17 Jul 2015, 10:21pm
personal finance shares
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  • Windfall for tourists as Carney trails interest rate rise

    The Grauniad tells us it’s a good time to be a British tourist, all thanks to that Carney chap trailing an interest rate rise. I can’t help feeling that empty promises of  rising interest rates are just like a lasting solution to the Greek predicament, this is a movie that we’ve seen before and will see again – announcement of interest rate rise only to welch on the deal when push comes to shove. But a lot of people seem to buy it. Or perhaps they’re pissed off with the Grexit shenaigans. Either way, we’re back in 2007 again in relative terms to the Euro, though we are all still flat on our financial backs with stars going round in front of our eyes. And that’s before you even think of Greece.

    1507_eurogbpNow an Ermine could take the opportunity to hit Eurotunnel, duel with the myriad desperados and striking Frenchmen, and join the massed ranks of British wage slaves on their annual family two weeks in the sun, or I could think to myself maybe I’ll pass on that. I’ve always avoided school holidays for travelling anywhere because it’s damned hot and the price goes up and, well l’enfer c’est les autres avec leur fractious rugrats on public transport in the heat of summer. After 30 years of avoiding this sort of fun I’m not about to start now.

    Nevertheless, perhaps I could take some of my ISA for a summer holiday. Last year I was a forced seller and sold IDJV 1 for about £16 because it had fallen to what I had paid for it. It was unwrapped, I’d already maxed my CGT allowance so I couldn’t sell any of the rest of my holdings at a profit even though I needed the cash, hence I had to borrow some. Now it’s still a bit higher than that at £16.91, so I’ve told TD to let me know if it falls to a bit below what I sold at, because then I can effectively bed and ISA this over six months.

    All sorts of other foreign stuff will get cheaper. Now the other side of the coin is that all the foreign stuff that I already own will go down the toilet a bit. As it is this isn’t a hugge issue for me as I am hopelessly unbalanced worldwide

    Ermine total equity distribution

    Ermine total equity distribution

    because my HYP is the largest lump and it’s UK biased. Index True Believers would sell off half of that and pump up that devxUK and EM. I’m okay with buying EM and have done some of that already, and it bleeds now of course 😉 I’m not touching the US at current valuations but I would quite like to see some of that IDJV, in my ISA this time thanks very much. I’m not in a great hurry – 1550 would do me well. I should probably knock it off on the EM and lift some bombed out dev world. The problem is that as the ISA gets larger the annual steering wheel of new contributions gets smaller compared to the overall size. Since I don’t sell and I bought a lot of the HYP in the bombed out years of 2009 to 2011 I’m going to have a hard time balancing this out a bit. But a high pound and a low Euro helps…

    So you can keep your sea, sun and sand. I’ll get my summertime kicks on the market, particularly if the Greeks go and scare the horses a bit more. I like hot lazy summers of snarl in the markets.

    Notes:

    1. IDJV is basically Eurozone big fish.

    My oldest is now at school and I have just had my first taste of paying school holiday prices for accommodation because I have almost no flexibility in determining when I can go. Now I just need to put up with this extortion for the next 14 years.

    Perhaps when I have retired early I will just take the kids out of school whenever it is cheapest to go away somewhere – I seem to remember the pace of learning being relatively slow at school anyway so maybe I could teach them the content in a couple of hours while we were away. Who knows how quickly kids can learn if they don’t have to slow the whole class down to suit the weakest child in the group?

    @InsiderAccountant – there’s also public school as an option, though it can’t really be described as cost-effective for saving money on holidays 😉 Mrs Ermine and I were a the rather pleasant Sole Bay Fish Co restaurant on July 14th at lunchtime. The Suffolk summer term ends 22 July so obviously we will avoid lunchtime at restaurants from now until mid September. I was surprised to see a load of kids so early in the month.

    There were about eight adults and then a whole gaggle of kids, late primary school age. Our hearts sank – but it seems these were private school kids, probably from St Felix. I was gobsmacked – not only did the kids all sit together at a separate table from the adults who were able to talk to each other while the kids talked among themselves, but the kids used knives and forks properly and didn’t throw food at each other or other patrons – it was a civilised experience all round. Anyway, the point being that Mrs Ermine educated me that public schools have shorter terms – indeed St Felix broke up on the 4th July, so there’s the opportunity to get one’s annual holiday in the shoulder season.

    One presumes the pace of teaching is faster – not only do you get the extra two weeks win in Summer but they have an extra five days in the autumn half-term, all round there’s nearly a month less school term than the State schools

    I would love to have Mr. Carney back as our Canadian dollar has taken a hiding versus just about every currency lately. His no-mind successor has overreacted to low commodity prices and reduced interest rates 50 basis points. No chance of a US holiday at anything close to decent prices.
    We had 35 years of taking our hols on school breaks and summers because my wife taught school all that time. Glad we are past that now.
    In fact in the mid 90s we took our March school breaks in the UK just to avoid the hordes of Canadians going to Florida or the Caribbean. Great memories of London and surrounding towns.

    Completely off topic, but a very Erminian (Erministic?) article in terms of it’s intelligence, perspicacity and perspicuity (okay, that’s enough!)

    Would love to hear your comments on this;

    http://www.theguardian.com/books/2015/jul/17/postcapitalism-end-of-capitalism-begun

    Would be interesting to hear John Gray, author of Straw Dogs, view too.

    19 Jul 2015, 4:57pm
    by Neverland

    reply

    Carney will raise interest rates about 3-4 months after the US does

    The Americans have spent a year preparing the market for it and seem serious

    @Ray I fear the flatlining patient that is the UK economy will keep Mr Carney busy for the next five years!

    @Jim – interesting – one to read in the sunshine on a Kindle under my favourite tree to do proper justice to it. I’d agree with his thesis that there is serious change in how we live together, I’m just not as convinced that those with power are quite so ready to relinquish it for his utopia, although the increase in information and dematerialisation of it are described well. The obvious criticism is summarised in letter to the Guardian. That’s the trouble with forecasting all round – it’s easy enough to say something is changing, but the margin of error is unbounded as to what it’ll change into.

    @Neverland if and when this does turn up I see a lot of hurt in our overleveraged housing market ahoy…

    Thanks for the reply and link to that letter. Yes indeed, that’s always my question to this sort of utopian vision: “And who will work down the mines?”

    Don’t say robots. Capital will seek the cheapest option, which will usually be people, of the expendable kind.

    But I really did like his Shakespeare to Dickens image as a way to indicate how inconceivable the future is to those in the present.

    I’m unconvinced that rates will go up soon, but I suppose a return to the ‘norm’ is inevitable. It does seem inconceivable that interest rates were once as high as 5%.

    I wonder how many people will be trying to sue the banks when they can’t afford mortgage repayments after leveraging themselves to the hilt.

     

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