Osborne Tells Bo E They May Launch Qe2

[Realistbear]

http://www.bloomberg.com/news/2010-10-08/osborne-says-he-d-approve-a-bank-of-england-request-for-monetary-stimulus.html

Osborne Says He'd Approve a Bank of England Request for Monetary Stimulus

By Gonzalo Vina - Oct 9, 2010 12:00 AM GMT+0100 Tweet (2)LinkedIn Share

Chancellor of the Exchequer George Osborne said he is prepared to give the Bank of England the green light for more monetary stimulus if the central bank judges it’s needed to keep the U.K. economy from slipping back into a recession.

Osborne said he will bow to any decision made by the central bank’s nine-member Monetary Policy Committee, led by Governor Mervyn King, to expand its 200 billion pounds ($319 billion) bond purchase program, a strategy called quantitative easing.

Was there ever any doubt that Merv would be receiving printing orders? An end to vigilance and the beginning of the end of the pound, at least for a few years?

[goldbug9999]

I wonder if they are just using the threat of QE to keep the pound from going ballistic ?.

[@contradevian]

You need proper job creation, as the US is discovering. And not just short term, supermarket shelf stacking, or mac jobs either. The economies "gone."

[Pent Up]

Surely merv and his pals are independent they don't need georgies permission?

Problem is if QE causes a rise in inflation expectations, which surely it must do we could see some aggressive tightening of monetary policy further down the line.

[guitarman001]

It's as simple as this, as many I know have found out.

THERE ARE NO JOBS.

No jobs, no growth. Globalisation sucks.

[council dweller]

I wonder if they are just using the threat of QE to keep the pound from going ballistic ?.

By 'going ballistic' do you mean that it won't fall quite as fast as the dollar and euro (compared to the currencies of Asia etc.)

The pound is over-valued, therefore we have a massive trade deficit....is that not the case?

[Sour Mash]

Combined with the news that they are considering backing off on the public spending cuts in view of the shaky economic outlook, doesn't seem that the Tories are anything different than Labour. Except of course that they are going to scapegoat those on Welfare.

Not really a surprise - none of the mainstream politicians are willing to take the action necessary to get us out of this mess because the public simply won't accept a cut in their standard of living. So full speed ahead for living beyond our means ... until the market tells us to eff off.

[REP013]

Combined with the news that they are considering backing off on the public spending cuts in view of the shaky economic outlook, doesn't seem that the Tories are anything different than Labour. Except of course that they are going to scapegoat those on Welfare.

Not really a surprise - none of the mainstream politicians are willing to take the action necessary to get us out of this mess because the public simply won't accept a cut in their standard of living. So full speed ahead for living beyond our means ... until the market tells us to eff off.

I'm wondering ...

By reducing the income of the poor what does that ultimately do to the income of the rich?

The poor buy stuff and they borrow stuff. Currently the government is borrowing stuff to meet the needs of the poor too. What happens to the rich when less stuff is borrowed or bought?

[Bloo Loo]

It's as simple as this, as many I know have found out.

THERE ARE NO JOBS.

No jobs, no growth. Globalisation sucks.

Merv is worried about his charges though....that'd be the private banks...his very job is to protect them.

Edited October 10, 2010 by Bloo Loo

[goldbug9999]

By 'going ballistic' do you mean that it won't fall quite as fast as the dollar and euro (compared to the currencies of Asia etc.)

The pound is over-valued, therefore we have a massive trade deficit....is that not the case?

I meant that the threat of QE would put a ceiling on the value of the pound since the markets have to price in the risk. In the absence of QE, the £ would quite possibly acquire "safe haven" status, I mean it does look like a pretty good bet compared to the dollar or the euro.

As for value of pound vs trade deficit that a whole other argument but in essence your right although I think these forces have a very long time horizon, who the hell knows what will happen. Having said that its one of reasons I'm currently diversifying my cash heavily in to surplus & commodity rich economies such as brazil and china - at some point their respective governments attempts to peg the currency at artificial lows to boost their trade surpluses may well fail, if they don't well I've been paid A decent amount of interest in the mean time.

Edited October 10, 2010 by goldbug9999

[tim123]

The pound is over-valued,

No

therefore we have a massive trade deficit....is that not the case?

that's because we don't make anything that the rest of the world wants to buy

[zebbedee]

With the US also looking likely to take more of this course of action I wonder what will happen to the PoG