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Wot, no green shoots?

So it is official then: the economy is more knackered than the great and good thought. What a surprise!

So its shovel on more coal so we can at least keep the bubble expanding and tell Johnny Voter its actual growth.

Once can only hope that when inflation is happily roaring away in a few years time they will remember where they left the fire extinguisher.

Well given that this QE costs nothing to do, keeps a few people busy, and has pretty much no effect on the economy, they didn't really have much reason to stop either did they?

For me the main signal is that they still haven't grasped the economic fundamentals, and that if they want to stimulate the economy they should be targetting the man in the street, not the banks and corporations. While they have some degree of state control, the banks should be forced to drop loan interest rates (while maintaining the monthly repayment figure to a large but not 100% extent)

It's not really how much money they print that matters - but who they give it to.

- If they give it to consumers, they will either consume more and prop up the economy or they will pay off their personal debts.
- If they give it to businesses, they might avoid redundancies or bankruptcy.
- If they give it to the banks, they will just pile it into some new asset bubbles.

They keep choosing the latter, so the real economy is nose-diving, while share prices have gone up along with the bankers bonuses.

Damned if you do and damned if you don't !! Britain is bankrupt and printing money will not make it wealthier again. However, all that money printed earlier have gone into a blackhole, never to be seen again by human eyes but the resultant debt still had to be paid off !!

So now, it's trying to pump more into that same blackhole !! In most other countries, their government stimuli were used to improve infrastructure, improve manufacturing or improve the economy in some form or manner. In Britain, it's pumped into a blackhole !! Therefore, the answer to the earlier question - "Why them and not us" - in blindingly obvious !!

The headline - Extra £25 billion to stimulate the economy - is so misleading in the extreme !! The only obvious stimulating it does is to stoke up the bankers bonuses and egos !!

Am I totally wrong but are the billions being input to the banking system just being printed in fact. If this is true the only outcome is inflation and currency devaluation - Surely we should be joining the Euro since there is almost parity in value, if we wait too long it will cost a lot more to join. I am a manufacturer in England and the Euro zone is out of bounds for us due to the complication of currency difference, they will buy in the Euro zone out of preference, this means that to the of Europe if a market we find very very hard to break in to, even though we have a great product.

Our economy is stuffed we do not make anything we just consume, it is not rocket science what this means eventually. A difficult period of adjustment looms I think.

James Adlington

It's just a further indirect tax, the more they pump in, and the more of the banks they own, the worse it is for businesses. See the following for an interest take on it all:

Those that let us get into such a catastrophic situation are the gaurdians to get us out? Lunatics in charge of the asylum.

What a joke!

Another £25 billion for the banks to hoover up and use to restore their balance sheets. Impact on the real economy = zero.

Bunch of amateurs- you couldn't make it up.

The Government has become dependent on QE, like a Junkie on Heroin, so who of us is ready for the Cold Turkey when the monthly fixes stop?

I am used to sandwiches after Christmas, but how about all through 2010 and 2011. It's grim, it's not getting better, just getting worse more slowly than before. There is feint reason for cheer, and the stiff faced optimism of the commentary belies the pain we are about to experience.

Hi turn on the gas / James Adlington

I agree that the UK should switch to Euro, but this is I think a separate problem to the effects of QE

The governments (not just the UK) have been persuaded into "recapitalising" banks. In the earlier panic and in the face of bank collapses they were pushed into saving banks.

The newly created money has gone to these banks, and some large corporations. It improves the look of their balance sheets.

This money is being hoarded, while the consumer is expected to cover further risks in the banks' operations by being omitted from the benefit of cheap money, by having to pay high interest rates (higher than what the banks enjoy), by having to pay high transaction fees and so on.

What this means is that the newly created money is not actually in circulation. Because nobody wants to take on new debt, the banks do not even have the opportunity to push the money through into the system.

This means that there is no inflation, just higher costs for the taxpayer and continuing debt-deflation.

Unfortunately, the government is unwilling to subsidise the taxpayer because the only effective way to do this is through direct intervention in the banks they (we) now hold. This is politically incorrect, pro-state and so on. So we have to suffer.

We have just plugged the banks with 2nd bail out of £30B and this is still not enough, so why not just buy another £25B of goverment debt. Its all they can do its so dire. In the past these high heidons and alleged gaurdians of our democracy would of probably been shot for treason.

This begins to look like the exit strategy from the Bank of England for QE.

The next major strategy will be from Alistair Darling's autumn statement.

Interesting to see if we will now be told just what the nasty bits will look like. Could bring many back into the real world again.

If you look at GILT yield relative to Germany, France and Italy, before BoE started this experiment GILT yields sat a bit below French Bond yields and a bit above German bond yields. Now GILT yields are above both French and German and creeping towards Italy (not good news!).

