Should I be bothered about when I change £1400 to dollars between now and 20th August or is it just going to be shit all round and at this point, a few quid here or there?
Brexit and Financial Markets
- Thread starter Raoul
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In the latest episode of the United Hour Podcast, Nik (@Rood) is joined by CEO Duncan Drasdo and Financial Director Andy Green from the Manchester United Supporters Trust for a special episode on all things behind the scenes at Old Trafford including a brief history of MUST and their aims today, views on INEOS and Sir Jim Ratcliffe so far, and the Old Trafford regeneration.
Its odd isn't it? Must be in part due to global QE. Too much money chasing too few assets.
Bad luck mate!
I have been negotiating a mortgage recently, I don't complete on my new house until mid October, hoping if I play my cards right I can take advantage of the base rate cut and get a better mortgage offer before then!
Pretty much entirely down to QE and prolonged artificially low interest rates. Feck knows how they can unravel it painlessly without a magical growth burst appearing from nowhere.
I was just wondering if someone could explain the last 15 pages to me?
The fed pays banks interest on liquidity, so m2 is not getting out of control, yet at the same time they are unwilling to reduce their balance sheet. They are not even trying to “boost the economy”. It is just arbitrary credit allocation to keep certain institutes alive, that would go down, if the market would reprice certain assets.
In Europe the whole dynamic is slightly different, but the logic line is more or less the same. Central banks are juggling with asset prices and interest rates to keep everything alive. Most of the post 08 central bank policy is motivated by “financial stability” (which is equivalent with keeping certain price levels). They do everything to stop the market from repricing certain assets, because that would end in a bloodbath. In many ways the whole situations is similar to a poncy-scheme; central banks can´t stop adding fuel or everything collapses.Some investors are just front running assets, that are/will be getting boosted by central banks. Yet at the same time the low interest rates and collapsing yield spreads are killing various investors. e.g. pension funds are getting massacred
There are too many layers to that to explain it in this forum, but it is sheer madness. Paradoxically growth will only pick up pace after the re-pricing. Not before it.
Summary: Brexit was like setting fire to your pants to make you look hotter to girls.
Maybe I'm a hopeless romantic but that would work for me.
Pfft, stupid goddam Obama and his record breaking period of private sector job growth.
if now all those bartenders would just unionize and push for higher wages....
They'll need to make up for the tips I won't be giving them anymore!if now all those bartenders would just unionize and push for higher wages....
Can't see the point in lowering interest rates when there is so little room for manoeuvre. 0.5%, 0.25%, how much difference is it going to make? £10, £20/month on your mortgage, big deal. You get no interest on deposits, you'll still get no interest. Personal loans are really cheap anyway. The only thing that really pisses me off are credit card interest rates, how can the 'mainstream' cards justify rates of 15%-18%, they have not changed since interest rates were at 5%, even so, even if they did reduce credit card rates, it would only be by a fraction.
When rates were in the 5s, 6s, 7s and higher, then reducing it by a % or 2 can make a real difference, but that was already done to the max 7 years ago.
All seems a bit pointless to me.
When rates were in the 5s, 6s, 7s and higher, then reducing it by a % or 2 can make a real difference, but that was already done to the max 7 years ago.
All seems a bit pointless to me.
25bps could mean the world to a business' bottomline. Mortgages and sb accts are almost never the consideration of a rate decrease/increase.
50bps is a significant room to manoeuvre around and they can go into negative as well (though we would need to be really fecked for that to happen).
25bps could mean the world to a business' bottomline. Mortgages and sb accts are almost never the consideration of a rate decrease/increase.
50bps is a significant room to manoeuvre around and they can go into negative as well (though we would need to be really fecked for that to happen).
Not really, it's a little bit less, but it's not going to mean 'the World'.
Let's face it, it's £2.5K per million per annum. If your business lives or dies on that, your already fecked.
Unnecessarily dismissive.
25bps could mean the world to a business' bottomline. Mortgages and sb accts are almost never the consideration of a rate decrease/increase.
50bps is a significant room to manoeuvre around and they can go into negative as well (though we would need to be really fecked for that to happen).
Most mortgages are fixed rate, right? Unless people have chosen to go the variable route, very few mortgage benefits can be felt from this...but then they are not really the target here. Small and Medium industries will benefit greatly. Getting a big loan will be more attractive and banks are being forced to pass on the savings to the borrower. this is just a stimulus or a kick in the backside for economy to recover...not a end benefit of it's own.
You really dont have a clue as to how businesses (in particular capital and profits) work.
It seems that you have never been close to a fin/econ text book or a finance function of a company. Have you?
Not necessarily actually; the more immediate impact of rate cuts is to boost consumption. Lower interest rates means more people take fresh mortgages, buy more houses; take personal loans for repairs, cars, gadgets and travel.
Yes, businesses also do get tempted to take new loans but in a dead economy you would be anyways be sitting on overcapacity on the production side. So its not like new companies will start popping up.
@Sassy Colin - you're right to the extent that 25bps is a small amount; but it is a small amount in the context of high-interest rate economies. Think about it this way - reduction of your interest rate from 0.5% to 0.25% will effectively halve your interest costs each year. Ie, if you could not afford that GBP1mn house because the mortgage was out of your range, its now atleast 25-50% cheaper
It wouldn't be that much cheaper though. Business loans are not set at base + a percentage, not at base.
Admittedly. But even then it makes a big difference. For instance, if you were borrowing at 3% and now it is 2.75%, it is 8% cheaper. That's a reasonably large sum of amount. Think of your mortgage coming down from GBP2K to GBP 1.8K. Moreover, on the flipside, like you said, saving becomes useless and therefore you're more inclined to spend more rather than store it up in investments.
Money is essentially becoming free to pick up now and essentially its uncharted, desperation play now. So it is quite possible that what you may be saying is right and there could be no material positive impact on consumption.
I just did a biggie more than x10 that figure and went ahead with it. I reckon that it could get worse before it get better. just my personal gut-feel, instincts.
Be a good time to refinance your mortgage!
It makes almost no difference at all for the SME sector.