tag:blogger.com,1999:blog-2249851329008146395.post3550821089488802829..comments2023-10-30T09:11:12.922-07:00Comments on Clouded Outlook: The Bank of England is out of controlAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2249851329008146395.post-45495663284379168152009-06-08T06:10:36.188-07:002009-06-08T06:10:36.188-07:00Haha - Be careful what you wish for; You will get ...Haha - Be careful what you wish for; You will get it eventually - or -"Price Stability" begets Price Instability: <br><br>When prices are stable, a speculator must take on ever larger bets to make a profit. Volatility-based risk-models will show low risks, and since interest rates are a function of the risk of loss rates will also be low giving added incentive to gear harder. <br><br>As the speculators push more and more money around creating fluctuations in the market, the central bank must compensate more and more to keep prices stable. <br><br>Eventually, speculators or the bank runs out of decimal points, someone slips up and the whole mess collapses with huge collateral damage to society. <br><br>The choice stands between "a little chaos every day" or a lot of chaos "once in a while". The amount of chaos integrated over time is constant - i.e. it follows a Power Law. <br><br>"Price Stability" goes for the Big Bang Mess every 30 years ...fajensennoreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-22127750540457052292009-06-08T08:38:18.611-07:002009-06-08T08:38:18.611-07:00"This is madness"??The whole thing is ma..."This is madness"??<br><br>The whole thing is madness, our country has been run by madmen (and madwomen) for centuries, this lot may be worse than most of the others (the idiots who took us into WW1, for example), but it's nothing new.Mark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-25756570740994910572009-06-08T16:05:15.535-07:002009-06-08T16:05:15.535-07:00What they mean is the banks aren't lending to ...What they mean is the banks aren't lending to commercial organisations. In the USA Ben has been buying up commercial paper which has been reasonably successful in creating investor appetite. The UK market is too small and full of risk (eg currency risk) for that to be a viable proposition. Thus they think that government should step in and be the lender. Of course that dumps the risk of commercial lending in the taxpayer's lap. We are liable for bank failures already and now we will be liable for business failures. Given the need to issue more treasury debt, I can see interest rates ratcheting up. Another dip in house prices, and more pain for business. Oh, and more losses for the taxpayer.<br>I agree, they are meddling too much, but have gone beyond the point of having an exit strategy.boiling frognoreply@blogger.comtag:blogger.com,1999:blog-2249851329008146395.post-3529731855023833332009-06-08T16:55:09.847-07:002009-06-08T16:55:09.847-07:00In how far is "This [is] madness. "??? T...In how far is "<br>This [is] madness. "??? The central bank is feeding money directly into the economy. Why? Because this is possible nowadays. We actually have competitive markets to provide financing. That is the reason why medium - large companies where able to issue corporate bonds in the past and that is the reason the BOE is able to currently buy them up. "bypassing the banking sector directly." well congratulations for the first intelligent action so far.(If you want to increase liquidity in the economy, do you a)buy up assets held by investment bank(that are worth 80% of their face value)with the bank holding these assets being insolvent. Or do you b) buy up commercial paper "to support the provision of working capital to a broad population of companies"?<br><br>This would of course help the economy directly. But given the fact, that "They shouldn't be trying to replace commercial banks" especially given the fact, that these institutions have never cost us a penny in the past and are in no danger of ever negatively impacting the tax payer, "supporting industry directly." would be a grave mistake. After all, any success of such an endeavour could seriously put into question the necessity of fractional reserve banking. Being the elite of the US/UK (Ivy League/Russel Group) we would surely hate to share the fate of those lowly journalists at the "Financial Times" or "Wall Street Journal" who actually have to cope with deregulation, new entrants to their field of business and actual competion. <br>Good job, that our CEO´s can still predict, 25% returnns on capital, without anyone questioning whether there actually is any competiton in our sector or whether the barriers to entry should be lowered.<br>Yes indeed, meddiling in the business of providing money to business and the public, who do they think they are, these guys from the BOE. It´s a sovereign right! Leave it to the private banks! Anything else will lead to a credit freeze, danger to the financial system and will necessitate a huge bailout by the government!Anonymousnoreply@blogger.com