The great interest rate rip off part 1

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Every household pays £900 a year to cover bungled Government projects | the Daily Mail

 

Every household in Britain is paying £900 a year to cover the cost of bungled Government projects.

Labour has squandered a staggering £23billion of taxpayers' money by failing to control the spiralling costs of hundreds of flagship schemes, figures reveal.

 

The 2012 Olympic Games in London, the Channel Tunnel Rail Link, a super-computer for the NHS and the Eurofighter military aircraft are among the projects that have soared over budget. The wasted money would have been enough to build nearly 100 new hospitals.

 

MPs and low-tax campaigners said the sum squandered was "criminal".

Philip Hammond, Tory Treasury spokesman, said: "It is outrageous that hard-working British families have been hit to the tune of £900 each to pay for Labour's project cost overruns.

 

..........

Experts said the problems stemmed from a failure by departments to specify exactly what they wanted, underestimating costs to get a project approved and paying over the odds in an attempt to solve the problem.

 

Not only do we get the tax bill we also get rewarded with higher interest rates further straining household budgets!!

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Tesco sets aside green issues to focus resources on a price war - Times Online

 

Tesco is launching its biggest price-led advertising campaign for a decade amid growing concerns of a slowdown on the high street. The £4 million campaign, starting on television tonight, will feature independent price checks on 10,000 products in each supermarket chain and show where Tesco is cheaper – or more expensive.

The move comes three weeks after Asda announced £250 million of price cuts. Within hours, Tesco responded with reductions worth £270 million, putting pressure, say analysts, on Morrisons and J Sainsbury.

Tesco claimed yesterday that in the past year it has been 7 per cent cheaper than Sainsbury’s and 1 to 2 per cent cheaper than Asda. However, Asda said that research in The Grocer showed that it had been Britain’s cheapest supermarket for ten years in a row. A spokesman said: “Tesco needs to get its calculator back out.”

 

Slow down or start of a recession caused by successive BoE interest rate rises?

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After the floods - Hull struggles with rate rises | Special report | Guardian Unlimited Business

 

Some towns are suffering more than others from the continuing rise in interest rates over the past year, with Hull, Stevenage and Slough the hardest hit, according to new research.Researchers at Experian Business Strategies analysed more than 400 towns to identify types of people and neighbourhoods most susceptible to debt and rising interest rates.

"There are winners and losers when interest rates change," said Neil Blake, chief economist at Experian Business Strategies. "People with savings will gain and those with mortgages or large amounts of unsecured debt will lose out. However, our research shows that the winners and losers are heavily concentrated in some locations and in certain socio-economic groups."

He said the rise in interest rates was bad news for places such as Hull, where there are higher proportions of people with large mortgages, lower gross incomes, significant levels of unsecured borrowing and fewer savings. Hull is still struggling with the effects of recent floods.

The report uses Experian's postcode-based Mosaic consumer classification to identify types of people and neighbourhoods most susceptible. Neighbourhoods most vulnerable include those identified as "just moving in", "fledgling nurseries" and "burdened optimists".

 

A single interest rate doesn't work the whole system is failing the people of this country whilst our politicians sit and watch.

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GE bails out of US sub-prime market - Times Online

 

General Electric (GE), the US conglomerate, is set to offload its sub-prime mortgage business as American-based banks increase the number of foreclosures (or repossessions) on homeowners with a poor credit history. GE is expected to announce the sale of WMC Mortgage Securities as part its second quarter trading update later today. The mortgage group, acquired by GE three years ago, has already been subject to cost cuts after 1,200 jobs were slashed, leaving 700 staff at the company, while it has reduced the number of home loans it grants to borrowers.

It has already had to write down the value of these loans and is expected to have to take another one following the sale.

GE's decision emerged as the number of foreclosures on home loans in the US leapt by 87 per cent during June, compared to the same period last year. Around 720,000 Americans are expected to be left without a house as banks repossess homes following borrowers' failure to make mortgage payments during a 90-day period.

 

The number of loan foreclosures in the States hit 925,987 during the first half of the year, compared to 1.25 million over the whole of 2006 and 857,000 recorded in 2005

 

 

 

How long before UK starts to see a similar picture due to the current irresponsible rate raises???

