The great interest rate rip off part 1

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BBC NEWS | Business | Oil price climbs on rising demand

 

Oil prices have hit their highest level in almost a year as US stockpiles fall while demand from refineries rises. US light sweet crude settled $1 higher at $76.88 a barrel after earlier peaking at $77.24, while London Brent crude rose 52 cents to $76.84.

The rise came a day after a US Department of Energy report showed crude oil stockpiles had fallen while refineries had stepped up production.

 

Luckily Mystic Merv has the solution to this inflationary problem, increase interest rates as they will magically solve demand for oil.

 

Trust Mystic Merv he knows what he's doing!!

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BBC NEWS | England | South Yorkshire | School merger plan given go-ahead

 

Controversial plans to merge two schools in Sheffield have been given the go-ahead. Wisewood and Myers Grove secondary schools will now be demolished and replaced with a new £20m school on the Myers Grove site.

Sheffield City Council proposed the move amid falling pupil numbers. It was approved at a meeting on Wednesday.

Angry parents had staged protests and submitted a 2,000-name petition urging education chiefs to change their minds.

Some 43 council members, including 41 Labour councillors, voted in favour of the merger. A total of 40 councillors, including 38 Liberal Democrats, voted against.

The new school, which is expected to open in September 2011, will accommodate 1,050 pupils compared to 1,800 at the two existing schools.

 

Genius, you have 2 schools which can accommodate 1800 and you replace it with a school to accommodate 1050. Brilliant!

 

Perhaps we should get the council on the MCP???

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House price rises on the wane | Special_reports | Guardian Unlimited Money

 

Higher interest rates are denting demand for mortgages and bringing down the rate of property inflation, according to two sets of figures released today.In a double whammy for the housing market, the British Bankers Association said the number of home loan approvals last month was down 11% on last year while the Nationwide building society reported the smallest increase in prices in more than a year this month.

The City saw the two sets of data as evidence that the five interest rate increases since last August were at last taking their toll on Britain's booming property sector and said the weakness may cause the Bank of England to hesitate before raising rates again.

 

What wasn't revealed was have the vaules of loans compared to 12 months ago gone down??? Falling numbers of approvals means nothing if they are for larger loans.

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CBI asks Bank of England to hold off interest rate rise after sharp fall in factory orders | Special_reports | Guardian Unlimited Money

 

Britain's leading employers' organisation urged the Bank of England yesterday to put further interest rate increases on hold after its latest snapshot of manufacturing showed rising interest rates and higher energy costs putting the brakes on industry's expansion.Unveiling its quarterly industrial trends survey, the CBI said the outlook for order books, output and business optimism had deteriorated over the past three months and that the Bank should be cautious about further rises in the cost of borrowing.

Ian McCafferty, the CBI's chief economist, said the Bank's nine-strong monetary policy committee should take time to "study the data over the summer and early autumn" after raising interest rates in five quarter-point moves to 5.75% since August last year. City expectations - that the rate would need to be raised to 6.5% or higher - "might need to be revised" in the light of what was happening to industry, Mr McCafferty added.

The survey of almost 600 companies in the manufacturing sector found that factory orders fell at their sharpest rate since the start of the year and that output rose less strongly than firms had predicted three months ago.

After a period in which the strength of demand had allowed industry to rebuild its profit margins, the employers' group said firms were having problems passing on cost rises to their customers. The CBI said this trend was particularly evident for companies producing consumer goods.

Mr McCafferty said firms had seen the price of oil rise to $75 (£36) a barrel and were paying 10% more for their raw materials. The balance of firms reporting that their costs had risen over the past year increased from +11 percentage points in April to +24 points in July, while the balance of firms able to increase prices fell from 14 points to 10 points.

 

Haven't these people being listening to Mystic Merv??? Companies have to absorb costs and not pass them onto consumers!!! Not only do companies have to cope with increased costs of raw materials thanks to Mystic Merv they now have to cope with higher interest repayments as well. It's a good job business's aren't run for profit!!!

 

Clearly none of these increased costs are going to be inflationary, every things fine and we don't need to worry!!!

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US stocks suffer - Telegraph

 

US stocks suffered one of their worst openings so far this year as concerns about sub-prime lending, an impending credit crunch and continued weakness in the housing market weighed on traders.

