QE puts UK in 'better position than Germany' QE puts UK in 'better position than Germany'
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    Default QE puts UK in 'better position than Germany'

    Fitch said the additional £50bn of gilt purchases planned by the Bank's Monetary Policy Committee would "significantly reduce" the UK's need to tap the private sector to fund its budget deficit.

    The ratings agency highlighted the limited ability of individual eurozone countries to act - because it is part of a monetary union - by pointing out that Britain's economy benefited from its independence. (AtW's comment: this "benefit" is much higher inflation)

    In December Christian Noyer, head of the French Central Bank, and François Baroin, the French Finance Minister, launched an astonishing attack saying that Britain should be stripped of its AAA rating before France because it has a higher deficit.

    Standard & Poor's subsequently stripped France of its top tier rating.

    Fitch said: "The UK's deficit is larger than both France and Germany; however the maturity profile of the debt means that the UK's borrowing requirement in 2012 is less than that of France.

    "If the Bank of England's asset purchase scheme is taken into account the UK's 2012 borrowing needs are below that of Germany.

    "The programme underscores the monetary and financing flexibility enjoyed by the UK sovereign."

    The MPC voted on Thursday to expand its target for gilt purchases through quantitative easing from £275bn to £325bn.

    Despite the thumbs up from Fitch, it warned that more QE was not in itself a solution to concerns about Britain's large structural deficit and "rapidly rising" public debt burden.

    "The most important factors regarding the UK's overall creditworthiness are economic growth and its fiscal consolidation programme," it said.

    The Bank buys gilts in the secondary market, and Fitch warned there was no guarantee that investors would choose to buy newly issued bonds from the Debt Management Office.

    "Nevertheless we think that a significant portion of the proceeds will be reinvested in gilts, considering constraints on supply in the corporate bond market.

    "In addition to the direct benefit of meeting some of the UK's financing needs, quantitative easing has also played a positive role in keeping the UK's bond yields low," Fitch said.

    It came as the Office for National Statistics published weak figures for Britain's construction industry, which showed output fell 11.2pc in December.

    Economists said that while the fall was not enough in itself to cause a downward revision to the ONS estimate that the economy shrank by 0.2pc in the fourth quarter overall, it was disappointing after various upbeat surveys in recent days.

    "Construction fell sharply in December, taking the sting out of some otherwise decent growth momentum into the first quarter," said Allan Monks, economist at JP Morgan.

    Over the fourth quarter as a whole, construction output fell 0.5pc, following 0.3pc growth in the third quarter. Private housebuilding and new public non-housing work were both down during the quarter. Infrastructure output was up 4pc however.

    Annual factory gate inflation slowed in January but not as much as expected according to Office for National Statistics figures.

    The prices paid by customers for manufacturers' finished goods rose by 0.5pc during the month, bringing the annual rate down to 4.1pc from 4.8pc in December. However, economists had expected the rate to come down to 3.7pc.

    Input prices, those paid by manufacturers for their raw materials, also rose by 0.5pc, pulling the annual rate down to 7pc from 8.9pc. Again, economists had forecast a bigger fall to 6.8pc.

    Source: Bank of England's £50bn QE puts Britain in 'better position than Germany' - Telegraph

    So, Fitch thinks that UK printing £50 bln gets a better position than Germany that exports as much real stuff as China?!?!

  2. #2

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    This time next year Rodney ........

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    He thinks printing pounds is like making an apple or producing a barrel of oil. What clever people they are to have discovered this easier way to riches.

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    Does anyone on here actually understand high finance?

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    Quote Originally Posted by Doggy Styles View Post
    Does anyone on here actually understand high finance?
    No. But then I bet most on here could do a better job than Mervyn for alot less cost. All you have to do is make sure inflation does not go under zero - even if you have to drop money from a helicopter. Never mind f**king up the lives of those who have saved.

    Eventually we will all learn to just spend spend spend.

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    Quote Originally Posted by Doggy Styles View Post
    Does anyone on here actually understand high finance?
    Yes, next!

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    Quote Originally Posted by AtW View Post
    Yes, next!
    Can you explain it to Mervyn then? Once you are done could you do Gordon Brown?

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    Quote Originally Posted by BrilloPad View Post
    Can you explain it to Mervyn then? Once you are done could you do Gordon Brown?
    I said I understand it very well, rather than I can explain it to idiots.

    Having said that neither Brown nor Sir Merv are idiots - they just put their own interests above the country in my view. If this isn't treason then it should be.

    HTH

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    Quote Originally Posted by AtW View Post
    I said I understand it very well, rather than I can explain it to idiots.

    Having said that neither Brown nor Sir Merv are idiots - they just put their own interests above the country in my view. If this isn't treason then it should be.

    HTH
    I disagree, I think Brown is an idiot.

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    Quote Originally Posted by AtW View Post
    n - by pointing out that Britain's economy benefited from its independence. (AtW's comment: this "benefit" is much higher inflation)

    Economy is see nearly 0% growth, regardless even if it were the case standard of living back is being dropped kicked back to the stone ages for every man, woman and child.

    I'm sure if you asked voters, more QE or less inflation on thing your fuel / food costs I know, which they would choose.

    France may downgraded but pulled this from under our noises:

    http://forums.contractoruk.com/gener...-industry.html
    “We've always defined ourselves by the ability to overcome the impossible. And we count these moments. These moments when we dare to aim higher, to break barriers, to reach for the stars, to make the unknown known. We count these moments as our proudest achievements. But we lost all that. Or perhaps we've just forgotten that we are still pioneers. And we've barely begun. And that our greatest accomplishments cannot be behind us, because our destiny lies above us.”

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