Tuesday, Jan 26, 2010
Damned if they do, damned if they don't
Investors Chronicle: Easing off the property rally
Thursday 4 February sounds like an unremarkable date. However, economists fear it will be the day the mini-boom in the UK commercial property market comes to an end. Why? It is when the Bank of England's Monetary Policy Committee is expected to call a halt to its £200bn programme of quantitative easing (QE).
There are growing fears that the suspension of QE will stop the nascent recovery in its tracks.
"It's important to remember that quantitative easing doesn't just happen and stop - it gets reversed," Prew argues, comparing the process to paying back the principle on a £200bn mortgage. "To do this, the government will have to issue more gilts, or start selling assets. No one knows how it's going to be done, as it's never been done before."
21 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. devo said...
QE b(r)ought us out of recession.
Why stop now?
And if £200 billion equates to 0.1% growth, what price a 'proper' recovery?
2. devo said...
Blanchflower on News at Ten tonight:
"I wouldn't rule out more Quantitative Easing."
3. Veronica said...
Hi, for a long time now, I have been very worried about this pretend economy. I am no expert, only a stereotype housewife. We have been paying too much for everything in this country for too long. Shoe-box size houses, selling at silly prices,---not now of course-- uncontrolled personal debt, greed in our government M.P.'s never mind the looting that has been going in our banking system. To announce to-day that Britain has emerged from recession, conjours up pictures of ministers with their fingers crossed behind their backs. I think this time in our history will be called the "emperors new clothes" period. It might take quite a short time now for everyone to notice just how naked bankrupt UK is.
4. markj69 str05 said...
I doubt that much of that £200B actually reached deep into the economy. Most I suspect remains in the banks coffers, balancing their books. Some filters through to business and private borrowing (But only very low risk candidates). Some re-invested in the mrkets, keeping the wheels turning.
Better add another £200B to saturate the market, then at least 10% might get through to the needy. Oh, and another £20B for next years bonuses!
5. fallingbuzzard said...
Priceless. We can't get one.
6. fallingbuzzard said...
markj69 str05, all of it is out there. you're alluding to it not moving which i wouldn't disagree with but seems to be the lesson not learned from Japan's dibbling in QE
7. devo said...
the extensive reports of the recession having ended have just made millions of people realise we've been in one
they'll now be looking for signs of a sustained recovery
8. devo said...
5. fallingbuzzard said... the lesson not learned from Japan's dibbling in QE
so the lesson to be learned is restart risky lending?
9. fallingbuzzard said...
QE doesn't create growth, it encourages unproductive activity at the expense of productive activity.
10. devo said...
"QE doesn't create growth, it encourages unproductive activity at the expense of productive activity."
so if it was to continue, well that wouldn't be a good sign at all, would it?
11. paul said...
It does just that - it effetively backstops risky operations by freeing up capital for banks to engage in more exotic and casino-type operations on the back of their newly-gifted wealth.
History will judge Mervyn King and the Bank of England very harshly. There will be a public enquiry one day.
12. devo said...
£200 billion of Quantitative Easing (QE) has just about propped up the economy, so far.
Expect more of the same.
13. vacuouspolitician said...
"History will judge Mervyn King..." ...as Penfold
"There will be a public enquiry one day." ...where it will be discovered that he was napping on the job for a number of years. Someone wake the old duffer up.
14. devo said...
@vacuouspolitician
appearances can be deceptive
15. This comment has been removed as it was found to be in breach of our Blog Policies.
16. fallingbuzzard said...
I don't quite see what Mervyn has done wrong. He's trying to target 2% inflation which is an impossible task. He who set that target will spend the next two decades explaining where 2% came from and why it always has to be 2%.
17. markj69 str05 said...
@11 devo... 'Expect more of the same'...
Unfortunately, I do. But only because the economy must look to be recovering before the GE. After then, the brown stuff's going to hit the fan. Almost as if someone shot old Gordy out of a canon and into one of those lovely wind turbines! If only...
18. devo said...
@14. vacuouspolitician... Oooh isn't "Mervyn" wonderful...lol
yes. like harold shipman
as i said; appearances can be deceptive.
19. happy mondays said...
Paul said, History will judge Mervyn King and the Bank of England very harshly. There will be a public enquiry one day.
Thats right about the same time they open up the medical findings for Dr David Kelly s post mortem...
20. Crunchy said...
2. devo said...Blanchflower on News at Ten tonight:
"I wouldn't rule out more Quantitative Easing."
Come on let's face it, QE and further stimulus will not stop. It was only yesterday that I heard Darling over the radio saying (paraphrase) he would not risk the UKs recovery by cutting off stimulus. Remember, whatever it takes? Oh the paradox! Meanwhile the international debasement of currencies continues unabated.
21. Crunchy said...
17. devo
Mr Mervyn Greenspan.
Enough said!