So as far as GILT yields are concerned the policy is arguably having the opposite impact to what is intended. As far as the money supply is concerned it is unclear, it seem that banks would prefer to pay cash out in bonuses than rebuild capital or lend.

Wheelbarrows at the ready boys!

I can't help (cynically) feeling this is all in an effort to make growth by election time - even if it's an unsustainable QE bubble.

The simple fact is that capital needs to be destroyed - propping it up with 'funny money' isn't going to get the job done.

At least the public are not fooled (judging by the comments above me) - and nor are the markets it seems - partly because they priced it in days ago (meaning if the BoE didn't expand there would have been a fall)

....so which one is the dog and which one is the tail?

QE = system maintenance.

1)Make a list of the names of the business and political elite extant at the begining of this downturn ( or as George Soros indicates supercycle endgame ).

2) Make a similar list once the crisis is declared over ( when QE is reversed )

3) The strength of the correlation will indicate the level of tax payer abuse.

Its going to be a expensive month for jolly tax payer,

32Billion spent on the banks
25Billion injected into the system from the bank of England
and
10-20billion last bid spending to be anounced in the pre-budget report.

All to be added to the 270billion projected goverment debt!

Thats at least £1000 EXTRA goverment debt for ever man, woman and child in the country, and all spent in one month!

It'll be dificult to get the economy out of the woods when its at the bottom of the burning lAAAke of fire ,most sensible hibernating buisinesspeople are not going to be sticking their necks out of their hole to shout "whoopee spring has AAArrived, BRING on THE GREEN SHOOTS " unless they want the governmint with the hole in the middle to sequestrate what remains of their nuts ,ie kill and eat the goose that lays the golden ego.

In a normal buisness cycles the downward spiral of wages/prices creates an incentive to act[ when the ponzi pie speculaaative bubble is removed] ,the counterfiating scaaam that now maintains staaataaas QE'r prices wants to cajole buisinesses into buying into their ponzi pie.



In their dreams!

QE, like all monetary policy instruments, is blunt. By the time you know its working, it too late to turn it off and the damage is done. Very much like interest rate policy.

As everyone knows the effect is very similar to trying to drag a brick along the pavement with an elastic band. By the time the brick starts to move its no use relaxing the elastic because the potential energy in the elastic has been transferred to kinetic energy in the brick, which is now moving rapidly towards your face.

All QE is doing, as others have already mentioned, is storing up an equally destructive period of inflation and it makes me question whether those charged with economic management have actually learned anything.

The banks have never had it so good. £200 billion of QE handed to them, sitting in the coffers. £125 billion of taxpayer bail-outs. And an ongoing licence to rip off businesses and individuals with extortionate interest charges and arrangement fees, all ostensibly to "discourage irresponsible borrowing and repair their balance sheets", while they continue to pay themselves fat bonuses. It's theft on a huge and unprecedented scale, backed up by an incompetent Bank of England and a stupidly naive Government.

WOTW post 14 I don't disagree with the sentiments in the first paragraph of your post.

Messrs Brown & Darling are inveterate gamblers determined to keep shovelling money into the system in a vain hope that it will be all right by election night.

Their only aim seems to be a recovery at any cost before the election to try to bring some hope to Labour MP's and candidates. We are facing financial armageddon and they seem unable or unwilling to face reality.

They continue with the same flawed QE plan in the hope that if they gamble enough it must work yet all the time they dig us all deeper and deeper into a financial hole that will take a generation to solve.

Is QE required just so that the bankers can get bigger bonuses?

"The headline - Extra £25 billion to stimulate the economy - is so misleading in the extreme !! "

Spot on! I was about to comment on the headline, but I see many have already done so.

I fully expect there to be another QE round (or two). Q4 will be another quarter in recession. Doing QE this way, I am looking at a figure of £300B, so we're only 2/3 of the way there!

How else can we stimulate the "economy" on the whole? A bit more spending by all? Create confidence? Etc. etc. What's the annual personal tax receipt? How about putting money directly into everyone's pockets? How about a a year off tax (at least personal tax) right from the onset?

Too late for anything now. And what's the most interesting part? I write with good authority.

The idea is to stimulate the economy by providing more liquidity for the banks to lend money out.

Unfortunately, this money will go straight on to their balance sheets to recover their losses and pay their bonuses.

In the first place, they were bailed out as they blackmailed the country by threatening to turn off the ATMs. That money went into their coffers, as did the previous lot of QE largesse.

Yesterday, they received another huge bailout, due to EU legislation we are told.

We are being used as a milk cow. Not only are our savings being devalued by printing more money, but the exchange rate collapse has devalued them in terms of world currencies. Not only have equities gone down, but savers' interest rates have as well.

It is outright theft from the savers to bail out the borrowers.

The government and the banks gambled with our money and lost. Now they are taking more off us to pay their ever increasing debts.

There is nobody to blame but ourselves; we elected this thieving, murdering, treacherous bunch and then we elected them again.

