0545

7 August 2009

New Delhi

I have an early morning call for a play a group of us do for schools, so I'll keep this brief:

- yesterday, the Bank of England surprised markets by announcing an extension of its "Quantitative Easing" program, a facility by which it buys bonds directly from the market, hoping to lifting the pressure on banks burdened by their own stretched balance sheets. The scheme, worth 50 billion pounds, lifted bond prices, but drove the pound down. 

- in the US, home prices stay stubbornly down, despite the willingness of housing finance agencies to lend upto 125% of home prices. Remember, that credit on easy terms was one of the culprits of the current financial crisis, for which greedy lenders were blamed. Now that government agencies are offering over-generous terms, I guess this is benevolent. Be that as it may, news comes in that one of these agencies, Fannie Mae, is going to require another rround of federal support, of, oh, only 10 odd billion dollars.

I don't know where all this is going to end, but I doubt it's going to be one of those "Happily Ever After" endings.