Tuesday, 31 March 2009

Poll reveals even Labour supporters oppose the Prime Minister's emphasis on global solutions to economic crisis

"The public overwhelmingly wants Gordon Brown to turn his attention to the British economy rather than seek a global solution to the recession, according to a ComRes survey for The Independent. ...The findings are a severe setback to the Prime Minister as world leaders fly in to London for the G20 summit he will chair on Thursday.Some 72 per cent of those interviewed believe that he should focus more on a domestic solution than a global one. Just 22 per cent favour his global strategy. Even Labour supporters are not convinced about Mr Brown's emphasis: 66 per cent of them favour a more domestic approach."

S&P fears debt crisis for Europe's companies

"Standard & Poor's has warned that it may prove "extremely difficult" for European companies to roll over €565bn (£524bn) of rated corporate debt coming due by the end of the next year, raising the risk of a default crisis on low-grade bonds. ...The rating agency said car manufacturers have already "burned through" much of their cash reserve, leaving them "glaringly exposed to the downturn". Oil and gas, utilities, and telecoms are all likely to face difficulty refinancing their debts."

Monday, 30 March 2009

Ireland downgraded as world markets fall

"Ireland's reputation as the "Celtic Tiger" of the 21st century economy has been shattered after its sovereign debt was downgraded, sparking fresh fears about the possibility that it may default as it battles the crisis. Standard & Poor's has announced that it is removing Ireland's coveted AAA rating and replacing it with a AA+ rating, capping a day of misery in global markets.The decision will raise suspicions that the UK may soon find its own debt downgraded."

Sunday, 29 March 2009

Has Darling slipped up over the Dumfermline Building Society?

"Might the collapse of Dunfermline Building Society turn into a political scandal? Tonight, Channel Four news has an interview with Jim Faulds, its chairman, who appears to be saying the Treasury have been lying about him. He didn't want a bail out, he says, just a £20m loan (the spin had been that he wanted three to five times that). He also flatly denies Darling's claim that the building society had any sub-prime exposure."
Building society on Gordon Brown's doorstep collapses days before G20 (The Times)
"The Treasury swiftly sought to place the blame for the collapse on the building society’s own management, hinting that they did not think the company was fit to continue in its current form. They pointed to disastrous investments in Lehman Brothers and an ill-advised venture into the sub-prime mortgage market as responsible for bringing the 140-year-old institution to the brink of collapse. Dunfermline was also one of the last lenders to pull out of the 100 per cent-plus loans market. ....Jim Faulds, the chair of Dunfermline, said this morning that suggestions that the society invested in sub-prime mortgages were wrong and “a scandal” and said that the Treasury had not spoken to the company since October last year."
Update:30/03/09 Nationwide is PAID ?1.6bn by taxpayers to take over profitable parts of the Dunfermline (Daily Mail)

We're not going bust, but Gordon has to get a grip

Daily Mail (Vince Cable)
"As a result, the Government cannot do much more to stimulate the economy. In effect, the Bank of England has taken over economic management from the Government – what I called last week ‘a very British coup d’etat’, not entirely as a joke. So where does this leave the Government and the budget?"

Saturday, 28 March 2009

Bankrupt Britain may have seek help from the IMF, warns Soros

Daily Mail
"The dire state of Britain's public finances means the country may have to go to the IMF for a financial bailout, according to billionaire investor George Soros.With Gordon Brown set to increase public debt to more than £350 billion in the next two years and tax receipts falling at record levels, Mr Soros predicted the prime minister faced having to beg for billions of pounds in aid."

UK GDP suffers worst quarterly fall for 30 years

"Britain has suffered the worst quarterly fall in GDP for almost 30 years, raising fears that the country's fiscal situation is far worse than expected. ...The pound fell 1.73 cents against the dollar to $1.4323 on the GDP revision, which reinforced the concern of the International Monetary Fund that Britain could be the worst affected by global recession. .....David Miles, Morgan Stanley's chief economist, warned that public debt could now rise to 70pc if the banks needed more financial support."The fiscal situation is far worse than anyone imagined 12 months ago, yet gilt yields are lower: is this sustainable?" said Mr Miles, who is due to take over from David Blanchflower on the Monetary Policy Committee in June."