Maybe we'll be better off in the US of E next month, with the Fourth Reich running things; we could hardly do worse.

16. At 1:58pm on 05 Nov 2009, icewombat

oh yes - and when the 'party is over' - then we're going to have to grow in a climate of extreme taxation.

Ever tried running a race with a piece of elastic tied to you and the start line? - that's what it's going to be like.

We as humans wil run and run and run, until we reach a point where we're exhausted and then - SNAP - we're taken all the way back to square 1.

I remember earlier in this crisis that there were comparisons made to our GDP - for example the Japanese and Italian level of public borrowing - and how our level was in fact relatively small.

What all these analysts (or as I call them - soothsayers) missed is that these countries did not start day 1 with massive GDP % borrowing - it started relatively reasonable but the fine line between 'payback' and 'stifling growth' meant they could not start the payback before they got the growth going - which meant borrowing more and more.

When we're on our 8th bank bailout next autumn and QE is still going - will you believe me then?

Alternatively the BoE may 'overshoot' and take us into Wiemar-land - that will be fun - won't it?

However I suspect the first case is the more likely at the moment - the BoE seems to be making a very amatuer mistake of 'reading it's own signs'.

It views the upturn in the car markets as a sign of growth (forgetting about the cash for clunkers injection)

It views the stock market rising as evidence of growth (forgetting that banks might actually be taking earnings from their subsidised gilts to dabble in the equity markets - because they don't know how to do anything else!)

It views the rise in factory prices (this month) as a sign of growth - and not a fluctuation based on the Government tinkering with the petrol tax (which is at the core of every price)

It views the 'reducing speed of unemployment' as a sign of growth (I can't believe I'm typing that!) - and not the Government tinkering with the numbers again.

Poor old Merv, he's playing poker with a cheat, but how reliable is the cheat?

If you look outside of the financial world you can see:

Job losses
Insolvencies (I noticed the ³ÉÈË¿ìÊÖ have stopped reporting the rise in them)
Mortgage defaults - like Northern Rock's, glossed over with some 'sell back news'
Retail profits declining - overshadowed by the focus on NEXT or M&S results
Strikes Which indicates pressure on the workforce's wages and conditions

...and they think we're close to recovery?

Maybe the BoE staff need to take a field trip up North or somewhere to see what the REAL economy looks like.

I believe Merv is from Wolverhampton - how quickly people forget those they leave behind. I have been there recently and I can assure you there is no recovery in sight there.

Hi Stephanie,

200 billion sterling printed since March is equivalent to nearly 14.5% of annual GDP, isnt it? Alistair Darling is under the mistaken impression in his letter today that " This facility has enabled the BoE to influence monetary conditions in the UK by influencing the quantity of money in the economy as well as by setting the bank rate."

Adam Posen ( MPC member) has just said " We
can identify two recent instances where central banks consciously created large amounts of central bank reserves on a similar scale to that being pursued by the Bank under QE this past
year.10 Most similarly, the Bank of Japan officially began what it termed Quantitative Easing in March 2001, buying huge numbers of Japanese government bonds and creating reserves in the
banking system. As can be seen in Figure 8, the spike in narrow money growth did not result in an increase in broad money or credit growth, let alone an increase in the price level. Looking in
close up at the period of 1999-2003 (Figure 9) shows how Japan stayed mired in deflation despite QE. The Bank of Japan has since indicated that it believes those QE measures undertaken were largely ineffective, and certainly not inflationary (Shirakawa (2009))."

In fact, Mr Posen says there is no real inflation threat from QE " The reason for recapping this is to emphasize what these unconventional measures including QE
were not. They were not attempts to expand the money supply per se, especially since the
velocity of money was declining and unpredictable during the crisis. They were not optimal
policy setting exercises, where an interest-rate setting rule told central banks by how much more
they should have cut rates below zero, and the amount of reserve creation or asset price
purchases was calibrated to be equivalent."

So, we're back to Dr Deanne Julius saying its a financial sector ( not real economy ) boost and an excercise in holding down interest rates payable on Government gilts/borrowings. She says that's not what it should have been doing!!

I suppose we are going to find that the Treasury will now insert the QE boost straight into its growth projections as they did in the Budget. Webs and weaving come to mind.

...one thing I forgot....

Weren't the Government talking about selling back banks to the private sector or something earlier this week?

Surely the actions of the BoE show this is not a good selling market?

If they are sold back - where do you think the money will come from to fund a purchase? - QE perhaps?

We're no longer robbing Peter to pay Paul, we're robbing Peter to pay Peter!

Oh the insanity of it all...

....and still not one person dare mention the cause of this crisis - for to renounce Capitalism would be so unpopular amongst the people nobody would dare.

....and who say's the people are always right?

