Why can’t the BBC tell us what’s really happening?

By Neil Patrick

The Bank of England:
 Remembered where the UP button was yesterday

In my opinion, yesterday was the best news day in the UK since I started this blog. Yet anyone watching or reading the UK mainstream news could be forgiven for assuming quite the opposite.

I'm referring to the news that the Bank of England is raising interest rates for the first time in over 10 years.

The simple and obvious impact of this is that if you are a saver, this is minor good news. If you are a borrower, it’s not. Yet reality is seldom this binary and most people both save and borrow albeit in varying proportions.

So the BBC TV News thought it would be appropriate to ask two types of people what they thought. One who was struggling with a low income, a mortgage and the costs of a young family. The other a retired bloke who relied on his savings income. Naturally enough, they gave totally predictable answers. The saver that it would make little difference to his income and the borrower that any extra costs would be hard for them to bear.

I guess this is the result of the BBC striving to be inclusive; less London centric and eliteist. But it turned much better news than any sports victory, royal wedding or Oscar win, into the overall message that whether you’re a borrower or a saver, there's little to celebrate.

The Guardian’s headline followed a similar vein – ‘More costly mortgages in wake of rates rise’. Buried in this piece was the fact that this amounts to a £22 a month increase on average for homeowners with mortgages. It didn’t mention that those on the lowest incomes will have smaller mortgages and so their increase will typically be much less.

I’m not saying that this isn’t tough for those on the lowest incomes. But this news is a minor revelation. It represents a tentative first step back towards normality from which all will ultimately benefit. This is the real story, but it’s just not reported that way.

The increase was just 25 basis points (0.25%), taking the base rate from its all-time low of 0.25% to 0.5%. This isn’t a hike, it’s a tiny increase. I am old enough to remember when base rates reached 17% and a 1.00% move in either direction barely merited a mention. Yet the BBC described this news as ‘interest rates will be doubled’. Technically correct, but also completely misleading to anyone who doesn’t watch these things closely.

Mark Carney, the Canadian Governor of the Bank of England has proven to be a shrewd judge of when to intervene with rate changes. With inflation at around 3%, high levels of employment (despite poor wage growth) and growing consumer debt, a rate increase has been on the cards for months now.

As central bankers repeat ad nauseum, base rates are a blunt instrument, but they are also an immediate way to cool things down, especially inflation. Carney described it as ‘easing off the gas a little’. In other words, moving further away from the quantitative easing panic button which was pressed repeatedly in 2008 to retain liquidity in the wake of the collapse.

It is also an experiment to see how things react. The FTSE 100 surged:

The pound fell a couple of cents against the US dollar. This is not a catastrophe – it’s a fairly normal adjustment. And it’s part of why a free-floating domestic currency is so helpful in keeping an economy under control. The Greeks would chop off a finger I reckon to have that option.

I predict further small rises leading up to the Article 50 deadline on 29 March 2019, unless there is some drastic reaction which persuades against this path. Carney wants to ensure that whatever form Brexit finally assumes, when it happens, he has the scope to move rates accordingly to keep the UK ship stable.

Forget what the Westminster monkeys on both sides are saying about Brexit. The Bank of England is doing a fine job of preparing us for any scenario. And bear in mind that the BBC and the mainstream press have long forgotten how to tell us the things we really need to know.

Global Economic Collapse?

Yesterday I talked about a worst case possibility that I called global economic meltdown.

I don’t like to use alarmist language – I feel that it always carries the message that somehow, you are a bit of a crank or fanatic. You know, like the folk with the placards saying ‘Repent Now - The End is Nigh’.

However, as I have watched politicians around the world of every political persuasion, fail to  come up with a credible solution to the world’s economic crisis, it has become clear that no-one is willing or able to come up with or implement a solution that can reverse this downwards slide.

This short film explains why a collapse is almost certain now.

I am of the view that all  politicians are being very  economical with the truth. Politicians want to gain or retain power. So their horizons are governed by the electoral terms in their nation. And we all know that they will say or do whatever they think will help them achieve that goal. That’s it.

Jim Rogers is convinced that this is going to happen unless there is a complete writing off of global debts and we start again. Here’s his view on the matter:

I think the US Federal Reserve will continue printing money and continue diluting the strength of the dollar. The Bank of England will continue with quantitative easing. And the Central European Bank will continue will bailouts and austerity measures for the failing Eurozone nations. All the while just trying to buy more time for a miracle to happen while building up a bigger problem for the future.

In my view, the very best we can hope for now is that the credit lines and quantitative easing available to the western governments can stretch out long enough without breaking, while we simultaneously (somehow) get growth back into our economies. Oh yes and we have to do that without spending any more money... 

What do you think?