The great interest rate rip off part 1

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More on the train fare rises.

 

Higher fares will be the price of railway expansion - Independent Online Edition > Transport

 

Passengers face a fresh round of "stratospheric" fare rises to pay for a huge package of expansions on Britain's railways, ministers have been warned.

Ruth Kelly, the Secretary of State for Transport, announced plans to increase passenger numbers by 180 million a year by 2014 and cut overcrowding, but raised fears of fare rises by confirming that government rail subsidies would be cut by £1.5bn a year.

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Dow Jones slides on fears credit crisis will hit takeovers - Independent Online Edition > Business News

 

The US stock market skidded lower after new predictions of an end to the era of cheap money, and with it an end to the boom in debt-funded takeovers and in corporate share buy-backs.

For weeks, the debt markets have been awash with evidence that lenders are demanding higher interest rates, and the consequences dramatically spilled into the equity market last night. The Dow Jones industrial average plunged 226 points to 13,716, at one point sliding so fast that the New York Stock Exchange introduced trading restrictions aimed at dampening the sell-off.

Investors fear that private equity takeovers will dry up if buyers cannot finance the deals at the historically low levels of recent years. In recent days, Wall Street banks postponed the sale of $3.1bn in loans to pay for the leveraged buyout of a General Motors subsidiary, Allison Transmission, and there were also rumours that bankers for Cerberus Capital were having to sweeten the terms of $12bn in loans to recapitalise Chrysler, the car maker it has agreed to purchase.

 

You mean it could mean the end of the get rich quick schemes for the city!!!! How will these people survive if they don't get their multi-million pound bonuses on top of their multi-million pound salaries??? Will they have to sell their 3rd homes????

 

I think there needs to be a telethon appeal to help these poor people.

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Fears grow over US fallout | | Guardian Unlimited Business

 

Fresh concerns were raised yesterday over the fallout from the US sub-prime mortgage market, which a leading ratings agency described as a "dangerous cocktail" and a Bank of England deputy governor warned was not yet over.Moody's Investor Service said the size of losses from the turmoil in the US housing market was still unknown. It said that until they could be quantified "the headline risk will probably test markets' nerves". It added that a relaxation of risk management and underwriting standards combined with the growth of little understood debt derivatives, many of them based on US sub-prime mortgages, had proved to be "a dangerous cocktail".

 

It's a good job the city isn't full of panicking idiots who behave like lemmings.

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Dollar tumbles as huge credit crunch looms - Telegraph

 

The dollar has tumbled to its lowest level ever against the euro and to a 26-year low of $2.06 against the pound as financial turmoil sent US markets tumbling to their worst day’s performance in over four months.

US stocks were left spiralling along with the American currency on fears of broader economic contagion from the sub-prime property slump.

The benchmark Dow Jones Industrial Average plummeted 226.47 points to 13,716.95.

The fall caused London markets to tumble dramatically late in the day. The blue chip FTSE 100 fell 125.7 points to 6498.70, while the FTSE 250, which consists largely of UK-based firms rather than multinationals, plummeted 198.20 points to 11,584.

 

It does make you wonder if consumers are now having to pay for city buyouts with higher interest rates!!! Is it the city that's driven inflation upwards??

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Property values are stagnating. Mortgage rates are rising. And, after years of staggering returns from property holdings, even the most hardened professional investors are urging caution. Yet small investors are still drawn, irresistibly, to bricks and mortar. Here, Financial Mail looks at putting money into property with safety in mind.

For most homeowners, the roof over their head makes up by far the biggest portion of their total wealth. But for many that exposure to property is not enough. Tempted by runaway house prices over the past ten years, they want even more. For thousands of people the answer has been to branch into buy-to-let property. Some have bought the homes their children live in while at college. Others have invested in a flat or house to let, in the hope that the rent will cover the mortgage and that the value, over time, will rise. Others have bought newly built flats whose value is still largely untested.