It struck me the other day that now is that time to join the Euro. There is no way we get a better parity rate at the moment and it would encourage growth. Of course Camerons little Englanders would probably mess themselves at the prospect, but if i was Gordy just think of the fun one could have, join the Euro, get Blair elected El presidente, and Moat owning MPs brought before the courts (Tory majority here onethinks) What a perfect storm Dave would walk into. Its almost worth Labour losing the election just to see the look on DC's face as he is confronted by the "Euro out" factions within his party. I think Hague would actually physically explode with indignation.
With regards to QE anyone in an SME will tell you that trading is tough at the moment, and next year is filling people with dread as it looks like its going to get a lot tougher. Many professional people i know are on 3 or 4 days a week now and are looking nervously over their shoulders.
There was an interesting article i think in the Telegraph about thursday becoming the new friday for a lot of city staff with regards to having a drink at the end of the "week", more of this to come i fear.

Looking at the above comments, it is very interesting to see the level of consensus!

False economy. Governments and economist fail to address the idea that this money may need to be repaid and exactly where does that all fit in. I guess because they (government and banks) will not be paying this back but rather the taxpayer there is no need to calculate something that might people upset. Apparently we will continue with one-eyed economic predictions. Another idea to be considered is that no one is borrowing the money so there is less need for more money. Banks are flush with bonus money so maybe withdrawing some is the only way to curb the continued greed. Since nothing has changed why is there some expectation that things will suddenly get better. If you burn all your firewood, at some point you will be cold, or like the banks you could steal your neighbor's wood..

18. At 2:15pm on 05 Nov 2009, Axeldstinger wrote:

"As everyone knows the effect is very similar to trying to drag a brick along the pavement with an elastic band. By the time the brick starts to move its no use relaxing the elastic because the potential energy in the elastic has been transferred to kinetic energy in the brick, which is now moving rapidly towards your face."

That wins 'best description of QE' yet in my book - however from your incredibly descriptive piece can I assume you have actually done this? (the brick thing, not the QE)

This talk of money being spent is all very interesting but in this txt and tla abbreviated world I think we lose sight of quite how much of my hard earned tax contributions is being squandered on lost causes. Would you please be kind enough to represent numbers as numbers? £25bn or £25B or however you like to put it should be written as £25,000,000,000 – which is quite a lot of money. It is certainly significant a number to be represented correctly. You may even like to write it in full as twenty five thousand million pounds – just to focus the attention.

If the recession is over why do we need another £25 billion of free money ?

Answer high risk of double dip...

More cash for the black hole that is Labour's economic policy. It looks like knowing that you are going to be kicked out of government gives a license to squander as much of the taxpayers' resources as you like, knowing full well there will be no need to account for it or repair the damage done. Already the pound has been devalued against the euro and the dollar by about 30% in two years, and as long as the same incompetents rule the treasury the inexorable devaluation will continue.

25. At 2:27pm on 05 Nov 2009, shireblogger wrote:

"200 billion sterling printed since March is equivalent to nearly 14.5% of annual GDP, isnt it?"

I make it 7% based on the GDP of 2008 (2.68 Trillion) - although I would conceed 2009's GDP is going to be much less.

One thing which is not reported on at all is that if we pump in 7% of GDP in 2009 (lets for argument sake take the GDP of 2008) - and we get a GDP growth(!) this year of Q1 -1.9%, Q2 -0.6%, Q3 -0.4%

...then surely the situation is far worse than it seems, we added 7% to our wealth and yet reduced our wealth overall

I know a lot is pinned on the next quarter - but unless we see an 8% or more GDP growth rate then we're effectively printing pointless money. In fact the counter effect could be much worse as many stimuli are now wearing off - or ending (VAT, Cash for bangers, holding back fuel duty etc)

I am inclined to agree that QE is not proving to be inflationary - but then that makes it even more dangerous as the foot will have been on the pedal for more than a year - making it more difficult to lift it at the right time at the right speed when the time comes.

However what seems to be indisputable is the QE money is piling into the stock market - I suspect this is because traders are offsetting their gains from supported gilts and investing in the Equities market as a sort of hedge.

If growth continues downwards then the gilts will provide a steady (and rising in real terms) income.
If growth kicks in - what you loose on the gilts - you will win on the equities.

They can play both sides of the coin, but Government does not have such a luxury.

28. At 2:51pm on 05 Nov 2009, FrankSz wrote:

"Looking at the above comments, it is very interesting to see the level of consensus!"

Agreed.

Having seen the eye watering derivative liabilities RBS stated in its last annual report - close to 1 trillion pounds if I remember rightly – how much more money will the government need to hand over in the coming year(s) to pay off its losses from its ludicrous gambles in unregulated derivative and credit default swap markets?

I'm sure RBS is not the only one hiding liabilities of this nature, though yesterday's laughable rise in house price news gives you some idea on how heavily hinged the banks are on over hyped property valuations – residential and commercial.

