成人快手

Declan

Can wyou look into the suggestion that the government loan to banks is being charged at 12% interest. This would explain why banks won;t drop their interest rate charged to each other, or us - that would cause them a 6+% loss on the value of the loans. It could also explain the reluctance to draw down those funds from the government.

At last you go some way to explaining the way interest rates work but, you still do not explain the very large factor time has on interest rates. Base rate may be 3% but if it is anticipated that the bank of England will raise it back up to 5% over the next year then the reference rate they used for calculating a 2 year loan will be above 4%. The 3% rate is only good as a reference point for short term or variable rates but any calculation for 6 months or longer will include an element of prediction of what direction rates are headed in the future.
As so many are so interested and are na茂ve of the facts why don鈥檛 you on a weekly basis show what the LIBOR rates are across the whole yield curve and maybe it would help people understand what is really happening.

Declan, thank you for taking the time to explain properly how base rates are used by banks. The media coverage of this crisis has been truly amateur on the whole, particularly from some satellite news channels. What is needed in times of crisis are plain and simple explanations of events for Joe Public without the hyperbole. Your blog (and the programme) are one of the very few that provide this. Well done. And I would agree with sadbloke that an article on the show about the LIBOR curve and how it affects our borrowing is a good idea.

How many jobs could be saved if the 成人快手 changed the dodgy graphics of the downturn?
It really is a big mistake to hype the hysteria like this.
It is self -fulfilling
Please change it.

brookhillboy

I agree about the 成人快手 news downturn graphics they are deliberately panic inducing. No need for it.

Declan clearly posts and forgets never responded to his blog that I have seen.

Nor most 成人快手 blogs, they seem to be old fashioned media mentality, declaim from on high and ignore the public other than those they want to pick and chose as supporting the 成人快手 official view like rates down=good, talk first and near only to those with debts.

Or house price up = good, down = bad, in direct contravention of even their own surveys of public attitude with is the opposite.

I'd like to see much more technical detail, even more than this, on reporting the motivations of the banks and the calculations underlying. Rather than reporting again and again the same basic facts and what people say (often for political gain) like complaining again and again that the banks don't pass it on without explaining the full story. We have so much air time dedicated to repeating the headline, we could spare some for a real city technical geak to explain the details.

Along the same line Ive been told in the past by people who work on the city trading floor that they couldnt go home and do it on their home computer. They mention something about not have enough up to date information, or not having the whole story. How about a detailed piece explaining why a city trader can't do the same job on a home PC? I'd like to know as a home trader how much of a mug I am when the professionals wouldnt even contemplate it!!

Also...who are those people who smile and clap for the cameras when the dow jones closes?! They look silly enough when its been a good day, while on a bad day and the dow has dropped 10% there are perhaps only three people with awkward smiles on their faces clapping and looking like they have been forced to stand there.

Declan
At last see an explanation of whaty the (central) bank rate is. It is little wonder that the interest rate charged by banks does not reflect the bank rate exactly: it now seems to me that the high street banks do not borrow money from the central bank as many commentators imply, but from each other and banks in other countries. The effect of the central bank's rate cut is to make it less worthwhile lodging the money centrally, and reduces the amount other money-stores have to charge to attract funds.
A question: so the central bank pays interest (now of 3%). Where does it get this money from?

So lending is linked to this mysterious Libor we all know now.

But why are savings linked to either BOE or Libor? I figure we all thought that savings were used by banks to invest around the world and that those savings were dependent only only on the value (worth) of the investment.

If savings and savers are going to be lumped in the same bucket as lending - ie: pegged to very low values (dropping as the BOE reduces interest rates..) it's going to hit the very savers the system needs, right?

Why bother saving at all? This is nuts.

GC

Guycroft
There is no mystery in LIBOR go to the BBA鈥檚 web page where you will see the daily fixing for periods from overnight to 1 year published.
Savings just like mortgages are not directly linked to BoE base rate or LIBOR. Both these rates could be likened to the Manufacturing cost/wholesale price of any product, the rates we see as savers and mortgagees are the equivalent of the retail price of any product.
Like any business the banks must cover the costs of running their business and also factor in a profit margin The big thing that no one seems to want to accept is the risk factor, the rate paid to savers should bear a relationship to how risky the investment is and as it now seems that many savers want their funds guaranteed with no risk, they will have to accept a lower return. Its no good people moaning at the banks for not paying a higher rate when they don鈥檛 want to take any of the risk.
Why bother saving at all ? Well that鈥檚 the whole point of it, you do not want people to start hoarding their money in these times, and please note I am not advocating people go out and borrow new money to spend or do not take a prudent approach to their current debts, for those that are fortunate enough to have some excess now is not the time to be hoarding it under the mattress.