Mervyn King has calmly cancelled Gordon Brown's credit card

"Long before the first anti-capitalist protester descended upon London to rage against the G20 summit, a brick had already been thrown through Gordon Brown's window. How embarrassing for the Prime Minister that it should have been hurled by a man with the placid features and calm demeanour of Mervyn King, the Governor of the Bank of England. ...But there is no comparison with what happened last week. Mr King's remarks to MPs preceded the most important international summit of Brown's career and a make-or-break Budget on April 22. More than that: the Governor's red light to a second round of fiscal stimulus had about it a bleak symmetry that will not have been lost on the Prime Minister.
...King, in his diffident way, was acting as spokesman for the markets and the polity, as well as the Bank. He was calling time on Gordon and his spending bonanza."

Vast Spy System Loots Computers in 103 Countries

New York Times
"A vast electronic spying operation has infiltrated computers and has stolen documents from hundreds of government and private offices around the world, including those of the Dalai Lama, Canadian researchers have concluded."

Thursday, 26 March 2009

Brown to borrow £351billion in the next two years (that's more than Britain's total debt from 1691 to the 1997 election)

Daily Mail
"According to some forecasts, Britain's public finances are imploding at the fastest rate of any of the G20 nations.The only three previous occasions Britain faced similar debt problems was after the Napoleonic wars, and the First and Second World Wars.Between 1691 and 1974, the British state borrowed just £41 billion, the Financial Times revealed. From 1975 until 1997, governments borrowed a total of £307 billion, bringing the total to £347billion."

Collapse of Czech government puts fresh question marks over future of EU treaty

Daily Mail
"Czech deputy prime minister Alexandr Vondra admitted that 'it will be a lot more difficult now to convince (Czech) people to vote in favour'.Lorraine Mullally, director of the Open Europe think-tank, said: 'This sounds like very good news because it will definitely delay the Lisbon Treaty by making it more likely the Czechs vote in a Government that opposes it.'The prospect of another crisis around the Treaty, which supporters say is an attempt to streamline the way the EU operates, has thrown European leaders into panic."

Europe fetches the monetary helicopters, at long last

"Sadly I have little confidence that the ECB will undertake QE with adequate dispatch, but at least they seem willing to swallow their pride and start to do their part to mitigate the global depression that we are already in.
If they move fast enough they may even prevent the eurozone breaking. Big if."

For once, Gordon Brown had to sit and listen

"Daniel Hannan is staggered by the huge global reaction to his home truths about the PM...
Overnight, 36,000 people had watched my clip on YouTube. By lunchtime, it was up to 170,000, and the film was the single most watched video online. Then the American bloggers, The Drudge Report foremost among them, picked it up. The clip was played on Rush Limbaugh's radio show, and I was interviewed on Fox News. When I last looked, roughly three quarters of a million people have watched the speech."

Wednesday, 25 March 2009

The inflationary parrot is not yet deceased

"So far, the only major beneficiaries of the Bank's efforts to restimulate the economy have been heavily indebted house owners, who have seen their mortgage costs cut dramatically. Savers are being clobbered while the profligate who helped prompt the credit crunch are seeing disposable incomes soar, assuming they are still in a job. The reason Britain is in this mess is that we borrowed too much, spent too freely and allowed our financial system to take on excessive risks. Yet bizarrely, it is those ordinary people and small businesses that have lived their lives responsibly by saving and paying down debt that are being punished the most."

King correct to warn Labour against more public spending splurges

"Whether you believe him or not on this point, King was right on Tuesday to warn the Government over further public spending splurges. Given the long term damage Labour has helped cause to the economy, and sterling, we really can't take much more punishment."

Failed gilt auction stokes fears over UK economy

"The Government has suffered a major blow to its economic stimulus ambitions after an auction of Treasury gilts failed for the first time in more than a decade, underlining the market’s fears about the state of the nation’s finances....Moreover, politicians have raised concerns that an uncovered gilt auction could lead to a cut in the sovereign credit rating, which could have devastating consequences for the national debt – due to hit a record £1 trillion - as the interest bill would soar."

