£140Bn fund for small business and mortgage lending

Thrugelmir

DannyRadclif wrote: »

Creating more currency will do more harm long term but for now it kicks the can down the road.

The can is reducing in size every day. At the moment its the size of Wembley Stadium that's the problem.

DannyRadclif

Thrugelmir wrote: »

The can is reducing in size every day. At the moment its the size of Wembley Stadium that's the problem.

The can is getting bigger everytime they kick it into the future. Only the uneducated think the global financial crisis is getting better. Remember all the talk of green shoots, that is just as nonsense as the can is reducing in size everyday.

Thrugelmir

DannyRadclif wrote: »

The can is getting bigger everytime they kick it into the future. Only the uneducated think the global financial crisis is getting better. Remember all the talk of green shoots, that is just as nonsense as the can is reducing in size everyday.

So explain how RBS (for example) have shrunk their balance sheet by £700 billion since 2008.

Joe_Bloggs

Dear Thrugelmir,
Can you explain why RBS are doing better ? It is because they are not doing stupid things any more ?

This new money is mañana money with mañana terms and conditions to be determined mañana.

J_B.

Thrugelmir

Joe_Bloggs wrote: »

Dear Thrugelmir,
Can you explain why RBS are doing better ? It is because they are not doing stupid things any more ?

RBS was an international bank. So has been able to sell large parts of the business in order to downsize.

Whereas LloydsHBOS had £365 billion of mortgage debt on its books after the merger in 2008. Which will take years to run down.

DiggerUK

QE was always put forward as creative new thinking from government. Truth is, they have been QE'ing since paper money was invented. The puzzle for me today, now they have announced this stimulus, is how the £140billion is to be created; if they have said, then I missed it.

At the last meeting of the BOE no mention was made of any more QE, but previous to that, the IMF did say that the UK had room to print more. So it will be very interesting to see what happens when the BOE meets again in July!!!

As they are going to accept the loan book of banks as collateral for this money, should we now regard the state as getting in to debt derivative insurance? and describe the BOE as 'collateraliser of last resort'

'Quantitative Debt Collateralisation'.....now there's a new one we might just have to get used to.
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DiggerUK

I need to get out for some fresh air far more often than I do.

The new term is "The Extended Collateral Term Repo" , so no more nonsense about this being QE from any of you.
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homelessskilledworker

£140Bn fund for small business and mortgage lending


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Look on the bright side, at least the bankers should get decent bonuses this Xmas

Thrugelmir

DiggerUK wrote: »

The puzzle for me today, now they have announced this stimulus, is how the £140billion is to be created; if they have said, then I missed it.

Banks sell bundles of mortgages to the BOE as collateral.

Same as mortgage securisation. Which banks first used in 1998 to fund the credit boom.

Trouble is now all the buyers of the issues have gone home. So the banks are left with the issue of refinancing existing debt. While they they contract their asset bases.

The BOE has stepped in to provide the support.

QE will naturally wither away as the Gilts reach maturity.

At least this way there will less direct impact on gilt prices. Which is impacting pension fund liabilities.

DiggerUK

Thrugelmir wrote: »

Banks sell bundles of mortgages to the BOE as collateral.
Same as mortgage secularisation. Which banks first used in 1998 to fund the credit boom.....

This I follow, were I lose the plot is figuring out were the BOE gets it's money.
Are they going to QE again? is it to be found from reserves, are they going to lease foreign exchange funds.... are they going to lease gold?.....have they indeed been leasing out the national reserves and got the loot in brown envelopes already?

All will be revealed in time, but I am busting to know how they get this rabbit in the hat, let alone pull it out!
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