"The big thing that no one seems to want to accept is the risk factor, the rate paid to savers should bear a relationship to how risky the investment is and as it now seems that many savers want their funds guaranteed with no risk, they will have to accept a lower return"

Risk factor? Why accept savings at all if you cannot guarantee a decent return?

You can make an awful lot of money overnight with 拢1m never mind in a year - if you invest cleverly. I think such vast accumulated sums has been invested in banks - so to speak - that they have become blase about how they invest it. If the scale of the held savings is high enough the bank will turn a huge profit even on low yield investments. The bank wins, the thousands of small savers get F all in real terms.

The rewards from searching out high yeild investment are huge - if you bother to do the legwork - which I think the banks do not. Either that or they do and simply don't disclose the gross profit they're making or they don't because they're making enough already and don't give really a stuff about their 'small savers'.

I just find it it rather odd that they claim that because the BOE base rate has been cut - savers will suffer. If they're not linked, why should that be? Or - why should that have to be?

GC

Guycroft
I鈥檒l try and put this in words you might understand, two identical cars on the forecourt one has a lifetime parts and labor guarantee the other has no guarantee, would you expect to pay the same price for both.
you say
鈥淭he rewards from searching out high yeild investment are huge - if you bother to do the legwork鈥�
Please tell me where you can get this high yield without increasing the risk on any investment, there is no such thing as a risk free investment, the closet you will get is a government bonds which come with a low return and still have an element of risk as it is not been unknown for governments to default on their debt.
As for your million pound overnight investment currently that will earn you less than 拢100 and you still have the risk that it won鈥檛 be repaid the next day.
Your response sounds like you have no real interest in understanding how things really work, you just want your GAURANTEED DECENT RETURN without caring how its achieved as long as you don鈥檛 have any risk.

I don't know why you're being so combative!

If you're right and I'm wrong we're all in even deeper trouble.

GC

Not being combative just becoming increasingly frustrated at the amount of rubbish being written, so rather than relying on unfounded sound bites I am trying to be informative and explain how interest rate markets really work.
Please I ask again, tell me where you can get this high yield without increasing the risk on any investment, that you have said is available, that鈥檚 not being combative, its just asking you to support your comments with some facts!

Fine!

If you're not being combative you've simply missed my point to try and win the argument. My point being, if it's not obvious enough is that the returns offered by banks are so pitiful they almost seem pegged to BOE base rate! An investment that is so risky that the return hangs in the balance high or low is not an investment at all and there are plenty of advisers who talk big but are no more than experts at losing money. Legwork: The broker should be doing this himself. The performance of 'managed funds' is typical of how little notice managers take of what is actually going on with clients' money.

You can make a fortune very quickly on futures and I have done, your 拢100 overnight on 拢1m is laughable. If you want high yield investment look carefully at mineral mining.

I have also lost a fortune because of er, indequate fund management (monitoring).

That's all I have to say. Like it or leave it. Don't accuse me of soundbites and writing rubbish. It's hardly suprising so few write here with you posting remarks like that. It's a blog, OK? Not everyone agrees far less has to.

GC

And you miss my point, return is all about the risk you want to take and at no time do you mention risk, having traded futures since the opening of LIFFE I am surprised to hear you talk as if there were no risk, whatever futures you were trading there would always have been a risk that鈥檚 why you have initial margins and margin calls.
Good for you if you have made a fortune, but you go on to say you also lost a fortune, well that implies you must have been taking some risk ! (your excuse that you or your fund manager was not monitoring the investment does not take away the fact that there must have been risk in the underlying investment otherwise you would not have lost your money even if it wasn鈥檛 being watched)
As for 拢100 on a million overnight it may be laughable to you but it is a fact that with rates where they currently are for a low risk investment, that is all you will be getting.
Mineral mining low risk? Unless you have found oil in your back garden I think you will find the cost of exploration, the chances of not finding anything and the volatility of commodity prices are all inherent risks involved in any investment in the mining industry.
Yes it鈥檚 a blog and I have just a much right to question your statements on here, if you don鈥檛 want to enter into debate and provide the basis for your arguments fine , just don鈥檛 bother replying.

Call me simple. But why does the goverement just form a peoples bank. As long as its not run by people already making the mess that is. That way the interest rate cuts can be passed on to the people the way the goverement intends. plus of course they can then get the money rolling and help given to business and also come up with a package that is also good for the savers.

It would also have the benefit of making the others banks and othe companys like credit card companys ect raise there game to inmprove the service they give or get out.

Another benfit would be to stop the bankers doing what they like when they like take any risk they like and know that the goverment would be forced to bail them out with peoples money. If the people have to bail them out as they have and will most likely have to do in the future. at least the people and the goverement would have control over them or better still because they have to safty net of the goverment and peoples support in the future make them stop doing what they like when they like as now.

As interest rates are so low for savers and they start withdrawing money from accounts, how will this affect banks. do they really needs savers money.