Letters to the Editor - 27/05 - Dangerous rates, China’s rise, Best of Twitter

Dangerous rates

[Re: Britain’s mortgage prisoners must act now or face financial meltdown, Friday]
The fate of the “mortgage prisoners” (those who have used the opportunity of low rates to take out misjudged loans for new properties) is no doubt troubling. But to argue that this means we should put off a rise in base rates is entirely wrong. All we are doing by keeping rates near zero is encouraging more people to take on debt. The longer rates are this low, the harder it will be to raise them without bringing about catastrophic consequences for the overindebted. This is not to mention the pain now felt by prudent savers.

Sam Davis

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China’s rise

[Re: China is the real victor as Putin looks East, Friday]
David Gordon is right that the real takeaway from the Sino-Russian gas deal is geopolitical, and not economic. Russia thinks it is diversifying its international relationships by turning East, but the deal is really on China’s terms. The Chinese are the ones that have secured cheap gas, and will dictate the terms of the Sino-Russian relationship. If Russian President Vladimir Putin thinks he has found a friend for his international causes (Crimea, for example), he will be sorely disappointed. China will drop him the instant he becomes a liability.

Maria Howard

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BEST OF TWITTER

The Vix Volatility Index has fallen to the lowest level in over a year.
@ritholtz

YouGov: Labour’s average poll lead has dropped from an average of 7 per cent in November to 2.5 in May.
@GABaines

Russia to respect the will of the Ukrainian people in elections. The will to disrupt elections, for example.
@ianbremmer

All three establishment parties have themselves to blame for political mess that they find themselves in.
@LordAshcroft