The Dow Jones Industrial Average opened down 121 points at 13,684 - its second worst performance out of the gate this year. The Nasdaq was 27 points lower while the S&P registered an early 15 point loss.

The Dow immediately fell further to trade down 140 before regaining some of its poise to stand 100 points lower after the first half an hour.

 

But Bernanke has shown a deft touch, running the US economy!!!!

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Retailers hit by slowdown and waning bid talk - Telegraph

 

Shares in the UK non-food retailers tumbled today after Citigroup warned that the impending slowdown in consumer spending would hit profits over the next two years.

The investment bank also said that as the global credit crunch dampens private equity groups' ability to fund leveraged buyouts, takeover speculation surrounding the retailers was likely to fade, weakening sector valuations.

Citigroup analyst Bruce Hubbard said that despite rising interest rates, consumers are still continuing to spend freely.

But when the higher cost of borrowing does start to kick in, retail profits will suffer as a result and Mr Hubbard believes that this concern needs to be factored in to the retailers' share prices.

If retail sales flatten out or start to shrink, as they did in 2005, Mr Hubbard cautioned "the sector will suffer another severe profits reversal".

He scaled back his 2007 forecast for earnings growth at the UK retailers from 6pc to 2pc and slashed his 2008 estimate from 9pc to just 1pc.

 

But isn't the UK economy booming??? Everything is coming up roses, we've all got tons of money!!

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Bank risks 'overkill' after house prices stall - Telegraph

 

The Nationwide's chief economist, Fionnuala Earley, said: "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."

Ms Earley added: "When the effects of inflation over this period are added, the squeeze on finances becomes even more acute and further highlights risks of monetary overkill."

 

Recession isn't overkill it's good economic management cleansing the system.

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MPs hand taxpayers £95m bill for expenses | the Daily Mail

 

MPs claimed inflation-busting expenses and allowances last year. Commons accounts show that the taxpayer was hit with a bill of £95.48 million for MPs' expenses, travel, pensions, allowances and staffing costs in 2006/07, up from £90.475 million in the previous year.

This was a rise of £4.973 million, or 5.5 per cent.

The additional cost allowance, which MPs can put towards interest payments on a mortgage for a second home, rent or hotel bills, rose from £10.866 million to £11.447 million - an increase of 5.3 per cent.

 

Staffing allowances went up from £50.695 million to £53.274 million as MPs took on more office workers, a rise of £2.579 million, or 5.1 per cent.

Travel expenses rose from £5.994 million to £6.253 million, an extra £259,000 or 4.3 per cent The taxpayer contributed

£11.485 million for MPs' pensions last year, up from £10.172 million, a hike of 12.9 per cent.

Incidental expenses provisions, for office and constituency surgery costs, rose from £12.748 million to £12.989 million, a rise of 1.89 per cent.

 

Genius, release the figures just after saying "Public sector pay settlements - key to anchoring down inflation expectations". MPs should be restricted to a 2% inflation controlling increase year on year, lets see how they like it.

 

I bet you could get a good Carry On film out of this lot, (we've already got characters called Darling and Ladyman what more do you need) the only problem is it's costing us all money. Luckily our economy is booming so we can all afford it.

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http://www.dailymail.co.uk/pages/dmstandard/frame.html?in_bottom=http%3A%2F%2Fwww.thisismoney.co.uk%2Fsaving-and-banking%2Farticle.html%3Fin_article_id%3D422730%26in_page_id%3D7%26ct%3D5

 

Fixed-rate deals for savings are climbing towards the 7% mark before tax, reflecting expectations of a rate rise.

Savers can now earn 5.36% after savings tax (6.7% before tax) fixed for one year with new bonds from Anglo Irish, minimum £500, and BMW Savings, the internet personal finance arm of the car makers, minimum £100. Leeds Building Society pays the same rate but for two or three years on its bonds, available through the post on £5,000 or more. It also allows access to a quarter of your savings in the fixed-rate term without penalty. With most fixed-rate bonds you will lose three, or even six, months interest if you need your money back to cover an emergency, if you have access to it at all.

 

Seems a good return 7% for saving whilst the cash poor get get repossessed.

 

Excellent economic management, those who stupidly forgot to factor in £100 plus a month rate rises deserve to lose their homes.