 

 

I think what they mean is that is instant profit dead, rather than having to wait 10-15 years for a return?

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Daily Express: The World's Greatest Newspaper :: YourMoney :: How to stop debt getting out of hand

 

RECORD numbers of people are being plunged into debt as living costs and mortgage rates continue to rise.

 

Brit*ain’s personal debt is increasing by £1million every four minutes.

 

The average household debt now stands at £8,816 excluding mortgages, or £54,771 including mortgages, according to comparison website Money http://www.super*market.com.

 

Every day around 330 people are declared insolvent or bankrupt.

 

Surely these people should have borrowed what they could afford, they should have predicted that the worlds financial markets where going to change and should have factored in paying say maybe an extra £200 a month. It just goes to show how incompetent some people are when it comes to money. I mean it's not unreasonable to work out if you can afford an extra £200 a month mortgage repayment is it???

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Northern Rock predicts house price slowdown - Times Online

 

Northern Rock said today that UK mortgage lending was robust but admitted that it expects a slowdown in house prices during the second half of the year.

The bank announced that gross lending rose 30.5 per cent to £19.3 billion during the six months to June 30, 2007, with the total value of residential mortgages granted up from £11.5 billion to £15.9 billion.

Northern Rock conceded that customers were being affected by rising borrowing costs, that have increased five times to 5.75 per cent since last August, but it said the value of mortgages was making up a decline in volumes.

 

So banking profit will still be good then as you keeping lending out that cash in even bigger amounts. The rich can still afford to borrow it's left to the poor to face the pain of house repossessions. Makes you feel proud to be British.

 

It appears the problem of inflation is more to do with the cash rich rather than the cash poor. Luckily interest rates affect the cash poor first!!! There's a problem with this isn't there???

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BBC NEWS | Business | Yuan hits new high versus dollar

 

China's yuan has recorded a new high against the dollar ahead of a visit to the country by a top US official. The yuan stood at 7.5596 against the dollar, 7.28% higher than its value in July 2005 when the government ended its fixed exchange rate policy.

Analysts said the currency had been lifted by China's decision to raise interest rates last week.

China is under pressure to allow the yuan to appreciate more quickly, as its trade surplus with the US soars.

US lawmakers claim that Beijing keeps the currency much weaker than it should be to boost exports at the expense of US firms.

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BBC NEWS | Business | Oil prices fall on stocks hope

 

Oil prices have fallen for the fourth day, ahead of US data that is tipped to show a rise in petrol stocks. Brent crude, deemed the sector's benchmark, fell 33 cents to $74.75 a barrel in London after Tuesday's $1.78 drop. US crude slid 25 cents to $73.31.

US refineries have stepped up their output to counter earlier shutdowns and meet the summer's peak demand.

After last week's 11-month high, Oil has fallen recently on expectations that oil cartel Opec may raise supply.

 

The long term pressure remains on oil with ever increasing demands from China and India. It will be interesting to see what happens to oil driven inflation on the worlds economy.

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Northern Rock admits higher rates will hamper profit growth | | Guardian Unlimited Business

 

Northern Rock admitted today that rising interest rates will hamper profit growth next year as well as this year. Britain's fifth-largest mortgage provider, which last month issued a profit warning for 2007, predicted that profits for next year are likely to grow at the lower end of its target of 15 to 25%.

It blamed recent interest rate rises, which have made it more expensive to borrow money to lend to its customers.

Northern Rock is particularly exposed to changes in interest rates as over 70% of the money that it loans to customers is borrowed from the capital markets, a higher proportion than other mortgage lenders.

Its cautious outlook for 2008 came despite recording a 26.6% jump in underlying profits in the first half of 2007. Shareholders will benefit from a 30% increase in its interim dividend to 14.2p per share, from 10.9p last year.

Reiterating June's profit warning, the group also said today that its underlying profits for the whole of 2007 would rise by around 15%.

