Stick or Twist? US decide to twist.

Graham_Devon

US and Asian shares have fallen after the Federal Reserve launched a scheme - dubbed Operation Twist - to help stimulate the flagging US economy.
The Fed will sell about $400bn (£260bn) worth of bonds maturing within three years and buy longer-term debt.

This puts no new money into the economy, but aims to keep long-term interest rates low, thereby boosting mortgage lending and business loans.

More here: http://www.bbc.co.uk/news/business-15012682


Not gone down well with the markets, and observers are suggesting it's not going to help as people simply don't have the appetite for extra borrowing.

"Frankly, I don't see it having any meaningful impact on the economy," said Bernard Baumohl, chief global economist with the Economic Outlook Group.

Paul Ashworth at Capital Economics suggested the Fed was using the wrong policy instrument.

"The cost of borrowing simply isn't the problem," he said.
"Businesses don't have the confidence to invest and half of all mortgage borrowers don't have the home equity needed to refinance at lower rates."

Apparently this is what the BOE has been waiting for and QE2 for the UK is almost inevitable now, with £50bn extra in either October or most likely November. However analysts suggest it may be more than £50bn.

globalds

wrong place really, but hardly worth a thread all to itself:


Why is Gold falling at the same time as everything else?

I thought it was the safe haven in a turbulent world ?

I don't have any gold by the way ...or not any that is for investment ..So this is just me wondering.