Raise interest rates
[Re: Hike interest rates and return real working capitalism to Britain, yesterday]
Jonathan Davis is absolutely right. I would add that, with interest rates at 4 or 5 per cent, people who recklessly borrowed to buy a house at five to six times their earnings would no longer be able to pay their mortgages. Thus repossessions would increase, likely lowering the cost of housing. Also, with higher interest rates, zombie companies would fail, therefore allowing better-managed and more productive businesses to fill the gap. It’s good to hear Davis talking about rewarding people for good behaviour: saving, prudence and hard work. It’s far better than rewarding irresponsibility.
Hugo van Randwyck
Cost of migration
[Re: Migrant crackdown runs against all the economic evidence, yesterday]
This is a fairly one-sided article. It doesn’t mention the effect of immigration on housing costs, for instance. Extra demand has pushed up prices to the detriment of the younger generation. Jonathan Portes also compares the contribution of typically younger working migrants to the whole British population (including pensioners and school children), without factoring in the obvious point that migrants will also eventually go on to claim pensions and have children. This will involve support from the state. Although this may not completely destroy Portes’s analysis, it does mean that his conclusions shouldn’t be quite so strong.
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It’s seriously scary. Youth unemployment in Greece has now reached a record 64.2 per cent.
Sir Mervyn King said he wanted to make UK monetary policy boring. Looking at MPC decision comments, seems he succeeded.
QE damages annuities and, once bought, pensioners will be permanently poorer. Profit margins on annuities are very high.
Is the Bank of England waiting until Mark Carney takes over before altering its policies?