Saturday, 31 October 2009

The grim reality is that America is not out of recession

Telegraph
"So the US economy actually expanded by only 0.9pc during the third quarter – a fact most newspaper reports ignored. What growth we did see resulted from a 3.4pc annualised rise in US consumption between July and September, which was in turn caused by a 22.3pc spike in spending on consumer durables.That increase, though, was largely driven – quite literally – by last-minute vehicle purchases under the soon-to-expire "cash for clunkers" scheme. The much-trumpeted rise in residential construction – the first in four years – was also dependent on a temporary tax credit for first-time buyers. In other words, this latest US growth spasm stemmed from one-off government "giveaways" – with the public only able to take advantage of such gimmicks by going deeper into debt."

Bank of England called on to increase QE

Telegraph
"The Bank of England has been urged to increase its quantitative easing (QE) programme to a total of £225bn – more than the gross domestic product of Greece. ...Malcolm Barr of JP Morgan said: "Our best guess is that the MPC will extend QE by a further £50bn next week while also cutting the interest paid on a portion of reserves to zero. With inflation rising sharply as we move into early 2010, and signs of recovery broadening, this move is likely to be the last."

Friday, 30 October 2009

Recovery fears return to haunt markets on eve of Hallowe'en

Telegraph
"US markets were spooked on the final trading day of October as investors questioned the real extent of the global economic turn-around, despite America's positive growth in the third-quarter."

Stocks swoon as worries about the economy return

Yahoo Finance
"A day after a euphoric rally pushed stocks up the largest amount in three months, on Friday investors fretted that strapped consumers won't be able to carry on a recovery in the economy that has been driven by government spending and companies boosting profits through cost-cuts. .....On the New York Mercantile Exchange, gold fell, while oil tumbled $2.38 to $77.49 a barrel."

Bank set to inject more cash into economy

Daily Mail
"The Bank of England is set to extend its quantitative easing programme next week in an effort to kickstart the UK economy out of recession.Shockingly bad third-quarter growth figures appear to have swung most economists to expect action from the Bank's monetary policy committee, which will disclose its decision next Thursday at midday."

Thursday, 29 October 2009

Tony 'the twister' Blair now wants a free ride on the Euro Express

Telegraph
"With the stench of destruction still hanging over Baghdad – two huge bombs killed another 153 people this week – Mr Blair's ongoing role as Middle East peace envoy defies even gallows humour. The day he took up the post, satire was bound, gagged, shot in the back of the head and dumped in a ditch.Having failed spectacularly in a task for which he was uniquely unsuited, he's gagging to switch gravy trains for a first-class seat on the Euro Express. Mandelson did it. So, too, the Kinnocks. Now Tone wants his turn."

UK left behind as the United States climbs out of recession

Telegraph
"The figures coincided with statistics showing that a key measure of the flow of money around the British economy has shrunk to the lowest level on record. The Bank of England said that an adjusted measure of M4 fell by 0.9pc in September, resulting in an annual fall of 1.7pc – the worst since comparable statistics began.The fall is of particular concern since the Bank had hoped that its £175bn quantitative easing (QE) programme would have pushed up money growth and economic expansion."

Britain out in the cold as US exits recession

The Times
"Gordon Brown is facing growing embarrassment over Britain’s recovery after it became the world’s only major economy still in recession as America returned to growth in the third quarter. ...Britain, the world’s sixth largest economy according to the World Bank, was widely expected to have recovered in the third quarter.However, shock figures, released last week, showed that the UK economy contracted between July and September, leaving the country battling the longest recession on record."

US emerges from recession

Telegraph
"The US economy has emerged from its deepest slump since the Second World War, new figures showed today. ....The return to growth in the last quarter was driven by a rise in consumer spending and a blitz of stimulus measures by the Government. While acknowledging that the economy has rebounded, experts are divided on how strong the recovery will be. Some reckon there is a significant risk that the economy will fall back into recession."

Wednesday, 28 October 2009

Norway becomes first European country to raise interest rates

Telegraph
"Norway has become the first country in Europe to raise interest rates since the start of the financial crisis as its economy recovers from a shallow downturn."
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Norway becomes first European country to raise interest rates since financial crisis (Daily Mail)
"Norway, which has a population of 4.8million, is not a member of the European Union, and has escaped the financial crisis largely unscathed thanks to vast oil revenues, which it invests in a sovereign wealth fund worth $420billion."

FTSE 100 falls 2.3pc as recovery concerns weigh on shares

Telegraph
"Shares dropped sharply in London on Wednesday amid growing concerns that both the UK and the US could suffer a relapse into economic gloom."

Tuesday, 27 October 2009

Deflation fears as Eurozone and US credit contracts

Telegraph
"Bank lending to firms and households in the eurozone has fallen for the first time, raising fears of an economic relapse and a slide into deflation next year. ...Otmar Issing, the ECB's former chief economist, told an Open Europe forum in London that policymakers are entering treacherous waters. "Nobody can be sure that we have a self-sustaining recovery. The challenges facing the ECB are tremendous," he said."

Monday, 26 October 2009

Is the Treasury running out of ammo to save the economy?

