BOE calls 'crisis' meeting

inspector_monkfish

Bank calls 'crisis' meeting for experts

The Bank of England has summoned the City's leading economists to an unprecedented meeting in Threadneedle Street, as the pound plunges amid growing confusion over its radical Quantitative Easing (QE) policy.


http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6224090/Bank-calls-crisis-meeting-for-experts.html

PasturesNew

Oh noes ....

abaxas

Dont worry,

The a young person was sacrificed to the god of inflation. Everything is ok now.

dopester

The authorities are no match for the markets, as I've often posted.

The party is over. All this stupidity about banks not lending... they don't want to lend vast sums to poor credit risks, where the economy is undergoing total transition from a crazy boom... where many companies employing people only rose up in boom conditions. It is time for debt liquidation deflation... however painful... as forced reflation would be a disaster.

The lesson of September 1992 is a re-affirmation of a central theme: markets are more powerful than governments. The European Exchange Rate Mechanism cracked apart because the Bank of England was no match for George Soros. Even with tens of billions of Deutsch marks to spend defending an artificially high value of the pound, the British Government was obliged by the market to beat a humiliating retreat. Given similar circumstances it would happen again.

The major economic drama will be the struggle between the market and government over the liquidation of debt. Political authorities will prefer to wipe away debt surreptitiously through inflation. But to inflate away bad debts also means inflating away good credits. Market participants will seek to preserve the value of their assets denominated in money. To the extent they succeed, they will make it harder to repay excessive debt in cheap money, and thus make the system more vulnerable to overt default and deflation. As monetary policy is loosened, in increasingly desperate efforts to reliquify the economy, the market may force a deflationary response.

lemonjelly

It came after the minutes from the Bank's latest Monetary Policy Committee meeting revealed that the idea of cutting the interest rate banks are paid on the reserves they hold there was not discussed this month. The pound has lurched lower in recent weeks, thanks in part to speculation that the Bank will impose charges on banks for holding excessive amounts of cash in reserve at its vaults. Under QE, it is pumping £175bn into the economy, but much of this cash is sitting in banks' reserve accounts rather than being recycled and flowing around the broader economy.

Anyone else find it intruiging that not so long ago banks were being lambasted for not holding reserves, yet now they are, they're still doing the wrong thing?

Not saying whether they're right or wrong, just find it interesting how much things have changed in such a short time.

purch

There have been a lot of mixed messages emanating from the UK authorities.

The Treasury and the Bank have long been singing from different hymn sheets, and this uncertainty has not helped in the markets.

lemonjelly

purch wrote: »

There have been a lot of mixed messages emanating from the UK authorities.

The Treasury and the Bank have long been singing from different hymn sheets, and this uncertainty has not helped in the markets.

Completely agree.

It is a concern that many of the contradictions appear to come from the same source. Can't be helping confidence.

Also, it has to call into question their ability to maintain control of the situation, as it makes them appear to not know what the hell is going on...

purch

That has to be a worry, going forward.

alared

Mrs T once famously said "you can`t buck the markets".

All this talk of green shoots and we`re coming out of recession is very premature.
It`s obvious the BoE has cut rates to the bone and have now tried QE,but they are really just clutching at straws.
The worse is yet to come.

System

alared wrote: »

Mrs T once famously said "you can`t buck the markets".

And Mr T once said, "shut up foo'!"

chopperharris

Joeskeppi wrote: »

And Mr T once said, "shut up foo'!"

more like pass the brandy dear , and what country is junior lost or couping this week?