The Gov-ner of the Bank of England comes to see Mega

[Mega]

Sadly i was strangly "Not on the guest list".......bear in mind this man was "On Watch" during the run up of the credit bubble.
Mike

[Mega]

Re: The Gov-ner of the Bank of England comes to see Mega

They going to PRINT & PRINT & PRINT:-
http://www.bbc.co.uk/news/business-15365565
Wish i could EJ on this
Mike

[*T*]

Re: The Gov-ner of the Bank of England comes to see Mega

Wow, strong stuff from Merv. Surprisingly frank. Letting the banks hang is not an option for him, clearly, so he is left with printing. I was surprised he admitted a depreciating pound was part of his solution.

I am left with the feeling that Merv is competent, but workingnfor somebody else.

[Starving Steve]

Re: The Gov-ner of the Bank of England comes to see Mega

If we are in an inflation, as most seem to believe, why are asset prices FALLING?

What does it matter if groceries are up a few dollars per week when home prices are down by hundreds-of-thousands of dollars? Monthly payments on homes are cheap because homes are down in price and mortgage rates are at record lows. So, we have de-flation in the largest expense in household budgets.

What does it matter if Jim Willie in his "Money Whirlpool" blog is writing about $75 TRILLION in derivatives exposure to world banks when house prices are falling? It would appear that the velocity of money is near ZERO, so whatever money the central banks print is meaningless to the world economy. The money sits in central bank vaults.... Not only this, but banks worldwide are hoarding money because they are afraid to lend into this contracting economy, not to mention that the collateral that they do lend on is decreasing in value.

Imagine this de-flation now, and what the de-flation in asset prices might be when interest rates finally do go up--- if they ever would go up again?

And add to this de-flation, the unemployment (and hidden unemployment) which is grinding-away at household incomes. Compound that with falling real estate prices, falling stock prices, soon to be falling bond prices, falling commodity prices, and zero interest rates for savers. Then add to this strange mix, soon to be rising taxes in America, and maybe in other countries as well.

It's difficult to envision inflation ahead under these circumstances..... De-value the dollar, but against what? Every central bank is trying to de-value, but they can't do it against other world paper currencies when every central bank wants to de-value. So, they are stuck. They can print, but how can they inject money into a contracting economy when no-one wants to borrow and no-one can service their debts?

Thank you, Ben Bernanke. You may be a genius! A slow and controlled de-flation is exactly what the world economy needs now. The world's central banks may be quietly de-flating, but telling the world that they want to de-value their currencies. Hence, we have the Mervin King at the Bank of England threatening de-valuation, but against what? He is trapped just like Bernanke is trapped. Everything is going to de-flate, hopefully slowly.

For some reason, zero interest rates are de-flationary rather than inflationary. So, I was wrong. And in this de-flation, one can not save their way out in order to survive, because one has to dip into principle at the bank in order to pay for the cost of living.... Yes, one can work, but in order to find work in an economy that is contracting, one has to work cheaper than the guy working there now. Very strange! And there are no unions left to keep wages inflating, or even to keep wages steady. There are no unions left to protect anyone..... Those days are long gone.

[bagginz]

Re: The Gov-ner of the Bank of England comes to see Mega

Wow, strong stuff from Merv. Surprisingly frank.

Indeed. Some eyebrow raising moments.

I was surprised to hear him utter the "S" (solvency) word.

Even going so far as calling for an end to the "it's a liquidity problem" figleaf

[Mega]

Re: The Gov-ner of the Bank of England comes to see Mega

http://www.telegraph.co.uk:80/financ...ee-months.html

Not sure if "They" are trying to talk down the £ or is it this bad...or both?
Mike

[Starving Steve]

Re: The Gov-ner of the Bank of England comes to see Mega

How is the Bank of England going to "inject" seventy-five billion pounds into the economy when no-one wants to borrow, even at record low rates? People can't pay their bills, so how can they borrow? And how can banks lend when people can't pay-back because the cost of living is too high?

The Bank of England could inject into banks, but the banks will just hoard the money or buy treasury debt from the govn't. So the money will go no-where.

Key-point: Since the injections go no-where except maybe back to the federal treasury, the velocity of money is ZERO. So whatever the money supply is, it is of zero importance in the economy. The end-result is de-flation.