Interest rates

[Shambo]

Back To Business, Emmet Oliver - Nightmare: Act II

Yeuch!

[sauntersplash]

Bring it on. At least it will shut up the endless supply of middle-aged dolts who get their kicks from waxing lyrical about the bad old days. I hope they all lose their pensions.

[toughbutfair]

worrying about nothing.

It won't happen for a while yet as the european economy isn't recovering. When it does recover interest rates won't go much higher than the 4.25% they peaked at this time.

Of all our financial problems - this is the least.

[Eorna]

Interesting piece, I agree with Toughbutfair that the Euro economy will take a lot longer to recover. However all the money printing will lead to inflation eventually and rates will have to rise, thus throwing us back in the hole again. Another thing is that as investors see the debasement of currencies like the US dollar and Sterling, they will demand higher yields from bonds, which will drive up interest rates. Remember that during the credit crunch peak, that bank interlending rates were driving the cost of borrowing sky high. The market can change the interest rate, the fed or Threadneedle st. might not like it but it can still happen.

[seabhcan]

This article is just a rehash of the irrational obsession with interest rates. There are actually other aspects to an economy.

[kerrynorth]

This article is just a rehash of the irrational obsession with interest rates. There are actually other aspects to an economy.

But it in the case of Ireland the term 'this time it is different' really does apply. Private sector debt is 200% of GNP. We are the most indebted nation of individuals in the world. Despite our economy tanking up to 10% this year the fall in interest rates has cushioned the fall for many. If it turns abruptly in reverse and there is even less disposable income because of higher interest rates then Ireland is in for an even further fall. And remember the traditional economic argument of interest rates and the economy running in tandem does not apply here because we are in a currency block that sets interest policy to a tune that has feck all to do with our domestic economy.

[Scorpio]

Well, in fairness, real interest rates are already higher than at any point since the earl 1990s, while if you're looking just at property - if that's what the concern about interest rates is really about - they've never been as high!

So, what's another 1 or 2 percentage points?

Plus, it's hardly likely that Germany and France will launch into uncontrollable 5+% growth any time soon, now, does it?!

[feargach]

The ECB doesn't seem to know this, going by their pronouncements.

[seabhcan]

But it in the case of Ireland the term 'this time it is different' really does apply. Private sector debt is 200% of GNP. We are the most indebted nation of individuals in the world. Despite our economy tanking up to 10% this year the fall in interest rates has cushioned the fall for many. If it turns abruptly in reverse and there is even less disposable income because of higher interest rates then Ireland is in for an even further fall. And remember the traditional economic argument of interest rates and the economy running in tandem does not apply here because we are in a currency block that sets interest policy to a tune that has feck all to do with our domestic economy.

Ireland is an export economy (or at least, we should be). If the ECB were to set rates which favoured Irish debtors to the detriment of our customers on the mainland, that would harm the Irish ecomony far more than if we had ECB rates which encouraged further debt.

Ireland is too small to base our economy on domestic consumer spending,

[Libero]

This article is just a rehash of the irrational obsession with interest rates. There are actually other aspects to an economy.

Yes, but the interest rate - a guage of the cost of money - is always a fundamental factor.

This is especially true in a heavily indebted economy and in a society where the creditors tend to have disproportionate political influence, beggaring the rest of the economy to meet their debt burden.