Finance thread 2022.

[Rev]

1 hour ago, sage said:

Agreed. This time inflation has nothing to do with an overheating economy. They are doing this to be seen as doing something to calm city bods down, 

 

1 hour ago, ariotofmyown said:

Anyone really understand why interest rates are going up again? Is it really going to do anything for inflation? Won't demand just collapse after Christmas and we'll end up in a long recession, probably resulting in interest rates coming back down again but with loads of people losing their jobs snd businesses?

I've seen it argued that interest rates have to go up, to keep the UK an attractive place for foreign investors. 

Which sounds like BS.

[uttoxram75]

20 minutes ago, Rev said:

 

I've seen it argued that interest rates have to go up, to keep the UK an attractive place for foreign investors. 

Which sounds like BS.

You have to take into account that the people making these decisions are puppets of the vast institutional investment groups that control the City and other financial markets. 
 They will always act in their own interests rather than what’s best for the UK as a whole. 

[Tamworthram]

58 minutes ago, Rev said:

 

I've seen it argued that interest rates have to go up, to keep the UK an attractive place for foreign investors. 

Which sounds like BS.

That might say more about our understanding of global economics than reality.

By which I mean it probably isn’t BS but you and I don’t know enough about how the global money markets work.

Edited December 15, 2022 by Tamworthram

[Rev]

2 hours ago, Tamworthram said:

That might say more about our understanding of global economics than reality.

By which I mean it probably isn’t BS but you and I don’t know enough about how the global money markets work.

That's my point exactly. 

You say you and I don't know enough about how global money markets work, yet you've gleaned enough to say it probably isn't BS?

Why, what makes you take that position, what makes you say it isn't BS?

Why shouldn't the ordinary citizens of the earth know enough about how the global money markets work, we're the ones exchanging our labour to create the markets after all? 

 

 

 

[Tamworthram]

Just now, Rev said:

That's my point exactly. 

You say you and I don't know enough about how global money markets work, yet you've gleaned enough to say it probably isn't BS?

Why, what makes you take that position, what makes you say it isn't BS?

Why shouldn't the ordinary citizens of the earth know enough about how the global money markets work, we're the ones exchanging our labour to create the markets after all? 

 

 

 

Because the ordinary citizen doesn’t work in the global money market business and to suggest your average man/woman in the street really fully understands how such things work seems bizarre to me. I’m not entirely sure the ordinary citizen exchanging their labour for pay necessary “creates” the global money market. Besides which, it doesn’t seem like rocket science to me that if you offer higher interest rates you’re going to get more people investing.

[ariotofmyown]

19 minutes ago, Tamworthram said:

Because the ordinary citizen doesn’t work in the global money market business and to suggest your average man/woman in the street really fully understands how such things work seems bizarre to me. I’m not entirely sure the ordinary citizen exchanging their labour for pay necessary “creates” the global money market. Besides which, it doesn’t seem like rocket science to me that if you offer higher interest rates you’re going to get more people investing.

I was reading the bank of England website before and the patronising way they talk about interest rate rises.

I see what you saying about how we don't really understand how money markets really work, but we are then sold the line about these interest raises will help reduce inflation by stopping us spending.

For people really struggling, interest rises are going to mean they might not be able to make ends meet.

For those more fortunate, it will mean less spending, often at smaller businesses that need the money like restaurants and pubs.

Raising rates now just seems an orthodox response to unusual times.

[Rev]

52 minutes ago, Tamworthram said:

Because the ordinary citizen doesn’t work in the global money market business and to suggest your average man/woman in the street really fully understands how such things work seems bizarre to me. I’m not entirely sure the ordinary citizen exchanging their labour for pay necessary “creates” the global money market. Besides which, it doesn’t seem like rocket science to me that if you offer higher interest rates you’re going to get more people investing.

Interest rates in Argentina are now 75%, how many foreign investors are they attracting?

[ariotofmyown]

15 minutes ago, Rev said:

Interest rates in Argentina are now 75%, how many foreign investors are they attracting?

What is inflation?

[Rev]

2 minutes ago, ariotofmyown said:

What is inflation?

86.4%, last month.

 

 

[ariotofmyown]

17 minutes ago, Rev said:

86.4%, last month.

 

 

Good news if you want to pay of your house with an inflationary payrise. Bad news if you need to buy food.

[Rev]

4 minutes ago, ariotofmyown said:

Good news if you want to pay of your house with an inflationary payrise. Bad news if you need to buy food.

My point was that raising interest rates doesn't attract inward investment, otherwise the market would be pouring into Argentina. 

We've got things arse about tit in this country, imo.

We've ended up in a situation where we pay state owned Foreign companies to run crucial parts of our infrastructure, so they can take the profits back home to subsidise their national services, how on earth did that happen? 

Yet we don't question it, because we've been brainwashed that the state knows best, and if there was an alternative we'd pursue it.

We've had a decade, maybe more of historically low inflation and interest rates, and yet have kept most public sector pay packets from even keeping pace with those lows, and now the Government have the nerve to deny those very same servants the chance to keep pace with the cost of living.

