World facing worst financial crisis in history, Bank of England Governor says

World facing worst financial crisis in history, Bank of England Governor says
The Telegraph (One of the UK's leading newspapers), October 6, 2011
Posted: 2011-10-18 17:22:21
http://www.telegraph.co.uk/finance/financialcrisis/8812260/World-facing-worst...

The world is facing the worst financial crisis since at least the 1930s “if not ever”, the Governor of the Bank of England said last night. Sir Mervyn King was speaking after the decision by the Bank’s Monetary Policy Committee to put £75billion of newly created money into the economy in a desperate effort to stave off a new credit crisis and a UK recession. Economists said the Bank’s decision to resume its quantitative easing [QE] showed it was increasingly fearful for the economy, and predicted more such moves ahead. Sir Mervyn said the Bank had been driven by growing signs of a global economic disaster. “This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances, but to act calmly to this and to do the right thing.” Announcing its decision, the Bank said that the eurozone debt crisis was creating “severe strains in bank funding markets and financial markets”. Financial experts said the committee’s actions would be a “Titanic” disaster for pensioners, savers and workers approaching retirement. Under QE, the Bank electronically creates new money which it then uses to buy assets such as government bonds, or gilts, from banks. By increasing the demand for gilts, QE pushes down the interest rate yields paid to holders of these and other bonds. Critics of the policy say it pushes up inflation and drives down sterling.

Note: For lots more on the global financial crisis from reliable sources, click here.