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BBC NEWS | Business | Asian stocks continue world fall

 

Global stock markets have continued to fall amid concerns about the impact of higher global interest rates on company profits, takeovers and loan defaults. After London's biggest one-day percentage fall in more than three years, and woes on Wall Street, Japan's Nikkei average closed 2.4% down.

Hong Kong's index was trading down 2%, while Chinese shares were also lower.

Many markets had been trading at their highest levels in recent years, buoyed by low interest rates.

These have fuelled high levels of consumer and corporate spending.

 

Bernanke, Mystic Merv and the other Central Bankers I congratulate you on your management of the global economy, it's great having such economic geniuses in charge.

 

I salute you all.

 

Just think those of you with endowment mortgages you've got the problem of higher interest rates and now the fact your endowment may be worth even less!!!

 

Luckily the economy is booming, don't forget that folks that's what the data shows!!!!

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Think-tank warns that Bank risks overkill in fight against inflation - Times Online

 

The Bank of England will risk overkill in its campaign to curb inflation if it orders further increases in interest rates, Britain’s leading economic think-tank will warn today.

July’s fifth rate rise in base rates in less than a year was probably itself unnecessary for the Bank’s Monetary Policy Committee to bring consumer price inflation back to its 2 per cent target, and the MPC will be acting with excessive aggression if it goes still further, the National Institute of Economic and Social Research says.

A study by the influential think-tank says that the Bank is being prompted to take too hardline a stance because its economic models suggest inflation should respond more quickly to higher interest rates than it does in reality.

The institute says the result is that when inflation does not come down as quickly as the MPC believes it should based on these models, it wrongly sees more action as necessary in response to this disappointment.

 

Ray Barrell, the institute’s senior research fellow, said: “The Bank has got to be careful not to keep on worrying that inflation is not coming down enough, and not be frightened of the markets expecting a rise.

“The last rate rise we saw was perhaps unnecessary [although] it’s not going to do too much damage.”

 

It's not going to do too much damage!!!! Consoling thoughts for those struggling with debt repayment and the stresses it brings to family life.

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Rising interest rates finally bite on high street - Telegraph

 

A glut of corporate results yesterday showed that rising interest rates are at last starting to hit consumer demand, causing markets to tumble amid renewed pessimism about the UK economy's outlook.

Companies ranging from retailers Kingfisher, JD Sports and Kesa Electricals to Bradford & Bingley, the buy-to-let mortgage specialist, and insurer Legal & General all warned that five interest rate hikes in the past year are beginning to take their toll.

Softening mortgage approvals data from the British Bankers' Association also added to a growing consensus that the housing market is starting to slow.

In a day of increasing gloom across the City, the FTSE 100 fell by 3.15pc while the FTSE 250, which is much more closely correlated to the UK economy, fell by 3.35pc.

 

Is this classed as not too much damage?

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Prices 'will stay sky-high for years' - Telegraph

 

Europe's top-ranked natural resources investor has given warning that sky-high metal prices will defy the sceptics for years to come.

Evy Hambro, who manages Blackrock's World Mining Fund, said investors continued to underestimate the mismatch between soaring demand for raw materials and the mining industry's ability or desire to increase supply.

"We find it astonishing that, some six years into a cycle, the analysts are still getting it wrong", Mr Hambro said. "They have been too pessimistic for six years in a row and seem to be behaving like desperate gamblers, always betting on the same number."

 

I thought interest rates managed to bring price stability???? Don't worry the higher costs will get passed onto the consumer and that will be our fault so we can have some more interest rate rises to combat the inflation.

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Business comment: US debt sparked capital markets' 'slow-motion suicide' - Telegraph

 

The gathering storm signalled by last year's rumbling thunder of monetary tightening has this week turned into the expected deluge.

Yesterday's market falls were just an intensifying of the bad weather engulfing markets. The flood of debt that American consumers have been adrift on for years has finally turned toxic thanks to rapidly rising interest rates - and you thought Abingdon was bad.

To use one of the choicer quotes from a trader yesterday: "We're watching the slow-motion suicide of the capital markets."

Optimists will tell you that this is just a bout of indigestion, rather than a fatal sell-off. Banks simply need to clear their throats of the credit they've advanced to homebuyers, private equity and hedge funds, something which they'll do once the bond markets pull themselves together. The mergers and acquisitions boom will return and heavens, even the market for initial public offerings will open again.

