subscribe: Posts | Comments

Are interest rates really relevant any more?...

Once a month without fail the British press gets its knickers all in a twist over what the Bank of England’s decision on interest rates will be and what it will mean for us all. But is this monthly tweaking of rates by quarter of a percent in either direction really that important any more? The newly impoverished middle classes might be hoping for a rate cut to bring down their mortgage repayments, but the rates banks and building societies charge their customers have been almost completely divorced from the Bank of England base rate over the past year. Regardless of what the BoE does, the moneylenders will set rates at whatever levels they need to keep their...

posted on: Sep 3, 2008 | author: Lance

Alistair Darling wants to put the lunatics in charge of the asylum...

According to the FT, chancellor Alistair Darling wants to put a panel of leading lights from the City of London’s financial sector into the Bank of England in order to oversee the Bank’s decisions on financial stability. So let me get this straight – here we have a bunch of suits from the city, where financial services companies have run riot for the past ten years, chasing increasingly higher profits with a completely reckless and selfish attitude to risk and the impact their greed might have on the wider economy, and these are the people who are being asked to advise the Bank of England on the best way to achieve economic stability? Isn’t that rather like asking...

posted on: Jun 6, 2008 | author: Lance

How the UK economy works, part 1: The Bank of England...

Although most people have a rough idea of how the UK economy works (or, if you’re being cynical, doesn’t work), the functions of the various components and their relationships to each other can be quite elusive. We’ve covered some aspects of money on this site in the past (here, for example), but there’s more to the economy than money itself. In fact, arguably more important than money is the way in which that money is moved around the economic system of the UK. Over the next few articles I’m going to look at each of the main institutions involved in the movement and management of money in the UK. I’ll be looking at the Treasury, the FSA, the...

posted on: May 29, 2008 | author: Lance

Who’s wrong, the Bank or the Treasury?...

This article from the Scotsman highlights the difference of opinion between the Bank of England and the Treasury on what we can expect from the economy over the next year. The Bank, which is (at least in theory) independent from the goverment, claims economic growth will slow to 1.5% for 2009, while the Treasury says we can expect anywhere between 2.25% and 2.75% for the same period. More proof, as if it were ever needed, that the people who are supposed be in control of the economy have no more insight than the rest of us when it comes to figuring out what the future holds. You’d imagine the Bank and the Treasury would have access to all...

posted on: May 24, 2008 | author: Lance

The trouble with bankers

Usually on this site I write features about various aspects of the financial system, leaving Lance to concentrate on the current affairs opinion pieces. But it’s becoming increasingly difficult to remain dispassionate. The financial system is having a bit of a wobble at the moment, rather like that earthquake that hit the UK recently, knocking a few glasses off the shelves and knocking a few minor celebrities off the front pages, at least for a day. What has been called a ‘credit crunch’, and ignorantly predicted to be ‘over by Christmas’ (though, like the war, nobody states which year), is actually something rather more serious: in all probability it’s a return to normality. Risk is now being priced...

posted on: Mar 25, 2008 | author: Alex

« Previous Entries Next Entries »