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Homeowners feel squeeze as some rates top 8% - Times Online

 

Homeowners on standard mortgage deals are being forced to pay interest rates of more than 8 per cent for the first time since 1999. Bank of Scotland and Birmingham Midshires, both divisions of HBOS, the biggest mortgage lender in the UK, increased their standard variable rates (SVRs) yesterday to 8.1 per cent and 8.19 per cent, respectively.

The rates increased to more than 8 per cent after the lenders passed on last week’s quarter-point base rate rise. Only a fraction of borrowers take out mortgage deals pegged at their lender’s SVR, preferring cheaper short-term deals instead. But many end up paying the SVR when their short-term deal comes to an end while they are negotiating a new loan.

In addition, many homeowners who have nearly repaid their mortgage often choose to pay their lender’s SVR rather than pay large arrangement fees to lock into another short-term loan. Lisa Taylor, of Moneyfacts, the price comparison website, said: “If you have a small outstanding mortgage and are paying the SVR, this is really going to hit you in the pocket. Unsecured lending is now cheaper than these rates."

 

On a £100,000 loan that's roughly £8100 a year in interest!!!!

 

Interesting that they didn't state what the banks interest rate was before the last increase.

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The palaces of the mega-rich rise 35% in value - Times Online

 

The lust of rich men for real estate in Chelsea, Kensington and Notting Hill remains undiminished by rises in interest rates that are fast subduing the mood of other homebuyers. The prime Central London property market rose by 3.1 per cent last month, bringing the annual rate of growth to 34.5 per cent, the highest since 1979, according to Knight Frank, the estate agent.

Houses valued at £4 million-plus are the top performers, up 43 per cent over the year. Nationwide’s figures for the whole of the UK show average annual growth of 10.2 per cent, a result that is itself skewed by the ebullience of the capital.

Liam Bailey, Knight Frank’s head of residential research, acknowledges that he underestimated the sheer weight of cash that would seek out white-stuccoed town houses, or supersized “lateral” apartments. He says: “We saw growth of 30 per cent last year and expected 15 per cent; the surge in demand means that we have raised our forecast for the whole year to 25 per cent.”

 

And the poor get to pay with higher interest rates!!! Nice.

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The new home loan [problem] - Times Online

 

What should you do if you can’t afford the house of your dreams? Simple – downsize or start saving. But some homebuyers have sought out an easier alternative, faking their finances to make it seem that they are earning much more than they are.

A plethora of websites produce “duplicate” bank statements, payslips, utility bills and P60s at the click of a mouse. Some claim that these are legitimate services for people who have lost their P60.

But the sites visited by Times Money made no attempt to verify any of the information we supplied about wages or income. This makes it easy for people who want to borrow more than they can afford to fake their details. Alternatively, they can use the false information to claim they are earning less than they actually are, cutting their tax bill or child maintenance payments.

The documents are convincing. The P60s, the statements issued by employers at the end of the tax year that state how much a worker has earned, are printed on the same stationery as that used by employers. And the bank statements are full of fictitious “everyday” withdrawals and payments, such as the monthly subscription for Friends Reunited and groceries at Tesco. A recent report from the Institute of Payroll Professionals (IPPR) says that the number of websites offering these documents is increasing.

 

Helping to drive up interest rates!!!! Surely the BoE must stop this rather than raise interest rates further!!! O wait the BoE only know how to raise interest rates as nothing else matters or works!!!

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Petrol prices and property slide deter US shoppers - Times Online

 

Surging petrol prices and the slide in the American property market kept shoppers out of US malls in June, triggering a far worse than expected fall in retail sales.

Retail sales fell by 0.9 per cent last month, representing the sharpest fall in almost two years.

Demand for cars, furniture and building supplies fell as consumers eyed the sliding price of property and struggled to keep pace with higher mortgage payments.

Car manufacturers saw sales fall 2.9 per cent as the rising cost of fuel hit demand for gas-guzzling sports utility vehicles.

 

The figures also brought into question the stock market rally on Wall Street on Thursday, suggesting that investors may have been overenthusiastic about better than expected results from Wal-Mart, the retailer.

Jan Hutzius, chief economist at Goldman Sachs, the US investment bank, said that the poor retail figures raised pressure on the Federal Reserve to cut interest rates.