Tuesday, 24 March 2009

We're proud to be at centre of Europe, says Brown in most pro-EU speech of his life

Daily Mail
"He risked reopening controversy over the unpopular Lisbon Treaty, ushering in a revamped EU constitution, by saying he was also 'proud' to have got it through Parliament."
But have a look at the blasting Gordon got from an MEP in reply... (YouTube)

Millions face 'worst of both worlds' as cost of living rises but rate for fixing pay and pensions falls to zero

Daily Mail
"But at the same time, an alternative measure of inflation - including house prices and mortgage costs - which is commonly used to calculate pay rises has plunged to zero.
...This means more and more employees are likely to see their pay frozen or even reduced, even as the cost of living surges.This 'double whammy' comes after unemployment reached two million last month and close to 3,000 workers are made redundant every day.
It suggests that families will suffer an intensifying squeeze on their living standards, exacerbating Britain’s deepening recession."

Monday, 23 March 2009

Unemployment could double to 4m, predicts David Blanchflower

"A prominent Bank of England policymaker has cast doubt on the Bank's forecasts and predicted that the recession could be deeper and last far longer than policymakers admit.
......The warning, which preceded a sudden fall in the pound, is particularly significant since Mr Blanchflower is renowned for having presciently warned more than a year ago about the scale and significance of the economic crisis. He correctly predicted last year that unemployment would reach 2m by the turn of this year."

Sunday, 22 March 2009

'Deflation to start next week'

Daily Mail
"Inflation will next week tumble into negative territory for the first time since 1960, fuelling fears that Britain's downward economic spiral is worsening."

Saturday, 21 March 2009

US calls on Sweden's "Mr Fix It" Bo Lundgren

"Now, US President Barack Obama cites Sweden as a possible model of how best to tackle failing banks. Mr Lundgren, who was fiscal and financial affairs minister at the time of the last crisis, yesterday outlined the Swedish solution to the Congressional Oversight Panel, which supervises the US administration's troubled asset relief programme."
Stopping a Financial Crisis, the Swedish Way (New York Times,September 22nd 2008)
"The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. Mr. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s."
"By the end of the crisis, the Swedish government had seized a vast portion of the banking sector, and the agency had mostly fulfilled its hard-nosed mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again."

RBS was 'disaster waiting to happen'

"When the outgoing board of directors at RBS met for the final time in January, the scale of the business disaster they had overseen was abundantly clear. The bank was preparing to announce the biggest British corporate loss in history; the Treasury was about to underwrite £325 billion of RBS’s questionable assets; and even the Prime Minister had “gone white” when given details of the bank’s trading activities. .....By last month, the bank admitted the scale of its disastrous mistakes, unveiling a £28 billion loss. The taxpayer now effectively owns the toxic debts. One former executive estimates that losses could total more than £100  billion before the end of the recession."

RBS traders 'bought £34bn of toxic debt without telling board'

Daily Mail
"Royal Bank of Scotland is under pressure to answer claims that its traders bought £34billion of sub-prime mortgages - the toxic loans blamed for the world credit crisis - without the knowledge of board members.The purchases by traders at subsidiaries in the U.S. are being blamed for nearly destroying RBS.....By then RBS's investment banking division had about £20billion of sub-prime assets and a U.S. subsidiary, Citizens Bank, had about £14billion."
Car production plunges by 60% to the lowest level since 1970

Friday, 20 March 2009

Brown 'ignored warning on bank cash crisis FIVE YEARS before Northern Rock failed'

Daily Mail
"A bombshell official report revealed that the Treasury realised in 2004 that it did not have a proper plan to deal with a bank that ran out of ready cash and put the financial system under threat.But at the height of the boom, it was decided that the threat was not important enough.Just two years later the credit crunch brought Northern Rock to its knees and began a banking meltdown that drove the country into recession."

