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zugzwang

Mervo Outvoted Over £25Bn Additional Qe (3Rd Month In A Row)

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Minutes from the latest meeting of Britain's Got No Talent finalists show Merv is still as desperate as ever to print money.

And those who thought the Help To Buy scheme was a replacement for FLS might be surprised to learn they've got designs on extending the latter and running the two concurrently.

:angry:

http://www.telegraph...st-lending.html

Bank of England says extending FLS would boost lending

The Bank of England has floated the idea of expanding the Government's £80bn flagship lending scheme, as rate-setters remained split on whether more quantitative easing would help the economy.

By Szu Ping Chan

10:36AM BST 17 Apr 2013

The minutes from April's Monetary Policy Committee (MPC) meeting showed that members "saw merit in possible extensions to the Funding for Lending Scheme (FLS) that would boost lending further." Members said they believed that QE and stimulus from the FLS, which was launched in August, "were likely to support a gradual recovery".

"A strong possibility is that the FLS will be adjusted to specifically favour banks that increase their lending to smaller companies," said Howard Archer, an economist at IHS Global Insight.

Governor Sir Mervyn King, who retires at the end of June, was outvoted for a third consecutive month in calling for a £25bn increase in QE, as members voted 6-3 against expanding the programme from its current level of £375bn.

Members voted unanimously to hold interest rates at their record low of 0.5pc.

Vicky Redwood, UK economist at Capital Economics, said the minutes suggested that "even those voting against QE this month still seem open to further action to boost bank lending".

However, policymakers also said: "There had been some signs on the month that the pace of improvement in credit conditions had eased and net lending had so far remained subdued."

Bank of England data show that Britain's lenders cut lending to businesses and households by almost £2bn between August and the end of December, even as they drew £13.8bn from the state-backed scheme.

The FLS was designed to help the economy by using taxpayer subsidies to reduce banks' funding costs by around one percentage point a year, which was supposed to be passed on to borrowers.

Ms Redwood said that while more QE was still possible in May, it was more likely that the stalemate would continue until the arrival of incoming Governor Mark Carney in July.

Edited by zugzwang

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And those who thought the Help To Buy scheme was a replacement for FLS might be surprised to learn they've got designs on extending the latter and running the two concurrently.

They've noticed that FLS isn't going to businesses. No mention of the decimation of savings rates though. Of course the whole lot was going to be extended. Why don't they just nationalise the housing market?

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They've noticed that FLS isn't going to businesses. No mention of the decimation of savings rates though. Of course the whole lot was going to be extended. Why don't they just nationalise the housing market?

Far better to privatise the profits and socialise the risks, no?

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They have already started ... that is what HelpToBuy is. Don't worry about the lack of QE, Carnage will soon get the presses going with turbo power and inflation will rise to 5%, property prices will rise which will cause imputed rent to rise and so generate the holy grail of a rise in GDP.

Indeed. Has there been a time in the last five years when a HPC has looked less likely?

:(

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FLS = QE in a different dress

Edit :to add where has the money gone?

Bank of England data show that Britain's lenders cut lending to businesses and households by almost £2bn between August and the end of December, even as they drew £13.8bn from the state-backed scheme.

Edited by long time lurking

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Indeed. Has there been a time in the last five years when a HPC has looked less likely?

:(

Prices to crash over the next few months? ...... Unlikely.

Prices to fall over the next few years? ...... I'm expecting falls of 30 - 40%.

Is now a good time to buy an illiquid, depreciating, asset? ....... No!

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Prices to crash over the next few months? ...... Unlikely.

Prices to fall over the next few years? ...... I'm expecting falls of 30 - 40%.

Is now a good time to buy an illiquid, depreciating, asset? ....... No!

That a crash is going to happen is undeniable IMO. Whether the people who will benefit from it have been born yet is a separate issue.

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@zugwang

What's the point of getting flustered with the inner workings of a central bank.

You get zero say on how things go, and debating their minutes is like arguing with a menopausal woman. Pointless.

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FLS = QE in a different dress

Edit :to add where has the money gone?

Bank of England data show that Britain's lenders cut lending to businesses and households by almost £2bn between August and the end of December, even as they drew £13.8bn from the state-backed scheme.

Some lenders have increased lending using FLS but others such as Santander* have decreased lending by big amounts.