It next six months will be interesting, because the derivative time bomb has yet to go off.

I get the feeling the money pumped into these defunct banks has been spent already, and government attempts to enforce lending criteria in bailed out banks merely highlights how dangerously incapable they are of grasping the idea the giant Ponzi scheme is unravelling.

QE may well mean high inflation in the long term, however the government may actually want higher inflation: this will devalue their massive debt...

Steph

I am getting as worried now as much as when no one could see the crash coming but some off us could.

What Government and the power that be including the Journo's can't see
is, waiting to see the signs of recovery before we stop printing money is a blind stupidity.

For the economy to turn the corner the ordinary punter will have to have confidence in their situation.

They will then go out and start making purchases.


So you want me to go out and spend?

My first thought is how safe is my job?

If I have my job how much will I be left with after the Labour hand has been dipped into my pocket for the extra to pay of this Mother of all debts?

You can't answer that question.
The Government won't answer that question because they want it to come to light on the Tory watch.

We are being asked to make important investment decisions with a massive piece of the necessary information being kept from us for political reasons.

So will I invest in something that could seriously threaten my financial situation without knowing how much extra tax I am going to be forced to pay for Labour incompetence?

No

Due to the massive mess we are in and the fact no one will tell us how much it is going to cost us. We will not spend so the country will not grow as it should.
They will keep printing because we are not showing signs of coming out of recession and round it will go.

WE NEED HONESTY IN HOW MUCH IT IS GOING TO COST US AND OVER WHAT TIME PERIOD.

Only then can we make our spending plans for the future.

You and all of the other opinion former should be relentless in getting the answers to these questions.

People will not spend until they know it is safe to do so.

As long as you allow Labour to get away with not spelling out the cost then picture will remain incomplete and we will not spend.

This is now not so much becoming a Tale of Two Cities, by moreover a Tale of Two Nations ( Within ).

For on the One - Hand, we have yet another round of "NEW" Printed Money being supplied in the form of Quantitative Easing going through the vains of many Sector's of the U.K.'s Banking System, then getting stuck by failing like the rest to come out at the High - Street End, and the Business End of the line, while Banking Executives praise themselves for getting this far by awarding themselves Eye-Watering Christmas Bonuses.

While in the mean-time here in the REAL World at the High - Street End we are still seeing -

Secondly, both Small and Medium size Businesses still going bust, and closing-down due to not just now our "Over-Long" Recession ( as compared with other Western Nations ), where we in the U.K. are bracing ourselves for what is next to come after the the next General Election, when we will be seeing massive CUTS in Public Expenditure just at a time also when it is now being predicted that in the United States, and Europe Growth is expected to continue to boost these "Other" Global Economies.

It will become increasingly point-less to further inject 25 Billion into the British Banking System while there is clearly no exit Policies being formulated by either the current Government, or the Conservatives as to what the way ahead should be after the next General Election in Terms of Employment creation for the Medium to Long Term, thus ensuring that ANY, let alone ALL this extra Cash sloshing in the form of ( Q.E.) will in fact make any real impact on needs to reduce the current U.K. Unemployment figures and levels, or for that matter stop Unemployment from rising, and growing even further after the next General Election.

The "only" certain thing that must be excepted by this further injection of Quantitative Easing is that over time this will weaken the value of Sterling, which will see the Pound again de-value against other World - Currencies, in a future period whereby others will be heading towards Growth, while the U.K. due too its now extended weakened position will be the First Western Nation to go back-wards and slip further into any future Double-Dip Recession due to now the many Years of under investment in Manufacturing renewel which all started under the wasted 18 Plus Years of the last Thatcher Conservative Administration when last in Government.

32. At 3:12pm on 05 Nov 2009, martin hughes wrote:

"If the recession is over why do we need another £25 billion of free money ?
Answer high risk of double dip..."

...but there is no such thing as a 'double dip' recession - it's a media phrase coined to provide some sort of excuse for 'not actually coming out of recession' and diverting blame to simple 'bad luck'

It makes you wonder if the whole things wasn't planned.

Remember 'financial headwinds' and 'economic storms' - well I don't remember them in Economics - and yet apparently they caused this mess.

The uneducated media are being played for fools - and they're taking the public along with them. They can't explain 'overproduction' or 'diminishing profit' so they make up some stuff that sounds much better - and looks better in headlines (like £25Bn to stimulate the Economy - or the classic bailout this week which was somehow described as a 'sell off' - even though nothing was sold)

When you're in a depression, you might be able to alter the numbers through QE to make it look like you're growing - but all you're growing is the supply of money - it's not real growth. What you're actually doing is fiddling the books by devaluing your currency - a price that importers and holiday makers will end up paying. You and I will notice it when the price at the pumps starts rising as imported oil begins to ramp up (it's only kept down at the moment because it's valued in Dollars - which is falling as fast as we are through similar techniques)

One again, the Americans have shown us how to fool the public properly - out incompetent Government and whine-y media can't even get that right!

