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Bank Of England Posts £5.5Bn Loss On Qe Book

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http://www.telegraph.co.uk/finance/economics/gilts/7913316/Bank-of-England-posts-5.5bn-loss-on-QE-book.html

The Bank of England has made a £5.5bn full-year loss on the assets bought under its quantitative easing (QE) "money printing" programme to prop up the battered UK economy.

The Bank bought £200bn of gilts, corporate bonds and commercial paper between February 2009 and February 2010 to inject further monetary stimulus after slashing rates to 0.5pc. In its first annual report, the Asset Purchase Facility Fund revealed that the portfolio value has shrunk by £5.5bn. Gilts accounted for the entire fall, with the £198.3bn book valued at £192.8bn on February 28.

However, after the £3.8bn of interest paid on the bonds, the nominal loss to the taxpayer is £1.75bn. Since February, gilt values have improved due to the Chancellor's Budget actions and analysts say the fund is now likely to be in profit.

Economists stressed that the direct impact of the scheme on the public finances should be minimal, so long as the gilts are ultimately sold for their purchase price, as the Government is effectively paying interest to itself. Unwinding quantitative easing will not start for some time, the Bank's Governor has indicated, as he plans to raise rates before selling gilts.

According to Ray Barrell, senior research fellow at the National Institute of Economic and Social Research, quantitative easing has had a positive impact on the economy – lifting equity and house prices by around 10pc and adding about 0.5pc growth to GDP in both 2009 and 2010.

How nice that lifting property prices is a positive making them even more unaffordable.

Still at least we might now be in "profit" or will this be a paper profit (no pun intended).

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http://www.telegraph...on-QE-book.html

How nice that lifting property prices is a positive making them even more unaffordable.

Still at least we might now be in "profit" or will this be a paper profit (no pun intended).

course its good..£200bn to allow their assets to ONLY fall £5.5bn.

thats £40bn spent for £1bn saved.

oh and the tax payer only lost £1.75bn.

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course its good..£200bn to allow their assets to ONLY fall £5.5bn.

thats £40bn spent for £1bn saved.

oh and the tax payer only lost £1.75bn.

An where does one suppose the loss has gone to?  Oh could it be the banksters have had their overvalued assets subsidised?

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course its good..£200bn to allow their assets to ONLY fall £5.5bn.

thats £40bn spent for £1bn saved.

oh and the tax payer only lost £1.75bn.

you guys crack me up you just dont understand high finance, its all good

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Gilts accounted for the entire fall, with the £198.3bn book valued at £192.8bn on February 28.

EH??

So they've not revalued the bonds/paper yet, or it's not changed in value a penny?

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Have they sent the invoice to Fred Goodwin and Andy Hornby, or Gordon Brown?

Details are important.

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An where does one suppose the loss has gone to?  Oh could it be the banksters have had their overvalued assets subsidised?

slow-motion-bubble-popping-3844-1247506640-10.jpg?w=500&h=508

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...........slow deflation of the asset bubble. That is the aim of the game.

Anybody on here thinking that its all going to crashtastic forget it........................they will just print a little here a little there.

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...........slow deflation of the asset bubble. That is the aim of the game.

Anybody on here thinking that its all going to crashtastic forget it........................they will just print a little here a little there.

What about the exponential problem?

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What about it?

If you keep printing slowly you will hit the exponential problem. They've been printing money for hundreds of years, they might have reached the point where exponential growth kicks in and before you know it you've got hyperinflation.

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...........slow deflation of the asset bubble. That is the aim of the game.

Anybody on here thinking that its all going to crashtastic forget it........................they will just print a little here a little there.

Whilst id agree that that is and should be the aim of the game i have complete and utter faith in them to fail as spectacularly in succeeding as they have in not creating it in the first place.

I dont tend to put much hope in people making smart economic decisions to solve a problem given it is the people who have succesfully overseen the largest credit bubble in history thats already seen the biggest financial collapse in history. I just tend to go with form

Edited by Tamara De Lempicka

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...........slow deflation of the asset bubble. That is the aim of the game.

Anybody on here thinking that its all going to crashtastic forget it........................they will just print a little here a little there.

its not an asset bubble...the assets have done nothing at all...just sat there and been ruthlessly abused by a credit bubble.

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<br />you guys crack me up you just dont understand high finance, its all good<br />

Crackers!

It was you City circle boys/bosses - not knowing what you were buying into (doing) - that fekked up the whole country!

High 'flying' theatricals!

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you guys crack me up you just dont understand high finance, its all good

High finance...heem the word ponzi is more like it. Any loss will be charged against BoE capital, which can be increased by buying some gilts from the government and then the government uses the same money to purchase additional BoE Tier1 instruments.

The end result is nothing more than the initial effect of £200bn more of sterling in the system and hence devaluing the total amount of sterling in circulation (M4) by £200 bn (out of a few trillions). It is also interesting that when BoE raises interest rate, its paper lost will increase (not that that matters of course) and so, looking solely, it will be in BoE interest to keep rates low for a long time. However, people losing faith in the GBP (inflation, relative value versus Asian currencies on higher interest rates etc) could force it hands.

This will be interesting..

Edited by easybetman

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  • 277 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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