(* Others have too, this is the largest example, but it isn't clear yet quite which areas of lending Santander have been radically reducing.)

FLS almost seems to have been designed to offset reductions in lending from certain institutions which HMT or BoE may/would have advance warning of. i.e. FLS = sticking plaster mark 4 (after QE (=mk1) SLS (=mk2) and CGS (=mk3)), George's latest housing scheme variants seem the first ones actually designed to grow lending rather than just attempt to stabilise.

EU effectively / approved its version of Basel 3 today which may reduce lending a bit as they will need to increase capital / capital quality. More QE doesn't seem compatible with this.

More QE will be as effective as pushing on rope (unless they are worried about Government borrowing costs.)

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@zugwang

What's the point of getting flustered with the inner workings of a central bank.

You get zero say on how things go, and debating their minutes is like arguing with a menopausal woman. Pointless.

It comes from years of anger and frustration... Pointless, but what else can you do? Hearing some woman 'entrepreneur' on the radio this morning congratulating Thatch for letting her parents acquire a million pound ex-council house for just £25.000... Sometimes you just have to shout at them to keep yourself sane.

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They've noticed that FLS isn't going to businesses.

Only businesses who think QE-Normal is the new long-term reality want to borrow it.

Other businesses and new-entrants are waiting to pick up over-extended zombie competitor's assets up cheap.

Households don't want more debt when they have their own concerns for managing on the incomes they've already got, as well as worrying about maintaining those incomes, without loans for new purchases.

Sometimes I think they secretly know all this, and FLS is just a way to get the banks enough for a crash.

GoogleNews this for an article from today's WSJ, with some interesting figures = changes to lending scheme.

The numbers involved, shrinking big-time, despite all the stimulus money to banks participating in the FLS, including to households. One analyst calling for less FLS to real-estate, more to business.

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Some lenders have increased lending using FLS but others such as Santander* have decreased lending by big amounts.

(* Others have too, this is the largest example, but it isn't clear yet quite which areas of lending Santander have been radically reducing.)

FLS almost seems to have been designed to offset reductions in lending from certain institutions which HMT or BoE may/would have advance warning of. i.e. FLS = sticking plaster mark 4 (after QE (=mk1) SLS (=mk2) and CGS (=mk3)), George's latest housing scheme variants seem the first ones actually designed to grow lending rather than just attempt to stabilise.

EU effectively / approved its version of Basel 3 today which may reduce lending a bit as they will need to increase capital / capital quality. More QE doesn't seem compatible with this.

More QE will be as effective as pushing on rope (unless they are worried about Government borrowing costs.)

The cynical side of me is asking how much of the FLS money is finding it`s way in to guilt's in a i`ll scratch your back if you scratch mine sort of way

Edited by long time lurking

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The cynical side of me is asking how much of the FLS money is finding it`s way in to guilt's in a i`ll scratch your back if you scratch mine sort of way

FLS just seems to be designed to replace buying 'short term' money from the markets or from depositors to fund everyday operations. Not sure it would be suitable for Gilt purchases.

Ultimately, they will have to increase QE again .. and soon (unless they want yields on Gilts to rise sharply, making their own borrowing a lot more expensive and which would in turn force interest rates up) .. to fund the ongoing structural deficit and keep interest rates suppressed.

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FLS just seems to be designed to replace buying 'short term' money from the markets or from depositors to fund everyday operations. Not sure it would be suitable for Gilt purchases.

Ultimately, they will have to increase QE again .. and soon (unless they want yields on Gilts to rise sharply, making their own borrowing a lot more expensive and which would in turn force interest rates up) .. to fund the ongoing structural deficit and keep interest rates suppressed.

Amazing, isn't, how obvious the inevitability of more QE is to everybody except financial journalists?

Just look at how much bogus austerity Osborne is likely to drive into the economy next year:

£130bn primary deficit, £50bn FLS extension, £30bn Home To Buy, sundry PFI initiatives, £20bn mis-selling refunds, £20bn for Cable's Business Bank...

There's maybe £250bn in additional spending to be financed in 2014 alone!

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petrol prices have started dropping recently and the Mpc will be ready like hawks to print. its odd because falling energy costs puts money straight into peoples' pockets. still earnings growth is weak so again that will probably encourage them to print. ok so if they are honest they'd say hey we are just managing a fall in the standard of living in the general population

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  • 243 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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