Jump to content
House Price Crash Forum
Sign in to follow this  
Realistbear

Boe May Back Off Stimulus Exit As Economy Stumbles

Recommended Posts

http://www.bloomberg.com/news/2010-10-06/bank-of-england-may-step-away-from-stimulus-exit-as-u-k-economy-stumbles.html

BOE May Back Off Stimulus Exit as U.K. Economy Stumbles
By Jennifer "Jenny" Ryan - Oct 7, 2010 12:01 AM GMT
Bank of England Governor Mervyn King is getting pushed back toward the printing presses as central banks in the U.S. and Japan turn their focus on more bond purchases to defend the global recovery.
King is battling to keep the economy from sliding back into recession as Prime Minister David Cameron prepares the biggest public-spending squeeze since World War II. Pressure to do more is building after the Federal Reserve signalled in the past two weeks it may buy more assets to bolster U.S. growth, while the Bank of Japan on Oct. 5 pledged further purchases.
“The debate has been shifting toward the argument in favor of loosening, and it’s likely we’ll see another step in that direction at this meeting,” said Jonathan Loynes, chief European economist at Capital Economics Ltd. in London. “When we see the gory details of the spending cuts it may knock confidence and that increases pressure on policy makers.”

The black hole is £5TR--so what will Merv print? A few hundred billion? With HPI crashing there is little to fall back on.

Share this post


Link to post
Share on other sites

whatever he does..he will have learned from last time that it wasnt enough, it was wrongly targetted and illtimed.

Share this post


Link to post
Share on other sites

Say the black hole is £5 trillion. To fill in that hole you have to do it in sections. Ok we got £200 billion through last year. Now the hole is £4.8 trillion. Then there was 3% inflation. Hey that should take off a good £150 billion in the real value. Then there is the swap lines with the banks so they can exchange their worst bonds.. and those can be gradually absorbed.

Share this post


Link to post
Share on other sites

Say the black hole is £5 trillion. To fill in that hole you have to do it in sections. Ok we got £200 billion through last year. Now the hole is £4.8 trillion. Then there was 3% inflation. Hey that should take off a good £150 billion in the real value. Then there is the swap lines with the banks so they can exchange their worst bonds.. and those can be gradually absorbed.

You're not saying "it's contained", are you?

;)

Share this post


Link to post
Share on other sites

We don't need to print more money, all we have to do is allow property prices to fall to the level where people can afford to both service their mortgages and engage in consumer spending.

Share this post


Link to post
Share on other sites

So just as everyone is getting paid less, they are going to pump in more magic money so everything costs more.

Sounds like a winning idea. :rolleyes:

Yes - but the idea is to 'save the banks' who are increasingly coming to depend on central bank supplied cheap funding in order to make massive profits by lending the cash to the rest of us at huge margins, leveraged. The rest of the economy can go to hell apparently.

The thing is that if those banks are "too big to fail" then quite clearly they need to be broken up into smaller entities.

Share this post


Link to post
Share on other sites

http://www.bloomberg.com/news/2010-10-06/bank-of-england-may-step-away-from-stimulus-exit-as-u-k-economy-stumbles.html

BOE May Back Off Stimulus Exit as U.K. Economy Stumbles
By Jennifer "Jenny" Ryan - Oct 7, 2010 12:01 AM GMT
Bank of England Governor Mervyn King is getting pushed back toward the printing presses as central banks in the U.S. and Japan turn their focus on more bond purchases to defend the global recovery.
King is battling to keep the economy from sliding back into recession as Prime Minister David Cameron prepares the biggest public-spending squeeze since World War II. Pressure to do more is building after the Federal Reserve signalled in the past two weeks it may buy more assets to bolster U.S. growth, while the Bank of Japan on Oct. 5 pledged further purchases.
“The debate has been shifting toward the argument in favor of loosening, and it’s likely we’ll see another step in that direction at this meeting,” said Jonathan Loynes, chief European economist at Capital Economics Ltd. in London. “When we see the gory details of the spending cuts it may knock confidence and that increases pressure on policy makers.”

The black hole is £5TR--so what will Merv print? A few hundred billion? With HPI crashing there is little to fall back on.

Yes, what amuses me is that MK "is battling to keep the economy from sliding back into recession" - what recession? I thought the economy was growing? I think this is just yet another excuse for ramping up inflation to erode debt burdens; to my mind the BOE has abandoned its mandate and its credibility.

Share this post


Link to post
Share on other sites

Yes - but the idea is to 'save the banks' who are increasingly coming to depend on central bank supplied cheap funding in order to make massive profits by lending the cash to the rest of us at huge margins, leveraged. The rest of the economy can go to hell apparently.

The thing is that if those banks are "too big to fail" then quite clearly they need to be broken up into smaller entities.

The banks don't exist in isolation though. The reason they got into trouble and are still in trouble is because they lent money to people who couldn't pay it back. More funny money at the same time as people are losing their jobs and getting low or non-existent pay rises will just exacerbate the problem of loans not being repaid, and feed into the downward cycle.

In short, they can't print their way out at the same time as austerity measures are being applied.

Share this post


Link to post
Share on other sites

The banks don't exist in isolation though. The reason they got into trouble and are still in trouble is because they lent money to people who couldn't pay it back. More funny money at the same time as people are losing their jobs and getting low or non-existent pay rises will just exacerbate the problem of loans not being repaid, and feed into the downward cycle.

In short, they can't print their way out at the same time as austerity measures are being applied.

No, it isn't.

If they had lent money to people who couldn't pay it back and things went south then the money could at least be located and returned, or the economy would be making different stuff than it was but would be largely unharmed.

The banks didn't lend anyone any money though. They lied and hoped it would all turn out alright.

It didn't.

All the printing is being done to hide fraud.

Share this post


Link to post
Share on other sites

We don't need to print more money, all we have to do is allow property prices to fall to the level where people can afford to both service their mortgages and engage in consumer spending.

I'm sure the insolvent banks will love that idea.

Lets be clear it's stimulus to keep the rich rich.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 143 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.