Bailout money is flowing abroad

beaujolais-nouveau

Bailout money is flowing abroad
Independent
Saturday 14 March 2009
http://www.independent.co.uk/news/uk/home-news/bailout-money-is-flowing-abroad-1644887.html

Much of the new money the Bank of England has "printed" to stimulate the UK economy is ending up abroad where it will be of no benefit to UK households and businesses, according to an analysis of the Bank's "quantitative easing" programme. ... City experts analysing the scheme for The Independent say large quantities of money will simply end up abroad because so many of the gilts are held by foreign investors. They fear that they will hoard the cash, which will be of no benefit to the British economy, or dump it in favour of safer currencies, which could cause a run on sterling. More than a third of gilts are owned by foreign entities, official statistics reveal, and there are doubts about how effective the policy will be if that sort of proportion of the new money is diverted abroad.

We are so stuffed.

By the way, did anyone else hear Gordon Brown described (on a Radio 4 money programme last week) as "a one-man government" by one commentator, and another person agreed but used a different form of words. I guess that he is using powers brought in under the new legislation colloquially called the "abolition of Parliament Act", because that is what he is doing - arrogantly cutting out Parliament.

All the emergency bail-outs have failed to do anything but provide banks with a cushion against their bad debts and future bad debts. Meanwhile, businesses are going to the wall despite having full order books, people are losing their homes and jobs, pension funds have been trashed, and the cost of basic foodstuffs has risen dramatically.

The future for the UK looks very bad: homeless, workless, starving, destitute, a run on the pound. Except for Gordon Brown's merry band of incompetents, including Mandelson.

sabretoothtigger

Sounds like Japan, didnt their money go abroad into foreign investment, etc

chucky

rubbish article - typical of most of your scare mongering wine lady

i don't mind doom aricles but this one has too many 'if', 'possibly' and 'maybe' statements to be even worth putting out - no real fact or substance in it

some pieces from the article

"Colin Ellis, an economist at Daiwa Securities, said: "In principle, creating new money to pump into the economy is the right thing to do when interest rates are already near zero and further monetary stimulus is required. But the Bank of England may, possibly inadvertently, be buying up gilts from foreign investors"

"Even if a UK banking group sells the gilts, there is no easy way of telling whether the bank is selling those gilts on its own behalf, or more likely, on behalf of a pension fund or institutional investor in the UK or abroad. This uncertainty about the ultimate destination of bank money makes the policy hazardous."

"Vince Cable, the Liberal Democrats' Treasury spokesman, warned: "This may be another failed and ineffective initiative"

Even big Vince is saying it 'may' happen not 'is' happening - normally he'd be laying into the government if it was fact.

note to self beaujolais - must try harder

tomterm8

It doesn't matter in the slightest whether the gilts are sold by foreign investors, british investors, or Mr Blobby. The effect is still that there is more money in circulation. Foreign investors still need to use the money by lending it to banks, or investing it in UK assets.

Wookster

sabretoothtigger wrote: »

Sounds like Japan, didnt their money go abroad into foreign investment, etc

Yup - it was lent to British & American banks who lent it cheaply to US & British households and corporates contributing in no small way to the asset price bubble in those areas.