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Econoblog
Discussion and analysis of the latest economic issues.
By Sean O'Grady, Economics Editor of The Independent.
By Sean O'Grady, Economics Editor of The Independent.
Though the Bank of England and its Governor, Mervyn King, would never use such language, they are spooked.
Spooked that is both by the continuing weakness in the economy, which contracted again in the third quarter of the year, and out still defiantly bust banking system, which means that credit is scarce and dear for those who need it from a bank (if you can go to the stock market you'll be OK though).
The increase of £25bn to £200bn in the quantitative easing programme - so called printing money - brings the total to almost three times the original estimate of how much money would be needed to get the economy moving - estimated at £75bn when the policy was launched only last March. They might have gone further - another £50bn, but this is big enough news.
The credit crunch, in other words, is far form over, and is just one of the big factors - along with our vast debts and over reliance on the City and housing for prosperity - that will squeeze our living standards for the next few years. Even the bank’s moves are unlikely to change that. The party, in case you hadn’t noticed, is over and isn’t going to restart for many years.
Spooked that is both by the continuing weakness in the economy, which contracted again in the third quarter of the year, and out still defiantly bust banking system, which means that credit is scarce and dear for those who need it from a bank (if you can go to the stock market you'll be OK though).
The increase of £25bn to £200bn in the quantitative easing programme - so called printing money - brings the total to almost three times the original estimate of how much money would be needed to get the economy moving - estimated at £75bn when the policy was launched only last March. They might have gone further - another £50bn, but this is big enough news.
The credit crunch, in other words, is far form over, and is just one of the big factors - along with our vast debts and over reliance on the City and housing for prosperity - that will squeeze our living standards for the next few years. Even the bank’s moves are unlikely to change that. The party, in case you hadn’t noticed, is over and isn’t going to restart for many years.
Comments
Of course, the original owebrs of those assets ARE receiving some extra money - but it is not clear that they are spending it - at least not here. Maybe they are buying gold or foreign currencies!
So it is time for another round of drinks, everybody puts their hands in their pockets and looks to the wall, waiting for somebody else to stump up. YES the BoE will pay, this time!!
25 bill in QE, just wait until the BoE starts muttering about inflation and lets the gilt market drop like a stone.
Oh happy days!