Bank of England Pension Fund Surges Betting on Inflation
Guido is one of the small number of British market commentators who does not buy into the deflation scenario – Liam Halligan is another – it is just too convenient an excuse for politicians to print money.
The Bank of England pension fund is managed on behalf of a very select and savvy group of people with access to a lot of market insight – the employees of the central bank. With great market timing the fund sold out of equities entirely at the end of 2006 cutting a 21.6% holding down to 0.1%, thus avoiding a 35% drop in UK equities since that time. Awesome market timing, the fund was consequently up 12% last year when all around markets crashed.
The fund’s holding of Index Linked Gilts has shot up from 25.6% of assets to a 70.7% proportion of assets during the same period. That is a big bet of the pension pot owned by everyone who works at the Bank of England. Index Linked Gilts are linked to RPI – the inflation rate – you buy them if you are worried about inflation. They are a hedge against inflation.
Hold on, if deflation is (as the political elite and their client media commentators claim) the big threat, why is the Bank of England’s pension fund betting 3/5 of the £2.2 billion pot on hedging against inflation? This is their personal pension fund. Money talks.
Source : Bank of England Pension Report [pdf]
Hat-tip : Peter Oborne
And which recent Gilt auction was a success?
The index linked one of course.
The G-20 must remove the crushing mass of derivatives which is now dragging down the
world economy. Derivatives must be banned going forward, but this by itself will not be
sufficient. The ultimate goal must be to wipe out and neutralize the existing mass of $1.5
quadrillion in notional values of toxic derivative instruments. Some governments may be
able simply to decree that derivatives be shredded, deleted, and otherwise liquidated, and
they should do so at once. Virtually all governments should be able to use their
emergency economic powers to freeze derivatives and set them aside for at least five
years or for the duration of the crisis, whichever lasts longer. Legal issues can be settled
over the coming decades in the courts. Humanity is in agony, and we must act against
derivatives now. Going forward, we must ban the paper pyramids of derivatives in the
same way that the Public Utility Holding Company Act of 1935 banned the pyramiding
of holding companies.
Nonsense. Individual consumers were incentivised by artificially low rates and easy credit to borrow and spend too much. That was the cause of the bubble and subsequent crash.
Derivatives in and of themselves have little or nothing to do with this financial crisis. Mortgage and asset backed securities are not derivatives in the traditional sense (there is no risk-neutral pricing, no real hedging or arbitrage is possible) and that’s where the problems have occurred. Bankers bought these thinking they were just like bonds, but with a higher yield, and didn’t really investigate the risk they were taking on for that yield.
Secondly, for all the bloviation about credit default swaps, they are not to blame for this crisis, and in many cases they have allowed people to protect themselves from it. When people talk about the credit default swap business bringing down AIG-FP, actually those were much more structured than a regular CDS, they were sort of structured portfolio default swaps, more like protection on a synthetic CDO.
So on to Mortgage- and Asset-backed securities. You can’t have the bubble prices of housing, bubble consumer credit spending and the bubble lending without finance. These products provided the finance for the bubble. If society is willing to permanently give up on the idea that most people can own their own house and car and plasma TV (albeit debt-financed), then we probably mostly can do without securitization. But there’s no such thing as a free lunch. That change would be completely devastating to the economy. Think GDP reduced by two-thirds probably. People’s standard of living would go back to what it was during rationing after the war.
Now there are sensible reforms of derivatives that are possible (standardization of terms, central counterparties etc). These are all happening, so for CDS for example there is the big bang in April.
Bet you couldn’t even name any derivatives or explain what they do. I suppose you would get rid of swaps as well. I hope you don’t have a fixed rate mortgage.
BAN GOVERNMENTS NOT DERIVATIVES
Never did like derivatives, or text justification, for that matter.
Yr absolutely right and the post below that tries to justify derivatives is absolutely wrong.
Derivatives do have a place, but not if they are created solely to generate bonuses, which the vast majority are, especially CDS’s . When the amount of CDS’s that are outstanding, vastly outnumber the underlying vehicle, then all they are is bets…..
CDS’s are at the heart of all the banking problems, they are the reason that banks are implodeing, because as they blow up they impair all the other derivatives and liabilities the banks have, which is why despite trillions being thrown at the banks, the system is still frozen. The problem has become self fullfilling, as the position worsens, so the problem worsens and so on.
CDS’s were deliberately named and created to skirt Insurance regulations, because even though they are insurance, had they been subject to insurance regulation, they would have had to be priced far higher, to take into account set aside reserves, against potential future liabilities, which would then have wrecked the whole securitisation mkt. It was a CDS wrap that allowed sub prime to be triple A rated etc.
Unfortunately the whole banking system has been totally corrupted by greed, as the bonus mania took over. So much of the derivative mkt are nothing but fraud, fancy vehicles designed to generate massive bonuses, by stripping out all the potential income upfront and leave all the laibilities out in the future.
Anyone who tries to say otherwise, either doesn’t understand what has been going on, or is part of the problem.
Mimi, anonymous at 7.59am gives you a reasoned and highly accurate summary and you post a trite, nonsense reply. Shame on you!
116 you are an ass clown. It was certainly not a “CDS wrap” that allowed sub prime to be triple A rated. It was the fact that the collateral was tranched and that lower tranches take all the losses that enabled sub prime to be triple A rated. There are no CDSs of any kind embedded in the structures of conventional asset-backed securities. The only embedded derivatives in an abs are embedded interest rate swaps.
