddling will bring the whole bloody economy down. I've said this before and i don't want to sound like 2 sheds but if you've got savings you really don't want them in pounds or dollars for the foreseeable future.
  • Santa r u for real ? How about the OAPs then what about them ? tough shit !! on the steets !! well mate i hope its none of yours.
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  • but resources and food prices are a Global Problem aren't they?? zilch to do with our loose credit? again to do with poor supply and increased demand.

    It is not the people who had 100% mortgages or more, its normal people who are gonna take huge hits in the coming months when their house has depreciated and they can't finance a remortgage when they come off fixed rates.
  • Grow and read what i said GH. If interest rates arn't shunted higher what's going to happen OAP's heating/shopping bills? It's people like OAP's who by their very nature arn't speculators and are on fixed incomes who are going to get sold down the river by the government and their politically apointed MPC trying to protect the financially reckless. The situation we've found ourselves in stinks and sad thing is that most people are in lala land over it. Hope i'm wrong but i stick by what i've said.
  • edited June 2008
    Santa,You are quite right on most of it but I think you are still getting currencies, micro economics and macro economics slightly confused. The pound is weak but not because of our ability to finance consumption but almost all down to the credit crunch and lack of natural resources. Sterling will strengthen from here against everything bar the US$ but that is not becuase of a rate hike. Your comments on debt and housing are, in my opinion, spot on.

    I cant believe I'm talking seriously to Father Christmas................
  • [cite]Posted By: Brunello[/cite]Your comments on debt and housing are, in my opinion, spot on.
    Yes well stated SC.
  • [cite]Posted By: razil[/cite]is consumption that high?

    I am no expert but the increase in inflation is not consumption based its lack of supply and increased demand from the developing world. A weaker pound will boost our manufacturing sales abroad. Can't really see that raising interest rates is gonna help.

    I don't think that it's consumption that's so high but the amount of personal credit that individuals have. Access to cheap credit has fueled a decade of growth, with home prices tripling over the past decade but also the avialbilit of cheap credit cards has enabled people to overspend on consumer credit. British consumers owe £1.35 trillion on credit cards, mortgages, and other consumer loans.
  • You're right about my last post, simpler sentences, better punctuation and clearer points are in order, trying to read it back is giving me a headache. Anyway GH i hope you get the idea i'm not jumping up and down praying for others misfotune but i think it's criminal that the gov is trying to keep a bubble inflated when the cost to everyone of us including my grandmother and yours is so high.
  • BFR: As I see it we have two problems, rising inflation and credit crunch (soaring cost of credit/mortgages) both of which are largely due to global factors. I do agree that our economic picture isnt that rosey because of consumer debt, and government spending promoting growth.

    Inflation had been low until quite recently so does the argument that growth fuelled by consumer debt is causing the problem stack up, growth has been quite steady its not through the roof? I wonder therefore if raising rates its going to help, its more likely just going to push us closer to a recession. In my view the reason for inflation is mainly the soaring costs of energy which are passed on to consumers. I am not too sure what the government can really do about this.

    The credit crunch is hurting people due to the booming housing market which has forced people to stretch themselves. The boom has been fuelled by too much/too cheap credit and lack of supply in certain areas. Bringing in better credit controls on lenders might have been the answer to the housing boom/bust reducing demand/risk was ignored, and building more houses to increase supply which has been attempted

    As for year on year growth I think this has been maintained partly by a huge increase in government spending which unfortunately has been accompanied by huge government borrowing and has not been that wisely spent, this sort of growth will be hard to sustain. We need growth in products be they hard or soft that can be sold here and abroad.
  • [quote][cite]Posted By: razil[/cite]Inflation had been low until quite recently so does the argument that growth fuelled by consumer debt is causing the problem stack up, growth has been quite steady its not through the roof? I wonder therefore if raising rates its going to help, its more likely just going to push us closer to a recession. In my view the reason for inflation is mainly the soaring costs of energy which are passed on to consumers. I am not too sure what the government can really do about this.[/quote]

    I'm pleased you see things this way as well. The price of oil has shot up some 400% since MR Bush decided to invade Iraq
    (BTW I've heard it said that if Iraq was producing to full capacity the price of oil would be nearer to 90 cents per barrel).
    This has got to have a huge impact on everything that needs to be transported.
    Rather than the B of E or the bank of Australia raising interest rates, they should instead be looking to revise their inflation targets in view of this huge rise in the price of oil.
    Yes, credit has been far too easy, and hopefully many lessons have been learnt in this respect. However raising rates will mean that many will default on these loans, houses will be repossessed, workers will be laid off and companies will go out of business. Quite what purpose this will serve, I have no idea.
    Interest rates here are much higher, my mortgage is 8.7%, and they are talking about yet another rise in interest rates in August. This against a backdrop of a very strong Aussie dollar and a booming economy.
    The Bank of Australia seems intent on taking the economy into a recession however, just in order to keep inflation within the target range.
    Great discussion, would be interested in your thoughts
  • Couldn't agree more - a bit of an ease in inflation rates targets when all commodity prices are rising seems sensible - WORLD demand is increasing - the Euro Zone which has 3.5% inflation against 3% (by same measure in UK) is not raising interest rates we should allow CPI to go to 5% before we start to really try to rain things in and lets face it 6-7% is not exactly high by long term standards.

    Oz with a commodity based economy and all that gas being transported to China should be suffering less than the UK
  • I earn over £250k a year, have no mortgage and therfore couldn't give a toss. Get those interesst rates up I say, it pays me more money on my savings.
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