Devaluation of pound fails to help embattled exporters

"Demand for exports has slid to a new low, despite the 25pc-plus fall in the pound over the past year, according to a report from the CBI. The business lobby group said that a balance of minus 51pc of firms reported that their export order books were below normal in the past month. It is the lowest level for this measure since 1998. The finding will dash hopes that the weak pound will help support the UK economy throughout the recession."

Thursday, 19 March 2009

It's OK for banks to play roulette – but not with our savings

Lord Turner should have split investment – or 'casino' banking – from deposit-taking....leads us to infer that, in recent times, some of the world's most powerful financial institutions have been managed by executives who combine the intellect of a glowworm with the integrity of Captain Jack Sparrow. ....
Between them, the Royal Bank of Scotland and Lloyds Banking Group have dumped £585 billion of "assets" (dodgy loans and devalued collateral) in a box marked "Toxic Waste" – and we, the taxpayers, are insuring them. ....When the debt bomb finally exploded, both the FSA and the Bank suffered massive reputational damage. ....Lord Turner, in particular, delivered a damning verdict on the tripartite system of banking regulation, established by the Prime Minister, that fell apart spectacularly in the credit crunch's first tremor.
As No 10 tries to rewrite history, let's not forget that at the 2007 Mansion House dinner, Gordon Brown boasted that London's success was based on "light-touch regulation, a competitive tax environment and flexibility".

Public spending: outlook grim – with the threat of darker clouds

The Times
"The biggest task for whoever is unfortunate enough to win the next general election will be to mop up the gallons of red ink spilt over the Government's finances by the economic crisis."
Comment: And to get Gordon Brown to say sorry...

'Enough': FSA ends risky trading

"Vince Cable, the Liberal Democrats' Treasury spokesman, attacked Lord Turner's report. "If the proposals on pay and bonuses had been followed five years ago, Britain would not be facing such a huge financial crisis now," he said. "This report completely fails to call for the separation of low-risk high street banking from high-risk banking. Banks should be safe places for people's savings, not huge roulette wheels."

Federal Reserve is now playing a high-risk game with inflation

"The US Federal Reserve is increasing its balance sheet by another $1 trillion, including $300bn of Treasury bonds, the Federal Open Market Committee said on Wednesday. ...The experience of the 1970s in both the United States and Britain demonstrates that the Fed’s theory that inflation won't co-exist with economic slack is wrong. Thus an over-inflationary monetary or fiscal policy could quickly produce accelerating inflation even while recession persists."

Public sector debt to double in one YEAR to £200bn as IMF warns Britain's budget deficit is worst in the developed world

Daily Mail
"The IMF said Britain will face the biggest budget blowout of any leading nation next year.It predicted Government borrowing will balloon to 11 per cent of UK national income, or more than £165 billion. ....Britain will be one of the hardest hit economies in the world, with analysts at the Economist Intelligence Unit yesterday forecasting a 3.6 per cent contraction this year followed by a 1.1 per cent fall in output in 2010."

Wednesday, 18 March 2009

Boost from 'printing money' may take months

The Times
"Any reduction in take-home pay will presage both weaker demand and weaker prices,” Mr Ellis noted. "The fact that, across the economy as a whole, people now have less money in their pockets than a year ago is a clear signal that the UK is now knocking on deflation's door."

Britain will be only nation still in recession next year

"The British economy is heading for its worst year since the Great Depression, according to the latest predictions from the International Monetary Fund (IMF).The fund shocked analysts during a briefing in which it was revealed that the UK will see its economy shrink by 3.8 per cent in 2009, and a further 0.2 per cent in 2010 – the only large economy predicted to still be in decline next year as well as this.Some believe that the scale of the downturn signals the UK moving from recession to depression."

UK unemployment jumps at fastest pace on record

"UK unemployment last month jumped at the fastest pace since records began, driving the number of Britons without work to above 2 million for the first time since the Labour Government came to power in 1997. ....In a blizzard of terrible data, the number of people who began claiming jobless benefits in January was revised higher to 93,500 from 73,800. City economists had expected a jump of 84,800 for February and the month's increase is the fastest since records began in 1971, and leaves the unemployment rate at 6.5pc. ....The UK is likely to lose more than a million more jobs over the next 12 months, according to a report from consultancy company Oxford Economics, with the north and the Midlands hit hard."