CDS’s are not insurance in the conventional sense any more than an interest rate swap is insurance. All financial instruments can be used either to protect against losses or to speculate by taking risk. It is the fact that you can take either side that ensures that pricing is efficient and that everyone gets a fair price.
You haven’t the faintest fucking clue what you’re talking about.
What. I was replying to #46′s insane ramblings, not #73. And how is your reply not nonsense? Shame on YOU!
122.
Try reading this http://tinyurl.com/ch7hav and then maybe you will learn something about the what really happened….eg one role of .CDS’s provided the Triple A that banks needed to keep CDO’s with Sub Prime in them, or take a capital hit.
To argue that derivatives have no role in the problems that the banks have, is laughable and ignorant beyond words…..but what really scares me is that you may work in that world and still can’t work out what went wrong.
@129
You’re a real douche. YOU don’t understand anything. #122 never said anything about derivatives in general, he was replying to a commenter who is totally confused over securitisation.
@120 and 129, the AAA was given because the senior tranches had credit support because of the subordination of the junior tranches. No CDS necessary. If the holder of a bond wishes to buy protection through a CDS that is entirely a separate decision and does not affect the rating on the underlying asset at all. You really don’t know the first thing about finance.
I thought I recognized that name Liam Halligan, he was on Newsnight last night, Ruth Kelly proved she’s thick, interesting clip I found of it.
Hecules said.
No CDS necessary. If the holder of a bond wishes to buy protection through a CDS that is entirely a separate decision and does not affect the rating on the underlying asset at all. You really don’t know the first thing about finance.
Yr liveing in the past, it was all garbage from the get go, purely designed to pay out bonuses, to greedy bankers who understood nothing, but lineing their pockets..
Just how much money has to be lost before people like you will realise, that it was all highly dangerous rubbish that should never have existed, The finance world you talk of was and is nothing but a frauds charter, because none of the issuers could cover their risk, but none of you cared, so long as yr bonuses came through…..muggers are more honest than most bankers, because at least they are honest about stealing.
As I said before anyone who justifies what went on, either doesn’t understand it, or is part of the problem.
#135, you are just wrong though. Wrong as in factually incorrect. You’re just spouting gibberish. Stop living in your fantasy land of conspiracy theories and get real.
“Yr liveing in the past, it was all garbage from the get go, purely designed to pay out bonuses, to greedy bankers who understood nothing, but lineing their pockets..”
Oh you jealous, bitter little man! You don’t understand anything, probably just like when you were at school. I hope you get tasered by the police tomorrow trying to barge your way into Merrill Lynch, there is certainly no other way you would ever be able to get inside an investment bank.
By the way, no need for magic e when you are using the -ing form of the verb
136 said “Stop living in your fantasy land of conspiracy theories and get real.”
137 said “I hope you get tasered by the police tomorrow trying to barge your way into Merrill Lynch, there is certainly no other way you would ever be able to get inside an investment bank.”
There is no conspiracy theory needed, just look at the bottom line. Trillions lost and all you so called Masters of the Universe have had to go begging to the taxpayer to bail you out .The world now has 10′s of thousands of decent Co’s starved of loans and on the brink, unemployment is rocketing with millions out of work and most people liveing in fear of their jobs going. The economies are crashing and potentially looking at a re-run of the Great Depression or worse……Yet you people are still so removed from reality and so blinded by yr greed, that all you can do is hurl abuse at anyone who dares to question what you have all done.
But I thank you for the exchanges, as it is good to see that you have still to realise what went wrong and why. So unfortunately the Bear mkt has much work to do, to eradicate the crazed thinking that masquerades as wisdom and has taken over the financial world.
PS Merrill Lynch was once a fine Co, the US’s largest stock broker, a Co that one could be proud to work for…..until it too became infected by the bonus mania and it’s employees ripped it apart…..Now it’s flat bust, the name just a sub-division of Bank of America.
Guido, on this (and many other things), you are on the side of truth.
God help us.
You should take a look at Liam Halligan on Newsnight – great performance – he demolished Ruth Kelly:
http://news.bbc.co.uk/1/hi/programmes/newsnight/7974219.stm
After the journalist was hit by the Police pepper spray he was leapt upon by Eric Pickles who then proceeded to consume the poor c**nt.
‘Buuuuurp,more salt next time’
Methinks you might well be in a position to know, So17
Perhaps some anonymous insider might care to post some gossip, nudge, nudge, wink, wink, know what I mean, know what I mean, say no more, say no more, etc.
I just hope it was a bbc “journalist” who got a faceful of whatever spray the plod are deploying these days. Perhaps plod thought he was a Brazilian or a Tory.
Oh dear, oh dear.
Don’t tell me Gordon might face upward hikes in interest rates in the run up to the next election.
Could it get any worse?
Yup. If you have a tracker mortgage then enjoy! Payback is around the next corner. If house prices can’t be forced up any other way, then inflation it is!
Got gold?
7 Million Savers CAN’T be wrong – people aren’t spending their “mortgage bounty”-as for the £12 Billion VAT reduction zilch- people know that Gordon has bankrupted the country big time and his “grand global bargain” is so much “smoke and mirrors” with little substance to it . So they’re squirelling away their cash for the rainy days fast approaching and that’includes the ones in public sector jobs which are viewed as “secure” who the government expects to spend,spend and if they ain’t spending Gordon is really f***ed
The Grand”Master-Plan” is running into the sand quicker than the Treasury is chucking money at Scottish Banks and Building Societies. But never mind some nice photo-ops at the G20 but very little else for the “Saviour” as he preaches yet another interminable sermon to people who aren’t listening or really interested anymore in his views or solutions.
