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Fed Will Look After Us, Not The Uk

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See this at Zerohedge: http://www.zerohedge.com/news/2013-08-05/beware-rise-international-monetary-policy-tensions

Now, however, things are changing. The Fed, with an eye on an improving US economy, is preparing to end its super-easy QE policy. But US business and policy cycles are not well synchronized with those of Europe, the UK, Japan or, especially, much of the emerging complex. As a consequence, the Fed is now contemplating a policy shift that, unintentionally, runs the risk of undermining the objectives of other central banks. The stage is set for a rise in international monetary policy tensions.

Where are the pressure points?

The pressure points aren’t hard to see. Rising US bond yields have pushed up long-term interest rates in Europe and the UK. Capital inflows to emerging economies have dried up, precipitating in some cases rapid exchange rate depreciation, which several emerging economy central banks have tried to offset by tightening monetary policy. Problematically, higher interest rates and tighter liquidity conditions have arrived courtesy of shifting Fed policy expectations before recovery has convincingly taken hold (Europe) or as growth has slowed (emerging economies). Typically, some respite might come from a stronger dollar (i.e., domestic currency depreciation), but so far that has not been the case for Europe or the UK, while in some emerging economies currency depreciation has been worryingly rapid, threatening to stoke import-price inflation. Yet these adverse spillovers are also peculiar. Why should European and UK bond yields rise when their economies remain weak, inflation is falling, and their central banks are issuing ‘forward guidance’ as a promise to keep policy rates low for considerably longer?

We may find that Carney is unable to prevent spillover from the US.

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yes, but my point is the HPC may flow from US actions (hopefully)

Let's hope so. Thatcher's spoilt and entitled imposter children, who got the benefit of the late 80s crash to buy homes at value in places like Notting Hill, or to afford to trade up without mega debt, prefer to give younger people the "Dream of home ownership" under extra-debt 'Help-To-Buy' eating tissue paper to survive could be being played along as the US repositions itself. Feeling the USA will pat them on the head and take care of them.

Many signs the US puts itself first (in history), may want a taste of our commercial action as leveraged positions get squeezed, and may think some forced readjustment what we need anyway, for our own good.

He added: "This period of excessive UK speculation about the relationship is more paranoid than usual... This over-reading would often be humorous, if it were not so corrosive."

Mr LeBaron continued: "Though tempting to argue that keeping HMG off balance about its current standing with us might make London more willing to respond favourably when pressed for assistance, in the long run it is not in US interests to have the UK public concluding the relationship is weaking, on either side.

Edited by Venger

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Many signs the US puts itself first (in history),

Now the Feds responsible for the US economy. Thats all. No putting itself first etc.

Currently in the US, QE is believed to causing more harm than good. Reward Wall Street rather than Main St.

If Canute Carney thinks people will accept Gilts with a lower yield than US10Y bonds than he's a fool. But I don't think he is - he's renting in London with an eye to go home.

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See this at Zerohedge: http://www.zerohedge.com/news/2013-08-05/beware-rise-international-monetary-policy-tensions

We may find that Carney is unable to prevent spillover from the US.

Is the US creating jobs that pay similar wages to those lost or is it creating lots of low paid work? The US has a very high cost of living and it's cities are going bankrupt. Pushing up interest rates I suspect will create a raft of problems for the Fed forcing them to cut them again.

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