Don't assume just because someone is described as 'Economics journalist / advisor / guru / hero / superman' - that they know anything about the subject.

I am a 'astrology expert' - now try and prove I'm not.

31. At 3:11pm on 05 Nov 2009, ToldYouSo

....and clarify what 'billion' you're talking about - the UK billion (1,000,000,000,000) or the US one (1,000,000,000).

....or do you change depending on whether you're talking about 'Billionaires' or 'Bailout Billions'

Where did QE go and what is it doing. That's all that matters. Anyone with a clue as to human nature should be a li'l worried at the moment.

No 14 "I can't help (cynically) feeling this is all in an effort to make growth by election time - even if it's an unsustainable QE bubble."

Is that growth, Wiemar Republic-style or is that Zimbabwe-style ??

City Diaries for Nov 5th is a real fireworks disply. Terrific stuff from those who do the stuff. In particular Stephens page, 6th sense? insight? experience?........... Grat stuff.

No 24 "Alternatively the BoE may 'overshoot' and take us into Wiemar-land - that will be fun - won't it?"

Huh ?? Nicht Deutsch sprechen !! :-)

No 26 "Many professional people i know are on 3 or 4 days a week now and are looking nervously over their shoulders."

Well, many professional people I know are making plans to or have already departed for pastures new. Favourite targets being Canuckistan and Aussieland, followed closely by Singapore and Kiwiland !! It seems that's where there's a reasonably civilised life-style and where money can still be made without being "confiscated" by the government !!

Re: 42 herosrest.
Where did QE go and what is it doing. That's all that matters. Anyone with a clue as to human nature should be a li'l worried at the moment.
-----------------------------------------------------------------
Yes, I agree it is very hard to see just where sofar to-date upwards of now £200. Billion Pounds have gone in improving our Exporting Ecomony, or for renewed Investment in newly needed Manufacturing Employment places.

You get the impression that this QED is going nowhere.
No, No! Not that QED ( The Quantitative Easing Debate ). For are we being lead a "Dance" somewhere? As this reminds me of an "Old" Story, which upon being Re-Worked might go something like time.

Firstly, picture General Brown standing at the head of his Troops, and waiting too go into Battle. When.
He turns to his Batman, and saids:

Harriet, grad you Cape, and pass this Verbal Message on back down the line, to Captain Darling at H.Q. TO:-

"Send reinenforcments were going to advance".

This Messages was then relayed by way of mouth all the way back to H.Q., BUT somehow every time the Message was past-on, it got slightly changed.

So therefore finally, when the last Messenger got back to his H.Q. things relayed went like-

Messenger: " Captain Darling. Sir. - Message from General Brown, Sir."

Captain Darling: " Well man, don't just stand there, let me have the General's Message?"

Messenger: "Yes Sir. The Message is - To send Three and Four-Pence, were going to a Dance".

Yes, you've guessed it the Twist has come around again.

"Gordon Brown has backed the home secretary's decision, saying the government could not afford to send "mixed messages" on drugs."

In other words, this government will fire anyone who contradicts their spin with inconvenient facts !! Is it any wonder that so many are saying that "we are out of the woods", when Joe Bloggs and friends can feel it in their bones, *AND* their pay packet, that we have not even found the path to lead us out yet !!

Perhaps, in future years, when history is written about this recession, it will be described as the Great Delusion, rather like the 30s were described as the Great Depression !!

Hey everyone, since everybody seems to agree that this all looks like a desperate attempt by GB et al to have 'growth' before the election why dont we all VOTE for him! He'll then have to deal with the mess that he thinks he is storing up for David Cameron!

the only problem is that he is half blind so he can fiddle while the country disappears under a tidal wave of debt.

Oh well. Best start figuring out how to grow vegetables in window boxes.

Regards LondonHarris, your #47. That was an LSD trip(journey). :)

I have the answer - but don't ask questions.

Linked below is analysis related to a Competitiveness Report '2009' from the World Economic Forum at Davos. Goggle, giggle, perhaps even gargle. Did you take in and understand the opening factual data........... these ladies are pro's. Personal opinion based on data that no longer applies because it was gathered before a financial crisis neither the ladies or any other on the planet has experienced before - unless they are 100+ years old.
lncredible it is..... that people do this - but they do.
So's........ if'n you are going to listen to crud, listen to mine. l know what l am telling you. The world isn't flat. It is a bumpy triangle covered with large dollops of crusty cheese. If everyone is given payrises that restore relativity to that existing some 12 years ago....... say 131% rises, all the economic problems go away. Until the following monday morning at least.
Here is the business sector analysis that fell fowl of crunchy credit and the eternal wars for control of markets and profit.