Been trying to talk myself out of New World Order conspiracies, but the terrors are coming back . It’s the incessant, brainwashed ‘global,’ global’ ‘global’ from the Snotgobbler…now the pension jiggery pokery at the Bank of England.
It’s true. They started all this by design!
Nonsense. They are making prudent choices given the likelihood of inflation. They aren’t going to get rich out if this-just preserve their purchasing power better than others who don’t have inflation-linked investments.
They are not “making” prudent choices, they made them. At a time when McDebt was telling us he had eliminated ‘boom and bust’, the BoE had already taken measures to protect their pensions against – ‘boom and bust’! Did Gordoom not even know what the BoE was doing? What a plonker.
I agreed with Liam.
He is also absolutely spot on about separating the investment bank activities from the retail banks, and his implication that we need a 3rd party to go into every bank and make an independant assessment of their liabilities.
Gordon does not have the bollox for it.
Jeez, Gordon doesn’t even have the bollox to face the electorate.
G20 are going to laugh him out of the place.
If gordon had any bollox he would have stood against blair pre 97 instead of releasing that fairy story about standing aside.
fucking whimp.
By doing so he would also have taken on Mandy, whose powers should have been nipped in the bud: Brown could then have quickly disabused the electorate of its fantasies about Labour well within one term. But the one with the better manicure won out.
Spot on Guido, and wasn’t it odd that Ken Clarke was given a couple of minutes to make his points (haphazardly challenged by the inane Paxman), then shut out of the debate entirely when Ruth ‘Opus Dei’ Kelly joined in?
Liam spoke perfect sense, and Kelly had no answer, and no clue.
If the Hoons can’t see they’re killing this country, they need educating, and fast.
Paxman sucked his glasses, not understanding a word of what was going on, fantasizing about Ruth wearing a corset and crinoline, having overdosed on Victorian porn. It barely it penetrated his fog that Halligan knew what he was talking about even if Paxman didn’t.
Kelly may be economically illiterate, but she does scrub up quite well these days, sorted out her hair. First time I have thought ‘would’, provided she was gagged.
Guido, I repeat:
Comment 91 by unablogger on the “Lib Dems claim highest expenses” thread:
“They have systematically destroyed this once great country pandering to gays and ethnic minorities (yes I am a proud troglodyte).”
Please delete this comment and ban the user, or I will report you to Derek Draper for allowing racist and homophobic comments on your blog.
Prescott:
-a minister of the Crown
-fucking his secretary
-in his ministerial office
-in a government building
-in the middle of the day
-with employees in the next room
And then slurred his mistress.
Sexist? You bet.
Guido, I demand you report John Prescott to Derek ‘blog police’ Draper. Immediately.
Nigel Griffiths
Harriet Hormone
“If you have nothing to hide, you have nothing to fear”.
There would have been pix of the fight, but Nige has stopped taking his camera to the Palace of Westminster………………
HP. If you believe the comment is any of the things you claim, you should have immediately reported it to Derek. You are failing as an upholder of the Labourlost standard of public morals if you do not.
The comment says ethnic minorities. Everyone belongs to an ethnic minority of some kind so if no single minority is selected, how can it be racist? The same applies to the homophobic complaint. Why should the term gay only apply to the LBGT people you want it to apply to. Heterosexual people can describe themselves as gay if they wish. Your attempt to discriminate against them has been noted. To describe the comment as homophobic you would have to be sure what the poster meant. You seem happier twisting the words to fit you own definitions and then finding fault.
I do not know how Derek would analyze your actions, did he complete enough of his course to form an opinion?
“Everyone belongs to an ethnic minority of some kind”
What nonsense. Have you never received any Equal Opportunities or Anti-discrimination training at your workplace? Thought not – your ignorance speaks volumes.
Prescott off now, you hear…
Dumbass.
Labialust upholes pubic moles?
One for the News of the Screws, if ever I saw one.
The only fool who needs banning is poofter pride
Harman, you are a feisty bitch!
Hymen Pierced you are a pure hoon – no doubt a colleague of Silky Arsehole. You make a perfect pigeon pair. The C & A of a single body!
If Guido was not such an (over-)indulgent chap I am sure that he would have moderated your patent bollox out of existence.
Please do STFU!
This is an ad hominem attack, BTW!
Sigh. I was just about to close my internet explorer and head to bed, but a sudden impulse took me to check Guido quickly instead…
I remember Brown giving his “m-m-m-m-mr speaker he just doesn’t get it” routine to Cameron at PMQs, explaining that now deflation is the real problem. Yes. Never mind that the inflation rate is a tool (rather than a measure) and as such by its nature will underestimate inflation, it should be pretty ob-ob-obvious to eh-eh-everyone that when a country
a) runs a huge trade deficit, and
b) has a currency crash, while
c) printing money
inflation will run rampant. To think 30% of the electorate would still vote for them tomorrow. Incredible.
“Sigh. I was just about to close my internet explorer and head to bed, but a sudden impulse took me to check Guido quickly instead…”
Sigh. You rely on Guido for your news. That explains a lot.
“I remember Brown giving his “m-m-m-m-mr speaker he just doesn’t get it” routine to Cameron at PMQs,”
More hate-speech, Gordon Brown can’t help the way he speaks you intolerant troglodyte.
No. He can’t help lying and he does not have a stutter.
Stuttering from someone who has no identified verbal disability is one of the signs of a liar lying.
Ergo: Gordon Brown is a liar.
