Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

UK banks given six months to prepare for negative interest rates

theguardian.com

Post reply on HN
Print view View original

51–60 of 112 posts

Re: UK banks given six months to prepare for negative interest rates

#51

Post by pepperonipizza »

websites222 wrote: post #26
1experience wrote: post #15

Can anyone counter my impression that we are witnessing in the Western world the exact same course of events that happened in Japan in the 1990s? (low growth, high debt, ageing population, low interest rates, rising of average P/E ratios). Am I wrong to expect that corporate valuations in Europe and the U.S. will not appreciate in the coming decades as they have in past decades? Edit: Yes, the U.S. and Europe are ind…

Europe yes. US, no. The US is in an amazing position in terms of demography and growth. Aging population, but not immigrant averse like Japan and not an island. The US borders a rising economy with perfect demographics for growth (Mexico). The US is the least involved country in global trade. The US is increasingly disinterested in being the world police, so that capability can be deployed to protect economic interes…

Pretty much all the countries in America have a fertility rate around 2 more or less. Even Mexico is approximately at 2.1 They will start to lose population in a few decades.

https://www.cepal.org/en/pressreleases/latin-america-and-car...

Re: UK banks given six months to prepare for negative interest rates

#52

Post by andonisus »

GordonS wrote: post #46
websites222 wrote: post #26

Earlier quoted context omitted.

Europe yes. US, no. The US is in an amazing position in terms of demography and growth. Aging population, but not immigrant averse like Japan and not an island. The US borders a rising economy with perfect demographics for growth (Mexico). The US is the least involved country in global trade. The US is increasingly disinterested in being the world police, so that capability can be deployed to protect economic interes…

> not immigrant averse like Japan and not an island As the past 4 years have demonstrated, there is a very large segment of the US population is very much against immigration, and would happily turn the country into an "island" by building walls around the land borders.

The US still allows, and has been allowing over the past four years, people to immigrate.

Re: UK banks given six months to prepare for negative interest rates

#53

Post by LatteLazy »

unyttigfjelltol wrote: post #17

If chartered banks charge for ... holding cash ... don't people next create a new industry of unchartered financial institutions to hold money without charging so much? Like, safe deposit? Or insurance? This seems like an ivory tower exercise that has not yet met the messy realities of the world.

That is exactly my thought. All this can do in practise is reduce mortgage and other loan rates further and punish anyone holding cash. I'm not saying that's a good or bad thing, but I don't think any normal people will be able to borrow a billion pounds and then just live off the negative interest rate...

Re: UK banks given six months to prepare for negative interest rates

#55

Post by andrepd »

onion2k wrote: post #42
spacedcowboy wrote: post #28

Earlier quoted context omitted.

Well, the Bank of England is also predicting a rebounding economy in the Summer for the UK because of the vaccine. A whole load of pent-up demand to live again, a dearth of travel opportunity so the money is spent in the UK, and everyone vaccinated so things open up ... So who knows ?

At the current rate of vaccinations, 1.5m a week, with people needing 2 shots (750,000 people a week), it'll take approximately a year to get to 90% of the adult population vaccinated with 2 shots: 50m adults * 0.9 / 750,000 = 60 weeks (I've knocked off 8 weeks because vaccinations have already started). The idea that people will be back out spending again in the summer is ... ambitious.

You do not need 90% of the population vaccinated in order to live life again. As soon as you've protected the high-risk demographic and all that's left are the under 50s or under 40s for whom the CFR is 0.3% or 0.1%, you can pretty much go back to normal.

The zero-risk mentality is silly.

Re: UK banks given six months to prepare for negative interest rates

#56

Post by seanbarry »

onion2k wrote: post #42
spacedcowboy wrote: post #28

Earlier quoted context omitted.

Well, the Bank of England is also predicting a rebounding economy in the Summer for the UK because of the vaccine. A whole load of pent-up demand to live again, a dearth of travel opportunity so the money is spent in the UK, and everyone vaccinated so things open up ... So who knows ?

At the current rate of vaccinations, 1.5m a week, with people needing 2 shots (750,000 people a week), it'll take approximately a year to get to 90% of the adult population vaccinated with 2 shots: 50m adults * 0.9 / 750,000 = 60 weeks (I've knocked off 8 weeks because vaccinations have already started). The idea that people will be back out spending again in the summer is ... ambitious.

What % of the population has already been infected?

Re: UK banks given six months to prepare for negative interest rates

#57

Post by mhh__ »

onion2k wrote: post #42
spacedcowboy wrote: post #28

Earlier quoted context omitted.

Well, the Bank of England is also predicting a rebounding economy in the Summer for the UK because of the vaccine. A whole load of pent-up demand to live again, a dearth of travel opportunity so the money is spent in the UK, and everyone vaccinated so things open up ... So who knows ?

At the current rate of vaccinations, 1.5m a week, with people needing 2 shots (750,000 people a week), it'll take approximately a year to get to 90% of the adult population vaccinated with 2 shots: 50m adults * 0.9 / 750,000 = 60 weeks (I've knocked off 8 weeks because vaccinations have already started). The idea that people will be back out spending again in the summer is ... ambitious.

For the last few days the rate is much higher than that.

We did 1% of the entire population in a day a few days ago

Re: UK banks given six months to prepare for negative interest rates

#58

Post by _-david-_ »

GordonS wrote: post #46
websites222 wrote: post #26

Earlier quoted context omitted.

Europe yes. US, no. The US is in an amazing position in terms of demography and growth. Aging population, but not immigrant averse like Japan and not an island. The US borders a rising economy with perfect demographics for growth (Mexico). The US is the least involved country in global trade. The US is increasingly disinterested in being the world police, so that capability can be deployed to protect economic interes…

> not immigrant averse like Japan and not an island As the past 4 years have demonstrated, there is a very large segment of the US population is very much against immigration, and would happily turn the country into an "island" by building walls around the land borders.

That is not really the case. The last poll I saw said 78% of Americans are fine with some immigration.

The exact amount of immigrants and the requirements to come here legally is less uniform in acceptance.

The biggest issue is between legal and illegal immigration.

Re: UK banks given six months to prepare for negative interest rates

#59

Post by hocuspocus »

blackbear_ wrote: post #33
treespace88 wrote: post #18

Earlier quoted context omitted.

I don’t think so. All loans have terms and minimum payments. So if you borrow $1000 over a year at -1% you still have to make $990 in payments, or you will default.

So, forgive the ingenuity, what prevents me from taking that 1000 loan, park it in my bank account, and repay the 990 due in a year (earning 10 in the process)?

1) You probably cannot borrow from the central bank.

2) Your retail bank has to make money in one way or another, we haven't seen negative effective rate on personal loans yet, especially on small loans.

Re: UK banks given six months to prepare for negative interest rates

#60

Post by mattficke »

blackbear_ wrote: post #33
treespace88 wrote: post #18

Earlier quoted context omitted.

I don’t think so. All loans have terms and minimum payments. So if you borrow $1000 over a year at -1% you still have to make $990 in payments, or you will default.

So, forgive the ingenuity, what prevents me from taking that 1000 loan, park it in my bank account, and repay the 990 due in a year (earning 10 in the process)?

Your bank is going to start charging you interest as well. They might have a teaser rate that's positive up to a certain balance, but there's limits to the arbitrage here.
Post reply on HN