"Wait a minute, I was under the impression low interest rates where propping up house prices."

That's correct Matt, you certainly "were" under the impression, see the figures out today along with the comments.
فساتين سهره 2013
فساتين روعة لصيف 2013
برودكاست صباح الخير
خلفيات ايفون شهر رمضان
توبيكات واتس اب 2013
عبارات واتس أب
برودكاست نوم 2012
رمزيات خلفيات بلاك بيري 2013
رمزيات واتس اب 2013

Danny: You're back. Where have you been? HIYA Danny. Are you saying anything different this time around? Ya caught any fish mate?

Do you actually read non-economic stuff? And I don't mean fishing mags.

"How do you think you would solve the problem?"

It's more difficult now after the horse has bolted, but I wouldn't have had rates so low for sow long.

I'd have stricter lending criteria - we're slowly creeping back to 90-95% mortgages, and I think it's a bad idea to have our population growing so rapidly with such a housing shortage, and I would scrap these shared ownership schemes, maybe tax BTL more too. That would do for a start.

And Foxy.. try to talk some sense this time ... loads of people know you're the one with shit for brains.

"Growth is the key to getting out of this mess"

No. Need to go one step up. Competitiveness is the key to getting out of this mess.

Growth without competitiveness = borrowing.

Thanks for your response David.

However, reading the BoEs website:
http://www.bankofengland.co.uk/monetarypolicy/index.htm#
"One of the Bank of England's two core purposes is monetary stability. Monetary stability means stable prices - low inflation - and confidence in the currency. Stable prices are defined by the Government's inflation target, which the Bank seeks to meet through the decisions taken by the Monetary Policy Committee.

A principal objective of any central bank is to safeguard the value of the currency in terms of what it will purchase. Rising prices – inflation – reduces the value of money. Monetary policy is directed to achieving this objective and providing a framework for non-inflationary economic growth. As in most other developed countries, monetary policy usually operates in the UK through influencing the price at which money is lent – the interest rate. However, in March 2009 the Bank's Monetary Policy Committee announced that in addition to setting Bank Rate, it would start to inject money directly into the economy by purchasing assets - often known as quantitative easing. This means that the instrument of monetary policy shifts towards the quantity of money provided rather than the price at which the Bank lends or borrows money.

Low inflation is not an end in itself. It is however an important factor in helping to encourage long-term stability in the economy. Price stability is a precondition for achieving a wider economic goal of sustainable growth and employment. High inflation can be damaging to the functioning of the economy. Low inflation can help to foster sustainable long-term economic growth."

It is clear that the primary mandate is inflation, growth according to this explanation is only achieved through the BoE providing low inflation.

While I do not agree that the BoE should increase interest rates becuase it should have a dual mandate including unemployment like the Fed, if Sentence was employed to achieve the above mandate then he was correct in calling for interest rates to rise in 2010 if he expected inflation to rise in 2011.

Competitiveness could be improved without cutting living standards. But this can only be achieved by fiscal policy. Getting the unemployment rate through only monetary policy is causing high inflation and cutting peoples living standards.

For example if the government improved the UKs poor infrastructure and gave business more incentives to invest now, then capital per worker would rise, increasing output per worker. The increase in competitiveness would then allow more people to be employed.

Thanks mike: what's wrong with shared 'ownership' schemes? What ones are you talking about?

So RSD you are saying the BoE should stick to a narrow mandate and the economy be damned?

@Mr Divine

I don't pretend I have all the answers, but I have an opinion. The problem I have with shared ownership is that it's house price inflationary and they're becoming more widespread, there seems to be more and more initiatives every year. The very fact we have them shows that prices are too high.

If shared ownership becomes the normal way to buy a house it means house prices will potentially have a much higher ceiling. Schemes which are selective as to who can qualify are highly unfair as they give some people a leg up over others. I disagree with taxpayers money being used to help prop house prices up.

well said Indu

"Don't you think VALUE should be the focus of government not growth?"

Yes, I don't know what I've posted which would make you think otherwise. I'm against QE and the whole bailiing out of reckless behaviour.

Who cares what Sentance says? He's merely obsessed with inflation and not the wider issue of where the economy is going.

What is even more alarming is that the economic consensus here, there and everywhere, believes that expansionary austerity (despite the lessons of the Great Depression and Japan in 1990s) is the way forward.

When we are all once again in recession, what are these people going to recommend as the correct response to this crisis? 10 years of austerity, unemployment and misery?

Our leaders and the economists who inform them just don't get it. They ignore history and are casual in their belief that the polis will pay the price.

It is miserably bankrupt moral, economic and political system that raises itself and its interests above, logic, history and well-being of its own people.

Yes I agree with you Mike. Housing is a very important issue but trying to lay blame on who was responsible and why it happened isn't going to solve the problem. It isn't a Tory/Labour thing. It is an issue that needs to be solved in a way that has the most value for the people of the area. you can't have reckless private enterprise and you can't have government just uilding houses and giving to people. You have to think of a compromise and the first port of call needs to be 'VALUE'. that NEDS TO BE THE FOCUS. Focusing on growth you have all sorts of rubbish being built. Quality should be the focus. Does everyone want to get super fat?

RSD

Raising rates right now would be suicidal for the UK economy. Inflation is eroding living standards not least because Osborne raised VAT. But raising rates would kill home owners who have been able to protect themselves from inflation by the fall in the cost of their mortgage payment. Raising rates to control inflation would raise these payments and consumption and house prices would collapse further.

The CPI would be a lot lower if it included falling house prices. Oil and commodity prices have fallen and inflation is going to fall - it is transitory.

The MP is following its remit as is not simply an inflation targeter - it is allowed in its remit to slow the speed at which inflation is puled back to target if that would impact growth and unemployment

Behavioural economics shows that people care more about unemployment than they do about inflation.

We are in a once in a hundred years shock and the big mistake was to believe it was an ordinary shock and that it was fine to tighten early. Big mistake it turns out - exactly as happened in the US in 1937.

Danny Blanchflower

Mr. Blanchflower,

I salute you.

Mr Divine is back, it looks like Care in the Community has been reactivated.

I can see a couple of big dogs, golden retrivers, labbies or even huskies. Good to cuddle up to when you're fishing out on the ice.

I agree with you Indu, but here's a question, do you think competitiveness can be achieved in the UK while current living standards are maintained?

On the house prices front, falling house prices would be welcomed by many, they are still very high. Keeping them high is in few peoples interest.

People with mortgages have had lots of help already, rates are very low. Sensible people will have budgeted for a much higher base rate than 0.5%.