Saturday, Aug 22, 2009
What a bunch of bankers......
FT: Investors strive to track Bank’s QE cash
'Pathetic' is the only word I can use to describe these incompetent fools......''The real issue for investors is the difficulty in tracking where the QE money has gone. No one knows whether the massive financial injection through the Bank of England’s purchases of gilts and corporate assets is likely to feed through into bank lending, vital to breathe life into the economy.''
Posted by hpwatcher @ 07:10 AM (1032 views) Add Comment
8 Comments
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1. paul said...
I have a bad feeling about what's going to happen here. They are playing 'chicken' with the gilts investors.
2. Ndg said...
"If the banks continue to hoard, then jitters about economic prospects might trigger a sell-off in gilts. This would lead to a damaging rise in yields and interest rate costs for a government that has taken on record levels of debt, holding back recovery."
Wow, a circle of maybe 6 Catch 22's. Infinite possibilities arise from so many variables.
Thank heavens we can trust the banks and UK government to correctly ascertain the situation in order to make the right decisions on behalf of the nation's men, women and children to provide a solution that will meet the best interests of the electorate. Just like they have always done.
The only 'solution’ I've read about is a mandatory cancer infected pork flu vaccination program. Good luck.
3. little professor said...
Not quite as bad as America, where $235billion of TARP funds simply disappeared under Paulson's watch, with seemingly noone having any idea where it went.
4. mark wadsworth said...
The banks have put the cash on deposit with the Bank of England.
LP makes a good point. Our government has been pretty useless, but the Yanks were ten times worse.
5. icarus said...
Government support for banks has had the effect of making it more profitable and less risky to keep churning old IOUs and avoid lending.
http://www.ocnus.net/artman2/publish/Business_1/The_Return_of_Greed.shtml
6. hpwatcher said...
LP makes a good point. Our government has been pretty useless, but the Yanks were ten times worse.
But that's the rub, the UK is smaller with a a larger level of debt - by proportion...and that was before the bail out.
7. Muffin Moon said...
The government sells gilts to the bank of england and spends the money on the public sector. This pushes up the cash in the economy and is massively inflationary. However the government is ultimately required to pay back the money and in theory will push up taxes which in the long term will take back the inflationary impact. However what is more likely, is that inflation spikes and the BoE bring it "under control", by bringing it back to target but there is no corresponding undershot so from a cumulative perspective they have massively overshot the target. Any inflation targetting that is not cumulative is liable to this kind of moral hazard. All people want short term gain rather than short term pain longer term gain, and BOE governor loves nothing more than to be the saviour of mankind.
8. fubar said...
This is the effect of letting the fox look after the hen house. Back in March on the Renegade Economist website Michael Hudson described what was happening was the establishment of a kleptocracy in place of democracy. With oligarchs emerging already.
Here I think.
I was a bit skeptical to be honest but with these numbers I'm convinced.