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Post by bracknellboy on Feb 5, 2022 9:10:23 GMT
Isn't Andrew Bailey familiar with the economics of the 1970s. Didn't economists learn any lessons from then that can be applied to this day and age. One of the BOEs role is to control inflation. The Tory government has set a target of 2%. How well is he doing in achieving his targets? I'd suggest almost as well as he did when he headed up the FSA, perhaps a little better or perhaps a little worse. No doubt he will get a big bonus at the end of this financial year or he'll be promoted for his failure as often happens. Surely there is an economist somewhere, anywhere who is capable - or is his job a poisoned chalice and he's just the fall guy for an abject failure of government. I am worried about the people who will get a 1% pay rise and have to cope with 5 - 10% inflationary pressures, pensioners who will get a rise in what is already a very small basic pension and will be badly affected by the small rise in their pensions, working people who are already on benefits and may have more than one job who will have to consider if they are actually better off working or claiming full unemployment benefits. Yeah, but if their mortgage payments double because of a sharp increase in interest rates to bring down inflation..........Raising interest rates is probably the most painful in the short term for many many people: deliberately so as its intended to put a squeeze on spending to bring down inflation. And yes more on interest rates in order to squeeze inflation in the longer term (18 month lag?) may well be needed, but that is going to be as much or more of a squeeze on many in the short term. You can't have it both ways.
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pikestaff
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Post by pikestaff on Feb 5, 2022 10:08:55 GMT
Isn't Andrew Bailey familiar with the economics of the 1970s. Didn't economists learn any lessons from then that can be applied to this day and age. One of the BOEs role is to control inflation. The Tory government has set a target of 2%. How well is he doing in achieving his targets? I'd suggest almost as well as he did when he headed up the FSA, perhaps a little better or perhaps a little worse. No doubt he will get a big bonus at the end of this financial year or he'll be promoted for his failure as often happens. Surely there is an economist somewhere, anywhere who is capable - or is his job a poisoned chalice and he's just the fall guy for an abject failure of government. I am worried about the people who will get a 1% pay rise and have to cope with 5 - 10% inflationary pressures, pensioners who will get a rise in what is already a very small basic pension and will be badly affected by the small rise in their pensions, working people who are already on benefits and may have more than one job who will have to consider if they are actually better off working or claiming full unemployment benefits. Andrew Bailey may have many failings, but this is not one of them. The price rises of the last year are due to external factors outside the BOE's control (as was the oil price shock in 1973). The BOE's job now is to try to bring us back to target. Andrew Bailey asking for restraint is tone deaf and may be counter-productive. I think the increase in the cost of gas is here to stay. If so, we as a nation are poorer and need to find a way to live with it. This might mean higher benefits and higher taxes for the better off. The danger is a wage-price spiral like we saw in the 70s. The tight labour market post Brexit increases the risk. On the other hand, the unions are much weaker than they were. On balance, I think the spike probably will peter out but it will take a while and there will be some unrest along the way. If a wage-price spiral did take hold, the only way the BOE acting alone could deal with it is to raise interest rates so high that it kills the economy and sends unemployment through the roof. Let's hope it does not come to that. bracknellboy I agree with you, but doubt that modest increases in interest rates will have enough of an effect to make a difference.
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Post by bracknellboy on Feb 5, 2022 10:28:55 GMT
Isn't Andrew Bailey familiar with the economics of the 1970s. Didn't economists learn any lessons from then that can be applied to this day and age. One of the BOEs role is to control inflation. The Tory government has set a target of 2%. How well is he doing in achieving his targets? I'd suggest almost as well as he did when he headed up the FSA, perhaps a little better or perhaps a little worse. No doubt he will get a big bonus at the end of this financial year or he'll be promoted for his failure as often happens. Surely there is an economist somewhere, anywhere who is capable - or is his job a poisoned chalice and he's just the fall guy for an abject failure of government. I am worried about the people who will get a 1% pay rise and have to cope with 5 - 10% inflationary pressures, pensioners who will get a rise in what is already a very small basic pension and will be badly affected by the small rise in their pensions, working people who are already on benefits and may have more than one job who will have to consider if they are actually better off working or claiming full unemployment benefits. Andrew Bailey may have many failings, but this is not one of them. The price rises of the last year are due to external factors outside the BOE's control (as was the oil price shock in 1973). The BOE's job now is to try to bring us back to target. Andrew Bailey asking for restraint is tone deaf and may be counter-productive. I think the increase in the cost of gas is here to stay. If so, we as a nation are poorer and need to find a way to live with it. This might mean higher benefits and higher taxes for the better off. The danger is a wage-price spiral like we saw in the 70s. The tight labour market post Brexit increases the risk. On the other hand, the unions are much weaker than they were. On balance, I think the spike probably will peter out but it will take a while and there will be some unrest along the way. If a wage-price spiral did take hold, the only way the BOE acting alone could deal with it is to raise interest rates so high that it kills the economy and sends unemployment through the roof. Let's hope it does not come to that. bracknellboy I agree with you, but doubt that modest increases in interest rates will have enough of an effect to make a difference.Yep, will have little or no impact. Other than perhaps sending a signal to the markets that the direction is now upwards.