 

 

[uttoxram75]

1 hour ago, Tamworthram said:

Because the ordinary citizen doesn’t work in the global money market business and to suggest your average man/woman in the street really fully understands how such things work seems bizarre to me. I’m not entirely sure the ordinary citizen exchanging their labour for pay necessary “creates” the global money market. Besides which, it doesn’t seem like rocket science to me that if you offer higher interest rates you’re going to get more people investing.

Not sure how else money is created apart from people's labour?

If you take labour out of the equation then not a lot would happen in the money markets would it?

I know nowt about the global money market, other than who owns it, but I do know that businesses make money out of the labour of their workers. I have worked in the private sector for 45 years and I can state as a fact that not one penny of profit would ever be made without   a lorry driver delivering ingredients to our factory, a fork lift driver unloading that lorry, a process operative weighing out the ingredient, a mixing operative, an oven operative, a packing machine operative, a Quality Control operative, engineering operatives who can fault find and repair mechanical as well as robotic and systems equipment. More fork lift drivers to move the finished goods to despatch so more lorry drivers can take the product to storage warehouses and supermarkets.

So, I would argue that the ordinary citizen exchanging their labour for pay is the only way that money markets are created.

That is why the global money markets try so hard to reduce workers rights so the profit margin is increased.

The RMT union is on strike because the train operating companies want the workers to do more night shifts and more weekend shifts for less unsocial hours pay. Thats a good example of the way the money markets work. 

My business stopped double time on Sundays about 7 years ago, For nearly 40 years we always paid double time to workers for Sunday overtime, now its been reduced to time and a third. This was the difference between earning extra money to afford Christmas or summer holidays for the majority. (Rich people won't understand this)

The point is that its a constant battle for working people to survive and maybe enjoy the odd bit of leisure time. The money markets task is to make profit for the rich at the expense of the workers.

[JoetheRam]

Interest is a massive, complex subject that spans pretty much the length of human history.

From Aristotle to Keynes they've all had a go at arguing what it means, whether it should exist, when it should be charged, how it should be charged, how it should be calculated...

And interest is just one of many instruments of the global financial markets, so no, I don't think your average man in The Street will ever know how how the financial system works in its entirety.

The effects on individuals/businesses/government of rates rising and falling should be better reported though. 

The economy is a balancing act and everything has it's advantages and disadvantages to different parties, educating the public beyond "low interest good, high interest bad" would be a start.

Personally enjoying inflation reducing the real terms value of my mortgage by 15% a year not so much the effect it's having on the weekly shop.

 

[Tamworthram]

7 hours ago, uttoxram75 said:

Not sure how else money is created apart from people's labour?

If you take labour out of the equation then not a lot would happen in the money markets would it?

I know nowt about the global money market, other than who owns it, but I do know that businesses make money out of the labour of their workers. I have worked in the private sector for 45 years and I can state as a fact that not one penny of profit would ever be made without   a lorry driver delivering ingredients to our factory, a fork lift driver unloading that lorry, a process operative weighing out the ingredient, a mixing operative, an oven operative, a packing machine operative, a Quality Control operative, engineering operatives who can fault find and repair mechanical as well as robotic and systems equipment. More fork lift drivers to move the finished goods to despatch so more lorry drivers can take the product to storage warehouses and supermarkets.

So, I would argue that the ordinary citizen exchanging their labour for pay is the only way that money markets are created.

That is why the global money markets try so hard to reduce workers rights so the profit margin is increased.

The RMT union is on strike because the train operating companies want the workers to do more night shifts and more weekend shifts for less unsocial hours pay. Thats a good example of the way the money markets work. 

My business stopped double time on Sundays about 7 years ago, For nearly 40 years we always paid double time to workers for Sunday overtime, now its been reduced to time and a third. This was the difference between earning extra money to afford Christmas or summer holidays for the majority. (Rich people won't understand this)

The point is that its a constant battle for working people to survive and maybe enjoy the odd bit of leisure time. The money markets task is to make profit for the rich at the expense of the workers.

We’re not talking about creating money. We’re talking about moving it around and investing it aren’t we.

Your example of RMT working conditions and pay hasn’t really got anything to do with how global money markets and trading works (IMO).

[Tamworthram]

9 hours ago, Rev said:

Interest rates in Argentina are now 75%, how many foreign investors are they attracting?

Interest rates also reflect risk. I have no idea how many foreign investors they attract. If it’s not so many then perhaps would prefer a lower rate lower risk investment.

[Tamworthram]

10 hours ago, ariotofmyown said:

I was reading the bank of England website before and the patronising way they talk about interest rate rises.

I see what you saying about how we don't really understand how money markets really work, but we are then sold the line about these interest raises will help reduce inflation by stopping us spending.

For people really struggling, interest rises are going to mean they might not be able to make ends meet.

For those more fortunate, it will mean less spending, often at smaller businesses that need the money like restaurants and pubs.

Raising rates now just seems an orthodox response to unusual times.