But that implies a more benign interest rate environment some time soon. Alan Greenspan would not have hesitated, rates would have been cut to keep the long bubble afloat - the Greenspan put, as it's known. But his chatterbox successor, Ben Bernanke, can't. He's dealing with the over-borrowed, over-inflated US economy and all 67 Wall Street economists polled recently by Bloomberg reckon he will still hold rates next month.

 

However this is not too much damage!!!

 

I again salute the worlds Central Bankers. Your doing a grand job aren't you, but your only inducing the occasional recession to cleanse the excesses of the economy! Should this really mean cleanse the economy and get the poor out of their homes/accept lower wages??

 

It's just a good job interest rates do such a good job of controlling the economy, all of this clearly indicates that they work!!

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World markets plunge as fears rise - Telegraph

 

Global stock markets were plunged into fresh turmoil yesterday as a cocktail of fears over higher interest rates, debt defaults and lower earnings sent shares tumbling.

 

In the US, the Dow Jones Industrial Average plunged more than 440 points in late trading - on course for its biggest fall since 9/11. The FTSE 100 suffered its worst day for five years while the FTSE 250 posted its biggest points fall in history.

 

Investors fear that the ample liquidity that has driven so much of the merger and acquisition boom in recent years has abruptly dried up.

 

There have been more than $3,000 billion (£1,500bn) announced acquisitions so far this year, more than 50pc above last year's levels.

 

That activity has propelled stock markets around the world sharply higher. But with banks now struggling to raise the money to finance these takeovers, investors are fleeing to the relative security of government bonds.

 

Stagnation or recession?

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Credit fears send markets plunging | | Guardian Unlimited Business

 

Fears of a global credit crunch prompted by contagion from the crisis-hit US housing market led to panic selling and big falls on all the world's stock markets yesterday.Amid concern that heavily leveraged corporate deals would collapse in an environment of dearer credit, the FTSE 100 lost more than 200 points and the authorities on Wall Street imposed trading curbs to slow the market's decline.

Analysts said markets had been affected by a cocktail of bad news - rising oil prices, evidence that the slump in the US housing market is deepening, speculation that dearer borrowing costs will slow takeovers, and signs that the problems from the sub-prime lending fiasco are spreading through the financial sector.

Why are they panicking, the world economy is booming. Don't these people know this???

 

Everything is coming up roses and we've all got large slush funds in our off shore accounts to cover the rising cost of debt, what on earth are they panic selling for??

 

All this is great news for those about to retire with a pension built up with stocks and shares. Those pesky Central Bankers may cost you a several grand or more. But remember your loss if for the good of the economy.

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Daily Express: The World's Greatest Newspaper :: City & Business :: Divident delight at Rock

 

NORTHERN Rock bounced back from a profits warning last month by yesterday promising shareholders a cash bonanza.

 

The mortgage lender said it would hike the dividend by 30 per cent this year and step up its share buyback campaign as it takes advantage of new European rules on how banks can manage their own capital.

 

These allow low-risk lenders, such as the Rock, to free up some of the cash set aside to guard against a financial collapse.

 

The shares rose 15p to 817p as the company announced a 27 per cent rise in pre-tax profits to £346.6million for the half-year to June.

 

Profits up at the banks, lending up and it's the consumer who gets punished for it with higher interest rates.

 

Everything is coming up roses don't cha think???

 

The economy is booming.

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Think-tank warns that Bank risks overkill in fight against inflation - Times Online

 

The British Bankers’ Association said that it recorded 75,300 new mortgage approvals for house purchases in June, down from 77,400 in May and 11 per cent lower than a year ago. David Dooks, the BBA’s director of statistics, said: “Market demand may be reacting to higher mortgage costs.”

Despite the downbeat picture for property, Bradford & Bingley, the buy-to-let mortgage specialist, yesterday reported an increase of just under 10 per cent in underlying pretax profit for the six months to June 30, up from £164.2 million to £180.4 million, on the back of good growth in lending.

The bank’s net mortgage lending, which is calculated by subtracting redemptions from new loans, soared by 92 per cent to £4.5 billion compared with the first half of last year, fuelled by the healthy property market.

