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| Economy | |
| Bank of England and Federal Reserve stimulus gets lukewarm response from markets | |
| 2011-09-22 | |
The US Federal Reserve announced "Operation Twist", which will see the central bank buy $400bn of government bonds with longer maturities and sell the same amount of shorter maturities. Hours earlier, the Bank of England delivered its clearest signal yet that it is poised to restart quantitative easing. But with both the Fed and the Bank of England having already deployed much of their ammunition since the crisis started, investors focused on the deteriorating outlook that's forcing the fresh stimulus. The FTSE 100 closed down 75.2 points at 5,288.41, while the S&P 500 endured its worst day in a month, closing down 2.9pc at 1,166,76. The Dow Jones Industrial Average fell 2.5pc to 11,124.80. Minutes of September's meeting of the Bank's Monetary Policy Committee (MPC) showed the MPC believes the growth outlook has weakened to such an extent that the risks to inflation have "clearly increased" to the downside and that further stimulus would be needed. | |
| Posted by:lotp |
| #3 A friend said: Gov revenues are never linked to gov success ... I'm not even sure there's any such thing as a gov "success". Gov revenues NEVER create revenues ... revenues only come through taxes, fees, bonds, or other generation. As such ALL gov spending (including anything spent on research) is never more than tangentially based on business wisdom or business success. ... Solyndra comes to mind, or perhaps Lightsquared. In the case of Lightsquared I recall my own conviction that Iridium never made any business sense, nor the 10 year ago talk of Cellestri (which I recall of as being pretty much what became Lightsquared turned out to be). When I think of what role gov played in these 2 endeavors (Solyndra & Lightsquared) it pretty much revolved around granting of gov revenues and bestowing FCC favor, neither of which were likely decided upon anything resembling business merit. So if it can't show business sense or merit or make a case for something... how can government do anything with financial merit? |
| Posted by: Water Modem 2011-09-22 12:54 |
| #2 >that the risks to inflation have "clearly increased" to the downside They are CLEARLY talking bollocks. Inflation on their wildly under-estimating test is wildly over their target. The recovery will not start until the FED and the MPC are cleansed of Keynesian nut-cases. |
| Posted by: Bright Pebbles 2011-09-22 09:35 |
| #1 The US Federal Reserve announced "Operation Twist", which will see the central bank buy $400bn of government bonds with longer maturities and sell the same amount of shorter maturities. What happens when international creditors cut of the US gov and $trillions of short term bonds come due every year? two-year Greek government yields reached a high of 74.88% and ten-year yields a high of 25.01%. |
| Posted by: Eohippus Phater7165 2011-09-22 08:12 |