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Lending Data Raises Quantative Easing Fears

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Lending data raises quantative easing fears

Renewed concern about the effectiveness of the Bank of England's quantitative easing policy surfaced on Wednesday after the release of data showing consumer borrowing is down to its lowest level for 15 years.

A sharp drop in money supply figures added to the worries but a further rise in mortgage approvals provided more pointers to stabilisation in the housing market although many potential buyers say they are struggling to find money.

Economists again questioned whether the Bank's policy of pumping more money into the economy to support bank lending was working. Howard Archer, chief UK economist at IHS Global Insight, said there was little hard evidence and added that it was potentially worrying for recovery prospects.

New consumer credit and mortgage lending were well below forecast levels with the result that the £414m increase in net lending was the weakest since the Bank of England started collecting the data in 1993. Unsecured consumer credit fell to £71m, well below the predicted £300m while a modest improvement in net new mortgage lending - up from £331m to £343m over the last two months - was well short of the £600m pencilled in by economists.

Mortgage approvals ran ahead of expectations, rising from 44,169 to 47,584 - the highest for 15 months. Bridget O'Leary, senior economist at the Royal Institution of Chartered Surveyors, said that activity was still weak despite the welcome improvement. Net lending for purchases remained 50pc below the long run average while house deals were still falling through because of a lack of finance.

Money supply figures added to the nervousness. The headline M4 money supply dropped 0.2pc last month, the biggest fall for almost five years.

Economists feel the Bank's Monetary Policy Committee is faced with a tough decision next week on whether to expand quantative easing now that the £125bn tranche it approved has been spent.

Nothing they've done has worked so far. The economy is in shambles, and we are getting poorer by the day.

Go on Gordo. Print more, you know you wanna!

Shiny yellow stuff anyone?

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Economists feel the Bank's Monetary Policy Committee is faced with a tough decision next week on whether to expand quantative easing now that the £125bn tranche it approved has been spent.

Yeah, that'll be a toughie. I think we can all guess the answer, though. <_<

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Next shot : £200 billion.

The cruel reality is the current financial system we have is broke and QE is all we've got left.

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Lending data raises quantative easing fears

Nothing they've done has worked so far. The economy is in shambles, and we are getting poorer by the day.

Go on Gordo. Print more, you know you wanna!

Shiny yellow stuff anyone?

The economy is in a shambles but house prices have stabilised. That's what they wanted. It's worked.

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Next shot : £200 billion.

The cruel reality is the current financial system we have is broke and QE is all we've got left.

The tricky question is whether cash will go from aa3 to aaa (as it did in Japan) or to d (as it did in Zimbabwe) ......

I suspect that the nature of our economy means that cash will go from aa3 to aa2 with a positive outlook over the next two years or so before it embarks on its inexorable slide to d over the next 5 to 7 years ......

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The economy is in a shambles but house prices have stabilised. That's what they wanted. It's worked.

Not just our economy taking a pasting, just returned from hols in Spain and the effect of the exchange rate for the pound there is really, really dire. Got talking to the girlie from the local pub and she says takings have halved this summer. They have had to lay off staff .

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The economy is in a shambles but house prices have stabilised. That's what they wanted. It's worked.

Nothing can be isolated from the dystopian morass that is the economy. Not least the housing market. They are burning through funds at an incredible rate to prevent a full implosion of house prices, it cant last.

Take into account the economy is shrinking at -5% a year

AFTER

£300 billion ( 20% of GDP borrowing)

£150 billion ( 10% of GDP Qe)

a 30-40% depriaction of currency.

The economy is actually shrinking at way more than 50%. Its wiped out 10 years of 'growth'. House prices just dont reflect it yet.

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The tricky question is whether cash will go from aa3 to aaa (as it did in Japan) or to d (as it did in Zimbabwe) ......

I suspect that the nature of our economy means that cash will go from aa3 to aa2 with a positive outlook over the next two years or so before it embarks on its inexorable slide to d over the next 5 to 7 years ......

:lol: good one.

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Nothing can be isolated from the dystopian morass that is the economy. Not least the housing market. They are burning through funds at an incredible rate to prevent a full implosion of house prices, it cant last.

Take into account the economy is shrinking at -5% a year

AFTER

£300 billion ( 20% of GDP borrowing)

£150 billion ( 10% of GDP Qe)

a 30-40% depriaction of currency.

The economy is actually shrinking at way more than 50%. Its wiped out 10 years of 'growth'. House prices just dont reflect it yet.

Yes exactly few people realize how dire the situation is. They spent the 150 billion in the first half... so that is about 20% of gdp.. and still the economy shrunk by 5%.

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Guest The Relaxation Suite
Nothing they've done has worked so far. The economy is in shambles, and we are getting poorer by the day.

Go on Gordo. Print more, you know you wanna!

Shiny yellow stuff anyone?

Incredible all the places the press can fit the words "stabilisation of house prices", isn't it? Stabilisation here, stabilisation there, stabilisation everywhere. The volume of houses selling is frighteningly small and most intelligent people are all cowering with their money under the bed.

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