Thursday, 13 September 2007

Daily Mail, and others, don't understand free markets?

Daily Mail headline today expresses astonishment that the Bank of England says that "We Can't Control Mortgage Rates!".

Which bit of a free market economy does the Mail not understand? Do they really think that the huge range of mortgage deals, carefully tabulated on their own finance pages, are all individually controlled by the Bank of England? That the Bank of England says to, say, Bristol and West that their 5yr, 0.5% discount tracker deal, with £2k cashback and a £100 M&S voucher is fine; but that they'd prefer that the Woolwich shaved a couple of basis points off their 1yr-fixed, first-time-buyer- only offer?

The article at one point reminds us of the problem of sub-prime defaults in the US and says that "as a result, High Street lenders here are lookng to make more money from borrowers".

So, if it wasn't for the situation in the US, UK banks would be happy making less money from borrowers? That's just silly. Any bank will always try to make as much money as possible from their customers, but they are restrained by the fact that they operate in a competitive market. This is obvious stuff, everyone knows this really, don't they? They know that prices are controlled not by the State, but by competition from other companies?

But, you know, I think that while everyone sort of knows this, lots of people don't really believe it. They think that companies are generally out to get them, and if something is expensive that is nothing to do with the price the market will stand, but because the company is ripping them off.

I had a conversation with my brother (a scientist) recently about his car insurance, and he was utterly convinced that all insurance companies operate in a cartel, and that there is no competition for his business. He really believed this to be the case. Maybe it is, but it seems it would be a very, very complex cartel to manage. It seems to me much more likely that the market for car insurance in the UK is highly competitive, and if you are unmarried, drive a Lotus which you sometimes take to track days, and park it on the street in Bloomsbury, your premium is probably going to be quite high however competitive the market is.

5 comments:

Anonymous said...

I guess the only people who do understand free markets are people from http://www.essaykings.me/academic-writing/. When I have questions and ambiguous situations, I always give them my business to handle and they do it so well. They can do any problem in several hours even.

林磊 said...

2016-3-2 leilei
true religion
michael kors outlet
ture religion outlet
hollister co
ray ban sunglasses
kate spade outlet
toms outlet
jordan 6s
kate spade handbags
canada goose jackets
nike sb janoski
nike huarache
ugg australia
longchamp outlet
louis vuitton outlet
burberry outlet online
michael kors bags
christian louboutin shoes
longchamp soldes
michael kors outlet
toms shoes
michael kors outlet
true religion
jordan 3s
jordan retro 13
michael kors handbags
gucci outlet online
montblanc pens
ugg boots australia
jordan 3 retro
michael kors outlet
nike shoes
michael kors handbags
nike blazers uk
canada goose jackets
louis vuitton outlet
louis vuitton outlet stores
jordan shoes
michael kors outlet
michael kors handbags

Gege Dai said...

coach handbags
ray ban sunglasses
tiffany outlet
swarovski jewelry
swarovski outlet
lebron shoes
hollister
ugg uk,ugg outlet,ugg boots outlet
cheap canada goose jackets
michael kors outlet clearance
coach outlet
ray ban sunglasses
ugg outlet online
coach outlet store
iphone case uk
mulberry handbags
coach outlet clearance
juicy couture tracksuit
ralph lauren polo
nike huarache
cartier watches for sale
fitflop clearance
yeezy boost
cheap uggs
fitflops outlet sale
supra shoes sale
oakley sunglasses uk
christian louboutin outlet
longchamp bags
oakley sunglasses wholesale
abercrombie and fitch
longchamp pliage
longchamp outlet
hermes birkin
rolex watches
polo ralph lauren
0808jianxiang

dada24 Xu said...

canada goose
ugg boots
ugg boots sale
canada goose jackets uk
ugg boots
uggs
canada goose pas cher
tory burch outlet online
tory burch sale
michael kors outlet online
zhi20170107

Thomas pedro said...

Web moneylenders - the beginning of innovation made ready for individuals to use web banks when attempting to get a credit. More individuals are surfing the net looking for better home loans since it's quick and more advantageous. check cashing chula-vista