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Tory General Election Victory -I have two predictions -
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1) The Money we have thrown at the Banks will never be returned, as the Tories will follow the dogma that the Banks belong in the private sector and will liberate them from any public control at a knock down price.
2 A Tory government will task the Bank Of England with propping up the Pound with artificially high interest rates.
Any views?
2 A Tory government will task the Bank Of England with propping up the Pound with artificially high interest rates.
Any views?
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I think you're right there, also cut tax for the richest, benefits for the poorist, pensions for the oldest and child benefits for the youngest
There was a report I read about a month ago (in the times IIRC) that plans are already being drawn up to sell NR next year - perhaps it is Brown who is looking to sell it as a success prior to an election.
Of course the TSB which is part of the (now) Lloyds Banking Group was originally in public hands anyway and was 'privatised' under the Tories.
I can't see the banks remaining in public hands longer than is required and a sale would bring much needed funds into the Government's coffers (whichever side of the political spectrum).
Which of course leads to your next point - it matters not which side of the political spectrum is in power interest rates are going to have to increase - partly because the high level of borrowing will put pressure on the pounds, but in addition inflationary pressures (which had been subsumed with the credit crunch) will exist and what is called the money supply will need tightening. This was the primary reason why the MPC was so tardy in reducing rates - it also a reason for the MPC's terms of reference to be somewhat wider than just inflation.
Inflation is set to soar as a result of Labour having lost control of the money supply. It will take hold in 18 months to two years time. In order to prevent it from being hyper inflation (the 29% level Labour caused in the 70's, or even higher) tough action is needed on interest rates to get money back under control.
If the Government fails to react then our problems will simply get worse and worse.
High interest rates are an inevitable result of Labour's policy and are necessary to achieve a long term fix of our economy.
Oh, I should add also that large scale spending cuts (real cuts that is) are also essential. The size, power, influence and role of the State must be shrunk back significantly.
The amount of money given to the banks will never be fully recovered regardless of who wins the next election as it is just too large and btw Labour also believe the banks should be in the private sector.
It has been historically proven that using interest rates to prop up a currency doesn't work so any government would be stupid to try that again. If the money supply is expanded by too much then it will create inflationary pressure and therefore rates will go up. Btw unless a Tory government changes the rules it can't ask the BoE to use interest rates to prop up the £ as it's mandate is to control interest rates.
Actually its mandate is to control inflation, not interest rates.
Yep through interest rates which my post didn't make clear.
I thought the MPC's terms of reference were rather limited, all they could do was either raise or lower the interest rate and even that didn't require a great deal of effort, they just followed the Fed most of the time.
What was required were suitable policies and that of course was supposed to be a function of government.
Do you actually think the second one has happened? :eek:
Stairway got it right 4 (yes 4) years ago. Why have you resurrected this thread. It's not just dead, but fully decomposed so should have been left to rot in peace.
Why not have the profits from these banks being used to pay down the deficit. Instead of a quick sale which would bring in less money in the long term.
I'd have thought using interest rates to prop up the pound would only be a last resort in a sterling crisis. Why would any government, Labour or Tory, want to crash the economy further with higher interest rates? Yes rates could go up if the economy was overheating but an overheated economy looks a long way off.
The thread is from 4 years ago:mad: