King Statement From Boe, Understated...!

[VedantaTrader]

I have just been watching the BOE statements on BLoomberg. It is hard to take it seriously. For a start they are way off in the inflation figures. So how can you have a monetary policy that is effective if you grossly underestimating the real rate of inflation.

Also,two or three of the BOE board including King were encouraged that retail sales and consumer spending has been robust, and continues to be...no mention of personal debt fundiing the spending. Another member noted that consumption is the main component of our society and retail sales are strong, so all is well...then when questioned about the current account deficit, although they state it is a problem I think they dont understand how flawed this is for sterling.

Another thing, KIng said that the weak sterling would cushion exports. What exports. Yes the UK does export, but this is not a exporting nation, this wont offset the consumption side of things. He lent on the positive that a weak pound would be could for exports and under played the imported inflatio risks a weak pound would cause.

Again, he thinks house prices will stabilise and stay around the same price. Instead of house prices coming down he thinks wage growth will ctach up.HUh?

So we have the BOE saying consumer spending is the main part of the economy, and now we have a credit crunch and higher inflation, which will lead to higher unemployment, and less consumption, hence companies and business will suffer. So how can wages grow in an environment like this...? If business and companies are feeling the squeeze how can they raise wages to the extent that they will rise 10,20,30% to catch up woth house price inflation.

God it is scary that these guys are at the helm of central bank. Yes, they are intellectuals,but that means nothing it seems when it comes to central banks conduct.

[gfromls]

I’ve always had confidence in merv, but if he can’t stand up for himself against A, the banks and B, a group of clueless MP’s, he’s lost all credibility imho.

[kilroy]

God it is scary that these guys are at the helm of central bank. Yes, they are intellectuals,but that means nothing it seems when it comes to central banks conduct.

He was being cautious and careful with his words. Unlike Mr Bean who tanked sterling hard when he opened his mouth. Furthermore he called an end to the banking party:

" King said in testimony to lawmakers that any plan of action

must require banks' shareholders to shoulder the risk of losses

and assist lenders to finance existing commitments, rather than

subsidize new business or securities sales. "

[Gone baby gone]

Basically he has to stand up and give some good news, trying to foster optimism. The markets have been spooked over the last few weeks and no matter how bad he perceives it to be, he can't say what he thinks if that is negative. I can understand his position, but I can't agree with his outlook.

[Kootenai Brown]

I’ve always had confidence in merv, but if he can’t stand up for himself against A, the banks and B, a group of clueless MP’s, he’s lost all credibility imho.

Keep in mind that these treasury select committees are made up of politicians that don't know sh!t from good chocolate. If Merv has to use inflation, retails sales, etc. to placate the calls for rate cuts Bernanke style I have no problem with that. Actions speak louder than words and so far Merv's actions have been reasonable. Let's see what happens....

[VedantaTrader]

I dont think King is the worst, however, I do think he kept interest rates well below the rate of inflation and even during the "tightening" phase money and credit expansion increased. The reason...easy monetary policy.

[sambino]

Another thing, KIng said that the weak sterling would cushion exports. What exports. Yes the UK does export, but this is not a exporting nation, this wont offset the consumption side of things. He lent on the positive that a weak pound would be could for exports and under played the imported inflatio risks a weak pound would cause.

After the NR bail out I think the government should have bought Jaguar and Landrover off Ford and got back a good british manufacturing business back into UK ownership instead of them passing to Indian ownership

[Guest DissipatedYouthIsValuable]

After the NR bail out I think the government should have bought Jaguar and Landrover off Ford and got back a good british manufacturing business back into UK ownership instead of them passing to Indian ownership

Fuzzywuzzies? Taking our cars?

Disgrace!

[Umaguma]

Whatever he thinks, he has to claim stability because his statements have a direct affect on what happens. He knows very well what's happening, just can't say so.

[A.steve]

Whatever he thinks, he has to claim stability because his statements have a direct affect on what happens. He knows very well what's happening, just can't say so.

I consider this insightful. I've found that when I really think about what Mervyn says, a lot of subtlety is used to avoid commenting dangerously.

For example: saying that house prices will stabilise is entirely different to saying that house prices will stabilise at today's levels.