 

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Alex Potter, analyst at Collins Stewart, said today that the group's profit margins had been "heavily impacted by the mismanagement of rate risk and the gyrations in the money markets".

I think we should all move to support Northern Rock, underlying profits will only increase by 15% for the year and they need to issue a profit warning!!!!

 

Perhaps a telethon for Northern Rock is needed?

 

Please help Northern Rock their executives need there bonuses to make ends meet? We should all borrow some money from them lets help them get back on track.

 

So putting this into perspective, banks which have highly educated (?) skilled economists get the market wrong and borrow money from the wrong sector costing them money. Yet the BoE seriously expects consumers to make a better judgement on how much money to borrow, even without the knowledge the banks have!!!!

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BBC NEWS | Business | US growth outweighs housing slump

 

The US economy is growing at a "moderate" pace despite the housing slump, according to the Federal Reserve's Beige Book. It says that growth in manufacturing and commercial property outweighed the slowdown in housing in June and July.

The Beige Book is a summary of anecdotal evidence from district Federal Reserves.

It reported that consumer prices had been growing at a moderate rate as oil and gasoline prices rose.

Federal Reserve Chairman Ben Bernanke told Congress last week that inflation was his chief concern.

The report said that businesses were having mixed success in passing on their higher costs to consumers.

 

But the Fed is having great success in forcing low income families from there homes in an effort to contain inflation.

 

21st century economists don't give a damm about the people all they are bothered about are the equations and sod the consequences. Bernanke is more bothered about inflation than peoples lives.

 

Doesn't that just give you a nice warm glowing feeling???

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BBC NEWS | Business | IMF raises global growth forecast

 

The International Monetary Fund (IMF) has raised its forecast for growth in the global economy for this year. It cites accelerating growth in China, India and Russia and says that the US economy may be getting back on track.

It predicts global growth of 5.2% for this year and next year, up from its April forecast of 4.9% for both years.

China's growth forecast in 2007 has been raised from 10% to 11.2%, and for the first time it will become the biggest element in worldwide growth.

"With a growth slowdown in the United States, China will be the largest contributor to global growth," the IMF's Charles Collyns said.

 

Well countries that are undeveloped are going to have bigger rates of growth and statistically wise thats going to skew the figures.

 

There are three types of lies - lies, damn lies, and statistics

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BBC NEWS | Business | UK house prices 'stall' in July

 

House price growth in the UK "stalled" during July, suggesting that higher interest rates are starting to bite, the Nationwide has said. Prices grew by just 0.1% in July, cutting the annual rate of growth to 9.9% from June's rate of 11.1%.

The underlying trend also slowed, with prices in the past three months up 2% against the previous three months, down from June's comparable figure of 2.2%.

Nationwide said house prices would slow in the second half of the year.

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Credit crunch threatens sale of Cadbury’s US drinks arm - Times Online

 

The crisis in global debt markets looked close to claiming another high-profile scalp yesterday, amid fears that Cadbury Schweppes could be forced to delay or even abandon the multi-billion-pound sale of its US drinks arm.

Final-round bids for the business, which includes Dr Pepper, Snapple and 7-Up, are due in early next week. Cadbury had hoped to announce a preferred bidder at the group’s interim results next Wednesday.

But the sale, which is being handled by Morgan Stanley, Goldman Sachs and UBS, could run into trouble after the banks were forced to lower the amount of debt – called staple financing – available for the deal.

It is understood that the banks had originally agreed to lend on a multiple of 9.5 times Cadbury’s earnings before interest, tax, depreciation and amortisation. But as jitters over the collapse of the US sub-prime mortgage sector have spread to the leveraged loan market, the banks have been forced to decrease that multiple to 8.5 times, to ensure they can syndicate the debt to investors after the deal is completed.

 

9.5 times earnings, lowered to 8.5!!!!!!!!!!! WTF at best with mortgages we are advised to borrow 3.5 yet companies are allowed to borrow like this!!!!