The price of fuel hit $3 a gallon this week – just as US petrol consumption surges to meet rising demand from American holidaymakers.

 

A world wide recession looming, caused by the worlds central bankers???? And they are only one letter off being what they really are!!

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Banks rip off customers by pushing up price of using credit cards abroad | the Daily Mail

 

Banks are pushing up the cost of using plastic cards overseas just as millions of families take their summer holidays.

 

Travellers face higher charges on everything from buying a meal in a restaurant to hiring a car or paying a hotel bill.

As much as £6 in every £100 is going to the banks in some cases and industry analysts suggest the total figure for these hidden charges was £326million last year and will be approaching £500million for 2007.

Every time a card is used to make a purchase or withdraw cash overseas, at least one and sometimes two fees are added. The extra charges could cost a family of four more than £40 over a two-week holiday.

 

Personally I think Merv needs to put up interest rates to stop this, it's amazing how interest rates control everything in the economy. Higher prices forced on the consumer again, yet we all pay double with higher interest rates.

[elsinore]

You’ll like this, IRRO.

 

“Only simple ideas can be held by large groups of people. Commonly held ideas are always dumbed down until they are practically lies, often dangerous ones

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Property prices only ever go up

 

Governments and central bankers really do know what they’re doing

 

You can borrow yourself rich...buying things you don’t need with money you don’t have

 

And once the mass of people comes to believe one of these lies, they adjust their behaviour to get into sync with it. Thereby they change the world, and the world then no longer resembles the one that gave rise to the original insight.”

 

I got it from here http://www.dailyreckoning.co.uk/website/home.html

 

He seems to be singing from the same hymn sheet as you!

 

Els.

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Thanks for the link I'll have a look at it later

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The economy’s momentum still carries the day - Times Online

 

HEADWINDS vs momentum. That just about summarises what is going on in the US economy. Some weather watchers say the headwinds are close to gale force. The uproar in the subprime mortgage market has the rating agencies becoming more picky; lenders such as Barclays and Lloyds TSB taking a longer look at borrowers before handing over money; and even the red-hot private-equity dealmakers paying a bit more for the loans that finance their takeovers.

Oil and petrol prices remain at levels that are pinching consumers’ pockets, and driving up the cost of doing business. Inflation is tame (up only 1.9% from last year) if you look at the “core” prices, excluding food and energy, as Federal Reserve Board chairman Ben Bernanke continued to do last week in a speech that economists at Goldman Sachs characterised as “very academic”. But Fed members apparently neither eat nor drive, according to consumers who find that inflation in food and energy prices is hurting them.

Then there is the housing market, with foreclosures up 87% from last year’s level and prices falling. Consumers notice when petrol prices rise because they have to fill their tanks every week, and they notice when house prices fall because they have less to boast about at dinner parties. Those prices continue to fall under the pressure of rising unsold inventories. The spring selling season proved a damp squib: potential buyers are holding back in anticipation of still lower prices, and higher mortgage rates are making home ownership more expensive. Prolifer-ating “for sale” signs are upsetting reminders of the soft market.

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BBC NEWS | Business | Profit warnings at five-year high

 

Profit warnings issued by UK-listed firms are at their highest level since the low point of the technology-led stock market crash in 2001. In the first half of 2007, 191 companies cut earnings forecasts, 13% more than in the same period in 2006, research by Ernst & Young has shown.

A shortfall in sales was the most often quoted reason for warnings, suggesting a downturn in the UK economy.

Software and support services firms issued the most earnings downgrades.

More than 230 profit warnings were issued at the beginning of 2001 at a time when the UK stock market had almost halved in value since its exuberant peak in the final days of the dotcom boom.

Keith McGregor, corporate restructuring partner at Ernst & Young takes the view we are a long way from the economic climate of that time.

But he cautioned that the high number of profit warnings "are a reminder that segments of UK plc are struggling" in a changing environment of rising interest rates and more expensive borrowing costs.

 

Is the recession just around the corner???? Self induced by the genius that is the MCP???

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BBC NEWS | Business | US retail sales fall unexpectedly

 

US retail sales unexpectedly dropped by 0.9% in June, a report from the US Commerce Department says - their biggest decline in almost two years. Sales were down 0.4% even without the effect of a slump in the car market, the cause of much of the fall.

