BoE slashes interest rates by 1.5%

[Admiral Huddy]

The abolishment of Miras during the laste 80s played a big part in the boom and bust years then. Panic forced the market into overdrive in an already inflating market.

Today's downturn is purley lack of confidence in the US economy and Von put it well about them sneezing. Our bank 3 months ago decided to freeze its US position by deciding not to trade in US$.

[phykell]

I think it's a bit disturbing that apparently, the only "tool" for avoiding recession, is a cut in interest rates and a figure as large as 1.5% leads me to question the BoE's probity; it's like we're wasting our joker

[Admiral Huddy]

How else would you restore confidence?

[phykell]

Originally Posted by Admiral Huddy

How else would you restore confidence?

It's fire-fighting now and I wouldn't know what to suggest now. What I would have suggested to have avoid this in the first place is a different matter entirely. Certainly, I'd have suggested some legislation on the way banks lend money. I'd also have suggested strict legislation on the amount a credit company can lend to an individual. Lastly, I'd have suggested strict regulation on the housing industry especially unscrupulous estate agents.

[Mark]

Due to information overload I haven't read even half of this, but I've picked out a few bits...

Originally Posted by Pheebs

NooOOooo we're on a fixed rate darnit!! DARNIT!!

Boo!!

Read the small print on your mortgage to find out if there are any exit clauses or penalties, then take a stab at what your LTV is (bearing in mind the market crash) and see if you can get a better deal (you're most likely to succeed with your existing lender). T'is what I'm going to do when the rates have a chance to feed through.

Originally Posted by Admiral Huddy

Today's downturn is purley lack of confidence in the US economy.

Not true. The US may have started the contagion, but the UK also had an unhealthy obsession with debt, and that's coming back to bite now. The US is actually showing a few positive indicators (if a less steep slowdown than expected can be considered positive).

Originally Posted by phykell

I think it's a bit disturbing that apparently, the only "tool" for avoiding recession, is a cut in interest rates and a figure as large as 1.5% leads me to question the BoE's probity; it's like we're wasting our joker

It's the only one the BoE have at their disposal. The other options are government spending and tax cuts - which might be fine if the National Debt wasn't spiralling out of control. None of them are guaranteed to have any effect, and indeed I suspect they won't.

[phykell]

Originally Posted by Mark

It's the only one the BoE have at their disposal. The other options are government spending and tax cuts - which might be fine if the National Debt wasn't spiralling out of control. None of them are guaranteed to have any effect, and indeed I suspect they won't.

It might be a case of locking the stable after the horse has bolted but some decent credit legislation, as I've said before, wouldn't go amiss. For example, there's already a way for credit brokers to check out an individual. How about enforcing a credit limit on people that credit brokers were obliged to observe? Why shouldn't all credit agreements be audited against a single database preventing individuals from having the kind of plastic spending power they currently do - for example, an individual could have as many credit cards as they wish but the combined total spending limit would be spread across the cards.

Imposing such legislation wouldn't just prevent consumers from racking up huge debts, it would force the banks to lend sensibly and in a proporionate, controlled manner. That would also allow them to lend with more confidence.