No good news for borrowers or savers - but ignore King at your peril

Does anyone believe anything that Mervyn King has to say or take him seriously? I suppose he has to be taken seriously while he remains governor of the BOE on account of the potential damage he can do the UK economy rather than for his words of wisdom.

Why would anyone now buy government bonds? They will just lose value of money which is a very poor investment. The government must put up interest rates if it wasnt it's currency to be seen as somewhere people will invest or they will just take it elsewhere. Do they no longer want to sell any bonds? If that's the case do they care if they lose their tripple A credit rating? The BoE has had its wrist slapped after the publicity that over 80% of their forecasts have overestimated growth and underestimated inflation. They are becoming a joke.

"After years of being told that debt was good, we are now having to unlearn that."

WRONG. Many knew that borrowing was bad, except for the essentials, housing and education, but then that would have been factored into their calculations. It is the wastrels that got us to this pass and that includes Brown/Balls.

I think I have had one HP in my life. Apart from housing, if I wanted something I saved until I had the bulk and perhaps borrowed the last small bit when I got too impatient, rarely, or I went without.

This generation of easy come has to relearn this old virtue.

Thatcher had the old fashioned virtue and cut her cloth accordingly.

For Banks and the last govt their virtue over the last 15 years or so has been easy come easy go, with no cushion for the unexpected bumps.

My investment policy has been the same, apart from a few shares, unless it paid a decent dividend, it was left alone, and I NEVER borrowed to buy shares, and very rarely resorted to the rainy day fund, (in respect of the latter only when I could see that it would be replenished within a matter of months) .

King should rather be extolling the virtues of make do and mend and saving.

I know he (and the govt) would rather we spend our way out of recession, in most instances a mistake, because invariably it involves borrowing, rather than saving for the big items, few of which are essential.

I can't ever remember being told debt is good. Anyway if someone had said that, I would have pointed out the down side of such a ridiculous statement.

Come on! debt was good in the 70's and 80's at least. I for one can testify that I lost out big time by being too timid and not comfortable taking the risk. But most of my contemporaries went from house to bigger house (with bigger mortgage) simply because with inflation up at 24.2% in 1975 the value of your house was increasing whilst that of your mortgage decreased - lubbly jubbly - what more could you ask? well actually the fact that the interest rates were in real terms negative - didn't do any harm

This does help to explain the British love of debt and it will take some unlearning!!

As the East gets richer we shall get poorer,

Oddmoney

Negative interest rates destroy saving & investment. In the end that costs jobs, reduces real prosperity, and increases the propensity to borrow to keep the lifestyle going. You know the rest...................

Oddmoney is spot-on. It's a strange thing, but we've never got over the 70's/80's period when houses were rising faster in value than we were earning money, and interest rates were less than inflation making it appear daft to save rather than borrow.

Well I think that with a little bit of luck one can still play the system. I borrowed 150,000 last September at half pc above the base rate for a fixed 5 years to enable us to build a large extension on our otherwise mortgage free property. I bought everything up front at 15% VAT and we are now virtually finished with a beautiful property within 5 acres of land in deepest Somerset. My share portfolio is fully intact and the income generated from the high yielding dividends will pay for the lay within the allotted time period. Fingers crossed that interest stay low for as long as poss.

I just dont understant why, by putting up interest rates, that M King thinks that people losing their homes is good for the economy. We are all struggling as it is to pay sky high prices for day to day living expenses and extortianate taxes. Petrol and diesel going up, electricity and gas going up for green purposes, VAT going up where is it going to end. I often wonder why bother working as it seems to be a waste of time and if i hear "we are not saving enough for our old age" once more. Get the message all MP's- there is nothing left at the end of the month for the average working man or woman in this country.

Seems to me Mervyn's just making it all up as he goes along.

Jon Gallagher, I appreciate that the going is tough but what would you do if interest rates were 12 or 15%?

I've had to endure that. Who's to say it wouldn't happen again one day?

Jon Gallagher - house prices have gone through the roof and lead to this mess by people taking on mortgages that were more than they could pay, but believing that they will be able to sell at a profit before the chickens come home to roost. In other words they were gambling with other people's money.

Many of these people have been saved by the low interest rates at the expense of the prudent savers. Tracker rates have fallen so low that they have plenty of spare cash to save - or better still, pay down their mortgages. This has simply deferred house prices from falling further to their natural level.

snoekie

"Apart from housing, if I wanted something I saved until I had the bulk and perhaps borrowed the last small bit when I got too impatient, rarely, or I went without. Thatcher had the old fashioned virtue and cut her cloth accordingly."

Wrong. She liberalised the lending rules and encouraged the building societies to merge or float. This encouraged consolidation of the building societies, huge amounts of lending to unsuitable people, a property boom and ultimately led to where we are now.The building societies had been very careful lenders up until this point.

When will it all end... more boom cycles, more bust cycles until what is left... total disaster!?