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King To Halt Gilt Purchases On Economy

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http://www.bloomberg.com/apps/news?pid=206...id=a.MmHhH0PtF0

Aug. 5 (Bloomberg) -- The Bank of England will end a five- month program of bond purchases as Europe’s second-largest economy shows signs of emerging from a recession, said a majority of the firms that bid at government debt auctions.

Eight of 12 primary dealers surveyed by Bloomberg said the central bank will stop the program after announcing a pause at its monthly meeting tomorrow. Four -- BNP Paribas SA, RBC Capital Markets, Merrill Lynch & Co. and UBS AG -- predict policy makers will increase purchases.

The Bank of England has spent 125 billion pounds ($212 billion) of the 150 billion pounds authorized by the Treasury in March, equivalent to almost 10 percent of Britain’s gross domestic product, to help contain borrowing costs and pull the economy out of the recession. Central bank Governor Mervyn King’s policy of so-called quantitative easing helped spur a 23 percent increase in loans to small companies, British Bankers’ Association data show.

“The Bank of England may have done enough,†said Jamie Searle, a fixed-income strategist in London at Citigroup Inc. “They will probably announce a pause and reassure the market they can step in and resume the program quickly if need be. Our view is they won’t need to because the economy is beginning to recover.â€

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This is excellent news.

If they now try to reverse the decision when the bounce ends, it will just add to the panic.

They would have been better off keeping the option open and being cautious, but hubris ftw!

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This is great if it's true! Let us see how real this recovereh actually is with the crutches taken away. ;)

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Guest Parry aka GOD
It's as significant as an opinion poll

Cause a bond strike or whatever it's called?

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This is great if it's true! Let us see how real this recovereh actually is with the crutches taken away. ;)

If true, they've simply stopped giving out more crutches- not taken away the existing ones yet

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Cause a bond strike or whatever it's called?

I doubt it - if these guys put their money where their mouth was, they'd never make any.

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IF this is true rather than a show of hands guess at the bar over a ploughman's then i wonder what crud could hit the fan if they dont stop and they've just woken up to it or realised. answers on a postcard.

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Just to clarify, King is not going to create more than the original £150,000,000,000 planned for quantative easing. This is because the QE has had the desired effect and has kick started the economy. Not because it will be harder to sell government bonds in future and that they have been threatened with a down grading of the UK credit rating.

A lot of people believe the current 'green shoots' are an artificial affect of the QE, and are not sustainable or self supporting.

I guess time will tell.

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Guest Parry aka GOD
I doubt it - if these guys put their money where their mouth was, they'd never make any.

I'm afraid I'm very old fashioned and don't really understand anything beyond doing a days work for a days pay.

No offence to these finance people, I'm sure it must do something, just seems a bit overrated.

I'm thick.

Dime bar?

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Just to clarify, King is not going to create more than the original £150,000,000,000 planned for quantative easing. This is because the QE has had the desired effect and has kick started the economy. Not because it will be harder to sell government bonds in future and that they have been threatened with a down grading of the UK credit rating.

A lot of people believe the current 'green shoots' are an artificial affect of the QE, and are not sustainable or self supporting.

I guess time will tell.

What makes you think the down grade threat had nothing to do with it? :huh:

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If a bank lends money to itself, it pays no interest because it is paying the money to itself. Why then don't they lend money to themselves and buy Treasuries for a guaranteed profit with no risk. Or is this what they are already doing on the sly?

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Guest Parry aka GOD
Yes I am too. I want to know if she was OK.

I reckon it's a put up. There's a really big mattress down there.

Otherwise, I expect not as she's rather a big lass.

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Just to clarify, King is not going to create more than the original £150,000,000,000 planned for quantative easing. This is because the QE has had the desired effect and has kick started the economy. Not because it will be harder to sell government bonds in future and that they have been threatened with a down grading of the UK credit rating.

A lot of people believe the current 'green shoots' are an artificial affect of the QE, and are not sustainable or self supporting.

I guess time will tell.

werent they talking about going even more qe?

What makes you think the down grade threat had nothing to do with it? :huh:

+1

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We've experienced unusually rapid inflation of (debt-based) M4 over the past decade or so, mainly through HPI.

Does £125,000,000,000 of new M0 restore the M0:M4 ratio back to near trend?

Now that the population is maximally indebted and/or impoverished, let's reset the system?

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I'm afraid I'm very old fashioned and don't really understand anything beyond doing a days work for a days pay.

No offence to these finance people, I'm sure it must do something, just seems a bit overrated.

I'm thick.

Dime bar?

Hang on, didn't you just do 6 days work parting the seas from the land etc before resting on the seventh? Since then it's been a bit of a doss hasn.lt it?

Edited by sossij

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