Monday, March 2, 2009

Roger Bootle article

QE is a useful tool for the Bank as it tries to fix the economic plumbing

For something with such an obscure name, this policy has already caused an extraordinary amount of controversy. I can imagine that they will soon be arguing about quantitative easing down the Dog and Duck. So what are we to believe? Is it a case of Zimbabwe here we come? The key to recovery is sustaining bank lending at a higher level – and that will take more than just drowning the system in cash.

Posted by devo @ 07:15 PM (1680 views)
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22 thoughts on “Roger Bootle article

  • I haven’t got much time – answer the question.

    If you’ve done so before, do so again for me and those who missed it.

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    37. troy said…devo “as an acturay” came from a HPC forum post “When Is This Tsunami Going To Hit The Shore?” right?

    would like like to clarify?

    Sunday, March 1, 2009 07:01AM

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  • 7. devo said…

    I can’t speak for meedge….

    Saturday, February 28, 2009 01:53PM

    There it is.

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  • What the f#ck are you on about devo?

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  • crash bandicoot says:

    Devo posted a fourum post by meedge yesterday. It doesn’t sound so mystical when I say it – sorry.

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  • i don’t know what them guys are on about but just read chapter 3 of the mystery of banking at the following link:- the http://mises.org/Books/mysteryofbanking.pdf

    and make up your own mind, in my opinion the MPC are completely useless and so is brown therefore couldn’t trust them to use QE in a positive way, most likely outcome (and one that is probably desired by the gov) is some serious inflation for years ahead..

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  • crash bandicoot says:

    Yikes I meant forum, is it cos I’m from Somerset?

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  • Why is the government embarking on such an extreme strategy as QE?

    The question’s been asked before, but hasn’t been answered satisfactorily.

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  • Has any UK politician argued against the use of QE?

    If not, why not?

    So many questions, so little time.

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  • shining wit says:

    devo said @ 6 & 7…

    1. Why is the government embarking on such an extreme strategy as QE?
    2. Has any UK politician argued against the use of QE? If not, why not?

    1. QE will increase money flow and certainly increase inflation but I think we all know this. This will effectively reduce the national debt and the ‘value’ of property and debt. The labour party devalued currency before and the 70s property bubble bust was hidden within it. But I think you already know this.

    2. Politicians are reluctant to do anything as they are undoubtledly up to their collective necks in mortgages, BTLs and other debts. No doubt, and I think I’m right. Politicians pay is linked to inflation, problem solved for them and their debts will get smaller. No doubt they will reduce their debts before IRs shoot up!. they also singularly failed, almost to every man and woman, to warn of the impending doom. They are feckless and incompetant.

    But I think you might have been taking the P.

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  • @9. shining wit

    Re: 1

    70s inflation was far more ‘conventional.’ With QE we are talking about about an exceptional and untried measure.

    Re: 2

    Every politician, regardless of party affiliation, singing from the same QE hymnsheet?

    Do me a favour!

    The truth that dare not speak its name.

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  • shining wit says:

    devo.

    Re.1

    70s deflation had it’s roots in the 1967 devaluation of the pound by the Wilson government. They dropped it’s values by 20% and then ended up with 20% inflation by the mid 70s. They may not have printed money (but who knows) but they effectively made inflation happen by the devaluation and then the ensuing battles with all the unions wanting 10% plus wage settlements with millions of workers. There was nothing ‘conventional’ about it at all. Just bad political mismanagement as is the case today.

    Wilson quote “”This does not mean that the pound here in Britain — in your pocket or purse — is worth any less….” – Of course not you [email protected], we never imported anything did we!

    Re2.
    Politicians aren’t signing from the same hymnsheet they are just Feckless.

    Labour – the most responsible for the present predicament and a bunch of liberel wishy washy ex socialists who think the cbetter keep their heads down.

    Conservatives – A bunch of traditional incompetants who are just have likely to have presided over this fiasco if they were in power. To busy claiming expenses or their lazy children and getting done for perjury than being an opposition. The won’t be an lelection until May 2010, they are all getting pais, why the heck should they even considor critisizing Crash Gordon when they can’t change the outcome.

    Liberals – Apart from Vince Cable they appear to be a bunch or equally dreadful t!ts, spending half their time lying about being either drunks/bisexuals/or rent boy loving fools.

    That’s the nature of our pathetic democratic system. It is a joke. The Tories are the Queens ‘official’ opposition but they are under absolutely no obligation to actually do anything (like oppose a ridiculous invasion of a soveriegn state without seeing the evidence to do so), too worried about thier own wealth.