Apparently he can’t help creating UK economic collapse, either.
Budgie: you are so right.
LP. How is this hate speech? Steve is accurately recalling the actual words used by Gordon Brown at PMQs. I see no comparison in the post about how Brown speaks compared with anyone else so where is the hate? You seem to have a similar problem to your co worker HP, twisting words to fit your own definition and then being troubled by your conclusions. Working by your own standards, who should we report you to for being Guido phobic? Being dismissive about Guido’s news providing abilities is neither sophisticated or clever.
I object to your negative stereotyping of a legitimate racial grouping (i.e. troglodyte). Please withdraw your comment before I report you to New Labia’s HQ.
LP, your name links to the Fabian Society – first it was Labour List, then Labour.org and now this cesspit of verminous Fabians. Just clear off and get a proper, productive job you can be proud of instead of coming here to be humiliated day in & day out.
Labia Prick.
Whilst I would never (usually) side with a lefty pillock like you, you DO make a good point about Cyclops’ stammering.
My late father suffered very badly with a stammer, this was quite embarrassing for him….
BUT I USED TO PISS ALL OVER HIM WHEN PLAYING ‘SNAP’.
Every cloud etc etc…..
Now…Have I mentioned that I may have enjoyed a spot of frottage with Mrs Dolly..when I was 17???
“Labour Pride”
Is that some kind of loaf?
Anyway, don’t be silly – it’s not ‘hate-speech’ whatever the hell that might mean in your ‘mind’.
Now, fuck off you Hunt. That’s hate-speech.
I think Liam Halligan is generally right with this one proviso: if the pound had not tanked we would have been seeing deflation in the CPI (the ‘Chinese’ Prices Index) at the moment and RPI is already at zero. However I tend to think this ‘deflation’ is more apparent than real, and hence misleading.
At the moment the velocity of money has slowed due to the retail banks (and others) holding onto cash. This gives the impression of deflation. But when the pressure of all the money being sloshed into the system by McBust, after being held back by the banks etc, is suddenly released, we are going to get the most most god-awful sudden inflation.
Stagflation.
Inevitable.
Labour invented it.
Hyper inflation will be a currency event, not an economic one. The pound is toast – no manufacturing, not much North Sea oil, no High Finance. Falling tax receipts, massive increases in government sepnding.
As our trade deficit continues to explode, the current account deficit running at 10% to 12% of GDP and we still have this complete wanker in charge. The currency markets will eventually fall in to the end game – the pound will tank and tank big time.
See Iceland – it’s going to happen here.
http://news.bbc.co.uk/1/hi/uk_politics/7820658.stm
Who’s more likely to be well-informed: the leading economists in the Treasury, Bank of England, Federal Reserve, BBC – or a couple of Right-wing bloggers?
A couple of right wing bloggers.
(Or was that meant to be rhetorical?)
Prescott shags secretaries.
That was 2 years ago.
Stop living in the past and move on! Prescott isn’t even a Minister any more!
He’s a sexist, sleazy adulterer.
And he blogs.
He is also a fat, thieving, lying bastard who is paid for out of the taxpayers purse.
Outstanding.
The Prescott rebuttal is bullet-proof when dealing with the draperbot fudginators.
Move on after 2 years from the party that trys to blame a government that was in power 10 years ago for fucking up the banking system? Hypocrite.
And tosser.
Well we don’t buy it.
http://cityunslicker.blogspot.com/2009/03/inflation-modest-decline-2.html
Tell you what, lets see who’s right at the end of the year.
Loser buys lunch. if its me, I’ll stand you £50.
If it’s you, you’ll need £600 for the same meal.
Did any of your ‘experts’ forecast Gordoom’s boom and bust?
No- it was UNPRECEDENTED.
Why do you Right-wingers always want to blame someone? No-one saw it coming. Although if anyone’s to blame it would be Thatcher and Reagan whose laissez-faire deregulatory policies in the 1980s encouraged the sort of corporate greed for which we are paying the consequences.
Hate to be a bore, but inept finance ministers (Brown) destroying effective regulating systems (um, Brown), encouraging a catastrophic national credit bubble paid for by London-based cowboy securities (…Brown again), increasing government borrowing during an upturn – unlike the Chilean governmentm for instance – (yes, still Brown), prior to all this having robbed the country of its gold and its pensions (Brown’s first spin)….
Inept finance ministers like that (he’s lucky he’s unprecedented in his ineptitude) – historically they tend to get a firing squad, not re-election.
And this is the idiot you support.
Thankfully, the rest of the world already knows what you clearly don’t: he is on the way OUT.
I guess he gets to live, though.
what REALLY pisses me off is this “no one saw it coming” cry. FFS !- plenty of us saw it coming, and in my experience everyone was a right of centre fiscal conservative.
Socialist policies got us into this mess along with personal greed across all sectors of society.
yes many did and some of us took precautions so fuck you .
I’ll give Labour UNPRECEDENTED.
Any other than GB would have listened to Economists who would have said that continued growth will usually result in one thing, UNPRECEDENTED recession / depression / Argentinian style economic collapse.
Hate to burst your bubble, MothersPride, but the moment that Gorgon Brown became chancellor, it became HIS regulatory policy. He could have changed it any time he liked. He could have binned it and put his own policy in place – any time he liked.
See http://www.housepricecrash.co.uk and http://www.greenenergyinvestors.com.
