logo
  Join        Login             Stock Quote

Did the Bank Of England Just Kill the QE Trade?

 November 08, 2012 11:49 AM


(By Graham Summers) In case you missed it, something of major import occurred today.

That something is the Bank of England announcing that it is suspending its QE efforts because of questions relating to its "potency."

This is a heck of a statement from a Central Bank. And it's coming from the one that has even outdone Bernanke's QE efforts.

Since the crisis began, the BoE has announced QE efforts equal to $598 billion. The UK's GDP is $2.43 trillion. So the BoE has engaged in QE equal to over 20% of the UK's GDP. By way of comparison, the US Fed has announced QE equal to about 12% of the US's GDP (I'm not counting Twist here).

Despite this massive amount of QE, 2.53 million people are out of work today in the UK, up from 2 million at the start of the Great Crisis in 2007. Similarly, the UK's GDP remains well below its peak.

[Related -Pick a Valid Strategy, Stick With It]

In simple terms, QE fails to generate economic growth or jobs. End of story. The BoE spent 20% of the UK's GDP on QE (a truly staggering amount) and more people are unemployed now than when it started. And GDP has yet to get even close to its pre-Crisis highs.

And yet, the US Federal Reserve continues to believe that QE is the answer to our economic prayers. At this point they're not only ignoring history, but they're ignoring real world examples (the UK), which show that QE fails to aid the economy or jobs in any meaningful way.

Meanwhile, the cost of living continues to spike around the world. Workers have demanded wage hikes everywhere from Chicago to Germany to China. Food prices continue to rise as does energy.

[Related -How to Prepare For A Correction Without Missing Out On Upside Potential]

There is a word for this… it's called stagflation. And it never ends well. Which is why I strongly urge everyone to prepare for tings to get much much worse before they get better.

Now more than ever, investors need to get access to high quality guidance and insights. There sheer magnitude of the issues the global financial system is facing is enormous!

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imagePick a Valid Strategy, Stick With It

I’m not going to argue for any particular strategy here. My main point is this: every valid strategy is read on...

article imageHow to Prepare For A Correction Without Missing Out On Upside Potential

Recent market commentary is starting to remind me of the periods in 2000 and 2008 just before the bottom read on...

article imageBritain’s Boom Can Still Zoom

Don’t overthink the disconnect between strong UK GDP and wobbly UK stocks. Economic fundamentals should win read on...

article imageA Serious Red Flag

Stocks have stayed largely in reverse gear in the last week following weaker-than-expected earnings reports read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.