THE WORLD may be confronting its worst-ever financial crisis, the Governor of the Bank of England has warned.   :(

The warning by Sir Mervyn King came as Britain's central bank announced that it would print tens of billions of pounds in a desperate bid to prevent recession.

Sir Mervyn said the magnitude of the current crisis could well surpass that of the Depression of the 1930s and that the bank had to respond by injecting more money into the economy.   :o

The Monetary Policy Committee, which sets interest rates, voted to create another Stg75 billion ($A120 billion) of electronic money, which will be used to purchase bonds issued by the Treasury in the hope that this will stimulate spending and keep borrowing costs low.

The gambit, which happened sooner than many City economists expected, came after UK growth fell to just 0.1 per cent in the second quarter of the year, leaving the economy perilously close to a fresh downturn.



The Bank said that it would leave its official rate at its historic low of 0.5 per cent for the 32nd month in a row. Traders are now betting that the rate will not rise until 2013.

Sir Mervyn dismissed fears that printing more money would trigger dangerous levels of inflation, saying that Britain's problem was too little money in the economy, not too much.   :-?

“This is the most serious financial crisis we have seen at least since the 1930s, if not ever, and we are having to deal with very unusual circumstances but react calmly to this and do the right thing,” Sir Mervyn said. “The right thing at present is to create some more money to inject into the economy.”

Less than an hour after the decision, the European Central Bank defied calls in financial markets for it to cut its interest rate from 1.5 per cent, despite the intensifying debt crisis in the eurozone.

Instead, Jean-Claude Trichet, the bank's president, said that he would pour emergency credit into the zone's stricken banking system.

The Bank of England warned that Britain's economy was being threatened by intensifying strains in Europe.   :(

The Bank of England's initiative was welcomed by Chancellor of the Exchequer George Osborne, who this week hinted that he would like to see the bank recommence its money printing program, known as quantitative easing.

Labour said that the Chancellor had described quantitative easing as “the last resort of desperate governments” when he was in opposition.

Ed Balls, the shadow chancellor, said that the bank's efforts would do little to create jobs and growth and that Mr Osborne should instead ease back on his fiscal austerity plans.   :(

Stephen King, chief economist at HSBC, said that the bank's action was not a magic wand, adding: “It might be better to do something rather than nothing, but I would not hold my breath and think this is going to transform the prospects of the UK economy in any significant way.”   :(

The Times

He must be depressed to say such things  :)  :)

choose your tent carefully, you might be in it for a long time!

http://t1.gstatic.com/images?q=tbn:ANd9GcSEMV8mZJ0x2W1KmNFDyokhbL3Xx20G9tuDckFcwklt0XSgeQ4lYQ

Choose your spot carefully too!


http://t2.gstatic.com/images?q=tbn:ANd9GcSgxuZFMZNWByulEpCeBA2SebWcvINlJzGPgldqC0XYk2zjZU3t

Bad news mainly for those who live on handouts and have never had to fend for themselves.

Bring it on.

Yes no one knows when they could become unemployed, or for how long it will be.  What have governments done.   :(