The Bank of England vs the banks of England – Negative Interest Rates

What’s wrong with negative interest rates?

The problem with low and negative rates is that banks don’t like them. Which may sound like good news. Especially in a newsletter about taking on the financial establishment.

And perhaps it really is good news for those of us trying to get or refinance a mortgage. At least it would be good news in the short run.

But here’s the thing. When bankers aren’t busy wreaking havoc with your money or ripping you off (or both), they do perform some useful functions. They lend money.

And if they can’t do so at a decent profit, well, they won’t do so.

Sure, borrowing at 0% sounds good to you and me. But would you lend someone money at that rate?

Negative interest rates mean bankers are agreeing to lose money on their lending. Does that sound like something they would do?

And if they did do it, what do you think would happen to the bank over time? It would start to struggle.

In other words, negative interest rates do so much damage to banks that they undermine the banks’ lending activities. And even their financial soundness.

Banks then pass this lack of revenue on to their depositors. In the form of fees on accounts, negative rates on large deposits, or other fees. Either way, we end up paying somehow.

The point is, when rates go negative, banks lend less and make money in other ways.

Either way, it’s not great news for an economy addicted to debt. And not good news for anyone who needs a bank account. Which is all of us. Especially lately.

British Politics: UKIP and Nigel Farage. Credible or not?

For our friends in places other than the UK, Nigel Farage is the leader of a political party called UKIP: The UK Independence Party.

Their site is here:

They are a right of centre political party occupying the space the Conservatives once sat in – in the Thatcher years – before David Cameron (or Mr Slippery as some call him) became more interested in gay marriage and centrist Blairist politics than rebuilding Britain’s economy.

Their general aim seems to be to pull Britain out of the EU and thus removing the UK from the obligation we have of paying Billions of pounds to build roads in Bulgaria and such places; to regain control of our own borders, export terrorists back to Jordan or wherever, and for our courts to make their own decisions rather than being bound by ‘Human Rights’ decisions made in Brussels by unelected faceless people.

To me, Nigel Farage seems an unlikely party leader. And an even more unlikely Prime Minister. But his policies echo more and more common sense. He is from the Jeremy Clarkson school of common sense. And I subscribe to common sense.

They are already winning small seats in our neighbourhood:

Friday, 8th March 2013

UKIP National Executive member Louise Bours made a welcome breakthrough on Thursday with a comfortable win in a local Cheshire by-election, the party’s first council victory in the North West.

Louise topped the Tories in the Congleton Town Council poll with 769 votes, leaving the Conservatives on 587, one Independent candidate on 263 and a second Independent on 125.

Following the victory Cllr Bours said: “I am both proud and humbled by the people of Congleton West placing their trust in me.

“Throughout our country on May 2 voters will be given the choice to at last have their voice heard. UKIP councillor’s will deliver that voice and will bring to councils across our country, common sense and trustworthiness so badly lacking’.
Do you think UKIP is a credible party?

Should the UK leave the EU?

Is Nigel Farage a credible party leader?

Would you vote for UKIP?

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