Morning Line: who would benefit from interest rates at 8%?

I am a saver.

Perhaps there is someone out there who is able to explain to me

why I should feel "Hard Pressed"?

For someone who is fortunate enough to be able to save it will be a new swnsation.

Sorry SENSATION

This really means that the banks are operating a cartel based restrictive practice with the BoE and the Government's ( a large shareholder therein) tacit approval. It has been, and remains, disgusting that the prudent are being penalised for the feckless. What about the many that have had there spending and purchasin ability hampered and restricted by the drop in their savings and investment incomes. Terrible signal to future generations about the value and respect for the savings ethic!!

The banks are run bu quasi-legal spivs who feed like vultures off the apathy and indifference of many savers. They guide interest rates down and their margins up in carefully organised cartel harmony - so very illegal and yet no-one is prepared to stop it. How these sewer rats salve their consciences I cannot imagine.

I am a saver too Athiest (why not use a real name?!)

I DO feel hard pressed. I have savings because I work hard. I am not fortunate - I have earned the money I have.

Why should I feel happy getting below inflation interest returns because the Bank of England has seen fit to largely favour those irresponsibly in debt and has hung the savers out to dry?

Of course, Lorna you are a 'blinkered woman'.

A perfect offering for the' Thick Brit'

I don't suppose it crossed your mind that the best thing for the younger generation is a fair and reasonable correction in the price of housing. It would also be fair the the older generation, both those who saved for their old age, so not to be a drain on the state (taxpayer), and those feckless and greedy old'uns who borrowed with impunity and now deserve the hard times that the prudent are suffering.

Lorna:- get real and get fair!!.

Oh yes, consider this:- as the pound falls and falls, ever more of this nation's wealth, is being sold cheap to foreigners, right under our very noses, whilst your typical 'true Brit' stands in the pub and bangs on about how much his bloody house is worth!!

Well I would benefit for one !

I agree we poor savers are taking the brunt of low interest rate.

Having been responsible citizens and saved when others were borrowing

we are now getting dismal returns for our fiscal prudence.

So bring back higher interest rates please the higher the better.

How long are we supposed to accept this situation that the article refers to where the banks borrow at 0.5% and lend at over 5%. Instead of being made to suffer the consequences of poor practice and reckless lending the banks have been rewarded with the biggest subsidy ever given to any industry in the UK. We need to demand that the government follow through on their promise to separate investment (casino) banking banking from high street banking. Why should first savers and now tax-payers underwrite their feckless stupidity. Let them gamble with their own money. No doubt this year they will all get multi-million pound bonuses for being so "creative". Parasites. When are we going to wise up?

At the end of the day hoarding cash does not create growth. Only those who 'invest' stimulate growth.

Therefore unless those who 'save' are willing to actually invest their money this country will not return to serious growth. In the meantime we are reliant on those who have borrowed to fund their investment historically to reinvest. In order to support this section of the economy rates need to stay relatively low.

Also in this globalised economy there needs to be international consensus to bring down food/fuel inflation. Given the relative size of our economy it is stupid to think that raising rates to 8% here will really affect inflation on items imported from across the globe.

What a pointless article.

Rajah no Banks borrow at 0.5%.

Check out the net margins Bank's post in their results. They are well below 2% and no where near 4.5%

BoE interest rates should at least match inflation. If this policy had been adhered to the country would not be in the mess it's in now.

Please could someone arrange for Andrew 2 to meet Lorna face to face, and could I be there to witness the results?

A very interesting slant, Lorna - while I've seen loads of articles on the unfairness of rates on savers, there's very little written about the cost of pensions to the younger generation. This puts it in perspective.

Most of us save for the fear that we don’t know what these crazy self interested city spivs and not far behind them governments are going to throw at us next.

i usually wash my mouth out after saying the word banker.i have worked solidly all my like to have a reasonable pension a some savings just to see it gradually frittered away by these unspeakables in the banking sector.of course the government of ewhatever colour is totally unable to do anythi ng ab out them.we are in serious trouble beleive me

Just as the banks and bankers think they have the power to dictate to the rest of us - especially the savers - in this climate, the only real answer is to teach them a lesson, which requires a co-ordinated mass withrawal of savings from one of the banks. This would lead to the BoE having to save the bank, and the LIBOR and savings rates would triple overnight.

Bring on 8%. It's time us savers got a decent return on our cash. Why should the bankers benefit with such large margins? I'm sorry if it means people who have overstretched themselves will have some problems. Their problems can hardly be laid at the door of those who have been responsible with their resources. If we continue to bail everyone who has been foolish/greedy out, then it will only compound our problems. Isn't it time those who have been foolish to bite the bullet themselves, instead of sponging on the compulsory generosity of those who have been wise?