Go back into the thread archives. Both saw the credit crunch coming, both named the banks likely to hit trouble and in what order. In fact one guy has written the script for the last 5 years or so – and he wrote it 5 years ago! He’s apocolyptic – this is not going to get better, it’s going to get worse, a lot, lot worse.
You heard it hear first – don’t say ‘nobody saw it coming’. It’s a lie, just like most of Labour protestations.
@ Labour Pride
‘Unprecedented’? So fucking what? These idiots are supposed to be able to think outside the box. What you’re really saying is that any lack of precedent excuses gross incompetence. In any event, plenty of people were warning of the dangers long before Brown decided to get out from under and blame America.
Fucking Stone Age mentality.
It WASN’T Gordons boom and bust, it was a GLOBAL boom and bust and NOTHING to do with Gordon.
It is a GLOBAL problem looking for GLOBAL solutions and Gordon is leading the way finding a solution.
Which part of GLOBAL do you stupid fuckers not understand?
Gordoom’s boom and bust, along with the busts in the USA and the Eurozone have CREATED the global down turn. Pretending that the global downturn has been the reason for McDebt’s boom and bust is inverting cause and effect.
Well, as someone whose relative was (pre-NuLabour) a senior BoE economist, and who has discussed the matter extensively with said economist, I’d go with the right wing bloggers myself – people with 30-plus years of experience regulating banking think Brown’s a damn fool.
But never mind – keep up your Neues Arbeit sniping – you might hit a target one day…
Hilarious! Labour Pride says ‘stop living in the past’ when Prescott’s behaviour while a Minister is mentioned and then says ” if anyone’s to blame it would be Thatcher and Reagan whose laissez-faire deregulatory policies in the 1980s encouraged the sort of corporate greed for which we are paying the consequences.” Wanker.
I see they’ve made the mistake (again) of drawing conclusions about our economy based on comparisons with Japan. There isn’t enough space here to detail how utterly stupid and wrong this is.
Just one thing: the average amount of savings (ie deposits) of the average Japanese family is approx. 100K. Yep, a hundred grand.
Why, that’s just like us (note: sarcasm).
Just to be clear: 14 million yen or so.
Guido,
I appreciate the flattery but you are reading far too much into this old boy, I was just hedging out Gordon becoming PM and got a bit lucky.
Guido is “on the money”
Guido what we have now and will have plenty more of in the future is STAGFLATION.
Which is a horrendously nasty poverty creating combination of inflation and stable or falling wages or profits.
Of course it is an ill wind that blows no one any good. There will be winners, British manufacturing may make a bit of a comeback in areas that any remains. Others will be politicians, those civil-servants still in work, divorce lawyers and other types of immoral criminals such as multi-national corporations on government contracts.
However in general this country is going to join the 2nd world, were it does not also start to seriously resemble the 3rd, 1984, Animal Farm and Brave New World.
Globalization can not make us all rich, it can’t make us all poor, and it clearly never did have any intention of paying for our retirement. Therefore it will make many of us dead, one way or another, while permanently enslaving whats left of us. Which is the systems final solution to the pensions crisis, and the perfect answer to ending world poverty forever.
Atlas shrugged and shrugged again, but still his burden would not budge an inch.
“Pity really, it used to be such a nice place before the great architect gave these glorified monkeys some kind of conscious brain. Shame he didn’t bother to give them one that actually worked properly” He considered to himself.
“Of course it is an ill wind that blows no one any good. There will be winners…”
The winners – they will be benefitting from what then, exactly? The ill wind? Sorry if I’m being a bit thick.
The ill wind is what chuffs out of Nick Robinson’s arse. As for blowing good – Mandy keeps a little list in a crocodile skin pocket book.
I’ve been saying Inflation was the real threat for months and months. Lots of us have. It’s really not a ‘small group’ of commentators, it’s just the group that nobody listened to. Until now.
He’s just been hoping for deflation all along anyway, because then he has a justification for printing money like there is no tomorrow. When a sterling is worth half a dollar he’ll have his cover prepared!
Why oh why isn’t anyone asking for a vote of no confidence on this moron?
Found this on Foxnews On the record Gretawire, from a USA perspective shows just how bad things are : http://tinyurl.com/covgml
Last one leaving turn the lights off but no refunds from n-power
Well, you are almost definitely the man, Julian, judging by your link.
Incidentally, what do you think about Fred Harrison?
He’s the man, too…
intriguiging snapshot guido , who ever bloke was sat next to ruth kelly on newsnight , seemed right , i am with the inflation brigade , partly because CPI has totally missed mass inflation of food prices , ie what makes up most peoples regualr spend . bit late to say we should have used RPI, yeah stocks sell off did avoid pension pot loss , buying guilts also makes any , economy loss less dramatic, my guess is they are avoiding drama , but not necesselary loss . however i am a lay man to the subject so we will see , but if it does rip all those rushing for property boom will be in for tears round 2
any news on journo who was CS gassed behind mr speakers chair at eric pickles drinks party?? could it be draper ?? or arronovitch or polly
pollys guardian line “jaquie is just another victim of the puritans ” give me breath , time for another question time little john meet up .
just says non pass holder and woman , apparantly chamber was filled with CS gas , wonder if it would help on a sitting day LOL
Nobody at the bank of England saw the recession/depression coming, it was all a great big surprise, it was a shock for everyone, I mean who could have imagined that house prices wouldnt rise forever and cheap money couldnt be produced without concequence or harm, no no it was unforeseeable and unprecedented, or so they keep telling us!
Hmmmmm! plenty of people on this blog saw the crash coming many months before the storm hit, why was it possible for ordinary people to see the disaster coming from so far away when the so called experts and our highest elected officials had no idea that a disaster was about to engulf us all?