 

Is the consumer paying the price for excessive borrowings by the city??? Clearly with interest rates going up this effects the interest paid by heavily financed buyouts, which affects profits. To make this up are we faced with higher prices from companies trying to keep profits up because of interest rate rises, then we get hit with interest rates rises to combat rising inflation.

 

Catch 22.

 

Luckily our clever central bankers have spotted this and are well erm.... doing nothing apart from putting up interest rates and charging the consumer.

 

Brilliant!!!

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Soaring oil price pushes Shell to new record - Times Online

 

Shell has turned the screw on rival BP by posting a record quarterly profit of £40 million a day on the back of sky-high crude oil prices and refining margins.

Results today showed the Anglo-Dutch giant made $7.56 billion (£3.7 billion) in the three months to June 30, up 20 per cent on last year and nearly $500 million ahead of its previous best.

Analysts had expected Shell to report quarterly profits of $6.7 billion.

BP posted second quarter profits of $6.09 billion on Tuesday and Tony Hayward, its new chief executive, admitted the group had not been performing well enough.

 

Personally I wouldn't get out of bed for £3.7bn in 3 months!!!

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Northern Rock announces fresh assault on the mortgage market - Times Online

 

Northern Rock, Britain’s fastest-growing mortgage lender, has stepped up its assault on the mortgage market despite fears that rising interest rates will hit the housing market, Adam Applegarth, its chief executive, said yesterday.

The Newcastle-based bank yesterday unveiled flat pretax profits of £296.1 million for its first half, missing market expectations, after being hit by the increased cost of borrowing in the wholesale market.

Mr Applegarth said yesterday that he expected the Bank of England to raise interest rates at least twice more. “You can expect arrears and losses to increase on credit cards and unsecured lending,” he said. “I would expect residential [mortgage] arrears to tick up, but they’re coming from a low base and I don’t really see a credit crunch on residential lending.”

Northern Rock increased its share of the residential mortgage market from 8.7 per cent in the second half of last year to 9.7 per cent for the six months to June 31.

 

In other words those on low incomes are the ones who are going to suffer the most if they lose their homes who cares, where going to continue to make profit out of higher income individuals and where going to be quids in.

 

Such a caring society we live in. At least profit will be good.

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Banks dogged by crisis as Cerberus debt is stayed - Times Online

 

Banks led by JPMorgan Chase yesterday abandoned plans to syndicate $12 billion (£5.8 billion) of loans to Cerberus to help the firm to finance its leveraged buyout of Chrysler.

The banks, which also include Goldman Sachs, Morgan Stanley and Bear Stearns, halted the debt offering after growing losses on sub-prime mortgages made investors increasingly nervous about high-risk leveraged buyouts and they balked.

Cerberus’s takeover of Chrysler was agreed in May, before the extent of the escalating credit crunch came to light. As such, the banks had happily agreed to underwrite the debt because they were confident that they could easily syndicate it after several years of easy credit.

However, demand for buyout-related debt has plummeted in recent weeks, and the banks have been forced to hold the unsyndicated loans on their books. This could put a dent in their profits if Chrysler’s troubles continue and the carmaker is unable to meet its interest repayments.

 

It's just such a good job banks haven't pursed profit against the common good of the economy as that could undermine the argument for using interest rates.

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US home sales in decline as as lender eyes mortgage exit - Times Online

 

America’s ailing housing market was rocked again yesterday after weaker than expected figures showed that existing-home sales fell to their lowest level in more than four years last month.

Sales of existing homes slumped to an annual rate of 5.75 million in June, as fears mounted that the decline in house prices would accelerate over the next 12 months, deterring borrowers and lenders alike. Figures for new home sales will be released today.

The sales slump is the biggest since November 2002 and represents a 3.8 per cent decline on May and an 11.4 per cent drop on the year before, according to the National Association of Realtors. The figures increased fears that America’s housing market was spiralling downwards, coming just a day after the country’s biggest mortgage lender, Countrywide Financial, announced that its high-risk sub-prime default woes had spread to its prime mortgage book and issued a profits warning.

