Bank of England.....my arse !!

[SWP's back]

ok, so this Q.E. is a speculative move on behalf of the government that may have a positive effect or not.

my question is, who, if anybody, will definitely benefit from this course of action. i myself can only see even more bulging wallets all over the square mile.

or i`m i just an old cynic ?

Explain how you see that the BoE buying UK Gilts and banking bonds will result in that?

75 billion in Q.E. could raise to 500 billion according to reports. who benefits from this most i would you say the banks

boe are hoping for a trickle down effect. is that the same theory that if you throw enough shit at the wall some will stick.

Read the thread.

 

[metalblue]

I am in two minds about this, it will push up inflation, it did last time and the BOE expects it to do so, it's really a mini bank bail out again, with the BOE buying lots of the junk assets that the banks hold as well as GILTS and Bonds.

Exchanging money for bonds has no impact on inflation. The inflation we have seen does not look QE driven but does coincide with a commodity price boom.

Incidently of the £200bn of QE thus far most of it went in deleveraging and, so far, in broad cash terms the economy has increased by around £8bn.

 

[Ducado]

I am in two minds about this, it will push up inflation, it did last time and the BOE expects it to do so, it's really a mini bank bail out again, with the BOE buying lots of the junk assets that the banks hold as well as GILTS and Bonds.

Exchanging money for bonds has no impact on inflation. The inflation we have seen does not look QE driven but does coincide with a commodity price boom.

Incidently of the £200bn of QE thus far most of it went in deleveraging and, so far, in broad cash terms the economy has increased by around £8bn.

I agree, but if it allows banks to lend more this has a direct impact on inflation

What a great topic this has been by the way!

 

[metalblue]

I am in two minds about this, it will push up inflation, it did last time and the BOE expects it to do so, it's really a mini bank bail out again, with the BOE buying lots of the junk assets that the banks hold as well as GILTS and Bonds.

Exchanging money for bonds has no impact on inflation. The inflation we have seen does not look QE driven but does coincide with a commodity price boom.

Incidently of the £200bn of QE thus far most of it went in deleveraging and, so far, in broad cash terms the economy has increased by around £8bn.

I agree, but if it allows banks to lend more this has a direct impact on inflation

What a great topic this has been by the way!

Absolutely it does, infact there was a lot of talk prior to QE about the potential for hyper-inflation - and let's face it, as you allude to, the banks are holding the best part of £200bn with another £75bn added, eventually they will want to do something with that money.

 

[SWP's back]

I am in two minds about this, it will push up inflation, it did last time and the BOE expects it to do so, it's really a mini bank bail out again, with the BOE buying lots of the junk assets that the banks hold as well as GILTS and Bonds.

Exchanging money for bonds has no impact on inflation. The inflation we have seen does not look QE driven but does coincide with a commodity price boom.

Incidently of the £200bn of QE thus far most of it went in deleveraging and, so far, in broad cash terms the economy has increased by around £8bn.

I agree, but if it allows banks to lend more this has a direct impact on inflation

What a great topic this has been by the way!

It's a difficult one Ducado. (as to whether there will be a direct/indirect) increase in inflation. I understand where you are coming from though and I wouldn't say that you are wrong necessarily.

As metalblue states, the increase in commodity prices has done more to increase inflation than QE though as I said before, moderate inflation when combined with super low BoE rates is no bad thing and people need to get out of the old thought that inflation is automatically a bad thing.

 

[law74]

The ONLY reason why the BoE base rate has stayed so low for so long is that the property market along with almost every other market that the financial institutions use to make their money has stagnated at best and dropped alarmingly in other areas, an increase in interest rates now would only mean many many more houses repossessed, many many more shops closing and more people out of work, leading back to more repossessed houses.
QE is a gamble that might work if the money is used to help business through the current hardship, but if it is repeated too often, or the bankers (that caused this problem worldwide let's not forget), decide not to use it to help business, then it will be more money wasted when we can least afford it.
I am not and never was a fan of @New Labour@ and they must share their portion of guilt in not tackling the state that the tories left aspects of the coutry in, but what we need now is for the government to start employing people to build houses on brownfield sites, the rent from those houses will be useful in not only giving hose that are in need of a house a roof over their heads, and paying for the upkeep of the property, but will also enable local authorities to house those on housing benefit, with the money going back into the provision of social housing instead of into the back pockets of entrepeneurs.

 

[Manchester1894]

So when will City buy the Bank of England then?

 

[law74]

So when will City buy the Bank of England then?

When eamon Holmes is seen in a size 6 dress , Roy Keane is voted sportsman of the year just ahead of sour purple nose of trafford, and every teenage girls mag give Terry Christian hunky voice of the year and rooney advertises wash and go.


Hmmm, I think there is more chance of Brendan barbour getting a standing ovationat the tory party conference.

 

[metalblue]

The ONLY reason why the BoE base rate has stayed so low for so long is that the property market along with almost every other market that the financial institutions use to make their money has stagnated at best and dropped alarmingly in other areas, an increase in interest rates now would only mean many many more houses repossessed, many many more shops closing and more people out of work, leading back to more repossessed houses.

I'll let you into a little secret banks can make (and lose) money in any market condition including falling markets as well as range bound (stagnated to you) markets, hell they don't even need to worry where the price is going they can just buy or sell volatility or if that doesn't suit they can just buy and sell time. But yeah they're probably thought fuck that far better to be in cohoots with the BoE...

 

[Ruhr]

So what is it that Germany seem to be getting right? Read the Economist the other day and it seemed to show they had a GDP growth of +8%, whereas ours was 0.7%?

Not an economic expert by any stretch of the imagination, but surely it can't do any harm to at least have a look-see at what Gerry's up to?

Manufacturing sector that is strong, efficient, not brow beaten by unions and a populace known for meticulous quality.

Add to that a non-capital centric model that shares and distributes wealth throughout the country and the fact that Germany experienced high unemployment at the beginning of the 2000's thanks mainly due to reunification. This led to the German government reigning in spending and welfare at a time (us included) when the rest of the world were spending their surpluses. Partly due to this, Germany were in a far better position when the "credit crunch" reared its head.

However German GDP over the last 5 years is:

2006 2007 2008 2009 2010
3.7% 4.4% 2.8% -3.5% 3.6%

Nb - CIA factbook on Germany states a -4.7% GDP drop in 2009 with an expected growth rate of 2.7% this year (not 8%)

<a class="postlink" href="https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html" onclick="window.open(this.href);return false;">https://www.cia.gov/library/publication ... os/gm.html</a>

During this belt tightening reform (known as Agenda 2010), there was widespread criticism aimed towards the left at a perceived "decreased standard in living aimed at protecting the rich" - where have we heard this before.

In short, by luck or good judgement, Germany got its house in order due to internal factors when times were good. It was heavily castigated for this at the time by its own people as Brown continued to "buy off the electorate" with increased (and unaffordable) public spending.

When the rainy day came, they had saved and we were left with a knackered umbrella. Though they still have an employment percentage of 7.4% so its not at all utopian. (UK rate is 7.9%)

but my country is highly depending on the export industry and so needs growth in the EU and the US