Does the UK economy need 54Bn pound injection

Discussion in 'Current Affairs, News and Analysis' started by T.F.R, Dec 13, 2007.

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  1. Im not a tin foil hat wearer but..............I have a financial news ticker on my screen 24/7, some interesting news broke, which has now been removed. I am currently searching the Intraweb to try and find whether this was a local decision or whether it is gone completely.

    The Gist is as follows.

    54 Billion pounds is to be made available, by four international central banks, as loans to both the UK and US in order to aid, flagging economies as a result of the credit crunch.

    Gordon Brown has allegedly welcomed this and stated that this is the sort of international cooperation we require in a modern economy.

    Like i say it has just been removed along with a couple of other stories which i never got the chance to read, but i am searching the net to find a link.

    edited to add : this is the closest similar report i can find http://www.ft.com/cms/s/0/d9e03c62-a8bb-11dc-ad9e-0000779fd2ac.html
     
  2. It's on the front page of the Times today (paper, don't know about online).
     
  3. There was me hunting through high fallutin websites and it was on the BBC :D :D :D
     
  4. ok tin foil hat now off.

    This will clearly assist in the short term, no doubt softening the blow by creating a false ceiling, but effectively we are selling off corporate debt, by proxy, through the bank of England, so what will be the impact over the long term?

    We as a nation have only just paid off the national debt acquired to promote the social bill of the 1950's, which caused the UK to be labelled Americas puppet.

    Who are we becoming beholding to now?

    edited for spelling
     
  5. Biped

    Biped LE Book Reviewer

    I'll simplify things for you: It's called Public Sector Borrowing. This happens when cnuts like Broon spend more money than they make in taxes (though I haven't a clue how, with all the taxes that t0sser is raking in).

    So, four big banks, rather than the World Bank or the US gobment is bailing out the UK and US gobments. Does this make it any less ridiculous?

    Who's getting this money, and who's paying it back?
     
  6. I agree precisely why I compared it to the 1950's cash injection to support that Labour government.

    If the last major cash injection is anything to go by, the majority of the loans will be squandered before anything constructive could be done.

    Sounds to me like a socialist vicious circle.
     
  7. Alsacien

    Alsacien LE Moderator

    Its just market liquidity management - nothing to do with borrowing and spending in the normally understood sense.
     
  8. Biped

    Biped LE Book Reviewer

    So what you are saying is that this isn't gobment borrowing, but a big four lending to banks that won't lend to each other becuase they are at risk of 'doing a Northern Rock'?
     
  9. That is how it is described, by all parties.

    But you can not create liquidity in a global market place, by removing liquidity from elsewhere.

    A good analogy: removing tons of water from the Atlantic, to provide liquidity to the North Sea.

    Unfortunately both the cash and the water will level out on a global level.
    We will feel the benefit over the short term, but over the long term we will still be in the same position.
     
  10. Alsacien

    Alsacien LE Moderator

    For those who wish to understand:

    http://193.178.140.209/BCEV1/epressed.nsf/vENVOYEES/D41878D0D52149F7C12573B00018512E/$FILE/20071213V7002.pdf
     
  11. Public sector borrowing- read more civil servants,quangos,pen-pushers and other vote-buying initiaves in Liarbore-held areas.

    Oh and no doubt more handouts for immigrant housing,aid for Africa and the next 60% pay rise for our hard working MPs and ministers.
     
  12. Alsacien

    Alsacien LE Moderator

    l'additionneur noir :roll:
     
  13. I do understand however

    The cash is primarily being loaned to (us or them or whoever) and held against fixed assets. (what fixed assets?, as our reserves were systematically sold off by Brown, as chancellor so is it held against schools, police stations the Army?)

    The cash is being loaned for the purpose of releasing funds to lending Banks (to be held against fixed assets, the same fixed assets which were over inflated in value and subsequently caused the first credit crunch Property)

    The lending Banks then have cash to release to maintain buoyancy in the housing market (the same housing market whose previous buoyancy created a pay/cost gap which was unaffordable in most areas, which resulted in the first Credit crunch)

    so by adding buoyancy a problem (pay/cost gap) will be exacerbated as the supply and demand mechanism gets underway again, therefore creating further problems down the line.

    The government is not in a position to assist as Government borrowing is already extremely high as a result of out of proportion public spending, therefore paying public sector employees with debt monies, who then use their debt monies to raise further debt. Problem magnified.

    So a loan in itself is not the answer a loan and immediate resolution to cut lending (but then that dampens the markets), Cuts in the public sector (which again dampens the markets) and long term productivity can be reconstructed.

    I fear the economy is not in a great position.
     
  14. Alsacien

    Alsacien LE Moderator

    I would not say the UK economy is in bad shape - but it is vulnerable to the markets more than the Fed or ECB areas.
    This is the teaser on monetary union/economic stability/controlled growth - the flexibility comes with more exposure.