World Economic News (Tue 8th. Feb ’11)

US economy, US SS, US exports / China imports, US healthcare, US / Canada, Europe, Ireland, UK gilts, Asian growing pains.



Links – 1. 2. 3. 4. 5. 6. 7. 8. 9.

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  • Anonymous

    Quick question if you don’t mind Nick…

    I thought mortgage rates, in UK at least, were dependant primarily on the BOE base rate…
    Why would higher Gilt interest rates make mortgage payments higher??

    • Stevo

      Hi Sned, variable UK mortgage rates are base upon either BOE base rate (such as mine) or SVR (Standard Variable Rate) which is indexed against LIBOR (London Interbank Offered Rate i.e. lending between banks). It was SVR that shot up when banks such as Halifax and Northern Rock found the short term lending market shut to them. Unlike America, fixed rate mortgages are usually only for periods between 3-10 years. All others offer teaser rates for the first 6-24 months but charge an upfront fee for the pleasure. It’s hard to get a mortgage over 75% of the value of the property these days. During the boom times, mortgages up to 120% of the value of the property could be got. This facility was used by some people to pay tax bills or enhance the property. Bank mortgages are leveraged and then securitised whilst building society mortgages (equivalent of US savings and loans banks) are held against deposits.

      • Anonymous

        Ah yes, I remember Nick’ postings about Inter Bank Lending rates a few months ago, showing that Bonds are used to control the over night rates…
        Bit of revision here for me tonight….Quite sure mine is set at 2% above the BOE rate, but will double check now…!!!
        Thanks for the info….

        Any luck on the house sale yet??

    • Stevo

      Hi Sned, variable UK mortgage rates are base upon either BOE base rate (such as mine) or SVR (Standard Variable Rate) which is indexed against LIBOR (London Interbank Offered Rate i.e. lending between banks). It was SVR that shot up when banks such as Halifax and Northern Rock found the short term lending market shut to them. Unlike America, fixed rate mortgages are usually only for periods between 3-10 years. All others offer teaser rates for the first 6-24 months but charge an upfront fee for the pleasure. It’s hard to get a mortgage over 75% of the value of the property these days. During the boom times, mortgages up to 120% of the value of the property could be got. This facility was used by some people to pay tax bills or enhance the property. Bank mortgages are leveraged and then securitised whilst building society mortgages (equivalent of US savings and loans banks) are held against deposits.

  • Stevo

    Al Jazeera report on environmental damage in China. 25 minutes long.

    http://www.youtube.com/watch?v=pLwVycO7V-k

    • Vince327

      Great video. Very sad story.

  • http://abellia.myopenid.com/ abellia

    There isn’t anything “funny” about the money that the government has injected into the economy. It’s just like any other money. Sure, quantitative easing is a silly exercise in trading securities for cash, but the “stimulus” and unemployment payments sure haven’t hurt (people or the economy). Wish there were more forthcoming, but it looks doubtful.

    • http://overthepeak.com/wordpress/ Mystic

      I guess that I say things like `funny money`, in a vague wish that people ask themselves the question – `What is money, funny and/or otherwise~?`