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Sterling weakens against the dollar (inflationary for dollar denominated commodities) and strengthens against our biggest export market the euro. Not. not good ... playing their present game the Boe's worst nightmare .... HA HA .... Tough sh!t.

Again from the BIS paper. Central Banks impotent in their ability to control inflation, a complete disconnect between Central Bank and real interest rates. I would like to see the market reaction to that. Not that I have much time for the man but this might be what King was hinting at the other day .... start fiscal tightening now otherwise we lose control.

Its going to end up an awful lot more than that. According to the Bank of International Settlements : http://www.bis.org/publ/work300.pdf?noframes=1 the UK if allowed to carry on its current course will end up paying something near to 30% of GDP on public debt interest payments alone by 2040 (Page 11 - Graph 5) However they seem to take the view that the poblem might come to a head long before then.

Absolutely. No more money left to lend and that will be that, unless all of a sudden there is a whole load more money to lend .... I doubt it.

It appears that UKPLC has been given the benefit of the doubt thus far. As I understand it SLS and CGS have prevented a fire sale of the bank's worst looking assets, ie repo's haven't nearly approached the numbers that were first banded about a couple of years ago. This though all comes at a cost ... £330 bn ... if it's withdrawn over the next couple of years as the Boe wishes then I think it's fairly obvious what will happen, if not then it gets added to national debt !!!!! The IMF I believe also recently highlighted the problems of our £150 bn annual funding gap shortfall. It's been said often enough on here before but the bottom line is we don't come close to producing/saving enough to satisfy our appetite for debt and the markets (Q/E, dodgy accounting rules aside) are close to calling our bluff. If the markets are concerned about a piddly little £50 bn of public spending cuts, wait until they get their heads around what else is to come.

Whoops, the pc like Gordo appears to have gone mad.

BUMP http://uk.reuters.com/article/idUKLDE63E1OE20100415 Only a tiddler in the greater scheme of things I know, but maybe a taste of things to come.

Well this is his chance to change things ... From your response I take it that you have your reservations.

We have the potential for a post election sovereign debt downgrade (not that the agencies words count for much ... most of the Western world should be ZZ- already), in the UK a £ 300 bn SLS / credit guarantee scheme hangover to sort out and the rest of the PIIGS about to go down the sh!tter. I assume that the poor sods who have been left homeless in the USA as a result of GS fraud will soon be demanding heads on sticks ... I certainly would. I dunno ..... something has got to give soon.

UKPLC can't control Global demand and yet as a comparison for the majority domestic wages can only deplenish against Global wages and demands. The rest of the world has caught up at a pace I think.

. We're between a rock and a hard place on that one I'm afraid.Yields first, then oil, then equities (Perhaps the other way around), then the next deflationary wave. Coming to a central bank near you shortly. Don't quite get that bit, if the USD falls so will demand and oil price. However in the UK given our tax regime I doubt a Litre of unleaded will ever get back near to £1.10 ... disasterous in a eventual (and I agree with you) deflationary scenario.

Ahh yes but they will maybe have another £500bn of national debt to deal with. If I were you mbga9pgf I would wait until after the election. How would you feel if you bought that nice shining gleaming two up two down next week only to find that in another couple of months time UKPLC gets the thumbs down. Where does £500bn come from: £200bn QE (supposedly sold back to to the market (yeah right) but national debt still nonetheless) + £300n + SLS etc due to be withdrawn very soon (if not will have to be added to national debt). If this little lot doesn't either result in massive public sector job losses or rattle real borrowing rates in 6 to 12 months time then I like you will accept defeat. In the mean time negative private wage growth and increased real living costs means that unfortunately the daft sods get ever more reliant upon fantasy land monetary policy. I dunno but I get the feeling that one way or another there's one big splurge of Sh!t yet to hit the fan before we get back to "business as usual".

I smell that too .. like yesterdays festering kebab. What has Sterling got to offer that the other two haven't bar reserve status ......... SWEET FA.

Just a reminder of the Boe's QE remit: http://www.bankofengland.co.uk/monetarypolicy/assetpurchases.htm It would appear that the Boe currently has no remit.

The Euro and its PIIGS are currently considered more ugly than the £ but word has it that the £ might be showing early signs of facial herpes. http://www.telegraph.co.uk/finance/comment/liamhalligan/7174972/Wrong-time-for-Tories-to-start-wobbling-over-spending-cuts.html

Tell me scepticus, exactly what was the reason for its initial decline.

I quite agree. My point is though that I don't think a strengthening dollar and weakening Euro is in the Boe/Brown masterplan.

http://uk.reuters.com/article/idUKLDE6141WC20100205?pageNumber=2&virtualBrandChannel=0 Sterling hits 8-1/2 mth low vs in-favour dollar If anything I would have thought that the Boe would prefer a weak pound vs the Euro (our biggest export market) and strong vs the dollar (less inflationary for commodities imported and denominated in dollars). Interesting that the "pause" in QE did little for Sterling's cause, or maybe the markets believe that the " pause" will be very short lived. Or maybe the markets are putting UKPLC on a similar financial footing to Greece, Spain Etc, Etc.

A couple of questions for you FT, in one of your previous posts you say: "The DMO loaned the assets for most of these operations to the BoE. £275bn of Treasury Bills were created specifically for the SLS, and £50 billion of gilts were loaned for the DWF." Does this mean that this £325Bn that was created to swap "cash" for potentially dodgy bank assets is currently part of of our approx £800Bn national debt or is it classified as some other type of liability ??? Also when these special liquidity measures end (the CML refers to it as temporary) does it mean that the banks that have used the facility will have to take these assets back onto their books ??? Seems to me that if the mortgage lenders are asking for a large chunk of future mortgage issuance to be securitized against government borrowing/the taxpayer then our day of reckoning might be upon us sooner rather than later. I assume that potential investors, be they foreign or domestic pension funds or whoever must scrutinize the Boe's/governments books for any signs of financial impropriety in the same way that you do. I don't claim to understand a fraction of what goes on in this world of banking chicanery and deceit but thanks for keeping this thread going - it's a real education.

Grey Goo ... tell me Durch you don't happen to have a second wife called Camilla and a mother with a couple of corgis do you.

Hmmm, now there's a thought. I reckon Brown would quite like to be shafted by King. Nah, the Boe will tow the line, the tories and labour will continue their pathetic little spats resulting in hung parliament, and then the shit hits the fan ... or maybe not.

Spot on Durch .... this really scares me now. Forget about the housing market for a while and consider the pension industry, ten years ago you could have bought an annuity @ 10%, today nearer to 5%. For every action there is an equal and opposite reaction. How is anyone supposed to plan for the future without taking massive risk.

Big problem looming here IMHO ... CPI will exceed 3% within the next couple of months, a fact that the Boe will no doubt rather conveniently ignore (you know, spare capacity and all of that). Who is to say that embedded inflation in real living costs will result in increased wages as the domestic economy continues to struggle. If the Boe continue with current monetary policy it could well be that a large chunk of the benefits from reduced debt servicing costs will be wiped out by the increased cost of living, then we really would be in the shite.

http://www.thisismoney.co.uk/news/article.html?in_article_id=496973 It would seem that any reduction in asset values must be avoided at all costs. Even Brown's cronies on the Treasury select committee appear to take a more realistic view. http://en.wikipedia.org/wiki/Cloud_cuckoo_land