Boxing Day Poll

Boxing Day Poll - Mother had seventeen family for lunch boxing day. A quick poll showed that those who's Mortgages had gone down were keeping their payments the same and those without Mortgages were planning cut backs due to loss of savings income. So much for Interest rates stimulating the economy. Still Christmas Food was good as nobody had skimmed on quality, so food spend was probably up.

Opec makes largest ever cut to oil production

Wonder how Mervyn King now feels about worrying about deflation. If they do stabilise oil around 80 dollars per barrel, then Oil, Energy and food the essentials we rely on are surely going to keep inflation running high, especially with a week pound. Getting back to 2% would be nice, but I am not sure we are even going to see that.

Inflation only falls to 4.1%

Inflation only falls to 4.5% to 4.1% - now there's a surprise he says sarcastically. Food because so much of it is imported is labelled as the culprit. Taking interest rates so low has damaged the pound sterling and pushed up the cost of imports. What is sad is that a large number of people have been pointing this effect out to our intellectually challenged leaders. Mervyn King is predicting Inflation will fall to 1%. Personally I will believe it when I see it. Seems more likely that Mervyn and his chums will take interest rates even lower - the pound fall further and whilst Inflation may slowly fall it will remaining stubbornly higher than the target 2%.

End of November Budget.

Food was down in November, not sure if this because prices have dropped or the wife is working wonders with the Food budget. Petrol was par for the course. I think prices have dropped, but our mileage was up a bit and that cancelled out the reduction.

Reduced Interest Rate for Savers.

Earlier this week Alliance & Leicester reduced the Interest rate on their e-savings account from 6.3% to 5%. As this is where we keep our emergency fund this has hit our family budget which gets the monthly interest. So hard cutbacks are being made in our household. No we are not prepared to see our hard earned savings wither away to help save somebody else's job by keeping our spending the same. Seems grossly unfair that the frivolous get rewarded and money to spend when people who have saved get hit.

Also I am not convinced it does any good as low interest rates drag the exchange rate down, which pushes up the cost of Oil, Energy and food. Especially bad for a country like the UK that
imports more than it exports.

We will see what the Bank of England does on Thursday, but further cuts are not going to help those with Tracker Mortgages which have a minimum percentage.

I am sure somebody in a few years time will get the Noble prize for economics for proving that zero interest rates don't help stimulate economy's, witness what happened in Japan.

Seems to me that the whole world has gone mad about the possibility of deflation. The exception being the German's ,who are sensibly not going to throw money at the problem. Knowing full well that a recession cannot be avoided and the end result is a high level of debt for the country. Much better to just rough it out.