The month before, retail sales had risen by a revised figure of 1.5%.

The problems in the housing market were reflected by a 3% fall in furniture sales and a 2.3% fall in sales of building materials and garden supplies.

The figures are likely to add to fears about the prospects for the US economy, currently assailed by the problems with sub-prime mortgages and the risk of a knock-on effect on investment and lending.

If retail sales stay weak, that could impact economic growth, since consumer spending accounts for two thirds of economic activity.

Figures out on Thursday had led economists to expect better retail sales figures.

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The euro’s rise and rise is unsustainable - Times Online

 

Most commentators seemed to have no doubt about the explanation for last week’s most important economic event – the 26-year highs hit by the pound and the euro against the dollar, which now threaten to open the floodgates on a tide of currency speculation, transforming economic conditions for British and European export industries in the months ahead. The Financial Times explained this momentous event very clearly in Saturday’s leader, saying: “The dollar slide came amid another week of negative market movements, principally driven by more bad news from the US sub-prime housing market. The gap between growth in and outside the US explains some of the fall in the dollar. The large US trade deficit also puts inevitable downward pressure on the currency.”

I beg to differ. Market chatter last week may well have been dominated by the US housing panic, but a less emotional analysis suggests that something very different was probably going on. For a start, it seems odd to use the phrase “another week of negative market movements” to describe a succession of record highs on almost every stock market from New York to Hong Kong to Frankfurt – and the biggest weekly gain on Wall Street since 2003. Secondly, it is far from clear that the dollar’s decline has anything much to do with either the trade deficit or the gap between US and international growth. It is obviously true that the US economy has been relatively weak recently, growing by an annualised average of just 1.6 per cent in the past two quarters, and that America has by far the biggest trade deficit in the world. But before drawing any strong conclusions, it is worth recalling which major economy has had the strongest growth rate in the past two quarters.

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Ice-cream makers frozen out as corn price rises - Times Online

 

What’s the connection between ethanol, the biofuel produced from corn, and a cherry vanilla ice-cream?

Answer: the first is responsible for pushing up the price of the other.

This month, the price of milk in the United States surged to a near-record in part because of the increasing costs of feeding a dairy herd. The corn feed used to feed cattle has almost doubled in price in a year as demand has grown for the grain to produce ethanol.

 

Christina Seid, whose family have been making ice-cream at the Chinatown Ice Cream Factory for 28 years, said yesterday that she expected to have to raise her prices, along with all competitors in the short term. “We are holding out as long as we can, but prices will rise,” Ms Seid said.

 

As previously mentioned on this thread about the increasing cost of milk worldwide, no interest rate is going to combat this problem. Of course Merv the Dim thinks it will as it's all to do with the money supply and nothing to with reality. Perhaps we should all stop drinking milk to reduce the demand and the price will fall, then we can all develop osteoporosis and cost the health service billions in treatment???

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Are these the last days of the Oil Age? -Times Online

 

Oil ruled the 20th century; the shortage of oil will rule the 21st. There is now no doubt about the rising trend in oil prices. In 2003 a barrel of Brent crude sold for $29; in 2004 it rose to $38; in 2005 it rose to $54.50; in 2006 it rose to $65. Last Friday the price closed at $77.50. Some dealers expect it to test the $80 level quite shortly.

Last Tuesday the lead story in The Financial Times was the latest report from the International Energy Agency. The FT quoted the IEA as saying: “Oil looks extremely tight in five years’ time,” and that there are “prospects of even tighter natural gas markets at the turn of the decade”. For an international agency, that is inflammatory language. This steep rise in the oil price over a four-year period has been caused by demand rising at more than 2 per cent a year, while supplies had risen more slowly, by a healthy 4.1 per cent in 2004, but by only 1.25 per cent in 2005 and 0.5 per cent in 2006.

This has revived the “oil peak” debate among oil analysts. Some analysts believe that the world will never again be able to pump as much oil as we are pumping at present.

 

Don't worry interest rate rises will combat the inflationary pressure of oil price rises, again another example of planet MCP reality not being part of planet earth reality.