A borrowed text that hints at the underlying problem and structure of influence that exists today. "The concentration of ownership in the financial services industry has resulted in higher bank fees and interest rates that consumers are forced to pay for credit cards, mortgages and other financial products. No single financial institution should be so large that its failure would cause catastrophic risk to millions of American jobs or to our nation’s economic well-being. No single financial institution should have holdings so extensive that its failure could send the world economy into crisis."
My own thoughts - Huge concentration of influence and interest in efficient systemised wealth optimisation provides for systemic abuse of customers, over charging, profiteering and manic arrogance under the all consuming cloaks of commercial privacy. Those who consider measures such as GAAP accounting standards as a solution and measure of systemic financial activity are lost in a dream of stupidity. The answer is as bad or worse than the solution.
A decent primer -
An eye on the storm -
Dealing implications -
November 12, 2007 - "The risk of a worldwide banking crisis – one that is particularly damaging to mortgages, private equity, hedge funds and the banks themselves – is higher than it was a month ago, and the storm is rising. This is still an emerging story. It was not until last Wednesday that The Financial Times led on the legal provision that CDOs can be liquidated by the senior holders when they go into default. That could lead to a fire sale of CDOs and still larger defaults. Yet this, as important as it could be, is not the biggest threat. Few non-bankers have heard of FAS 157 and 159, yet these are the regulations that will set the terms on which the banks will value their assets. The trouble with FAS 157 and 159 is that they are perfectly reasonable regulations in themselves which could have disastrous, though unintended, consequences." - William Rees-Mogg
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The practice of accounting is an ART form of self interest - Here is a further potential banana skin being effected now - What ever is expected of year end - 4th quarter results - think again - no-one knows how the year end balance sheets will look, they are being 'created' now. And creations they will be - FAS166 & FAS167 are with us.


FAS 166 is a clarification of FAS 140. Assets that are transferred when the tranferor still has an interest in the asset cannot be derecognized...in other words - if a bank still holds an interest of any kind in the asset..it must be accounted for from a risk perspective. Mortgage Securitizations must be accounted for as would the transfer of any other financial asset..if the transfer does not meet the requirements for sale accounting (if the seller is still exposed to risk)..the securitized mortgage loans must remain classified as loans. Further, the transferor must recognize and measure at fair value all assets obtained and liabilities incurred as a result of the transfer of financial assets recorded as sales.

The solution to the bubble that is Credit Financed GROWTH is not accounting regulations by people who do not understand the nature of the beast. Across all, that is all and every aspect of Finance - lenders and borrowers - whether in fact there were problems before 2007 (a debate that was never had - that problems existed was an arbitrary decision) There definately are problems now and no-one really understands the scale of it.
The disaster caused by enforced revaluations of assets has a governing factor which must be addressed and mitigated. The contract length of the finance - which will run on through 3, 5, 7 or 10 years. In the case of domestic mortgages and the CDS problem, there were only two effective solutions to the GAAP revaluations of derivatives, mitigate the outstanding loan balance or refinance the loan into the new regime. Whilst those revalued contracts run to their contracted term the problems do not go away. They simply multiply through the economy because there is not enough growth taking place to grow back the equity destroyed. The negative equity endures. There is not enough time to grow back the equity lost.
On commrecial /debt that means bankruptcy as contract terms complete and repayment or refinance is sought. It isn't difficult to fathom, the problem won't go away, there is not a rug big enough to sweep it under and it is the real fact of life today. Business is going bankrupt. There are more accounting rules going into effect now, just in time to wreck the year end results if accountants at banks are not on the ball. You might think business would be screaming blue murder and begging help, no-one listened. They were told this is the standard now, get on with it. Hope springs eternal............ but there will not be growth to bridge the equity gap and that means bankruptcy or government bailout. There is an awful lot of that around at the moment.
Those responsible for GAAP expect it all to turn out ok in the end and will never, ever, admit they were responsible for the mess. It is time to start pointing fingers and put blame where it belongs, with the holier than thou. GAAP is wrecking the world.

Some of the best run and most conservative conglomerates, national giants who covered all risks, astute experienced business people, were holed below the waterline by FAS157 revaluations. Their assets carry a huge hole and business was no different to the consumer, everyone carried large credit exposures. No one understood the implications of a revaluing exercise to the derivatives market. Simply look at the size of it compared to world GDP. No one regulating derivatives, understands them.

If you followed any of my meandering witters, you may have realised that GS, Gold Sacks inc. do well, regardless. They know the game, they know the score. Hence, their thinking is an intersting insight. This is a provocative article, not for its conclusions but the pointers at risks and expectation for the neear future. It spells out very much of the current thinking and how and why things are running the way they are. It is also frighteningly awsome in the way it makes apparent the complete lack of understanding in the front line of what the Generals are doing back at base. We only know what we need to know - the hands at the tiller are playing the wrong game and fully expect to import wealth not growth, eventually, in the form of profit.

