jackovesk
7th October 2011, 03:44
Britain unveils more 'Quantitative Easing' to curtail looming crisis
October 7th 2011
THE world may be confronting its worst-ever financial crisis, Sir Mervyn King warned yesterday, as the Bank of England announced it would print tens of billions of pounds in a desperate bid to prevent recession.
The Bank's governor said the magnitude of the crisis could well surpass the Depression of the 1930s and the Bank had to respond by injecting more money into the economy.
The Monetary Policy Committee, which sets interest rates, voted to create another ₤75 billion ($119bn) of electronic money, which will be used to purchase bonds issued by the Treasury in the hope this will stimulate spending and keep borrowing costs low.
The gambit, which happened sooner than many City economists expected, came after UK growth fell to just 0.1 per cent in the second quarter of the year, leaving the economy perilously close to a fresh downturn.
The Bank said it would leave its official rate at its historic low of 0.5 per cent for the 32nd month in a row. Traders are betting the rate will not rise until 2013.
Sir Mervyn dismissed fears printing more money would trigger dangerous levels of inflation, saying Britain's problem was too little money in the economy, not too much.
"This is the most serious financial crisis we have seen at least since the 1930s, if not ever, and we are having to deal with very unusual circumstances but react calmly to this and do the right thing," Sir Mervyn said.
"The right thing at present is to create some more money to inject into the economy."
Less than an hour after the decision, the European Central Bank defied calls in financial markets for it to cut its interest rate from 1.5 per cent, despite the intensifying debt crisis in the euro-zone. Instead, Jean-Claude Trichet, the bank's president, said he would pour emergency credit into the zone's stricken banking system.
The Bank of England warned Britain's economy was being threatened by intensifying strains across the Channel.
The Bank's initiative was welcomed by George Osborne, who this week hinted he would like to see the Bank recommence its money printing programme, known as quantitative easing.
Labour said the Chancellor had described quantitative easing as "the last resort of desperate governments" when he was in opposition.
Ed Balls, the Shadow Chancellor, said the Bank's efforts would do little to create jobs and growth and Mr Osborne should instead ease back on his fiscal austerity plans.
Stephen King, chief economist at HSBC, said the Bank's action was not a magic wand, adding: "It might be better to do something rather than nothing, but I would not hold my breath and think this is going to transform the prospects of the UK economy in any significant way."
The Bank's announcement contributed to a jump in stock markets, with the FTSE 100 rising 3.7 per cent to 5291.26. The pound slipped 0.4 per cent against the US dollar to $US1.54.
It marks the revival of a scheme the Bank and the Treasury first used after the Lehman Brothers crash. Between March 2009 and the beginning of 2010 the Bank purchased about ₤200bn of government bonds in the hope this would lift the prices of assets such as shares and corporate bonds while making credit cheaper and more plentiful.
The programme was controversial, with critics saying it would worsen inflation, which has consistently remained above the Bank's 2 per cent target.
Ros Altmann, director-general of Saga, described the Bank's decision as a "Titanic Disaster", adding: "QE2 will damage pensions, impoverish pensioners and ultimately risk another crash. Inflation depletes spending power. It does not create growth."
http://www.theaustralian.com.au/business/world/britain-unveils-more-quantitative-easing-to-curtail-looming-crisis/story-e6frg90o-1226160946875
PS - So what do you need to take out of this article? It can be found in the last 2 paragraphs...
The programme was controversial, with critics saying it would worsen inflation, which has consistently remained above the Bank's 2 per cent target.
Ros Altmann, director-general of Saga, described the Bank's decision as a "Titanic Disaster", adding: "QE2 will damage pensions, impoverish pensioners and ultimately risk another crash. Inflation depletes spending power. It does not create growth."
The Globalist/Bankster/Elite's 'Secret Weapon' of choice...