Monday, 16 March 2009

IMF poised to print billions of dollars in 'global quantitative easing'

"Alistair Darling and senior figures in the US Treasury have been encouraging the Fund to issue hundreds of billions of dollars worth of so-called Special Drawing Rights in the coming months as part of its campaign to prevent the recession from turning into a global depression. .....However, economists warned that the scheme could cause a major swell of inflation around the world as the newly-created money filters through the system.

Britain showing signs of heading towards 1930s-style depression, says Bank

"The country is displaying early symptoms of being trapped in a so-called “debt deflation trap” where families find themselves pushed further and further into the red every month, according to a Bank report published today. ....It says that families with high debts could fall prey to the debt deflation trap. This means that the cost of their debts, which are fixed, would rise compared to average prices throughout the economy. While inflation erodes debts, deflation makes them relatively higher."
Fears of tax rises as collapse in City revenues puts pressure on Darling and his Budget
(Daily Mail)

Saturday, 14 March 2009

Bailout money is flowing abroad

"Colin Ellis, an economist at Daiwa Securities, said: "In principle, creating new money to pump into the economy is the right thing to do when interest rates are already near zero and further monetary stimulus is required. But the Bank of England may, possibly inadvertently, be buying up gilts from foreign investors – who, according to the latest data, held over £190bn, or 36 per cent, of UK Government debt. If the Bank is pumping its new money abroad, it is clearly not going to UK households and businesses, and will not help boost UK demand."

Gordon Brown and Bernard Madoff are separated by a single detail – Bernie's pleading guilty

"What's the difference between Bernard Madoff and Gordon Brown? Answer: one has drained fortunes from gullible victims, plundering their income and savings to create an illusion of prosperity. The other is going to jail. ....Mr Madoff has thrown in the towel....Nobody knows for sure how much has gone missing, but Wall Street scribes are calling it a $65 billion fraud.Not bad for peddling fresh air. It is, however, a nickel-and-dime swindle when set alongside the 12-year con trick perpetrated by Mr Brown on British taxpayers. That, too, has been a form of Ponzi, but with many more zeroes and little chance of the mastermind ending his days in what Americans call Crowbar Hotel.
....While Big Bucks Bernie was snaffling billions, Mr Brown had his sights trained on trillions. Five trillion, to be precise – that's £5,000,000,000,000 – which is how much Labour has taxed and spent since it came to power. In 1998-99 its Budget was £333 billion. By 2008-09, the Government's annual expenditure had grown to £618 billion. Every year, the sums required to shore up the house of cards became bigger and bigger. But while the good times rolled, too few cared to notice what was really going on."

Friday, 13 March 2009

G20 leaders are good for nothing

"At a time when our public finances are in a state of catastrophe, it is right to look for savings. And an obvious place to start would seem to be the cancellation of the G20 meeting of the world's supposedly richest economies, scheduled in London in three weeks' time. After all, it is now apparent that this circus – estimates of the cost of which seem to range from £20 million to £50 million – is going to achieve nothing. ....But once Barack Obama, late on Thursday, let it be known that he was not expecting any particular "commitment" to be issued at the end of the meeting, it became absolutely clear that the enterprise was doomed."

Thursday, 12 March 2009

'Run on UK' sees foreign investors pull $1 trillion out of the City

"A silent $1 trillion "Run on Britain" by foreign investors was revealed yesterday in the latest statistical releases from the Bank of England. The external liabilities of banks operating in the UK – that is monies held in the UK on behalf of foreign investors – fell by $1 trillion (£700bn) between the spring and the end of 2008, representing a huge loss of funds and of confidence in the City of London. Some $597.5bn was lost to the banks in the last quarter of last year alone, after a modest positive inflow in the summer, but a massive $682.5bn haemorrhaged in the second quarter of 2008 – a record. About 15 per cent of the monies held by foreigners in the UK were withdrawn over the period, leaving about $6 trillion. This is by far the largest withdrawal of foreign funds from the UK in recent decades – about 10 times what might flow out during a "normal" quarter."