 

So net lending is up!!!! I think the BoE is doing a incompetent job, clearly rates based on this data haven't gone up enough.

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BBC NEWS | Business | Volatility sweeps global markets

 

European shares made a volatile start to trade on Friday - rallying after early losses which were prompted by worries over interest rate levels. In London, the FTSE 100 dropped 0.9% before rebounding into positive territory, easing fears that Thursday's share slump would be extended.

French and Germany's key share indexes also made up their early losses.

World markets have been hit by concerns that higher interest rates will hit company profits and takeover deals.

Worrying conditions

The FTSE 100 was trading up 47.7 points, 0.76% at 6,300 by 1010 BST - having lost 3.2% on Thursday - its biggest one-day percentage loss since 2002.

Analysts had predicted a further dip when UK trading resumed, but said that because most of the year's gains had been wiped out in one day, the market was now undervalued.

 

Lemmings anyone!!!!

 

But the economy is booming, booming I tell you.

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BBC NEWS | Business | Has profiteering hit flood victims?

 

Heavy rains were still falling and flood waters rising when the first rumours of profiteering started to emerge. White vans were seen parked in front of supermarkets selling bottles of water for many times their original price to panicked shoppers hunting emergency supplies.

Unscrupulous retailers were accused of pushing up the price of everything from eggs to bread, while it was claimed that hotels were ramping room rates to take advantage of people fleeing their homes.

With a second wave of flooding hitting Oxford and Berkshire, after large parts of Gloucestershire were submerged earlier in the week, the stories will probably be swirling long after the waters recede.

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BBC NEWS | Business | Debt worries extend Cadbury sale

 

Cadbury Schweppes has extended the deadline for offers for its US drinks business because of turbulence in the debt market. Earlier in the week, banks involved in the buyout of Chrysler also had trouble selling on some of the debt involved.

The deadline for bids for the US drinks business was thought to be next week.

Cadbury Schweppes said it hoped the delay would "allow bidders to complete their proposals against a more stable debt financing market".

Speculation about bids for companies made by private equity firms has been the driving force behind recent gains on global stock markets.

 

Money doesn't grow on trees unless your the central bank, then it literally does as all you need to do is cut down a few trees and then print some new money. Lend it out to private equity firms, push up share prices and create growth. Then panic as you've printed too much money, push up interest rates, families lose there homes and the global financial markets end up in turmoil and the world could be on the brink of a recession.

 

But interest rates are the only way to control the economy, if we lend out too much money we just charge you more for it. What we won't do is ask you to pay it back, that would just be ridiculous.

 

Central Bankers creating stability for the world economy!!!

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AA-Saga merger under threat as banks fail to find additional underwriters - Times Online

 

The turmoil in the credit markets continued to wreak havoc in the private equity sector yesterday as it emerged that the merger of the AA and Saga could be put on ice after the financing banks ran into difficulties.

It is understood that Barclays and Mizuho, the two lead banks that underwrote the debt backing the deal, have been forced to hold on to the loans after they failed to persuade other banks to join the syndicate as sub-underwriters. “They’ve had to delay it,” one source said yesterday.

In the US, fears were also raised about the progress of the $23 billion (£11.2 billion) sale of Virgin Media.

Deutsche Bank, one of the underwriters on the Alliance Boots sale to KKR, is providing staple financing on the sale of the communications group, which has received an indicative offer from Carlyle and is being circled by other private equity groups.

But the economy is booming, it is booming isn't it our Central Banks aren't lying to us are they??? Complex economies can be control by interest rates, it is the best way as everyone's circumstances are the same it's fair and just as there are no regional discrepancies are there???

 

Surely all the growth that's been created is real and not just generated by debt buyouts!!! We wouldn't be that stupid would we???

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Cheap Oil Like Jonestown Kool-Aid

 

"Americans are delusional," began James Howard Kunstler, speaking to the investment conference we are attending here in Vancouver.

"They think they can continue living the way they've been living for the last 50 years. They think the key to it is to find a way to keep getting fuel. And Vice President Cheney summed up this line of thinking when he said, 'the American way of life is non-negotiable.' The trouble is, Americans may not be willing to negotiate. But if they don't, they are going to find that someone else is negotiating for them. And that someone else is called reality."

