Savers Votes.

If what I have read is correct savers out number borrowers three to one. I am surprised that we are not seeing a noticeable difference in the political polls. Surely the fact that Savers are being sacrificed and squeezed till they squeak with the interest rate at 0.5% means they would vote for change, especially as Joe Bloggs next door with a huge mortgage is laughing all the way to the Bank - Surely to goodness no saver in their right mind will vote for the current Labour party. There are rumours that savers will be helped in the budget with tax relief, but tax relief on nothing is nothing so I cannot see that it will or should make any difference. Okay not all the population is a borrower or a saver, but I would have thought the savers would be a high enough percentage that their voice/vote would count. Maybe Gordon Brown and co have not thought this through, but I hope savers vote for change with their ballot papers. Maybe just maybe the European Elections will prove a wake up call for the Government to do something real to help savers.

Quantitive Easing.

Seems to me that Mervyn King & the MPC don't have a clue about what they are doing and don't seem to understand economics.

Now lets see if I understand what they are doing!!! As I understand it they are buying or going to buy billions of Government Gilts off the Banks. Now given interest rates are much lower than the nominal interest rate of the bonds - yields are low and price of gilts high. If the Bank of England keeps the Gilts for the full term they will loose money. Now as yields are already very low there is a limit to how much lower they can go. As we come out of recession the yields should get better which means the price drops. So again if the Bank of England decides to sell them they will again make a loss. So its a no win situation, either they hold them for the full term and make a loss or they sell them some time in the future for a loss. The result is that the Bank of England will be running up a very large debt(loss) in the future. That future maybe 25,30,50 years but a debt loss it will be and a very large one to boot. Seems like they might as well just burn the stuff as I don't think it will make that much difference. Future generations will pay highly for this reckless act

MPC futile attempts.

5th March 2009 - The Bank of England cut interest rates to 0.5% and will start Quantitative Easing. Both seem pointless and futile to me. When are our leaders going to wake up to the fact that the world has changed. Essential Goods are inflating and will continue to inflate - Food is already at 9% and rising - Cutting interest rates might be fine for those with large Mortgages, but are they going to spend to kick start the economy? I doubt they will spend on discretionary goods so anybody working in industries involved with discretionary spending are going to find life tough.
Cutting interest rates and QE are just going to hit the exchange rate and cause imports to become more expensive.