The Looting of America’s Coffers

New York Times
"In the paper, they argued that several financial crises in the 1980s, like the Texas real estate bust, had been the result of private investors taking advantage of the government. The investors had borrowed huge amounts of money, made big profits when times were good and then left the government holding the bag for their eventual (and predictable) losses.
...And “Looting” provides a really useful framework. The paper’s message is that the promise of government bailouts isn’t merely one aspect of the problem. It is the core problem.Promised bailouts mean that anyone lending money to Wall Street — ranging from small-time savers like you and me to the Chinese government — doesn’t have to worry about losing that money. .....But the knowledge among lenders that their money will ultimately be returned, no matter what, clearly brings a terrible downside. It keeps the lenders from asking tough questions about how their money is being used."
Comment: Sound familiar Gordon ?

Bank 'prints' £2bn more cash - but has it all gone abroad?

Daily Mail
"Former Bank of England official Danny Gabay said the biggest participants in the unprecedented quantitative easing scheme were likely to have been foreign investors."
Do we need to print this money? (John Redwood Diary)
"We need to ask why? If you take the last three months figures for money supply and express them as a an annual rate, the recent rate of money creation has been lively. The latest figures show notes and coin growing at 12.2% - that is literally printing money - and wider money including all our deposits in banks growing at 22.6%. Yes, 22.6%.
.....The hope of the scheme is that this extra money will be spent on home produced goods and services, bringing factories back into use and leading to more people having jobs. Unfortunately it can also go elsewhere. It can go into pushing up prices, it can be spent on more imported goods and services, it can linger in bank tills and book entries and go nowhere as the broken banks throw an extended fit of caution after their past excesses."

Wednesday, 11 March 2009

Bank plan to 'print money' begins

"Market insiders said that most of the gilt selling had been done instead by investment banks and hedge funds, many of whom had been buying gilts from the Debt Management Office and merely selling them straight onto the Bank for an instant profit."
Why should 'printing money' succeed here when it failed in Japan ?
"..The Japanese (and for that matter the Americans) spent around 5pc of their GDP on QE, printing money to buy up assets. The Bank of England, on the other hand, has committed to spending just over 10pc of GDP. This is a hell of a lot of money. A terrifying amount."
Although the process of pumping billions into the economy is known as printing money, it in fact involves the Bank buying gilts and other assets from banks and paying for them with newly created money that is wired into their accounts.(Daily Mail)

Tuesday, 10 March 2009

Worst collapse in UK manufacturing in four decades

"In figures labeled by analysts as “shocking” and “a horror show”, Britain’s industrial production dived at record speed, underlining how hard the global downturn has hit producers and exporters. The statistics are doubly surprising because many economists had expected the weakness of the pound over the past year to have boosted their fortunes."

World in grip of 'Great Recession', IMF warns

"When we release our next package of forecasts at the spring session, that is to say in April, everything leads us to believe that it will indeed reveal a negative global growth for the first time in 60 years,"
Gold looks set to move substantially higher as governments all around the world embark on a programme of "quantitative easing"
Overvalued euro set to plunge 'within months'
"Quite a significant correction in the euro is coming in the next few months. The European Central Bank (ECB) is behind the curve in getting to grips with its economic problems," said David Buik of BGC Partners."
Subprime Europe (New York Times)
"Well, believe it or not, Europe’s current crisis is scarier. For while losses on Eastern European debts may be only a small fraction of those on subprime mortgages, the continent’s problems are politically harder to solve, and their consequences may prove to be much worse."
'We are all in this together': Darling urges EU bailout of East European countries (Daily Mail)
"He spoke out as the Baltic states and the other former communist countries that only recently joined the Union teetered on the brink of financial collapse."
Thanks to the Bank it's a crisis; in the eurozone it's a total catastrophe (Telegraph)
"Spain's agony is already well advanced. Industrial output has fallen 24pc. Some 352,000 people have lost their jobs in two months. BBVA expects unemployment to reach 20pc next year, touching 4.5m. Premier Jose Luis Zapatero can do nothing as long as Spain remains in monetary union."