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RBS raises the stakes in ABN battle | | Guardian Unlimited Business

 

Royal Bank of Scotland has launched a new bid for ABN Amro, offering shareholders more cash in an attempt to wrestle it away from rival bidder Barclays.The consortium of RBS, Fortis of Belgium and Franco-Spanish bank Santander this morning said that while it would stick with its original offer of €71.1bn (£48.1bn), the cash terms are being upped from 70% to 93%.

RBS said that it was still saw considerable value in buying ABN even though its LaSalle operations, which it wanted to acquire, are definitely being sold to Bank of America for €21bn.

 

No doubt this bid is all funded from lending, increasing the money supply therefore increasing the need to increase interest rates. Yep you've guessed it the consumer will pay for it!!!!

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BBC NEWS | Business | Inflation sends kiwi to new highs

 

Higher-than-forecast inflation and expectations of interest rate rises have sent New Zealand's currency to its highest against the dollar since 1985. Consumer inflation rose by 1% in the three months from April, which helped push the kiwi to $0.7900 to the dollar.

The latest inflation data was above central bank forecasts, and double that seen in the previous quarter.

New Zealand interest rates currently stand at 8%, which is the highest in the industrialised world.

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London helps to lift house prices - Times Online

 

House price growth softened in May, according to official figures released today.

Statistics from the Department for Communities and Local Government suggest that higher interest rates are beginning to bite in some regions, although across the country as a whole annual gains remained in double digits - boosted by rising prices in London, Scotland and Northern Ireland.

These combined to keep annual prices at 10.9 per cent in May, down from 11.3 per cent in April.

The average house price in May stood at £211,056, according to the Government figures.

 

The data is based on sale completions and so lags other surveys.

Howard Archer, the chief UK economist at Global Insight, said: “The data add to the overall evidence that house prices are coming off the boil, although it should be borne in mind that the DCLG tends to provide lagging evidence on house prices, as the office calculates its index at the time when mortgages are completed."

Seema Shah, property economist with Capital Economics, said: "The regional picture shows that the real strength of the market continues to lie with London, Scotland and Northern Ireland.

"These three regions continued to record annual house price growth of over 10 per cent in May. However, of these three, London was the only one not to see a moderation in house price inflation from the previous month."

 

Quite rightly another interest rate rise is needed to curb this regional problem. If northerns lose there houses who cares just as London is OK.

 

There is no justification for a national interest rate. Why should the north pay the price for the excess of London. Inflation is NOT a macro-economic problem, it's a micro-economic problem but we just get a blunderbuss approach by all central banks. Not that all Londoners will be fine many will suffer as well.

 

Interest rates simply do not work a 21st century approach needs to be developed for a 21st century problem. The banks are increasing becoming a hard sell operation as they MAKE MONEY BY SELLING LOANS there by increasing the money supply, this seems to have got by the MCP who just want to make the consumer pay for all the faults in the system.

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Sterling and oil advance into record territory - Times Online

 

The price of oil tested record highs in London today, amid heavy speculative buying and concerns over tight US fuel supplies.

Crude's ascent was mirrored in the foreign exchange markets, where the pound climbed to $2.04, a 26-year high for sterling against the greenback.

The dollar looked to be weighed down by continued jitters over the US housing market, soft US retail sales data from Friday and fears over today's Empire State manufacturing survey for July, which is expected to show a pullback in the sector in the US.

Meanwhile, Brent North Sea crude for August delivery hit $78.40 in London, within a whisker of the record, $78.64. set on August 9, 2006, when a pipeline spill forced BP to close production from Prudhoe Bay, the biggest oil field in the US.

 

New York’s main oil futures contract, light sweet crude for delivery in August, jumped to $74.44 a barrel, a level seen most recently last August 11.

Michael Davies, the Sucden analyst, said: “Just as at the end of last week, there is a continuous inflow of fresh speculative and fund money supporting the prices."

Brent prices were also lifted by upcoming maintenance work in the North Sea, which raised fears of a supply crunch.

Mr Davies added: “Tightening supplies from the North Sea region are still seen as supportive of crude futures, while market participants remain concerned about seasonal maintenance on North Sea oilfields at the end of the summer, in addition to unexpected outrages.”

 

I think another interest rate will will help to combat these increases, as well as stabling the Niger delta. It appears that Merv appears to think so!!

