Where's the rescue money gone?

The Mail reported a few days ago that:

"Much of the fresh money created by the Bank of England yesterday could have leaked abroad, a City expert has warned.

Former Bank of England official Danny Gabay said the biggest participants in the unprecedented quantitative easing scheme were likely to have been foreign investors.

The Bank yesterday created £2billion of new money and used it to purchase gilts - Government bonds.

Mr Gabay claimed that those selling the most gilts were overseas investors, who may withdraw the cash to their home markets.

...

It was offered £10.5billion in gilts - five times more than the allocated £2billion it wanted to buy. This was interpreted as a sign the scheme had been successful.

But Mr Gabay, now with Fathom Financial Consulting, said: 'The feedback from the auction is that pension funds and hedge funds did not sell. The only other major holders of gilts are foreign or overseas investors.

'Putting two and two together, they must have been doing the selling. That means the quantitative easing is going to do us less good.

'We need quantitative easing, but I am not sure they are going about it in the most sensible way.'

Mr King has admitted he does not know how long it will take for quantitative easing to have an effect, but he has claimed it will 'eventually work'. "

Even more worrying was the last line of this extract (my emphasis):

"Vicky Redwood of consultancy Capital Economics said: 'The drops in yields are pushing up pension fund deficits, which is not a very welcome side-effect of quantitative easing.

'In theory, it could mean that firms are more reluctant to invest, if they are worrying about how they will plug their pension shortfalls.'

However, she said the state of the British economy was so dismal that the Bank had little choice but to ignore the risks. "

Anyone else feeling deeply depressed?