Save or not. Only people to benefit will be the banks and Government.

The current world ecconomy is reliant on debt as commodity, the fact is that high interest rates will lead to losses for the credit nation, wages are kept low, to creat the nececity of debt, if you have large savings you will always suffer against inflation and tax. The only way to grow your CAPITAL is through longer term investment. Its just how the world is, you cant change it, we live in a broken system, with out poverty there can not be riches. So pay of your debts and get out of the evil system which banks and capitalists are creating. THEY WANT you in debt...

Roger Savage?

Why not use a tral name.

If I used Bill Smith or Mark Daniels you would not know if it was my real name or not, any more than I know that Roger Savage is yours.

I trust that you were not suggesting that others do not or did not work hard.

I know many people who worked very hard during their lifetime, but were never ever paid a high enough wage to be able to save.

So yes as it seems that both you and I worked hard , and we were paid well enough to have sufficient spare to be able to save, I at least consider myself fortunate, whilst it seems you aes of another breed.

I also am not very fond of banks, but of course if you are sutticiently aggrieved with the banks there is an alternative, take your money out and get no interest at all, then you would not have to pay tax on what you no longer receive.

There are a couple of typos in this article

"Not everyone believes the dire forecast from Andrew Lilico", should read:

"Nobody in their right mind should believe the dire forecast from Andrew Lilico"

"It’s fair to point out here that Lilico’s views are regarded by some as extreme"

Should read "It’s fair to point out here that Lilico’s views are regarded by every sane person as extreme.

Either this guy lives in cloud cuckoo land or he is on medication. Yet if I look at the responses some people are actually taking this seriously!

I expect his next forecast will be "unemployment to reach 90% of the population by 2012" !!

Pointless article and a spin machine at work. Are you really trying that hard to depress the housing market further? Or is there a hidden agenda here?

Interest Rates will hit 8% AGAIN, but not for a few years at least. We are living in a VERY low interest rate environmen. The lowest for 300 years, look at the average BR over 20yr periods for the past 100 years.

Over the next few years Inflation will stay high, helped in part by low interest rates, this way the govt. can inflate away it's debts and allow the housing mkt. to become more affordable in real terms.

If interest rates were to rise quickly in the near future a "double dip" recession will occur (how big a gap is needed between recessions before they become recessions in their own right rather than "double dip").

But as I said interest rate WILL hit 8% again one day, once the govt. has had enough of inflation it will allow/order the BOE to start agressively raising rates.

Those people who have become blase about the current absurdly low interest rates will get a a big wake up call. My advice - pay off as much debt as possible while you can afford to, I know a lot of people are going to argue that inflation is eroding savings and debt is better at the moment. But that is today, what about tomorrow, look at the big picture.

The number of responses to this article shows how many of us who have saved resent the way that we who are prudent are propping up the feckless.

Here is a radical suggestion: Why not have 3 interest rates? A stable rate for mortgage finance, a lower rate than that for businesses borrowing to fund investment and expansion, and a higher one for savers that is pegged just below the mortgage rate so that the lenders can make a small profit.

Little wonder the banks are making Billions whilst the people are left floundering like beached whales. Worse this is all with the blessings of our own government. I also feel sorrry for people who went abroad in search of a better life and were living on the interest from their savings. Now people are using up their savings and when there is nothing left, I'm sure that will be real good for the many economies around the world. With things the way they are it is only a matter of time before complete economic collapse occurs. Banks are 'too big to fail', this was the lie they fed us . Keeping them alive at the expense of the people is a most insidious crime, one which we pay for more than twice over. The day of reckoning is fast approaching! Our latest minority government is just the next step down in the systemic failure process. Banks will eventually cave in on themselves anyway. Everything has its cost and when one species becomes too dominant, eventually it becomes a victim of its own success. Thats not to say we don't don't all go down together!

Happy investing and as Teeka says 'Let the game come to you'. Don't chase the markets wait for your opportunities to present themselves and so that they are blindingly obvious.

oh, gawd!

"Athiest" - pardon me for commenting, I'm sure. From the literary greatness of your additional comments, I realise you probably can't even spell your own name, so I can understand why you use a pseudonym that you're comfortable with.

Clearly you didn't understand what I meant first time around and I'm afraid you probably won't understand what follows either.

Nonetheless...

I don't consider myself "aes of another breed" (your comment was very much in the style of Ali G, but I assume you meant I considered myself of another breed). It seems your comments have arisen from the pages of the socialist handbook.

My comments quite clearly relate to ANYONE hard working who has been sensible with their money and not wasted it.