Financial Weapon of Mass Destruction - "Quantative Easing"..!
http://www.sl-webs.com/custimages/dd395-Bailout%20(s).jpg
October 7th 2011
THE world may be confronting its worst-ever financial crisis, Sir Mervyn King warned yesterday, as the Bank of England announced it would print tens of billions of pounds in a desperate bid to prevent recession.
The Bank's governor said the magnitude of the crisis could well surpass the Depression of the 1930s and the Bank had to respond by injecting more money into the economy.
The Monetary Policy Committee, which sets interest rates, voted to create another ₤75 billion ($119bn) of electronic money, which will be used to purchase bonds issued by the Treasury in the hope this will stimulate spending and keep borrowing costs low.
The gambit, which happened sooner than many City economists expected, came after UK growth fell to just 0.1 per cent in the second quarter of the year, leaving the economy perilously close to a fresh downturn.
The Bank said it would leave its official rate at its historic low of 0.5 per cent for the 32nd month in a row. Traders are betting the rate will not rise until 2013.
Sir Mervyn dismissed fears printing more money would trigger dangerous levels of inflation, saying Britain's problem was too little money in the economy, not too much.
"This is the most serious financial crisis we have seen at least since the 1930s, if not ever, and we are having to deal with very unusual circumstances but react calmly to this and do the right thing," Sir Mervyn said.
"The right thing at present is to create some more money to inject into the economy."
Less than an hour after the decision, the European Central Bank defied calls in financial markets for it to cut its interest rate from 1.5 per cent, despite the intensifying debt crisis in the euro-zone. Instead, Jean-Claude Trichet, the bank's president, said he would pour emergency credit into the zone's stricken banking system.
The Bank of England warned Britain's economy was being threatened by intensifying strains across the Channel.
The Bank's initiative was welcomed by George Osborne, who this week hinted he would like to see the Bank recommence its money printing programme, known as quantitative easing.
Labour said the Chancellor had described quantitative easing as "the last resort of desperate governments" when he was in opposition.
Ed Balls, the Shadow Chancellor, said the Bank's efforts would do little to create jobs and growth and Mr Osborne should instead ease back on his fiscal austerity plans.
Stephen King, chief economist at HSBC, said the Bank's action was not a magic wand, adding: "It might be better to do something rather than nothing, but I would not hold my breath and think this is going to transform the prospects of the UK economy in any significant way."
The Bank's announcement contributed to a jump in stock markets, with the FTSE 100 rising 3.7 per cent to 5291.26. The pound slipped 0.4 per cent against the US dollar to $US1.54.
It marks the revival of a scheme the Bank and the Treasury first used after the Lehman Brothers crash. Between March 2009 and the beginning of 2010 the Bank purchased about ₤200bn of government bonds in the hope this would lift the prices of assets such as shares and corporate bonds while making credit cheaper and more plentiful.
The programme was controversial, with critics saying it would worsen inflation, which has consistently remained above the Bank's 2 per cent target.
Ros Altmann, director-general of Saga, described the Bank's decision as a "Titanic Disaster", adding: "QE2 will damage pensions, impoverish pensioners and ultimately risk another crash. Inflation depletes spending power. It does not create growth."
http://www.theaustralian.com.au/business/world/britain-unveils-more-quantitative-easing-to-curtail-looming-crisis/story-e6frg90o-1226160946875
PS - So what do you need to take out of this article? It can be found in the last 2 paragraphs...
The programme was controversial, with critics saying it would worsen inflation, which has consistently remained above the Bank's 2 per cent target.
Ros Altmann, director-general of Saga, described the Bank's decision as a "Titanic Disaster", adding: "QE2 will damage pensions, impoverish pensioners and ultimately risk another crash. Inflation depletes spending power. It does not create growth."
The Globalist/Bankster/Elite's 'Secret Weapon' of choice...
Financial Weapon of Mass Destruction - "Quantative Easing"..!
http://www.sl-webs.com/custimages/dd395-Bailout%20(s).jpg