Oh I totally understand the paradox of raising interest rates. The theory goes that higher interest rates mean people are more likely to save rather than spend. Especially those that previously borrowed at low rates in order to spend. Thus, inflation should drop. Unfortunately though, as you point out, there are many already struggling to cope who will suffer from the increased rates. I guess the hope is that they will benefit from reduced inflation and maybe interest rates will come back down a tad once inflation has been stabilised. I wouldn’t hold your breath though for the short to medium term.

Anyway, back on topic as to why higher interest rates should increase foreign investment in the UK. I’m guessing, by “investing in the UK” they mean gilts and government bonds which, presumably, would increase if rates go up. I haven’t really fathomed out entirely how that helps the economy (other than allowing the treasury to borrow money from abroad) which really proves my point. None of us really understand how high finance and government borrowing really works and impacts the economy.

[Crewton]

"Balancing act" is probably the most fitting way to describe it. It's a different balancing act also depending on particular country's credit rating, hence why Argentina's economic problems are harder to resolve than the USA, as an example. For the UK, what the Fed does is particularly relevant. If US base rate is rising, ours will go up too eventually. It's one of the reasons why talk of "taking back control" was and is a meaningless expression. In a global economy, external forces will always have an effect. 

[Tamworthram]

I appreciate that I have added to the digression (ironically, so has the originator of this thread) but perhaps it’s time we returned to, and limited our responses to the original purpose - tips etc on helping people through these difficulty times, instead of talking about economic policies, the mysteries of global money markets, reasons why certain sectors are striking etc.

There may be folk checking this thread for ideas only to be disappointed and frustrated (sounds about the same as supporting Derby).

Just a thought.

[Wolfie]

1 hour ago, Crewton said:

"Balancing act" is probably the most fitting way to describe it. It's a different balancing act also depending on particular country's credit rating, hence why Argentina's economic problems are harder to resolve than the USA, as an example. For the UK, what the Fed does is particularly relevant. If US base rate is rising, ours will go up too eventually. It's one of the reasons why talk of "taking back control" was and is a meaningless expression. In a global economy, external forces will always have an effect. 

I've had an issue for months about the BoE using a demand side tool in order to try and control supply side inflation but you're quite right - once other trading partners increase their interest rates, then it becomes hard for us not to unless we want to devalue our currency (which is of course bad news for a huge nett importer like us).

[Ram-Alf]

9 hours ago, uttoxram75 said:

 

The RMT union is on strike because the train operating companies want the workers to do more night shifts and more weekend shifts for less unsocial hours pay. Thats a good example of the way the money markets work. 

My business stopped double time on Sundays about 7 years ago, For nearly 40 years we always paid double time to workers for Sunday overtime, now its been reduced to time and a third. This was the difference between earning extra money to afford Christmas or summer holidays for the majority. (Rich people won't understand this)

The point is that its a constant battle for working people to survive and maybe enjoy the odd bit of leisure time. The money markets task is to make profit for the rich at the expense of the workers.

Good post Uttox...just like to put my five Penarth in.

"Union Barron's" will always be at odds with their Bosses either public or private sector, Mick Lynch is beginning to slowly lose his workforce, I've a mate that's works for the RMT at Derby, The money lost through strikes at this time of year his words is close to £2k, There are already rumblings of dissatisfaction with their elected leaders, Our train system in the UK is shyte, Cancelled, Overcrowded, Pi$$ poor carriages, Why is this...privatisation, Those privatised train services hive off their profits to their money men, Privatisation has been a phucking disaster for the UK worker, And we sleepwalk to our paymaster whether home based owners or foreign. 

I use the term "Union Barons" as this is a war between the working man and the Government altho the Government will say we're doing our best...Bo***x to that, Union leaders are elected by the workforce, Not necessarily in a fare and balanced way...McClusky at unite with his longer term pay packet when he should have retired and his battle with Jerry Hicks ex Union leader of RR in Bristol shows what a rigged ballot can do, It's all about POWER! and influence...and who suffers...the working man...it's a game played with the working mans life/future.

We have a busted system in the UK and have had for Centauries, Where the rich get richer on the back of a worker, The worker who just wants a little more for those nice things in life, The owners want to keep their feet on our backs because if they release that foot we want more, How can a Government pay 10s of 1000s of £s to agencies for a Doctor instead of paying for a decent pay rise...17% asking is a non starter 10% yes, But this then starts a ball rolling for all other Government workers as a base settlement. 

The answer to all this strife is...lock all in a room and if they come to no agreement then a Cat o Nine Tails awaits...for all ? 

The wheel has been invented, But we're told we have to change with the times, At RR we were paid also double time on a Sunday, Time and a half on Saturday and time and a third in week, A vote was taken and delivered a win for RR to pay overtime across the board of time and a half, There was of course a money inducement to vote this way...as there always is at RR like a 2 week bonus every year if RR made a profit...JCB near you do the same and pay good money.

My last word for the minute...pay the working person a decent wedge and you'll get a good service, Take the pi$$ and you end up with a situation we have now...it's a battle and the winner takes all, Power to the Toll Puddle Martyr's ?