I think Mervyn King recognises that the real risk to the economy is deflation - but that this can't be fixed by easy money... it can only be fixed by increased productivity.

[deflation]

Fuzzywuzzies? Taking our cars?

Disgrace!

No, no,no. They were from Sudan. For other generalised stereotypes, check out the 'colonel' in Fawlty Towers on cricket.

[Guest DissipatedYouthIsValuable]

No, no,no. They were from Sudan. For other generalised stereotypes, check out the 'colonel' in Fawlty Towers on cricket.

Indians? Lacquer headed curry chompers?

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

If you've noticed, the BoE are always way off on inflation forecasts. Track their forecasts over the last 4 years, then compare with what actually happened - . I suspect this is purposeful as it allows them greater flexibility.

Edited March 26, 2008 by gruffydd

[lets get it right]

After the NR bail out I think the government should have bought Jaguar and Landrover off Ford and got back a good british manufacturing business back into UK ownership instead of them passing to Indian ownership

What makes you think we'd run them any better now than we did when they were 'good British manufacturing' businesses?

I think Tata are nuts. Land Rover and Jaguar are anachonisms. If they were producing small, highly efficient, green cars with advanced technology - I could understand why Tata would want them.

As it is their days are numbered. Won't be too many years before Discoverys and Range Rovers will be illegal in this country - or certainly taxed out of practical use.

And I wonder how many of the snobheads that buy those cars will keep buying when the Range Rover Madras SE is launched.

[Guest DissipatedYouthIsValuable]

What makes you think we'd run them any better now than we did when they were 'good British manufacturing' businesses?

I think Tata are nuts. Land Rover and Jaguar are anachonisms. If they were producing small, highly efficient, green cars with advanced technology - I could understand why Tata would want them.

As it is their days are numbered. Won't be too many years before Discoverys and Range Rovers will be illegal in this country - or certainly taxed out of practical use.

And I wonder how many of the snobheads that buy those cars will keep buying when the Range Rover Madras SE is launched.

As my old dad used to say, "Son. Two things you can rely on. Chocolate teapots and Indian quality."

[Far Out Bear]

I have just been watching the BOE statements on BLoomberg. It is hard to take it seriously. For a start they are way off in the inflation figures. So how can you have a monetary policy that is effective if you grossly underestimating the real rate of inflation.

Also,two or three of the BOE board including King were encouraged that retail sales and consumer spending has been robust, and continues to be...no mention of personal debt fundiing the spending. Another member noted that consumption is the main component of our society and retail sales are strong, so all is well...then when questioned about the current account deficit, although they state it is a problem I think they dont understand how flawed this is for sterling.

Another thing, KIng said that the weak sterling would cushion exports. What exports. Yes the UK does export, but this is not a exporting nation, this wont offset the consumption side of things. He lent on the positive that a weak pound would be could for exports and under played the imported inflatio risks a weak pound would cause.

Again, he thinks house prices will stabilise and stay around the same price. Instead of house prices coming down he thinks wage growth will ctach up.HUh?

So we have the BOE saying consumer spending is the main part of the economy, and now we have a credit crunch and higher inflation, which will lead to higher unemployment, and less consumption, hence companies and business will suffer. So how can wages grow in an environment like this...? If business and companies are feeling the squeeze how can they raise wages to the extent that they will rise 10,20,30% to catch up woth house price inflation.

God it is scary that these guys are at the helm of central bank. Yes, they are intellectuals,but that means nothing it seems when it comes to central banks conduct.

But they create the inflation in the first place. The logical conclusion is that their stated mandate is not their real objective. Their real objective is to pass the inevitable losses of the banking system (and we've got a mother load of those still in the pipeline) on to the taxpayer / general public.

Dump the cash, buy gold. There really is little alternative.

Edited March 26, 2008 by Far Out Bear

[notthereyet]

After the NR bail out I think the government should have bought Jaguar and Landrover off Ford and got back a good british manufacturing business back into UK ownership instead of them passing to Indian ownership

What we have to remember is that 85% of new investment in China is from overseas, How much of India,s investment is from overseas?.

Who really is putting the money up for this sale?

This goverment are only in it for a easy ride.