Western central bankers are staring complete collapse of the system in the face. Anyone who thinks they will not respond by printing to infinity is insane. QE continues behind the scenes currently, but bold, public, MASSIVE, NEW QE will be applied in the very near future to prevent debt/ derivatives collapse contagion.
Worsening economic prospects could force the hand of the Bank’s Monetary Policy Committee, which last month voted to pause its purchase of government bonds after pumping £325bn into the market through quantitative easing.
Since then however, the data have painted a picture of a worsening, not improving outlook for the British economy, and there is no sign of a solution to the eurozone crisis.
The Office for National Statistics said the recession that began in the first quarter was deeper than it initially thought, with the economy shrinking by 0.3pc in the first three months of the year and not 0.2pc as it previously estimated.
Then on Friday the Markit/CIPS manufacturing PMI showed the sector shrank at the fastest pace in three years in May, suggesting manufacturing will be a drag on the wider economy in the second quarter.
George Buckley, economist at Deutsche Bank, said the grim manufacturing PMI survey was “a game changer”.
“Up until now we had been arguing the Bank would sanction no more QE after ending the previous programme last month. But conditions have worsened.” The situation is now so dire that even MOPE that easing is no longer needed causes the system to disintegrate!