Luckily it doesn't matter the world economy is booming, everything is coming up roses....

 

Those about to lose their homes should look at the bigger picture and accept their sacrifice at the economic alter for the common good. If they had better jobs they may have avoided their loss, perhaps they should have tried harder at school.

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With much of the UK reeling after the worst flooding for 60 years, many households are asking for the first time whether their homes will soon become too risky to insure.

Many of the areas struck have not previously witnessed flooding on the levels seen this summer. Some 2m homes and 185,000 businesses in the UK are situated on flood plains and are therefore regarded as being at risk of flooding. The deluges of this summer have flooded areas that are have never been flooded before, and many more that have not been flooded in living memory.

Insurers are expected to pay out more than £2bn in claims from those affected. It means that those homes will face higher insurance premiums when they come to renew policies for the coming year, but what will it mean for the rest of us?

Probably higher interest rates as these get factored into the inflation figures. If anything Mystic Merv knows how to help the people!!! Living costs are going up, what do the people need, yep you've guessed its a interest rate rise to help bring down those increased living costs. It's just such a good job mortgages aren't part of peoples living costs.

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Banks left holding debt for Boots and Chrysler buyouts - Independent Online Edition > Business News

 

Banks were left with more than £10bn of debt on their balance sheets yesterday after the debt market crisis forced them to abandon attempts to raise finance for the private equity takeovers of Alliance Boots and the American car giant Chrysler.

The eight banks underwriting the £11bn takeover of Alliance Boots by KKR and the retailer's deputy chairman Stefano Pessina failed to syndicate £5.1bn of senior debt, with sources close to the deal citing market conditions.

Daimler, the German car giant, will have to stump up still more money to offload its loss-making US division Chrysler after Cerberus cancelled a $12bn (£5.9bn) debt fundraising with which it was hoping to cover restructuring costs at Chrysler.

The collapse of the fundraisings was being seen as a worrying sign of the failing health of the debt markets. Potential debt investors have fled or are demanding much higher interest rates, dramatically reducing the amount of money available to finance risky private equity deals.

 

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Analysts estimate private equity firms have agreed to $300bn of buyout deals that still need financing, and warn the firms will have to accept tougher lending terms from banks. KKR alone has agreed more than $121m worth of buyout deals this year, according to Dealogic.

As liquidity in the debt market falls, the banks are increasingly reluctant to accede to the buyout firms' demands for favourable "covenant-light" loans. Some private equity firms have agreed to changed terms. Apax Partners accepted covenants, or borrowing guarantees, on its $8bn purchase of the text book publisher Thomson Learning after investors baulked at the debt on offer.

 

Buying out companies with debt doesn't seem a very sensible thing to do, it does seem more and more that the BoE base rate rises run the risk of completely crashing the economy. It's just such a good job there hasn't been a whole host of debt led equity buyouts where profits fund debt repayment!!!!

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Politicians will hit dealmakers but not just yet - Times Online

 

Since those who do not follow Wall Street or the City closely can be forgiven for failing to distinguish between corporate bureaucrats and the inventive, risk-taking entrepreneurs who run private-equity firms, public grumbling became a generalised dissatisfaction with “unfair” compensation. That, of course, attracts the attention of politicians and, when the private-equity operators proved inept at explaining what they contribute to the economy, the stage was set for a battle. Which is a pity because, by taking over troubled companies, private-equity entrepreneurs cure the problems stemming from the separation of ownership and control. They and their partners now own and control former public companies, and have every incentive to reward only those managers who earn their pay by increasing profits and growth rates. Enter that invisible hand, and the further long-term result might prove to be job creation and enhanced value of the pension funds and other institutional investors who share the profits of these ventures.