    Who is listening to them anyway. I’ve just heard Paxman on Newsnight take the p!ss out of the sitting PM, saying he was “The self-proclaimed saviour of the world”

    It’s not a conspiracy other than a conspiracy of absolute d!ckheads, incapable of even deciding whether weed should be illegal or slightly less illegal!

    We all dooomed I tell yee, doomed !

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  • (Off-topic, but who cares about netiquette in times like these?)

    Interesting to see Karl Denninger posting beneath Ambrose’s recent article:

    “Shock and awe”?

    You haven’t figured it out yet, have you Ambrose?

    I thought you were a pretty smart guy.

    Perhaps I was wrong.

    The reason the markets are melting is “The Bezzle” – the global embezzlement from people with capital.

    They’ve been screwed one too many times and are NOT COMING BACK.

    You can only fix this ONE way – you must start locking up all the liars, cheats and frauds.

    There is no central bank on the PLANET that can replace 2/3rds of the capital that drives our economy and credit markets. Yet that is what private capital is – 2/3rds of the total.

    They’ve left. They’re not coming back so long as “The Bezzle” is how business is done.

    Either policymakers face this and start reaching for handcuffs, or we are in for a worse Depression than the 1930s.

    We are very, very close to going over the edge on this where it simply will not matter any more.

    Either the thing thing is done NOW – which will convince that private capital to come back – or NONE of what you or anyone else suggests will make a bit of difference.

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4884975/We-need-shock-and-awe-policies-to-halt-depression.html

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  • @11. shining wit said… It’s not a conspiracy…

    What is a press embargo if not a conspiracy, albeit a rather pathetic one?

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  • shining wit says:

    What press embargo…

    Is that the one where Paxman openly takes the P outta Crash Gordon?

    Or the one where 40% of the wealth in the stock market has disappeared and they haven’t reported it.

    I think we are into a phase where everyone is frightened of adding to the turmoil and who can blame them.

    Still Pop idol and x-factor should be starting again soon.

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  • @11. shining wit

    Vince Cable has been given a platform, via the Daily Mail, to give a weekly address to the nation explaining our unprecedented current predicament.

    This week he chose to write exclusively about Jade Goody (yes, I know).

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  • 14. shining wit said… What press embargo… Is that the one where Paxman openly takes the P outta Crash Gordon? Or the one where 40% of the wealth in the stock market has disappeared and they haven’t reported it.

    No, the one that states that we are potentially a couple of hours away from a complete, systemic financial breakdown.

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  • QE is a useful tool for the Bank as it tries to fix the economic plumbing

    crunchy-QE is a useful tool for the Bank as it tries to stitch up the taxpayer who will repay real money for fiat money with interest if borrowed.

    Spot the con? Now that’s a plan worth planning for when you are talking massive sums of money. Lose. lose situation for the taxpayer,
    but the banks?

    It is great that our leaders and banks are looking after us!

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  • shining wit says:

    Devo….

    Brown better get his nose working in the crease of Obama’s butt then.

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  • @17: So that would be Brown Nose then?

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  • @17 Crunchy said… Spot the con? Now that’s a plan worth planning for when you are talking massive sums of money. Lose. lose situation for the taxpayer,
    but the banks?

    QE means a loss for the banks as well, surely?

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  • stillthinking says:

    I think the idea of QE is price fixing. Should the assets continue their downward trend then it becomes impossible to cover the defaults. By fixing the price, secured asset sales when foreclosed on can be sold and minimise bank default losses. The problem is that they are attempting to set a trend on a general price level at the margin, ie. 100 apples are for sale at 10p each but because only 99 people want to buy them the price has nowhere to go but in a spiral down, somebody will always attempt to offload the apple surplus to demand. However, if somebody stepped in with an -additional- purchase offer of 12p for two apples, the price has nowhere to go but up as suddenly there is a shortage. Also, really it isn’t money printing as such, just monetisation.
    However, the snag it seems to me is that the target purchases are not apples, they are financial products which have a fixed value, such that the price will never go above a certain value. Like bonds never go up in price above zero yield. So the risk is that the market will simply seek to offload assets and the price won’t change.
    They would need to inject sufficient funds to induce a market shortage of the assets they are targetting basically, and as the world generally seeks a flight to cash it is quite likely they won’t be able to do so. If they fail to do so, then what happens is that the banks losses are made good with printed money. Which will only become a problem in the future, not now.

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  • 21. stillthinking said… If they fail to do so, then what happens is that the banks losses are made good with printed money.

    Now we both know that they will fail, so the real players certainly do. This makes me think that the ‘problem in the future’ is trying to be addressed now, without success.

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