Monday, Apr 21, 2008
Peston's view
BBC: Mervyn bends - and how!
The Bank of England will on Monday morning perform what some will see as one of the greatest u-turns in its 300 year history.
Having been far more conservative than the Federal Reserve and the European Central Bank in the way that it provides financial support to banks, it will announce what may be the world's most ambitious and generous plan to pump money into the banking system.
The Bank of England will offer banks the opportunity to swap their mortgages for rock-solid Government securities.
When the dust settles, the proposal will spark controversy.
Posted by little professor @ 12:05 AM (1025 views) Add Comment
16 Comments
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1. planning4acrash said...
Oh cr$p
2. Superruss said...
If i were a bank id be swapping my entire mortgage portfolio for said bonds and sarting over in about 4 months time, when about 20% of the 50% that's coming off the average price of a house has solidified into the market. Thanks for destroying the future of my country, you !diots.
3. Hyrax said...
So banking crap being swapped for tax payers money, or taxpayers buying crap. As a taxpayer I dont want the crap, but hold on to my money!
No risk, no failure, banks win no matter what, Capitalism is a con and it does not work, it is an illusion. Wake up and smell the crisis!
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5. lvmreader said...
It's ok, who needs a strong GBP anyway.
We need low interest rates and a weak GBP so we can, erm, export our houses. That's it, we are exporting houses to China, not just washing transactions to-and-fro in blighty, soaking up all that Kirstie Allsop induced effort which may have gone into useless things such as research and development, manufacturing, increasing our competitiveness, innovation, that sort of thing.
And as for Gilts, well they were overvalued anyway and they needed to be sold off worldwide. I mean, it's only people's pensions which need strong gilts, no-one useful.
And we may see yet more losses, because we are only just beginning in this Gordon Brown created dystopia. So what then - ah yes, print another £100billion just like that (as Tommy Cooper would say).
China, the Middle East, the Gulf States, South America and the rest of Asia will just believe "we're worth it" because we say so.
They won't all flush our currency down the toilet in a flash, raising direct import costs to all UK businesses and consumers and thus raising inflation to 3 times it's current rate (I mean from 12% to 36% at a minimum).
All peachy. Nothing is more important than keeping house prices high now is it.
Education, Transport, Innovation, Research and Development, Products, Manufacturing, Optimisation - FUGETABOUTIT!!!
That is for all the backward non-white people of the world to do (and the Eastern Europeans). We Brits must just keep borrowing to finance Kirstie Allsop induced house appreciation.
6. who stole my pension? said...
Short term solution for a long term problem. Interest rates will have to go up to pay for this.
7. Orwell said...
Bends forward with his posterior in the air and his head in the sand.
8. stu_b said...
Anyone,
Can you please tell me, as a new boy to HPC, does this (issuing of Gilts) mean an increase in the money supply? Surely printing £50-100Billion will be highly inflationary in that it will weaken the pound?
Please help!
9. Neo-serf said...
Jesus Wept
10. it_is_going_with_a_bang said...
This money is going to the banks that probably least need it anyway isn't it?
They still then have to lend it to the other banks in turn.
I cannot see it making any difference to the LTV ratios that banks are now requesting.
It makes no real difference to general affordability to the majority of people.
The only action that will slow a big crash is to put rates down to 3%/3.5%. Given the problems with inflation I can't see how that would be justifiable.
11. techieman said...
more supply of gilts means higher interest rates. Its quite curious - i mean who is gonna buy these gilts? Anyway, didnt they try this with NR, and realise it wasnt a good idea. If they have the collateral of the MBS' AND a call on the other assets of the banks then i have no problem with that (if anything it will create the opposit effect of what they want). If though the MBS' are the ONLY collateral provided, the this will be a problem. Why would the banks want to liquidate these "loans" anyway? We need to wait and see the full text of the bailout before determining exactly what it means. Its a bit crazy, if you or I default on a mortgage then the lenders can chase us, if they defqault on these shouldnt they be responsible for the payback?
12. letthemfall said...
Are we in an age of robber barons, aka bank CEOs? A Labout govt that redistributes wealth from the poor to the rich? If this largess by the Bank stops big banks collapsing, that is one thing; but if it does little more than maintain dividends, bonuses, absurdly large salaries, then it is a disaster for the majority. Is the economy now out of all control, much like the seventies?
13. Greenbay said...
orrrrrrr bless you all, looks like im the only one to predict this intervention, why is it you are all so oblivious to whats going on around you, it seems like none of you have any financial intelligenece whatsoever! it really makes me laugh :-)
All you do on this site is try to discover some justification for house prices to go in the direction you want (ie crash) in reality this will never happen.... i think deep down you all realise this will not happen but are just clinging on to this hope.
Wake up the property market will prosper.
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15. Orwell said...
With Gordon Brown (very, very) close behind threatening to take the BOE into public ownership if he doesn't oblige...
16. wiltshire said...
Interesting that this isn't the main story on the BBC Evening News. I mean I know there's a bit of a spat going on at the House Of Commons but come on, this is ANOTHER historic and unprecidented moment in this country's history.
It had better work or this country (not just the housing market) is toast.