 

Obviously just ignore the pitfalls of buying a company with debt, these entrepreneurs are worth every penny, if fact give them a 0% tax break.

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Suit blows £105k in London bar | The Register

 

An unnamed businessman and around 18 friends last Saturday set an "all-time record" in alcoholic extravagance by working their way through £105,805 worth of booze in London's Crystal nightclub, the Telegraph reports.

During the marathon spendfest, which kicked off with a bottle of Pinot Grigio (£25), they quaffed £80,000 worth of champagne, including a six-litre methuselah of Cristal (£30,000), two three-litre jeroboams of the same (£9,600*), four bottles of Cristal Rose (£2,400), six magnums of Dom Perignon (£4,200), 36 bottles of Cristal (£12,960), 12 bottles of Dom Perignon Rose (£4,200), 15 bottles of Dom Perignon 1999 (£3,600), and three magnums of Dom Perignon 1995 (£2,700).

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The final tally was £81,471.50, plus £13,951 in tax and a cool £10,382.74 for service. Nightclub spokesman Fraser Donaldson admitted: "I have been in the nightclub business for 20 years and this is an all-time record."

 

 

 

The Govt is right lets put up taxes to stop binge drinking, that will stop this sort of excess!!!!

 

If people have this amount of money to throw around on booze quite clearly the BoE haven't put interest rates up enough to curb spending.

 

However a bill for £10,000 for service! I'm clearly in the wrong industry!!!

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House prices show significant slowdown - Times Online

 

House prices have grown just 0.1 per cent this month, their slowest growth rate for 15 months and the latest evidence the market has stalled, according to Nationwide, the No 1 building society lender.

Steep rises in utility prices have also stretched household finances. Nationwide has been predicting that over the full year house prices could rise by as little as 5 per cent.

The meagre price rise took the annualised increase in house prices to 9.9 per cent, the first time in three months it has fallen below 10 per cent, Nationwide said.

Five successive rate rises have taken their toll on consumer confidence, with the cost of borrowing predicted to rise to more than 6 per cent.

 

Fionnuala Earley, Nationwide's chief economist, said: "The Bank of England now faces a tough balancing act in the months ahead, with tightening consumer finances on the one hand and resilient economic growth on the other. Fundamentals do suggest that household finances are coming under considerable pressure, and that house prices and consumer spending will both see a slowdown in the second half of the year.

"The sharp slowdown in July’s house price numbers could show that potential homebuyers are thinking twice about overstretching themselves in a higher interest rate environment."

The average house price was £184,270 in July, an increase on a year ago of £16,537.

Nationwide's gloomy findings came as Bradford & Bingley, the lender, said that the rate of growth in residential mortgage markets was slowing.

It said that arrears on loans had increased modestly and that it expected them to increase slightly as strains on personal finances continue to bite.

 

What a way to manage the economy, make people poorer and you stop people spending. Genius!!! Why not just let muggers have free reign to steal £160 off everyone each month, to manage the economy?

 

What do they mean arrears have increased modestly?? Why not just say how many, eg last month it was 1,000 now it's 10,000. Perhaps I'll modestly pay back what I owe!!!

 

Perhaps if we put everyone in jail there would be no crime in society.

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Monetary policy | Allowing himself a smile | Economist.com

 

In the past year, Ben Bernanke has shown a deft touch at the Fed, but the economy may be weaker than he thinks it is

 

A YEAR ago, financial markets had their doubts about Ben Bernanke. Inflation was rising and the Fed's boss had fumbled his early communications with Wall Street. No longer. As Mr Bernanke delivered his twice-yearly monetary testimony to Congress on July 18th, his competence was lauded from all sides.

 

Nothing builds credibility quicker than success. And the Bernanke Fed's decision to hold short-term interest rates steady at 5.25% last August—squeezing inflation without crushing the economy—has been largely vindicated.

