paulr

Lots of countries are in debt, therefore lots of countries want to borrow money. If lots of countries want to borrow money, then the demand for money is high. If there is a lot of demand for a product, it usually pushes up the price. Therefore, why are interest rates, for people who have a lot of money to lend, so low.

what would scooby do

Study of scones?

legb4rsk

Economics! Don't get me started.
I have never understood it.It's just a weird freaky bunch of made up numbers.
Everyone trying to get bigger & bigger portions of an ever smaller pie.

If you ever work it out let me know,

Yours

George Osborne

what would scooby do

It all ends in disaster anyways.

Trout

iTrader: (1)

You are exactly right.

However the interest rate you and I see is the interest rate set by the central bank (Bank of England for us) - this is set low to stimulate growth as people can afford to pay their loans.

The market driven interest rate; i.e. The cost of debt, is seen in bonds - these are the instruments Government debt. And the cost of bonds is racing ever higher, especially for Spain, Greece, Italy, Ireland, etc.

The bond rate is jointly driven by demand and risk. The riskier it is the higher the rate - 19-20% for Greece.

And who said banking is really easy!!

FlightMan

Certainly not the banksters. They've ****ed things up a treat.

Trout

iTrader: (1)

The current crisis is driven by the deleveraging of the sovereign wealth funds - not driven really driven by the banks....

Midlife......

iTrader: (2)

Trout really should have said in Paragraph 3 in post number 5..... "Borrow money" rather than "pay their loans" LOL

Shaun

Slugmeister

I think Private Frazer was right.....we are all doomed!

Trout

iTrader: (1)

...pay their existing loans and business lines of credit.

New borrowing is actually falling and we are saving more than borrowing as consumers.

David Lock

So with investors pulling out of USA and European markets, including UK, and putting money into "safe havens" why has the Brazilian stock market taken a big hit? I thought they had a strong economy and strong growth, one of the stars of the Americas?

dl

Trout

iTrader: (1)

About a third of its economy is based on production of goods from aeroplanes to textiles and nearly half of its exports go to the US and Continental Europe.

If it has no-one to export to, it will slow down its economy. Same thing is happening in China and India. Chine needs to fund the US so the US can buy things from China so China can keep on growing and have a trade surplus...


...to lend to the US, so the US can afford to buy Chinese goods...


...etc

rossyboy

iTrader: (8)

I wonder how long it will take for tens of millions of americans to be working in sweat-shops to produce goods for China.....

Seems to be a cunning plan of the chinese. Suck all the money out of America, instead of going to war with them and loosing.

David Lock

Well they've made a good start on their not-so-cunning plan in S America and working hard at ripping off Africa. They might even bail out Greece to gain a foothold in Europe? Small change for them.....

dl

Leslie

Would I was correct when I say they will continue to keep on selling bonds as long as some one will continue to buy them in at attempt to keep it doing until event at last no one will buy them any more by which time it will be impossible to earn any thing to pay anything towards the national debt.

What on earth will happen then I wonder!

Les!