Kunstler is a good speaker. His vision of the world…and the future…has a certain power and authority to it. He imagines that higher fuel prices will change everything - the suburbs will become unlivable and undesirable…Wal-Mart will be unable to continue stocking its shelves with cheap imports…food will have to be produced locally, not shipped half-way around the world…and people will have to find ways to manufacture locally too.

"Globalization is not a permanent trend," he cautions. "It is a consequence of two transient and unstable trends. Currently, the world's governments are favorable to it…they provide the political stability necessary. And the price of the fuel that transports all this stuff is unsustainably low. Both those trends are going to change."

Kuntsler is the author of The Long Emergency. What is the long emergency? We're not sure. We think it is the fact that energy is going up in price…making a lot of arrangements - the aforementioned suburbs, for example - untenable. But, listening to him, we got the impression that he hated big cars and parking lots long before he discovered peak oil. The man has a vision of the way things "ought to be" in America. The rising cost of gasoline is probably just a prop - an argumentum that turns "ought" into "will". Since the era of cheap oil is coming to a close, he says, Americans will have to stop living in ugly, soul-destroying suburbs; they will have to stop their vulgar consumerism; the moron masses won't be able to keep driving their commuter tanks either. They'll have to change, whether they like it or not.

But interest rates will control inflation, won't they?

 

It's what the central banks tell us, we get price stability from interest rates.

 

ECB: Objective of monetary policy

 

The Treaty establishes a clear hierarchy of objectives for the Eurosystem. It assigns overriding importance to price stability. The Treaty makes clear that ensuring price stability is the most important contribution that monetary policy can make to achieve a favourable economic environment and a high level of employment.

 

These Treaty provisions reflect the broad consensus that

• the benefits of price stability are substantial (see benefits of price stability). Maintaining stable prices on a sustained basis is a crucial pre-condition for increasing economic welfare and the growth potential of an economy .
  
• the natural role of monetary policy in the economy is to maintain price stability. Monetary policy can affect real activity only in the shorter term (see the transmission mechanism). But ultimately it can only influence the price level in the economy.

 

I quite like the quote from the ECB "ultimately it can only influence the price level in the economy." For the thousands of pound in interest rate charges we are all paying I want results, this I think you can say is a political cop-out. When it's good where doing a great job when the **** hits the fan, we only influence things and it's not our fault?

 

Doesn't this mean interest rates are not an effective mechanism for controlling national economies???

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Cadbury halts £7bn US drinks sale - Telegraph

 

Cadbury Schweppes, the confectionary group, has become the latest victim of the credit crunch after it indefinitely postponed the £7bn sale of its US drinks arm because of the ongoing market turmoil.

The move comes as the private equity groups behind New Look, the clothing retailer, shelved a planned refinancing as a result of the jittery debt markets.

And the AA and Saga were forced to deny reports that their merger could be put on hold after Barclays and Mizuho, the banks underwriting the debt behind the deal, failed to convince any other banks to help them with the financing.

Cadbury stressed that interest in the US beverages business, which is thought could fetch £7bn, "remains strong".

 

I think what they mean is we'll wait until interest rates come down again, when the whole debt driven cash buyouts start again and we can coin it in.

 

But remember the economy is booming!!!

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Premiums set to rise as companies pay out £2.5bn - Telegraph

 

Premiums set to rise as companies pay out £2.5bn

 

Homeowners were warned yesterday to expect to pay more for their insurance because of the floods.

 

Insurance companies said they would be forced to raise premiums to offset the cost of flood claims, which are expected to climb above £2.5 billion.

 

"We've had three major events already this year - storms in January and flooding last month and this month - so it's likely that premiums will increase across the household portfolio," said Jason Harris, senior claims manager for Norwich Union, the country's biggest insurer.

 

The average premium is £200 for buildings and £150 for contents, which has remained unchanged for a decade due to the competitive nature of the market.

 

But the floods in Yorkshire alone will leave a dent of around £1.5 billion and those over recent days could see claims worth £1 billion or more.

Increased premiums won't be good for the inflation figures, at least it will give Mystic Merv another excuse as to why inflation hasn't been on target for over 12 months. He'll be able to cite oil prices, food prices, increase insurance premiums. But remember Interest Rates work, we'll in the sense "they may in some rather vauge way influence things, maybe!!!"

 

Don't doubt it and certainly don't question it.