 

The Fed has got two big calls right. It calculated that the housing market would slow the economy, but not derail consumer spending enough to cause recession. It also judged that inflationary pressures would abate, without the need for further hikes in interest rates. But a closer look reveals that the economy endured a bumpier ride than forecast. The homebuilding slump has proved deeper and more protracted than expected. Housing investment plummeted by 16.4% in the year to the first quarter, cutting a full percentage point off GDP growth. Things have not improved much since, as Mr Bernanke acknowledged in his testimony. Weakness in residential construction, he said, would depress growth for some time yet.

 

Yep the Fed got it right as sub prime mortgage lending isn't a significant problem, and the 1000's losing there homes over it don't matter as inflation was contained. A job well done, I just love this sort of journalism.

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Darling pledges tough line on spending - Independent Online Edition > Business News

 

Alistair Darling struck a tough pose on public sector pay yesterday in his first major speech as Chancellor of the Exchequer and signalled that there would be no major change in direction for the Treasury.

"We were right to set stability as our foundation", Mr Darling said. "There will be no return to the past. My first priority as Chancellor is to stick to stability now and in the future ... Public sector pay settlements - key to anchoring down inflation expectations - must be consistent with our inflation target."

The remarks suggest that, after some years when their pay and conditions markedly improved (including pension entitlements looked on increasingly enviously by the private sector), those who work for central and local government can expect much more modest progress. In March, ministers granted nurses, doctors, prison wardens and judges a 1.9 per cent increase.

The Prime Minister, Gordon Brown, echoed Mr Darling's sentiments, telling the Commons during Prime Minister's Questions that all workers had to accept pay settlements are "the means by which we can conquer inflation in the next few months". Mr Darling did not mention the current postal workers' dispute by name, but the message, to them and the other 6 million employees in the public sector, was unmistakeable.

With an eye to inflationary pressure in the economy, and the continued squeeze on disposable income implied by tax rises and costlier mortgages, Mr Darling indicated he intends to stick to the spending constraints outlined previously by Mr Brown. After years when spending on education and the National Health Service increased much more rapidly than for decades, and way ahead of inflation, a less frenzied pace was indicated, given that Mr Darling is thought likely to stick to Mr Brown's plan to cut the budget deficit by a third by 2012. However, he may not share Mr Brown's tendency to complicate the tax system. "We must continue to simplify the tax system further wherever we can," Mr Darling said.

Providing the Bank of England with the fiscal headroom to bear down on inflation through interest rate policy was a key objective for the new Chancellor. "I will ensure fiscal policy continues to support monetary policy... I will support the Bank of England in the decisions they take to meet the inflation target". Inflation has been above the Government's 2 per cent target for more than a year.

What's the betting that MP's pay will some how get round "Public sector pay settlements - key to anchoring down inflation expectations - must be consistent with our inflation target." I doubt our hard working MP's will settle for the 1.9% offered to the nurses. Our MP's have got mortgages don't you know and some pesky civil servant's increased interest rates, and I need more money, 1.9% isn't going to cover it, are you MAD.

 

Does this mean that the Olympics will come in on budget then?? And we won't see the tripling of costs as already predicted.

 

Then there's all the other Govt projects which have ballooned in cost way above inflation, it's nice to know that the Govt we stop this from happening. I can see a flying pig from my window while I type!!!

 

"that all workers had to accept pay settlements are "the means by which we can conquer inflation in the next few months"." I don't think our darling Darling finished the sentence, I think "except for those working in the City who deserve much bigger pay rises." Public workers will help quell inflation whilst those in the Private sector can have bigger rises.

 

"Inflation has been above the Government's 2 per cent target for more than a year." Mystic Merv's not doing a very good job is he, it's been above his target for over 1 year and yet he remains in post. I wonder how many of us would remain in our jobs if we failed to spectacularly fail to meet our targets. No doubt it's not Mystic Merv's fault, it's the damm oil price, floods, banks lending too much money, increasing food prices all beyond my control gov, but INTEREST RATES WORK!!!