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Thread: ECB Rate set to drop another 50 Points

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    Politics.ie Member Propforward's Avatar
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    Default ECB Rate set to drop another 50 Points

    ECB set to cut interest rates to record low - The Irish Times - Thu, Mar 05, 2009

    A few questions:

    Would the ECB not be a lot more effective just dropping the rates to 0 and slowing down the recovery - the drip drip drops don't seem to be having the jump start required?

    Is the ECB's economic influence not immasculated when divorced from a joined up tax strategy? - i.e. basic way to stimulate economy is reduce tax and lower interest rates

    Should new bank regulations force variable interest rates to be tracker rates? Why should banks have discretionary power over interest rates within a variable interest agreement?
    The early bird may get the worm - but the second mouse gets the cheese.

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    The reason we got into trouble was because of low interest rates,so the ECB is doing the same thing again,but people are still afraid.They are afraid for their jobs so they will hoard,they beliieve house prices are still to high and looking for them to fall further.
    All governments love inflation,the nastiest silent tax on people,as it fills the coffers and allows them to spend like a shopaholics.
    Deflation they say is bad for whom,the person that can buy a cheaper house,cheaper goods.
    A champion of the people emerges with the age-old and appealing promise of "something for nothing" - to be financed through every-increasing taxes. Supply and demand are thrown out of gear - the overhead goes up; the effective use of human energy goes down; the standard of living is lowered because money cannot buy wealth that is not produced.

    WEAVER, HENRY GRADY,

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    Politics.ie Member Propforward's Avatar
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    Quote Originally Posted by atlantic View Post
    The reason we got into trouble was because of low interest rates,so the ECB is doing the same thing again,but people are still afraid.They are afraid for their jobs so they will hoard,they beliieve house prices are still to high and looking for them to fall further.
    All governments love inflation,the nastiest silent tax on people,as it fills the coffers and allows them to spend like a shopaholics.
    Deflation they say is bad for whom,the person that can buy a cheaper house,cheaper goods.
    Going down a hill is dangerous if you accelerate but you can't get up a hill without accelerating.
    What happened to us was we accelerated up the hill and couldn't stop at the edge - so we plummeted to the bottom.

    Now we need the stimulation that low taxes and interest rates provide. People will instinctively hoard and hold fast but as the environment remains consistent and favourable they will slowly start to emerge and spend.
    Companies will start to get business and find they need to employ new people.

    Deflation is great for a season but it disincentivises enterprise and effort as rewards are diminishing.

    We should be borrowing out of the recession, i understand that the national debt is ridiculous but we need petrol to get back up that hill.
    We need better regulation of the entire economy and more accountable and responsible government.
    The early bird may get the worm - but the second mouse gets the cheese.

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    Borrowing to consume,we can not spend our way out of a depression,we have to start producing things that we can export.Everything reaches a top and now it has to reach a bottom and the 4million people will say when they are happy to start spending.
    I agree with low taxes but that ain't going to happen unless government spending and cuts are got under control.
    Low interest rates,the Government and banks are at it again trying to coax young people by offering 1000 and rates @2.45% fixed for a year.This is awful carry on.What happens when interest rates rise.
    If they want to help young people they should set the rate at 5% for 10 years and if rates are below this the extra money should be put in a seperate account to pay of some of the principal 10 years later .At least they would have the comfort of a fixed cost and little bit saved at the end.
    Quote Originally Posted by Propforward View Post
    Going down a hill is dangerous if you accelerate but you can't get up a hill without accelerating.
    What happened to us was we accelerated up the hill and couldn't stop at the edge - so we plummeted to the bottom.

    Now we need the stimulation that low taxes and interest rates provide. People will instinctively hoard and hold fast but as the environment remains consistent and favourable they will slowly start to emerge and spend.
    Companies will start to get business and find they need to employ new people.

    Deflation is great for a season but it disincentivises enterprise and effort as rewards are diminishing.

    We should be borrowing out of the recession, i understand that the national debt is ridiculous but we need petrol to get back up that hill.
    We need better regulation of the entire economy and more accountable and responsible government.
    A champion of the people emerges with the age-old and appealing promise of "something for nothing" - to be financed through every-increasing taxes. Supply and demand are thrown out of gear - the overhead goes up; the effective use of human energy goes down; the standard of living is lowered because money cannot buy wealth that is not produced.

    WEAVER, HENRY GRADY,

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    Quote Originally Posted by atlantic View Post
    The reason we got into trouble was because of low interest rates,so the ECB is doing the same thing again,but people are still afraid.They are afraid for their jobs so they will hoard,they beliieve house prices are still to high and looking for them to fall further.
    All governments love inflation,the nastiest silent tax on people,as it fills the coffers and allows them to spend like a shopaholics.
    Deflation they say is bad for whom,the person that can buy a cheaper house,cheaper goods.

    Deflation is a disaster for everyone. It completely retards consumer spending, as consumers delay spend as they feel goods will get cheaper.

    This leads to a collapse in the government funds, which leads to all manner of problems for everyone.
    Yes, your car will cost 2% less, but you'll wish it didnt in 12 months when there is no money for essential services.

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    Politics.ie Member revereie's Avatar
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    Atlantic, you demonstrate a woeful knowledge of basic economics and currentaffairs

    You say we should export, not spend - but there's no-one to buy the goods as they're not spending either.

    This crisis has hit exporting countries hard - witness the travails of Japan, German and now China.

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    Politics.ie Member TradCat's Avatar
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    Quote Originally Posted by meriwether2 View Post
    Deflation is a disaster for everyone. It completely retards consumer spending, as consumers delay spend as they feel goods will get cheaper.

    I'm doing it already. I want to change my car but I'm convinced they will be cheaper next month. And I'm trying to sell a house and everybody else is convinced that will get cheaper. So activity slows to a crawl. It's a very hard cycle to break out of.

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    well on OP as a joe soap these drops are the only real bright spot on the horizon. if they dropped to zero now you'd kill that sentiment for a one off gain.

    i mean realistically we're talking at least another one or two to come in the near future. i know i cant speak for everyone but getting the extra money back in my pocket makes me feel good and im spending it and knowing more are coming instead of rises is a relief, so its working as a tactic for SOME of us at least.

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    Politics.ie Member forest's Avatar
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    I noticed ads reappearing for mortgages again (the one where the actor gets a loan)
    I don't know if thats good or bad
    "We know what to do, we just dont know how to get elected afterwards" Jean-Claude Juncker on how to fix the European economy

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    Quote Originally Posted by constitutionus View Post
    well on OP as a joe soap these drops are the only real bright spot on the horizon. if they dropped to zero now you'd kill that sentiment for a one off gain.

    i mean realistically we're talking at least another one or two to come in the near future. i know i cant speak for everyone but getting the extra money back in my pocket makes me feel good and im spending it and knowing more are coming instead of rises is a relief, so its working as a tactic for SOME of us at least.
    Yea i have 3 years left on a fixed mortgage at 4% with bank of ireland.

    there could be a penality to pay to get out of it.

    would it be worth paying, and how long will these rates keep down, do ye think?

    i fixed it in the first place as they were rising like mad.

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