Monday, 9 March 2009

There are nearly three quarters of a million illegal immigrants in Britain, research has suggested.

"The last official estimate of illegal immigration, a Home Office report in 2001, put the figure at 430,000. ...Because of the nature of illegal immigration, accurately charting numbers is difficult. The LSE team said the figure lies somewhere between 524,000 and 947,000, with a "midpoint" figure of 725,000.
Number of illegal migrants in Britain is 80 per cent more than official estimates
"BBC's Panorama programme last night claimed that at current rates of deportation, it would take 34 years and cost £8 billion to clear the backlog of people who are currently in the UK illegally."

Sunday, 8 March 2009

Taxpayer underwrites another £260billion of 'toxic' loans as State takes over Lloyds

Daily Mail
"The Lloyds deal is particularly humiliating for Labour because Gordon Brown personally intervened to broker Lloyds TSB’s £8billion takeover of ailing HBOS in September to create the new banking giant.Brown urged Lloyds TSB’s chairman Sir Victor Blank to make the deal, promising to waive competition rules. But far from being a rescue, the takeover has infected the previously robust Lloyds with HBOS’s bad assets."

Quantitative easing is not the answer

"Printing money "is all about saving jobs" say my opponents. So if you're against QE, you're happy – even gleeful – to see decent people suffer the trauma of unemployment.
That's how we've got into the current situation – where history shows QE is nuts and almost the entire country thinks QE is nuts, but no mainstream politician has the guts to oppose it. The stage has, instead, been left clear for Gordon Brown to vandalise the UK economy, decimating our financial reputation in a vain bid to cover-up his previous mistakes. ....Little wonder, then, our political classes take the easy option and give us QE. No matter that investment will be stymied as the threat of double-digit inflation looms. No matter that savers will suffer.For QE, and the price surge it will cause, will allow the UK, like some kind of post-Imperial banana republic, to inflate away its debts."
Bank of England to 'print' first £2billion this week (Daily Mail)
"Quantitative easing is a huge gamble, intended to kick-start financial markets that have been spooked by the credit crunch....But a leading authority on debt markets warned of long-term consequences. 'We are deluding ourselves in thinking it is not going to be inflationary,' said Peter Warburton, director of Economic Perspectives."

The special relationship is a joke, and it isn't funny

"The first few months of Obama's presidency are turning into a car crash (last week, US unemployment hit a 25-year high). Consequently, his primary concerns are national, rather than international, his time too scarce for Brown's grand visions of global new deals and reformed regulatory structures. And anyway, when he does need to look abroad for economic partners, why would it be to Britain? His main focus will be China."

Gordon Brown must apologise, and quickly

"Brown really has invested extraordinary hopes in the G20 summit in April as one of the defining geopolitical gatherings of our time, and one that will significantly boost his own chances of electoral revival.Here's how much difference the G20 will have on Gordon's prospects at the next general election: nada. Nichts. Nul Points. Zip. Bugger all. ...Precisely at the moment that Gordon's vistas are broadening as never before, to the point that he can address Congress itself with poise and confidence, the very opposite is happening to the voters who will decide his fate."

Thursday, 5 March 2009

Bank of England will have its fingers crossed as it starts printing money experiment

"In the autumn of 2007, Ben Bernanke, the US Federal Reserve chairman, realised things were very bad. The US central bank began to slash interest rates and to engage in what he likes to call "credit easing" - dropping newly-created Fed money into markets that had seized up. ...About a year and a half later, the Bank of England has arrived at a similar conclusion. The Old Lady is getting ready to follow with her own "quantitative easing" (QE) - but will go about it in a different way. ...It will adopt a different approach to Bernanke's. Rather than, as it were, taking to its monetary helicopter and dropping newly-printed money into distressed securities and markets, the Old Lady will buy UK government bonds and, probably, high grade corporate securities. In contrast, the Fed has reduced its holding of US Treasuries in the past year."

