Sunday, July 1, 2012

Taps on full flow

Bank of England prepares £200bn economic stimulus

The Bank of England is preparing to unleash a £200bn stimulus package for the economy by printing more money this week and relaxing financial regulations. Details in the Bank’s Financial Stability Report (FSR), released last week, showed that the decision to let banks tap reserves of cash and liquid assets could provide as much as £150bn for new lending – a sum equivalent to the entire stock of loans to UK small and medium-sized businesses. Rate-setters on the Bank’s Monetary Policy Committee are also expected this week to unveil a further £50bn of quantitative easing (QE).

Posted by drewster @ 10:14 PM (3802 views)
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16 thoughts on “Taps on full flow

  • Perhaps the money could be used by the banks to settle cases brought over the Libor-fixing scandal. See post below

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  • More made up money to be poured down the bottomless pit that is the UK bank industry which remains in this mess because it spent the last decade lending money it simple made up. makes sense.

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  • Got gold? Got silver? There are ways to hedge against fascism. Whilst gold is much better on the long term, less volatile, brother, the silver charts look pumped. Expect mega spikes in silver prices once this and the new coordinated EU bailouts hit the fan. Both have hit a triple bottom after an entire year of consolidation following a major breakout.

    The only way they can hold together the Euro without it falling apart is major devaluations, period. And Germany will like that because its exports will become more competitive. Get ready for major inflation ahead.

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  • the silver charts look pumped

    Are we looking at the same charts? silver has been on the downwards part for the past year.

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  • Just read an article to say that as production slows worldwide, Silver could drop to $19. This is around 30% down.

    A further fall may be a good buying opportunity, but with manipulation and hedging rife due to lots of loose cash in the system who can tell?

    There have been expectations (speculation) worldwide that the Dollar, Pound and Euro will print soon, so I would be surprised to see a sudden move upward on Gold as some money printing is being discounted.

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  • Thecountofnowhere says:

    I think it’s time to protest !!!

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  • HPWatcher, yes, we are looking at the same charts. Mega breakout, followed by a re-test of the breakout not once, not twice, but thrice. This is an extremely powerful sign because silver, if it holds the present bottom (same with gold), will likely springboard the last breakout possibly with twice the action. My target would be $100 an ounce within the next two years.

    On that same measure gold as an intermediate target of $2500.

    What else do you expect Swervin Mervin’s £200bn of QE to do when it hits the market?

    If silver hits those lofty heights expect a correction down to $50 to test the breakout, and gold to retest $1900 before heading higher, so lots of volatility ahead, but this will be the ride of the century. And British gold bullion is capital gains tax free, wohoo!!

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  • Alan, you are right and wrong both at the same time. Silver should have collapsed into deflation, but has been kept from there (this is the triple re-test) because the market is pricing in the stated fact that central banks will not allow deflation. Why? Because they bed-fellows in corporate finance and government are in debt up to their eyeballs and need inflation and devaluation to get themselves out of the hole.

    Yes, if they didn’t do QE, there would be a spike in interest rates, banks would shrink and sell off their bad assets, government would shrink in size, there would be defaults and governments would be forced to slash taxes. We would then be back to growth within one to two years after a major hangover.

    But no, they would rather have a multi-decade depression fuelled by inflation, exacerbating the misallocations of capital destroying our economy, culture and way of life, for one reason, to maintain the status quo. This is why gold and silver have major upside, because although they will succeed in the short term in market manipulation, gold and silver are already manipulated to the maximum and these thin markets are almost impossible to hold back when they finally price in all the hot money.

    Why is this? The market for gold and silver is GLOBAL. They can stop folk in one country from buying and selling, manipulate the price of it there, but then others in China, others in Vietnam step in and buy it, and the other major issue is that unlike paper money, central banks only hold about half of the gold. There is enough floating around in black markets and with private holders to ensure that government cannot fully control these markets.

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  • mark wadsworth says:

    SK at comment 1, that’s the whole idea, isn’t it? These multi million pound fines are but a tiny percentage of all the freebies and handouts the banks have received.

    As to the article, is this not a bit like the first World War, they send 10,000 men over the top to be slaughtered and it doesn’t work so next time they send 20,000 over the top and that doesn’t work either, so the next time they try 30,000?

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  • general congreve says:

    Image and video hosting by TinyPic

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  • Libertas,

    You seem to take the whole thing very personally. This undermines the extent I would be persuaded by what you write. There is too much of you in your comments at the expense of calm objectivity. Of course perhaps you just want to tell everyone how you feel.

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  • HPWatcher, yes, we are looking at the same charts. Mega breakout, followed by a re-test of the breakout not once, not twice, but thrice. This is an extremely powerful sign because silver, if it holds the present bottom (same with gold), will likely springboard the last breakout possibly with twice the action. My target would be $100 an ounce within the next two years.

    On that same measure gold as an intermediate target of $2500.

    What else do you expect Swervin Mervin’s £200bn of QE to do when it hits the market?

    If silver hits those lofty heights expect a correction down to $50 to test the breakout, and gold to retest $1900 before heading higher, so lots of volatility ahead, but this will be the ride of the century. And British gold bullion is capital gains tax free, wohoo!!

    You are just trying to get me excited aren’t you? 😉

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  • Bellweather. If you aren’t used to hearing a red blooded male thump his chest, then fine, go play patty-cake with paper money. Us real men will deal with hard currency.

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  • Libertas,

    I hope that in general your chest thumping involves more than silently blogging thoughts to a closed loop of anonymous and largely directionless individuals

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  • Also by taking my comments personally it kind of proves the point I was making. The debate on here is largely sh*t because its all about emotion rather than the substance.

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  • [email protected] 9:46 AM said, “And British gold bullion is capital gains tax free, wohoo!!”

    My understanding is that British gold coins are free from any capital gains tax – but gains on bullion are liable to tax.

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