Reply #26: Bank of England's Rate Schism Is Poised to Widen

[54anickel]

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_gilbert&sid=aokHKdS_LA0o

Aug. 18 (Bloomberg) -- U.K. monetary policy, which Bank of England Governor Mervyn King says should be ``boring,'' just got a lot more interesting.

King this month earned himself the dubious distinction of becoming the first U.K. central bank chief to be outvoted on monetary policy. The schism between policy makers who see a need for lower borrowing costs to bolster growth and those more concerned about accelerating inflation looks set to widen.

Five of the Monetary Policy Committee's nine rate-setters voted to cut the key lending rate by a quarter-point to 4.5 percent on Aug. 4. Charlie Bean, the chief economist, cast his third consecutive vote in favor of a reduction, assuring himself of a solo lunchtime seat in the canteen by siding with the bank's four independent members to overrule the other four full-time employees, including King.

snip to the bizarro>

More than 50,000 Britons draw income from selling secondhand goods on Internet sites such as EBay Inc., the London-based Centre for Economics and Business Research said this week. Adam Smith's ``nation of shopkeepers'' is becoming a race of junk dealers. No wonder the U.K. economy is heading into the ditch.

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Among the Britons using EBay's U.K. site to boost their wealth and confidence are Paula, who's offering to have a company logo tattooed on her lower back for 2,000 pounds ($3,620); Jenny, who's auctioning the story of her husband's hernia operation; and someone called crasswarrior whose piece of toast burned with an image of Jesus Christ is available for 10,000 pounds, and who declined to answer questions by e-mail.

``If people realize that they have sellable goods sitting in their cupboards, it ought to increase consumers' confidence just like any other unexpected boost to wealth,'' :spray: said CEBR economist Laura Phaff in a press release. With the health of the U.K. economy depending on such shaky foundations as rising stocks, a declining pound and digging secondhand trinkets out of the attic to flog them over the Internet, the Bank of England is unlikely to stop for long at a 4.5 percent rate.