Bank of England embarks on radical plan to print money as it cuts interest rates to 0.5pc

"The Bank of England has slashed interest rates to the lowest level on record and pledged to pump up to £150bn of new money into the economy as it embarks on a radical new policy to fight recession."
...The sweeping move - known as quantitative easing and considered to be the "nuclear option" for central banks - was predicted, but the speed and scale of the initial investment came as a surprise. The Bank plans to fire £75bn of money into the economy over the next three months largely through the purchase of government bonds, known as gilts. The Bank is embarking on policy to prevent the UK economy - already mired in the deepest recession since the 1980s - from tipping into something worse. Despite the massive recapitalisation of the crippled banking system, unemployment is rising and consumer confidence collapsing as the crisis spreads from financial markets into the broader economy.
"Although the £75bn of quantitative easing was a bolder move than many had expected, I think that even this could prove to be insufficient," said Roger Bootle, economic adviser to Deloitte. "The Bank will probably have to do much more. And until we see firm signs that quantitative easing and other stimulus measures are working, a prolonged Japanese-style period of deflation remains a significant risk."
COMMENT:"quantitative easing" IS devaluation by another name

Wednesday, 4 March 2009

Europe’s banks face a $2 trillion dollar shortage

"European banks face a US dollar “funding gap” of almost $2 trillion as a result of aggressive expansion around the world and may have difficulties rolling over debts, according to a report by the Bank for International Settlements. ...British banks have borrowed some $800bn in sterling to make dollar investments and loans. By mid-2007 they had accumulated what amounted to a $300bn net “short position” on the US dollar. The latest BIS data up to the third quarter of 2008 shows that this exposure has been trimmed by “deleveraging” but it still largely hanging over the UK financial institutions."

Tuesday, 3 March 2009

Downing St left embarrassed after President Obama scales down first meeting with Brown

Daily Mail
"After overnight protests from British diplomats, the White House agreed to allow journalists into the Oval Office later for a brief round questions with Mr Obama and Mr Brown after their talks. ....As the first EU leader to be offered a coveted invitation to the White House, Mr Brown is banking on an Obama bounce to rescue his dire poll ratings."
Comment: Brown is sinking fast....

Gordon Brown refuses to apologise over recession despite plea by Alistair Darling

"The Prime Minister has rejected pleas from Cabinet colleagues and will not use a speech in Washington on Wednesday to issue any sort of apology for the role he played while Chancellor in allowing banks and the City to operate unfettered. ...in direct contrast to his Chancellor, he defiantly believes that the problems were unique and were not the fault of the system he put in place and presided over while at the Treasury for a decade. ....
The Prime Minister also knows that if he admits he made mistakes he will hand a massive propaganda coup to the Conservatives."

Monday, 2 March 2009

FTSE loses billions of pounds within hours

The sharp decline took the FTSE 100 below the lows experienced last October as UK banks teetered on the edge of collapse and were bailed out by the Government.
It came as analysts expressed concerns about the state of the UK economy, saying the financial crisis could spill over into other industries.
FTSE plummets to six-year low after HSBC reveals £12.5bn share sale (Daily Mail)
Wall Street stocks hit 12-year low as insurer AIG unveils £43.8bn loss... the biggest quarterly loss in U.S. history (Daily Mail)
World stocks tumble on AIG's $61.7bn loss (Independent)

Sunday, 1 March 2009

Alistair Darling's debt-defying stunt

"The Government is desperately hoping that the Asset Protection Scheme will prove to be the silver bullet that ends the financial crisis and gets banks lending again. It is the culmination of more than a year's worth of state interventions that began with Northern Rock, gathered pace with last April's £200bn Bank of England special liquidity scheme and appeared to end with the £50bn recapitalisation programme in October, which came with £250bn of loan guarantees for good measure. Despite the £500bn scale of the bail-out, it wasn't the silver bullet. ...Sandy Chen, banks analyst at Panmure Gordon, is sceptical about such a philosophy. "You could build enough wind turbines for the whole of the UK for £325bn," he says. "Wouldn't it be better to give people free power than rescuing RBS?" Mr Chen is an advocate of hard love. Britain is over-indebted and assets overpriced, he says, and the only remedy is a nasty crash. The Government, though, takes a different view."