Cfk Finally Following Baexpats' Advice

[thorsten]

I don't know where you get your information from, but according to the official numbers, its about 10% for the east and about 6% for the west. I agree that its worse than the former official 0% unemployment of East Germany, maybe we should go back to their sustainable economic strategies... ^_^

 

[Reneige]

I have a question and it's due to not have knownig much about various areas of banking/finance and also don't do the whole "making enough money to put some away" thing. So the question is:

What does this mean?



Specifically, what is:
-a "wholesale interest rate"? (maybe what does it affect? who pays it? who receives the payments?)
-...and at what percent is it now?

Thanks, I'll hang up and listen.

It is the rate of interest the central bank charges commercial banks to deposit their money at the central bank. When the rate is low, commercial banks do not have much incentive to park their money away at the central bank, so they lend it out to businesses and consumers and the supply of money in the economy grows (stoking GDP growth and potentially inflation). If the central bank increases the rate, commercial banks will lend less to consumers and businesses because is relatively more attractive to deposit their reserves at the central bank and earn the higher interest rate. This extracts/reduces the money supply in the economy (fighting inflation).

Since any bank can deposit at the central bank, it also sets a minimum lending rate between commercial banks. This is because banks will not lend to a relatively riskier commercial bank at a lower interest rate when they can park their money at the central bank effectively "risk free".

While 27% percent interest rates sound high but it is not. Since 27% interest is below the inflation rate 30%+, anyone collecting interest is effectively losing money. That's hardly an attractive proposition. While it may seem monetary policy is tightening, it's not at all, it's very loose at the moment.

PS I'm quoting 27% ignorantly as I have not checked the official value.

 

[ajoknoblauch]

Right with the "blooming" industries in the east these days - oh and and "low" unemployment rates of 20%.

Some of them are doing well - I just met a couple Ossis from Dresden who are at least able to travel to Chile.

 

[EdRooney]

Absolutely. I was thinking the Eurostat and IMF statistics about the terrible state of the EU economy were right, but since Knoblauch met a couple of Germans in Chile they must obviously be as false as the INDEC.

 

[EdRooney]

Continuing her "pivot to the north" CFK and Obama are now officially "Bestest Hydrocarbon Buddies For Life". Who will stop the Mad Capitalist in the Casa Rosada?

 

[ajoknoblauch]

Absolutely. I was thinking the Eurostat and IMF statistics about the terrible state of the EU economy were right, but since Knoblauch met a couple of Germans in Chile they must obviously be as false as the INDEC.

Please note the qualifier "some."