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BBC NEWS | Business | Your Money | Wealth gap 'widest in 40 years'

 

The gap between rich and poor in the UK is as wide as it has been for 40 years, the Joseph Rowntree Foundation (JRF) has said in a report. The JRF found that households in already wealthy areas had become "disproportionately" richer compared with society as a whole.

But the number of "poor" households has risen over the past 15 years.

Since the 1980s, wealthier people have moved to the suburbs while the poor remain in inner cities, the JRF added.

Society polarised

Looking at wealth patterns over the past four decades, the JRF found that the gap between rich and poor actually narrowed in the 1970s.

But during the 1980s and 1990s inequality had increased as a "polarisation" in British society had occurred.

As for the decade beginning in 2000, the report said the picture was "less clear", with some initiatives such as tax and pension credit helping the poor while wealthier people were gaining from a property market boom.

 

I would suspect that this picture will change again when the interest rate rises start to kick in, the BoE helping to plunge more people into poverty.

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BBC NEWS | UK | Parents struggle to find balance

 

The dual demands of work and childcare placed on parents mean that family life is suffering, a survey suggests. Most of those questioned - 61% - said parents do not get enough time to spend with their children.

Nearly half - 48% - said they had to put their career first even if it affected their family relationships.

The survey, which saw 1,148 adults questioned, was commissioned by The Children's Society and is part of the charity's Good Childhood Inquiry.

The inquiry, which includes research around the themes of friends, family, learning, lifestyle, health and values, will publish its final report in the autumn of 2008.

The survey found that 48% of participants did not believe that a pre-school child was likely to suffer if his or her mother went out to work, but 37% disagreed with this statement.

Two-thirds of respondents - 67% - said they did not believe parents should stay together when they did not get along, even if there were children in the family.

 

With the rise in interest rates many parents will be having to work longer shifts to get the money to pay the increase cost of borrowing which is so conveniently left out of the the inflation figures. Not to mention how much stress and tension the rate raises will bring to family and relationships. Could we see a raise in divorce figures over the coming 18mths as families start to struggle. Fortunately that's nothing which can be counted in economic terms so the BoE and MCP don't care and aren't bothered.

 

Broken homes and Merv doesn't care just as long as the money supply is fine.

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Traders prepare for week of sliding dollar - Times Online

 

The pound strengthened against the dollar to climb above the $2.04 mark for the first time in more than a quarter of a century yesterday, as currency traders braced themselves for fresh dollar weakness this week.

The greenback fell against currencies such as sterling and the Australian and New Zealand dollars, where interest rates offer higher returns.

The pound rose as high as $2.0405 in morning trading, its highest level in 26 years, before falling back to $2.0366.

Continued weakness in the American housing sector and the possibility of a slowdown in inflation prompted speculation that the US Federal Reserve could move to cut interest rates next year.

By contrast, the Bank of England is expected to raise interest rates once more to 6 per cent, thereby widening the yield gap between the American and British currencies and chipping away further at the dollar’s value against sterling.

The latest update on producer price inflation in the United States will be published today. Tomorrow US consumer price inflation figures will be released and there will be the first of two days of congressional testimony by Ben Bernanke, the Fed Chairman.

 

The higher pound makes if far more difficult for UK exporters to sell there goods abroad, but hey Merv don't care if your company goes bust just as long as the money supply is curbed he'll gladly hand you your P45.

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Lenders predict UK property crunch as rates take effect - Times Online

 

Higher interest rates are set to provoke a crunch in Britain’s property market next year with the weakest growth in prices for 13 years, the Council of Mortgage Lenders (CML) said yesterday.

The CML also said that consumers would have to cut back on spending as they struggle to cope with a painful increase in mortgage repayments.

Michael Coogan, director-general of the CML, said that house prices would grow at half their current rate by the end of the year and would rise by only 2 to 3 per cent in 2008.

According to data released yesterday by the Department of Communities and Local Government (DCLG), house price inflation stood at 10.9 per cent in May.

 

If consumers start spending less the recession surely can only be just around the corner. On a £100,000 loan with most rates around 8% or higher from the banks that's £8000 a year purely in interest with none of that going to pay off the debt!!!!