Why should I feel grateful that my hard work has generated a nest egg? My hard work has also raised a fortune for the Treasury, a large chunk of which they spend on workshy spongers or 'new arrivals' who never contribute a penny, yet are classed as 'underprivileged'. My heart most certainly doesn't bleed for them.

Genuine, decent people in genuine need, absolutely fine, I'm all for helping them - but feeling grateful for having something as the result of one's toil? No, sorry.

Why should I feel fortunate when I'm given a pittance in interest by greedy banks that have been bailed out by the taxpayer. The same taxpayer who is now also bailing out those who borrowed more than they could realistically/sensibly afford, all at the expense of savings rates (or any sort of common sense economics that would encourage the financial stability of the UK)?

I'm afraid the old cliche 'there's always someone worse off than you' doesn't really wash with me when you look at what and who is driving fiscal policy in this country. Reality check - current scenario = Bank of England/fiscal policy is rewarding those in debt (many not through necessity, but through stupidity) and encouraging more debt and inflation whilst punishing savers. What sort of moron with savings feels grateful or fortunate that such a scenario exists?

Couldn't agree more with Eric Warner - the prudent ARE being punished in favour of the wreckless and feckless.

In a low growth, high inflation environment interest rates will rise to 8% within 2 years? No chance. If the Government were that worried by inflation they wouldn't be raising VAT by 2.5%.

OK if you have savings to contemplate higher returns - but unlikely with our present banking structure. I was talking to the owner of the B&B we were staying in last night this morning. He has done a brilliant job of making a boutique place and wants to expand - a decent restaurant in town, small hotel etc. He has a properly established business plans, which he could finance but his bank will not lend him the cash. The decisions are made well away from the branch and they 'are not lending to that sector'. On the evidence of the luxurious room we stayed in he deserves to succed but needs an alternative source of finance. We suggested he borrows from his customer base - I think that would be a good investment proposition. He has a loyal following.

Allan

That's a good idea.

In the end the loyal lending clientelle shall have to invest in this chap. They will want some guarantees, that if, despite all his efforts, it all goes belly up, they will get their money back. That requires a legal contract on something tangible that can be used in a last resort. Usually it's the property. But what if the property is mortgaged to the hilt? This really good entrepeneur is only as good as he can get a loan.

This leads the way to Venture Capital. Big risks and big rewards!

The lender must judge on the quality of this guy and the tidal stream he is swimming in.

It don't look to good just now; ebbing spring tide with a river in full spate, me thinks.

None the less, he sounds to be high caliber.

Zero inflation would not be good. Firstly it is a hair's breadth away from being deflation which is very bad. Secondly, 2% inflation has a boosting efect on economic growth. 5% inflation would be significanly helpful in paying back our massive debts!

I have just made my coment above, what else do you want?

Lorna, 8% high? Just shows that you are still wet behind the ears.

I started out married like paying 8-10% which rose to 15% and when it dropped I continued paying at the old rate, and got rid of the mortgage the sooner.

The Banks are paying the upper echelons stupid amounts of money and bonuses and pensions, and not rewarding those that provide them with the funds that they are lending and all they do is pay themselves more, but not reward the savers.

Gordon Brown/Balls are largely responsible (don't forget Bliar), with the spendthrifts.

Better the bankers (worldwide) took a pay cut and minimal bonuses and those that got paid stupendous amounts of money just before, during and in the last year or so pay pack, in full the bonuses, including Fred and his pension and the MPs get their salaries calculated on 40 years service and their pensions scaled back by the rate those with pension pots suffered. The free rides are over.

Inflation, deflation who cares. None of it makes any difference. Our problem is the planning laws which have trapped our country's home building and manufacturing plant locations to those of 1947.

Europe is our market. Export business needs east and south coast locations with workers whose housing costs allow them to consume and save. We haven't achieved this, the rest of europe has. That's why we have a second rate health service and benefits system, huge numbers of single mums, the oldest retirement age in europe, and a ridiculously low standard of living.

The Town and Country Planning Act of 1947 might be popular with housewife economists, but in the real world, we should be on the same level as Holland and Germany if not further ahead. People like to blame the Unions or poor govt but the truth is it's our fault.

We voted for a dysfunctional economy orientated towards ever rising house prices. We should have voted for prosperity and a higher standard of living for all.

This isn't political. All parties are unwilling to be honest about this. We don't have a deficit problem. We have a political problem, none of the parties is willing to tell the truth and voters don't want to hear it. So look forward to 8 years of difficult times and afterwards continuing decades of relative decline.

This is a very interesting discussion, but perhaps could benefit from fewer ad hominem attacks - Roger Savage and Atheist, I'm looking at you. By the way Mr Savage: if you're going to attack someone else's argument on the basis of a few typos, you'd do well to spell to their forum name correctly. After all, it's right there in the original post!