another blow for spenders

[baasvandieplaas]

http://www.fin24.co.za/articles/default/display_article.aspx?Nav=ns&ArticleID=1518-25_2041757

The hinking of interest rate will not solve the spending problem. Educating the spenders will.

 

[nthdimension]

He, however, pointed out that credit extension and domestic demand remain strong, and there are only tentative signs that household consumer demand may be responding to the tighter monetary policy stance.

He just doesn't listen. He has been told he needs to give it time. He's also been told that inflation obsession is not necessarily the right attitude when you're trying to grow your economy as fast as possible. And he's been told to remove oil price effects from the inflation rate.

What he is probably going to do is create a vicious cycle - he'll raise rates too often instead of waiting 9-12 months for the rate change to have an impact, then when rates are again lowered everyone will rush out to borrow. A slight increase should have been the limit, although he probably should have just left the rate alone to fuel the economy.

Punishing the credit institutions should be the first line of attack to curb excessive lending

 

[fivelza]

He just doesn't listen. He has been told he needs to give it time. He's also been told that inflation obsession is not necessarily the right attitude when you're trying to grow your economy as fast as possible. And he's been told to remove oil price effects from the inflation rate.

What he is probably going to do is create a vicious cycle - he'll raise rates too often instead of waiting 9-12 months for the rate change to have an impact, then when rates are again lowered everyone will rush out to borrow. A slight increase should have been the limit, although he probably should have just left the rate alone to fuel the economy.

Punishing the credit institutions should be the first line of attack to curb excessive lending

It takes about 12-18 months for any rate hike to really filter through and slow down credit extension. As nthdimension says something needs to be done regarding the institutions offering credit, but that alone won't solve the problem. Consumers need to be responsible as well.

 

[Syndyre]

How do you punish the institutions? Something needs to be done to encourage people to save, the idea mentioned a while ago by Mboweni about a low interest home loan sounded like a good idea, get people to put their money into some equity instead of consumer goods.

 

[Gatecrasher]

On the plus side, those spenders who don't use credit are benfiting from the stronger rand brought about by the higher rates.

And savers are rewarded.

Cash is King.

 

[nthdimension]

They could start by making it illegal to use money from a home loan for anything other than improvements to the property. I regularly get letters from banks trying to get me to pull money out of my home loan and spend it on luxuries.

Every week I get letters from various institutions trying to get me to borrow at high interest rates. This is not new, it has been like this for a long time. Mboweni is at least aware that the banks are out of control, pushing credit constantly. It might take creative measures to discourage them.

I don't think the level of borrowing is the real problem. Capitalist society runs on credit. The problems appears to be that supply isn't keeping up with demand, leading to increases in prices. South Africa needs to increase its capacity so it can keep up with consumer demand. If we can boost supply and maintain demand the economy will benefit.

 

[simple_simon]

so the monthly anal rape i'm getting from the bank for my homeloan has just gotten more uncomfortable....instead of the usual lubing up before the event...they have now thrown away the bottle and are going for the rough feeling