Now we are starting to find out that in fact people at the top actually DID realise that we were heading for meltdown, these experts who never saw the storm did a bang up job of protecting their own wealth didnt they?
I wonder just how many people at the top actually really did know about the unfolding disaster, as long ago as McMentals corronation?
I suspect there are more dirty secrets to be unveiled.
“I wonder just how many people at the top actually really did know about the unfolding disaster, as long ago as McMentals corronation?
I suspect there are more dirty secrets to be unveiled.”
This is the big story. I was quaking with a growing sense of impending financial catastrophe for over a year before it arrived. An army of disbelievers assembled at Housepricecrash, daily deconstructing the official fantasy. Brown knew well what game he was playing and the serious downside risk – hence his impatience to assume the mantle of his birthright as PM before it all went tits up.
Best way to track down a smoking gun? Open your nose to carbide.
Blair knew
The timing of his departure was absolutely perfect leaving that idiot Brown to carry the can. The funny thing was Brown never saw it coming. Now Brown must hate Blair as much as we do.
Actually, index-linked bonds are a good investment in inflation AND deflation (so long as you don’t earn negative interest if inflation turns negative). NSANDI index-linked bonds have been the safest investment for some time. They yield a minimum of 1% even if inflation collapses to say -5% giving you a real return of 6%. If hyperinflation kicks in, you remain protected (except against currency collapse). So while they might not perform as well as non-index-linked bonds sometimes, they are much less risky.
Those pension fund managers were managing their fund superbly. I wouldn’t say that proves deflation won’t happen. The QE inflationary effect is gnat’s piss compared to the destruction of credit growth going on right now
i am shitting in my own hand.
Morning sexy!
NuLab will be out of power for decades, the sordid, wretched Hoons.
hey Guido
was tht you on radio5 this morning – missed the intro?
Yes, you missed the punch-up with Nicky Campbell at the beginning – for which he had to apologise.
i like gold
Looks like there’s profits be made in setting up a BoE Pension Fund Tracker Fund – insider trading legitimised.
FOI for minutes of Investment Committee meeting would confirm why decision was taken. This was a huge bet for a pension fund to take such a radical asset allocation decision and would only have been made with data that indicated a high degree of probability that BUST was on the way. King and other Deputy Governors would have been informed of the decision.
So on the one hand BOE knows a BUST is on the way but King’s boss, Brown, does not. This illustrates the inherent policy weakness in the BOE remit since asset price inflation was ignored when making interest rate decisions but not when managing their own money.
Fucking troughing wankers, shoot the lot of them.
If you read the pension report before this one (2005/2005) you will see the BofE had 70 pct in equities and 10 plus pct in property. All that was sold. It’s fair to say that the BofE fund managers DID see the collapse in property prices in 2005.
Search google for. Bank of England pension report 2005
Labour Pride: So because Prescott is no longer a minister that puts him in the clear yet the governents of 15/20 years ago can still be put in the frame for any accusation Labour make. You’ve all caught Brown’s disease and are pathalpgocally unable to face the truth. It’s gone pear shaped with Lab at the helm and the buck stops with YOU!
Guido
I’m stunned at what I heard on R5 at 07:05. I won’t repeat it but for Nicky Campbell to brand you as such is appalling.
IMHO, the fact that he spat it straight out without a nano second of thought reveals a lot about his views. That stupid giggly response he gave you was more like a 6yr old. Glad he apologised on air at the end of the piece but I’d take it further if I were you.
He is Derek Draper and I claim my £5.
Disgusted of somewhere that is not Tunbridge Wells.
Do tell. What did Nicky Campbell have to say?
Just Google “Nicky Campbell Guido” for the answer.
Done. I hope Guido pointed out that it was this Labour government of occupation that were the fucking fascists hereabouts.
Guido,
The Dunfermline Buiding Society ‘sale’ to Nationwide looks fishier by the day. Apparently it has consistently made modest operating profits including c.£2.0M this year. The anticipated loss of £26.M to be announced, included write-downs/provision for some non-core investments which are apparantly still performing quite well. The core business continues to perform perfectly.
DBS management were seeking a £20M loan from the Gov’t liquidity fund or whatever- Darling announced that this was not enough and they might need between £60-100.M. With further risk on the potentially toxic investments which amount to £800M something had to be done.
In a matter of days and a “very close loook at the boooks’ the Nationwide deal is announced. Nationwide said the assets transferred include a 1.02 billion pound prime mortgage book and 34 branches as well as 2.35 billion pounds of retail deposits. They decilned to take the ‘toxic’ assets which are to be assimilated into the B&B pot- Taxpayer has the exposure.
In this ‘sale’ the Treasury is paying Nationwide £1.6Bn cold hard cash for their trouble.
I do not understand how this can be a good deal for the country. How the hell can an operating profit of £2M which might be an actual loss of £26M, which might require a loan of 20 or 60 or even £100.M, where the worst case exposure could be £800.M generate a bill to the taxpayer of over £2.0Bn.
WTF! The cash sloshing around here makes the parliamentary allowances look like petty cash.
agree
I posted same yesterday. The DBS chairman is very unhappy and as good as called eyebrowns a liar.
The only way I can work this out is that the Government wants to be seen to rescue something in their own back yard for votes. They could have done same with 20 million or what DBS chairman originally stated.
Why 2 billion???? something seriously wrong here.
Yeah but it delivers to the SNP one massive kick in the goolies.