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michaelc
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Post by michaelc on Feb 6, 2022 16:09:54 GMT
Whether or not he decides to give his own staff F-all, the chairmen of Tesco. makes the right sort of noises. Bailey could use some communication lessons from him. Meanwhile, Mr Allan also rejected suggestions from the Bank of England's governor that people should not ask for big pay rises because it was feeding into higher inflation. Andrew Bailey's comments to the BBC were branded a "sick joke" by the GMB union, while the TUC said the call was "ill-founded". Tesco is the UK's largest private sector employer, with about 300,000 staff. Asked if the company would be telling employees to follow Mr Bailey's advice, Mr Allan said "no, absolutely not. I think that's the wrong direction for people to go in," he said. "We are not telling people not to take a pay rise. We think our colleagues deserve pay rises," Mr Allan said. "We have given 5-6% raises to our distribution colleagues, and we're in the midst of negotiations, which will probably lead to a similar result for our store colleagues."www.bbc.co.uk/news/business-60279019
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keitha
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Post by keitha on Feb 7, 2022 11:16:39 GMT
As someone living on a works pension, it is linked to inflation, wages, or 1% with a maximum of 5%. This year I can expect 5%, I was talking to a an ex colleague last week when the pandemic hit, all middle earners were hit with a 10% pay cut ( not the senior management and board ). He says they got nothing last year and have been offered 2% this year so will be still close to 8% down.
what this actually means in real terms is my pension is slowly gaining ground If we say I was getting £100 and he was getting £200 year 1 I get £101 he gets £180 year 2 I get £102.5 he gets £180 year 3 I get 107.5 he gets £183.6 so my pension is slowly as a percentage of income increasing, of course the NI rise is an effective pay cut of 1.25% for them
I have colleagues that retired 10-15 years ago and because management restricted pay rises but the pension increased are now on well over 2/3 salary rather than 1/2.
Then of course add in that they no longer pay 6% Pension contribution, and lets say 8% in NI,and get a state pension of £9000...
for me the reality is when I get my state pension I will about £3,000 worse off than when I was working
In reality I'm better off than the majority of pensioners but the 2 recent increases in energy alone would wipe out the increase in my pension, fortunately I'm still on a fix for gas and my solar helps with the electric.
I would lay a bet that Bailey etc will get decent pay rises ( I believe MPS are in line for £2000, on their already decent £81 K )
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Post by bernythedolt on Feb 7, 2022 13:27:47 GMT
You may be feeling better off, keitha, but inflation will soon eat that away. Especially if Tesco, for example, are freely offering 5-6% pay rises. How will they pay for that? By putting up the cost of your shopping.... by more than 6%. Bailey's call for wage restraint was sensible and well intentioned, but I fear I'm the only one who thinks so. But then I lived through 24% inflation in the 1970s and saw the effects first-hand.
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keitha
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Post by keitha on Feb 7, 2022 13:33:04 GMT
I started work in the late 70s and may wages were subject to the threshold payments.
I don't feel better off, I know I'm more fortunate than most
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Post by overthehill on Feb 7, 2022 13:42:09 GMT
You may be feeling better off, keitha , but inflation will soon eat that away. Especially if Tesco, for example, are freely offering 5-6% pay rises. How will they pay for that? By putting up the cost of your shopping.... by more than 6%. Bailey's call for wage restraint was sensible and well intentioned, but I fear I'm the only one who thinks so. But then I lived through 24% inflation in the 1970s and saw the effects first-hand.
Inflation only affects non-discretionary spending, people reduce discretionary spending by the amount they are losing out to inflation, forcing down prices and eventually inflation. Interest rates rise to discourage credit and speed up the process !
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Feb 11, 2022 11:58:34 GMT
There is interesting report on Bloomberg saying that the taxpayer will be paying £175 billion covering the loss on bonds bought by the BOE during it's quantitive easing, this will be over a long period as the bonds mature as they were all bought at a premium, the initial loss is £4 billion. It seems to be behind a paywall so you may not be able to read it.
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pikestaff
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Post by pikestaff on Feb 12, 2022 8:14:58 GMT
There is interesting report on Bloomberg saying that the taxpayer will be paying £175 billion covering the loss on bonds bought by the BOE during it's quantitive easing, this will be over a long period as the bonds mature as they were all bought at a premium, the initial loss is £4 billion. It seems to be behind a paywall so you may not be able to read it.
I can't see behind the paywall so I don't know what the article actually says, but it sounds like complete nonsense. The bonds were bought at a premium because they were paying an above market rate of interest. The yield to maturity (amortising the premium over the life of the bonds) will have been the market rate so there is no loss as such. Having said that, market rates at the time were depressed because of all the QE. With market rates going up now, the BOE would have a loss if it chose to sell, but that's another matter entirely.
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Mousey
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Post by Mousey on Mar 30, 2022 14:54:49 GMT
Internal FCA e-mail from 1st June 2016 : "Just met with J**** P*** to get his view on the next ‘Peer-to-Peer’ steps. - We have the draft EXCO [Executive Committee] paper which is on a tight turnaround as it will go to EXCO and back to the Board within weeks. Andrew Bailey was at the Board discussion and commented that the FCA would take any blame if this goes wrong"
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