Sunday, 8 February 2009

BoE "won't abandon savers"

Check this out....

MERVYN KING, the Bank of England governor, will insist this week that the monetary policy committee’s aggressive cuts in interest rates do not mean savers in Britain have been abandoned.

He will say the best interests of savers will be served by steering the economy out of recession as rapidly as possible and returning rates to normal levels. Insiders say the Bank is not insensitive to the effect of record low rates, particularly on older savers.


There are occasions when the mask falls, and the true face of policy makers is revealed. This is such an occasion.

King must really think that UK savers are stupid. He must think that people can not distinguish between a one percent and a five percent interest rate. He must also think that savers don't understand the damaging consequences of inflation upon personal savings.

UK savers fully understand that King and the rest of the MPC drove the UK economy straight into recession by cutting interest rates. Yes, it was the MPC that caused most of our problems. With each rate cut, the MPC sent a powerful signal that the UK economy was in deep trouble. This was one memo from the BoE that we received and acted upon. UK consumption fell, investment contracted and GDP growth went negative.

In terms of reviving the economy, the rate cuts were utterly ineffective. It merely redistributed income away from prudent savers to feckless borrowers. Above all, it meant that the Bank of England abandoned savers, condemning them to watch helplessly as their hard earned savings are destroyed by a ruinous, short-sighted and futile policy.

So King says the BoE are not "insensitive" to the plight of savers. His actions speak far louder than his press releases.

9 comments:

Anonymous said...

I am in absolute agreement with you. Lowering interest rates to these absurd levels helps no one; it has been done entirely as a PR exercise. The UK consumer is in debt up to the eyeballs and needs a period of SAVING, NOT SPENDING. Sure, 0% interest rates will help some mortgage holders, but the vast majority of people who are or will be in trouble with their mortgages are those who took out ruinous "teaser deals" that will reset at MUCH HIGHER RATES between now and 2012, whatever the BoE does. Meanwhile those of us with savings are grotesquely penalised. And what is the result? We stop spending. EXACTLY WHAT IDIOT KING AND HIS COHORTS DID NOT WANT TO HAPPEN.

Ah, what's the feckin use.

The Economic Voice said...

"Not insensitive" means "we knew it would turn out this way, but we also knew there was b****r all we could do about it. So we're wringing our hands for you."

Man in a Shed said...

I suspect the plan is to pile the pain on Savers ( or cash horders as we will soon be branded ) so that we conslcude the best thign is to spend the money before its value drops further.

Underhand, unjust yes. But its certainly worked as I've spend my savings on a new car before the full shock of the drop ion Sterling's value makes them unaffordable.

Peter said...

You are correct. It is having no effect on the economy whatsoever, except giving a message not to save. But it will have a huge effect on my retirement income. The savings income of myself and my wife will reduce by £3,000 pa. This while inflation is still over 3%. My wife and I have only state pension plus about the same again that came from private pensions. This si £3,000 tax on top of the £11,000 stamp duty I had to pay when I moved into my retirement home. Our joint income is tiny - leass than one avergae wage.

Anonymous said...

When the banksters ruined the country in 1125, King Henry removed their right hands and testicles. What are we waiting for?

Anonymous said...

Anon: "King Henry removed their right hands and testicles."

Ah, and King Henry was such a good guy?

Look people, the bankers responded to the economic rules and economic environment put in place by our elected politicians. Over a long time, small changes have a huge effect.

Brown & Blair wanted to get reelected, we (not me) reelected them on the back of what we all thought was a tide of neverending prosperity.

The Bankers just did what they were told by the politicians. The politicians could have stopped this any time up until the point at which the scheme collapsed. It was a politically inspired ponzi scheme.

We all went along because "things can only get better".

Now you want to defenestrate the bankers! Look closer to home, this is a democracy, we elected these tossers, we stood by while Brown lectured every leader who would stay in a room with him for five minutes, how the UK economy was 1. all his doing (Yes it was).
2. Should be the model for all the other economies. (No it shouldn't have been)

Bankers were the willing servants of the politicians in this SNAFU.

sobers said...

Face it, the govt and the bankers know we are screwed, the debt hole is so big we can't possibly hope to get out in one piece. So they are trying to ruin everyones savings so we are all on a level playing field come the point when they announce all old pounds are nul and void and we all get 100 new pounds each and start again. I think they did something similar in Germany in 1948 after the War to prevent another bout of hyperinflation.

Anonymous said...

@Peter:

How about a quick bout of Arson? If f.ex. you decide to torch the BoE HQ then the state will have to feed & clothe you and you get some revenge!

Anonymous said...

If you are a saver you need to stop getting screwed over. I would suggest getting a healthy % of your savings out of the banking system into something like gold which will hold value over the next 5-10 years. Hit the corrupt banking system where it hurts and withdraw as much savings as you can afford to put away without touching it. Keep what you need for personal emergencies and taxes. That's my strategy anyway.