The Governor muses about sterling and borrowing

Yesterday the Governor said enough for Labour to be able to claim he supports an unfunded tax cut – a temporary fiscal stimulus.
However, he also warned that borrowing could get out of control. He said if people did not think extra borrowing would be reined in quickly and credibly fears would build that it “might get monetized and put pressure on sterling”
And what does he and the Chancellor think is happening at the moment to the pound?


  1. Kit
    November 13, 2008

    Also note that Gavyn Davies is preparing the ground for Gordon to turn on the printing presses:

  2. Tony Makara
    November 13, 2008

    A major collapse in the value of Sterling becomes more likely by the day as the government sets its focus on trying to spend its way into winning the next general election rather than showing concern for the consequences long-term. The weaker Sterling becomes the greater the cost of our borrowing and the greater the burden on the taxpayer, meaning less disposible income and sluggish demand. An incoming Conservative government will be in the business of damage limitation for years to come with no room for tax-cuts whatsoever. It is our severe misfortune that the wrong party is in office at this time of crisis.

  3. mikestallard
    November 13, 2008

    One of the very worst things the Labour has done during its disastrous term of office is to make every agency part of the Labour party. The Speaker of the House of Commons, Sir Ian Blair, the EU Commissioner (John Major(Con) chose Neil Kinnock(Lab)), many, many of the House of Lords.
    The subjection of the Bank of England to the Labour Party is turning out to be one of the worst mistakes as, now that we really need a firm hand on the helm, we have got vote seeking/photo opportunity/spinning Labour politicians/lawyers in charge of the banking system.
    What a lie (yes, I am not a politician and I mean it – this was a deliberate lie from someone who knew the truth and deliberately falsified his words) it was to say the Bank of England had achieved its independence.
    I will not repeat the bit about Iceland/Rhodesia-Zim/Argentina all over again.

  4. Acorn
    November 13, 2008

    A year in the life of the Governor of the BoE and his Chief Cashier. (Do you think we could get the latter to explain this lot. It must be great to have a job where you have to think in Trillions).

    In November 2007 his balance sheet looked like this:-

    In November 2008 it looks like this:-

    I understand from Alice that the "Reserve Balances" is the money that Merv' lent to the banks, sticking it back into, errrrrrr, Merv's BoE. But Merv seems to be heavy on "Reverse Repo" activity. Hence the banks are not lending to Joe the Plumber.

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