You’ll hear Salmond speak in a higher pitch from now on.
ZaNuLabour – manipulating the banking infrastructure for party political gain.
Adolph Hitler, Benito Mussolini – fucking amateurs!
Cost per head £9.0m !!!! Salmond funnily enough seems to have wound his neck in on this. The speed of delivery of the FSA brokered package was truly astonishing.
A run on the ‘bank’ could easily have been avoided with a NR style bail-out, saving the treasury £2.5Bn. No wonder King is telling Darling there isn’t any more money!
Looks as though the DBS chairman was cut right out of the loop, but Sir Fred needed his huge bung to keep his mouth shut. About what?
Scotland has no financial muscle overnight. The power and control is back in England. Very important when we all become part of USEU.
Perhaps it’s coming quicker than we think.
Nevertheless the numbers do not make sense. Someone needs to start asking questions.
Kudos for finding this nugget of information from the BoE: there is clearly some mismatch in expectations between the current money-makers’ stated policies and their pension-funded positions.
HOWEVER looking a little closer you will see that the BoE pension fund manager was given different objectives during the year which explain the change in fund breakdown more effectively – from “outperformance of the market” in 2007, to “protecting value” in 2008. As Anonymous @ 55 correctly points out index-linked bonds are almost always the winners in this scenario.
Perhaps a little naughty to suggest conspiracy here then?
No, it is not “naughty to suggest conspiracy”. So the fund manager “was given different objectives” – how conveniently timed!
Um… well this is a pension fund, not a gambling pot. It was obvious back in 2007 that we were heading towards a recession – if I were the pension trustee I’d have been telling my fund manager that going anywhere other than backwards was ok in that environment too.
What this does NOT mean is that the BoE is trying, or will try, to stoke inflation just so that their pensions are less badly affected than everyone else…
But McDebt kept saying he had eliminated boom and bust until at least the end of 2007 (in fact he still claims it!). So the BoE knew there was going to be a bust whilst its effective boss McDoom was misleading the electorate. That is, McDebt knew there was going to be a bust and lied, or did not and was incompetent.
Report date 29-Feb-08 – 13 months ago
The interesting thing would be to know the current situation
quite. the stats should be seen in the context of feb 08.
fuel price inflation was seen as a major issue at the time.
At least the existence of Brown suggests that there isn’t a new world order conspiracy or anything of the like.
He is obsessed with doing things his way – and having perfected the screening out of disagreement (with pretend doodling and chanting of of tractor stats) – he is clearly not taking orders from anyone – dear god that he would!
All public sector pension funds should be merged and what ever the total value – that is what they all share.
Gordon has not only spent all the new tax income he stealthed off us on new public sector salaries, he has committed future generations to paying those public employees pensions — and like his other ponzi schemes, there is not enough money in the world for a good outcome.
Once the public accept that they are going have the nuts taxed off them for ever more, Brown (and Cameron when he follows) have very little incentive to make savings — once we agree to be enslaved, they will whip us with all their might (with more and more spending).
Labour property bubble leading to property crash leading to a Labour government printing cash?
All predicted years ago. By me:
June 2005:
http://boards.fool.co.uk/Message.asp?mid=9347676&sort=username
Which will hit his Tax receipts but he still has to pay his newly employed legions of gubmint non-jobbers so he’ll be forced to borrow money. Or increase taxes. Either will feed into the loop of a general recession. Nope the only way out (medium term) is for him to print cash ie borrow ever more money and effectively devalue the stuff.
What other choice does he have? He’s not going to take the tough decision and actually cut the public sector payroll by 20%. He’s borrowed hundreds of billions getting them those pretendy jobs and keeping them there. Why alienate them now when all he has to do is print another half a trillion quid?
now this really is something!
I’ve commented several times over the past few months that inflation is more likely than deflation. I don’t accept it either.
My premise is that we already have rampant inflation in the debt bubble. Its just that its not quantified as inflation. What we’re doing by printing money is swapping debt inflation for good old monetary inflation.
The fact the pound has devalued so much against other currencies and we import so much (including food, which is the main worry) means that price rises across the board will push inflation up. Petrol is already on the rise even as spot prices sink to their lowest for years. That alone says volumes about what is to come in the next 3 months.
As does your revelation that the Bank of England is betting on inflation.
How right was I….?
June 2005:
http://boards.fool.co.uk/Message.asp?mid=9347701&sort=username
Nothing wrong with a pile of cash under the bed or in an ING account as opposed to fretting over an empty pile of bricks you have to maintain and that is losing value daily in my opinion. Only don’t put more than 28K (I think that’s the gubmint guarantee limit on any one account) in any one account in case the over-borrowed institutions start to go bust too.
Yeah. But of course it was unprecedented and nobody saw it coming.
Fucking jackasses.
And so I say unto y’all, for it has been written for the past five years. Inflation is coming and it will blow away all your savings. Totally annihilate them.
We are fucked. Entirely predicatable. And I have proved it to you by fucking well predicting it.
The sad part is that it was totally avoidable. It would have been easier to get it right.
Brown was given the perfect economic pass by Ken Clarke, the ball rolled perfectly along the floor, the goalie floundering in no man’s land. Brown had only to side foot it into the net and run down the pitch with his jumper over his head. But no. The fucking imbecile had to take an extravagant kick and hoik the fucking ball so far wide it went out for a throw-in.
What an arsehole. And then to have Brown apologists trying to tell us that he in fact scored a fucking blinder. What a joke.
B of E Pension Fund
Shouldn’t the FSA be investigating ‘insider dealing’?
