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BUMP Times might become interesting again Lots of talk of money exiting bonds in favour of equities and I assume strengthening commodity prices. Your thoughts and commentary over the next few months would be much appreciated FT.

From the Boe's website The FLS will open for drawings on 1 August. For 18 months thereafter, banks and building societies will be able to borrow UK Treasury Bills from the Bank for a period of up to 4 years against DWF-eligible collateral, for a fee. Participating banks and building societies will be able to borrow up to 5% of their stock of existing lending to the real economy, plus any net expansion of lending during a reference period (from end-June 2012 to end-December 2013). I read this as meaning the FLS ends December 2013 and will be reversed in 4 years time, in which case any uptick in lending will be very short term. Any ideas ??

Spot on. In terms of debt servicing what savings have been made by ultra loose monetary policy have been eaten up by non discretionary inflation.As you point out this isn't the 1970s, the UK has the rest of the world to compete against now and as the rat Sir Mervyn says he can't control global commodity demand/prices can he !!!

Dick Fuld or Dick Fluid ???

Best buy 5 year fixed rate bond 4.6% Theoretically cash buyer on £250k house purchase borrows 60% of purchase price @ 3% with HSBC - ignoring repayments this would be £24k including arrangement costs Compounded interest net of tax from the fixed rate bond would be approx £29.7k. Nice little bit of beer money or have i got my sums wrong ???

Its not relevant until the point where UK banks are forbidden buying gilts with newly created BOE monopoly money.

Why is it nowadays HPC seems to miss the most relevant news ??? http://www.telegraph.co.uk/finance/economics/9415638/Chancellor-seen-at-risk-of-public-sector-borrowing-overshoot.html

A gloomy report but will it be outweighed by seemingly limitless amounts of stimulus being conjured up by the Boe and Government. Meanwhile : BIS voices concerns over the same Central Bank stimulus Government borrowing came in at £18 bn The Eurozone gets another sticking plaster City tainted by Libor scandal All most frustrating.

Even though this plays out as a slow motion train wreck and it seems that each Central Bank is as inept as each other, I wonder how long before we start to see a proper run on a currency. In as bad shape as Europe is in, if I were the BOE I wouldn't get too cocky.

It will be difficult for them to get away with more QE in the near term with CPI likely to break through 5% in the next few months. If the FED go on a printing spree with resultant commodity price increases before the BOE, then I think it would be even more difficult.

Clueless Tossers sometime soon hopefuly these w@nkers will be held to account,

Does this not apply to Sovereign default ... I should well imagine that UK bank/insurance involvement is significant.

FWIW I can't see how UK banks are going to come up with £500 bn to lend without ye olde securitization markets some how miraculously coming back to life. Unless of course the Government are going to "create it" whilst hoping that no one else notices.

Negligable wage growth, High inflation, just borrow more ..... http://budgetresponsibility.independent.gov.uk/wordpress/docs/household%20debt%20paper%20formatted.doc1.pdf .... oh dear.

For what its worth I think the Western sovereign/bank debt monetization process is very close to hitting the tipping point. Been said many times before but Central bank monetary policy will count for little once the BRICS/East start to dump Western debt & currencies. Then the sh!t will hit the fan in one way or another, rising food prices and resulting troubles in the Middle East could be the precursor to an awful lot worse.

Banks using QE, such as the Bank of England, have argued that they are increasing the supply of money not to fund government debt but to prevent deflation, and will choose the financial products they buy accordingly, for example, by buying government bonds not straight from the government, but in secondary markets.[1][7] Thems the rules, they ought to be enforced. UK deflation has been beaten in the medium term .... time to sell that £200 bn back to the market .... although highly unlikely. What you describe isn't workable ... the West can't simply print its' way out of trouble without bringing the rest of the world down with it,

A state must be in control of its own currency and monetary policy if it is to be able to unilaterally employ quantitative easing. Countries in the eurozone (for example) cannot unilaterally use this policy tool, but must rely on the European Central Bank to implement it.[citation needed] There may also be other policy considerations. For example, under Article 123 of the Treaty on the Functioning of the European Union[7] and later Maastricht Treaty, EU member states are not allowed to finance their public deficits (debts) by simply printing the money required to fill the hole, as happened in Weimar Germany and more recently in Zimbabwe.[1] Banks using QE, such as the Bank of England, have argued that they are increasing the supply of money not to fund government debt but to prevent deflation, and will choose the financial products they buy accordingly, for example, by buying government bonds not straight from the government, but in secondary markets.[1][7] Yeah right, they really stuck to those rules didn't they. No mention either that the Fed by their Dollar printing antics have played a large part in the mayhem currently unfolding in the Middle East. Pr!cks the lot of them.

We must be nearing some kind of inflection point now ... The average consumer in a consumption based economy must be very close to breaking. I thought we might have had a few problems with unleaded @ £1.35 by now but hey ho . In other words, how long before non-discretionary inflation becomes more expensive than debt servicing costs in an ultra loose monetary policy enviroment to the average debt ridden consumer ??????

And don't forget those who have accepted reduced hours / part time jobs and its effects on net household income.

IMHO cpi will hit > 3.5% within the first six months of 2011, maybe a whole lot more if the Boe does embark on QE2 and sterling takes a big hit. I wonder what the unions will make of that or maybe as Newsnight pointed out a couple of weeks ago, given the amount of household debt workers will just be happy to hang on to their jobs and accept a lower standard of living. Having reluctantly just spent a pre Xmas afternoon in a local retail park, it appears to me that Joe Public have no fear as yet, or are they just stupid ????

Never a truer word spoken brother. One minute I think Merve has some sort of conscience and sense of morality, and the next ... NADDA .

I also agree. For our masters to achieve their objective they need to increase monetary velocity, simply creating money out of thin air to shore up a bust banking system doesn't work. Money, make believe or not needs to enter the system and be exchanged to create growth. Unfortunately for them the deeper they delve into the unknown the worst the likely outcome will be. Pr!cks the lot of them.

Annuities currently @ 5% or so. £30 bn wiped off the value of savings (and out of the economy) since QE began, pensioners skint . Warnings of currency wars/protectionism. There is no easy way out of this mess. I just wonder what will be the final straw that beaks the camels back ????

Utter drivel, it won't be pineapples, it'll be Halal kebab meat that gets the blame ... Hmmmm Kebabs

Far too sensible. According to the article the fact remains that this will only raise £2 bn of extra tax revenue - that's only 4 days worth of government borrowing at present rates !!!! Apparently 'official' borrowing went through the £800 bn mark last week. I still can't get my head around how they plan to halve the deficit in 4 years - that's about £80 bn of spending cuts / tax rises and will still leave us at near to 100% of GDP without taking account the other 'nasties' that Brown has hidden off balance sheet. What a mess.