G20 vows to spur fragile growth -

It matters not by order of significance, that a Tobin type tax move would impact short-term speculation, it would be possible and to all 'but' those engaged in the activity, should be a reasonablw constraint. It matters not of an imposition of 1% tax rate - it would be utterly ridiculous. One penny per transaction is all that is neccesary because it is the data that matters. What is vitally important today, is the provision of near real-time data and access to such, that accurately and comprehensively details trading activity. Even the people who know what is happening (hehe!) do not know what is taking place or how the most commonsense and logical ammendments to practice will actually pan out. Markets are there to be taken advantage of, government is there to regulate and encourage and ensure a general benefit.
What we have is a free market, people have dreamt of this for a very long time - it is in jeopardy, at risk from the stupidity of systemised greed - which despite Gordon Gecko's appeal to the dark side is an unsustainable path to oblivion. It is the New Frontier - it is the Wild, wild west - send in the Sheriffs and the Marshalls. Take, take, take until there is nothing left to take means there will be nothing left, the process is destructive, self defeating.
Regulatory attempts are immature and sadly quite pathetic. Honestly pathetic in regards the conduct of human nature. Ooooh look, educated, principlaled, high flying, astute, rolling in it, robber barons, hot off the gravy train of interest rates and desperate for the next financial killing. Never mind the mess, where there's muck there's money - Profit ho!. Catch them, lock them up. It is that simple.

Bank credit to rise about 20% next year - Last Updated(Beijing Time):2009-11-08 14:32
China's bank loan will expand by 20 to 22 percent in 2010 to fuel the economic recovery, a leading Chinese bank predicted Sunday.
The new Renminbi credit balance issued by the commercial lenders is expected to reach 8 to 9 trillion yuan next year, according to the China Banking Development Report issued by the Bank of Communications, the nation's fifth largest commercial lender.
Chinese banks extended a record 8.67 trillion yuan in the first three quarters in 2009, up 30 percent year on year, to echo government's call for aggressive lending to power the economic growth.
The report said the cooling-down of the loan increase depends on the government's policy fine-tuning and the expected slowing fixed-asset investment.
Bill financing, a short-term credit which easily go to the speculative stock market other than the real economy, is forecasted to fall next year after regulator's warnings, said the report.

Perfect irony - Bill Fair and Fico.

This could be pepto bismol time............

Youi have to give them credit! - SHARM EL-SHEIKH, Egypt: The Chinese Premier, Wen Jiabao, pledged $US10 billion ($11 billion) in loans as a two-day Forum on China-Africa Co-operation opened in Egypt yesterday. ''We will help Africa build up its financing capabilities … we will provide $US10 billion for Africa in concessional loans,'' he said at the start of the forum in the Red Sea resort of Sharm el-Sheikh. He also pledged to cancel debts of African countries to increase his country's role in the continent. China pledged $US5 billion in assistance at the last forum, held in Beijing in 2006, and has signed agreements to relieve or cancel the debt of 31 African countries.

:)

Did someone say hedge?

Here's why applying arbitrary revaluations to Derivatives isn't very clever.

66. A couple of economies seem to be weathering matters better at the moment than the herd. China has gone for it... quite frenetic, litterally flipping from bust to boom. Her economy was devastated, thoroughly wasted during 2007. It did not generate the interest that was perhaps deserved. The Olympics went well. 2010 in China will be worth watching to see if they can. simply power on through. It is an interesting prospect, the numbers are frightening.
Australia in practical digger fashion are out front of the pack - It isn't a mistake - At this time they are doing well - here's why with interesting insights. Language like so much of our lives is an art - listen to the words. I reckon, in honesty that Aussie accountants are probably worth their weight in gold.

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Popped out yesterday evening to a local hotel 4 a quiet beer. Sat at a bench table in the paved garden, l enjoyed a gloomy colourful sunset whilst contemplating life, people, ignorance and the rather gorgeous lady who had served my drink. The table at which l sat was one of these slat type affairs, nestled under a small tree. An acorn had dropped to the bench beside me and focused my attention to the varnished woodwork.
Lo and behold l was not alone. Some half dozen ants were foraging busily across and beneath the slats defying gravity. Shortly, a spider appeared. As they do. A greenish amber blob perhaps half the size of the ants, scurrying the length of the table following an edge and negotiating various chips and knocks that fate timber. The spider quite suddenly halted for no obvious reason. An ant had approached within some 4 inches feeling it's way around in that disorganised ramble that ants do. Magically the ant honed to spider and seemed to recoil in confusion at an inch away, circuiting spider. As the ant got some 4 inches on, spider sprang to life, continuing on its way.
This act repeated 4 times as little yellow blob traversed the 2 yards of table top and vanished over its end. Amazing wot a pint or 2 can do 4 ya.......