Why didn’t Herr VanKing Schmidt just borrow a couple of Gordo’s region-1 DVDs instead of watching pay-view gayboy films?
Bloody Hell Guido – thats probably the most useful piece of market insight available to anyone. How about having a “side bar” on this site which shows up the movements that the BoE makes every week or month or whatever. Whats good for them is good for us!
Allow me to join the chorus of fiscal right wing bloggers who did indeed see it comuing It wasn’t hard, lots of debt expanding the money supply an unsustainablbe rise in house prices and an arse who thought he had magically stopped the economic cycle and replaced it with the economic diagonal line.It is is also not hard to predict that we are in for some good old fashioned inflation/stagflation.And no it wasn’t unprecedented a bit bigger maybe a tad more universal but all too obvious. The reason why the various idiot prides were surprised is that the don’t read the right blogs or economists. These are the people who want to restrict our freedom of speach and that is no co-incidence. Let them blog ban no-one and pray that they come to understand that gifting your grandchildren huge amounts of debt is wrong morally and practically.
As it said in the report, the decisions were taken based on a CPI prediction of 2.8%, so this is a complete non-story. Inflation will decline over the year, and then the QE and stimulus will kick in, increasing it a little.
Whose report is that? All these treasury reports are reverse engineered like every thing Brown touches. Brown just declares the result he wants and then commands his employees to go away and manufacture the numbers that produce the ‘result’. This is why every single budget prediction he ever made was wrong. And not wrong plus or minus but consistently (ie always) wrong on the down-side. He’s estimate a deficit of (say) 30bn but it would be 40bn by the same time next year. Without fail.
Why? Because he wanted to give a series of figures that would, over five years finally converge to a surplus. So he simply declared them to be true and had the treasury boys back-fill the necessary estimates and assumptions. Same with the work of fiction PBR that was produced in November. A half trillion quid of borrowing and squandering and he proposes to pay this back how? By taxing ‘the rich’ an extra 5% on anything over 150k. Raising 2bn a year. 2bn quid! FFS that’s how much money he just poured into buying 500 votes in Dunfermline.
He has NO hope of paying that money back. None. Not without MASSIVE tax increases on EVERYBODY and MASSIVE pay cuts for the public service. The numbers simply do not add up. And 28% of the population don’t care whether they add up or not.
There is another option of course. The Mugabe approach. Quantative Easing. And it is this option that the Maximum Idiot is peddling to the fucking mathematically incompetent liberal art types that run the BBC and the newspapers.
Yeah. What could possibly go wrong with printing money. I mean, now that you think about it why has nobody ever thought of it before. It’s just so obvious. Fuck the Tory Manifesto being a ‘Millionaires Manifesto’. At the rate Gordon will be printing money Brown’s manifesto is a fucking trillionaires manifesto.
Too right.
If printing money actually worked, then world poverty would have been abolished the day after Caxton introduced the first printing press into England – ca 1476
The pension report which Guido quoted. Their investment decisions were made on that basis – modest inflation, and a big decline in equities.
You do appear to have gone off on one as a result of my post, so it wasn’t wasted, at least.
it’s called liability driven investing. LDI. Match your liabilities with assets of suitable duration. inflation linked because benefits are inflation linked. move along nothing to see here
[...] The great interest rate rip off Bank of England Pension Fund Surges Betting on Inflation – Guy Fawkes’ blog [...]
Curiously I am told that many (all??) FSA staff will get their gold plated pension from the BoE pension pot as well…………double whammy .
From the rural idyll I inhabit it’s hard to know if this is true;any Citiboyz know the facts??
They certainly share and use BoE sports facilities-and very handsome they are
“With great market timing the fund sold out of equities entirely at the end of 2006 cutting a 21.6% holding down to 0.1%”
No, this happened between March 2007 and February 2008 not at the end of 2006. The FTSE 100 peaked June 15 2007 at 6721.60 and 31 October 2007 at 6732.4. The credit crunch kicked in August 2007.
Astute timing.
Surely what we need are the current holdings (not the Feb 2008 values). Doesn’t mean to say I don’t believe you and Liam, but we know that inflation was on the up in early 2008 so the BE’s position then makes sense anyway. What we need to know is whether they have changed since then, or whether they are still backing inflation to go up.
[...] Fawkes today had a shocking posting revealing that the Bank of England’s own pension fund is betting on inflation going up. Please do read this! It also shows they saw the crash coming as early as [...]
[...] Bank of England Pension Fund Surges Betting on Inflation – Guy …You bet. Guido, I demand you report John Prescott to Derek ‘blog police’ Draper. Immediately. Reply. 18. Budgie says: March 31, 2009 at 1:27 am. Nigel Griffiths. Harriet Hormone. “If you have nothing to hide, you have nothing to fear”. … Read more [...]
[...] Bank of England Pension Fund Surges Betting on Inflation – Guy … (order-order.com) – March 30, 2009You bet. Guido, I demand you report John Prescott to Derek ‘blog police’ Draper. Immediately. Reply. 18. Budgie says: March 31, 2009 at 1:27 am. Nigel Griffiths. Harriet Hormone. “If you have nothing… [...]
[...] know about as much as the rest of us which way we’re going. That said, it seems they might betting on inflation when it comes to their own [...]
Guido,
Most unexpected apology from BBC interviewer on radio a few days ago when a Tory lady was also present.
The Question Time tactic of using the terms left and right does not work all the time and was really pleased that that the interviewer was not allowed to get away with that banal label.
AV