Independent
"Nevertheless, these numbers present a dilemma for policymakers. If the economy continues to shrink, or fails to recover, what are the necessary "next steps"? What is left in the policymakers' arsenal?As things stand, the answer is "not much". Interest rates are already remarkably low. Both Labour and the Conservatives accept that the budget deficit cannot continue to grow. That, then, leaves so-called quantitative easing, whereby the Bank of England buys gilts (government IOUs) in the market. ..Quantitative easing is very imprecise. Knowing whether or not it is proving successful is tricky: its effectiveness depends on faith as much as pure economic reason. ...First, QE works merely by boosting people's expectations. ....(Second)In other words, QE enables borrowers to bypass the banking system entirely. ....Third, and most obviously, it works because foreign investors are losing faith in the UK economy, can hear the hum of the printing press in the background and choose, in their droves, to sell the pound,....."

Report warns how the rise of the quango 'costs each family £3,640 a year'

Daily Mail
"The Government says there are around 800. But a comprehensive survey by the Taxpayers' Alliance campaign group has identified 1,152. ......Today's report says they now employ more than 534,000 people and are riddled with problems of cronyism and accountability.Last year, the Government at Westminster funded 960 bodies to the tune of £82billion, while the Scottish Executive spent £7.3billion on 146 organisations.The Welsh Assembly spent £1billion on 37 bodies, while nine organisations cost the Northern Ireland executive £700million."

Footling measures are of no use when dealing with public sector debt

Telegraph
"Last week saw further evidence of the dire state of the public finances. Borrowing came in at almost £15bn for September alone and nearly £80bn for the financial year so far."

The outrageous truth slips out: Labour cynically plotted to transform the entire make-up of Britain without telling us

Daily Mail
"...After all, a deliberate policy of mass immigration would have amounted to nothing less than an attempt to change the very make-up of this country without telling the electorate.There could not have been a more grave abuse of the entire democratic process. Now, however, we learn that this is exactly what did happen. The Labour government has been engaged upon a deliberate and secret policy of national cultural sabotage. ...But the most shattering revelation was that this policy of mass immigration was not introduced to produce nannies or cleaners for the likes of Neather. It was to destroy Britain's identity and transform it into a multicultural society where British attributes would have no greater status than any other country's.

Labour 'deliberately let migrants in to make Britain more multicultural and so Tories could be accused of racism'

Daily Mail
"..Former Labour minister Frank Field said: 'I am speechless at the idea that people thought they could socially engineer a nation on this basis.' ....Jack Straw last night dismissed Mr Neather's claims as untrue. ....However, Labour's former welfare minister Mr Field, co-chairman of the cross-party Group for Balanced Migration, said a 'beam of truth' had been shone on the immigration issue.'It is so dangerous that I cannot believe anybody even contemplated this course of action,' he said.'I can't believe anybody could have been this stupid. All along anyone who raised questions was told they must be racist."

Sunday, 25 October 2009

Gordon Brown has that sinking 1970s feeling

The Times
"It feels grim. Britain was supposed to have said goodbye to the cycle of boom and bust and to have left behind damaging and disruptive industrial relations. Both have returned. Labour has taken us back to the 1970s in the crisis it has created for the public finances and it is taking us back to the industrial anarchy of that era. That is why people are heartily fed up with this government. And they are right."

'Dishonest' Blair and Straw accused over secret plan for multicultural UK

Daily Mail
"Jack Straw and Tony Blair 'dishonestly' concealed a plan to allow in more immigrants and make Britain more multi-cultural because they feared a public backlash if it was made public, it has been claimed."
------------------------------
So now we know what many had long suspected - that the Blair Government deliberately set out to encourage large-scale immigration in a conscious but unacknowledged attempt to transform our society.

Saturday, 24 October 2009

Ever-Present Surveillance Rankles the British Public

New York Times
"It has become commonplace to call Britain a “surveillance society,” a place where security cameras lurk at every corner, giant databases keep track of intimate personal details and the government has extraordinary powers to intrude into citizens’ lives."

Where have all the green shoots gone?

FT
"If the UK’s continued slide is particularly depressing, neither Europe as a whole nor the US can yet boast of unambiguously good economic news. True, Germany and France both grew by a modest 0.3 per cent in the second quarter, and one must hope this has continued in the third. But the strength of the euro risks snuffing out the spark of increased net exports that helped reignite economic activity."

Britain's economy is still dangerously fragile

Independent
"What these figures illustrate is just how fragile our economy remains. Output from manufacturing, construction and services is still well below trend. The economy is no longer contracting at the terrifying rate of earlier this year. But there has been no strong rebound to growth. And there is little prospect of one either. The British economy has contracted by about 6 per cent since the middle of last year. Getting back to the levels of employment and output to which we have grown accustomed will be a long and arduous journey."

Longest recession ever puts Britain seventh behind Italy in world economy table

Daily Mail
"Today's figures mean the UK has fallen behind Italy for the first time since the 1990s to become the world's seventh biggest economy.Italy's economic output in the third quarter of this year was £350 billion, compared to Britain's £347.5 billion, according to analysis by Citigroup".

Britain is still in recession: the emergency measures propping up the economy

Telegraph
"Britain is now officially in its worst recession in modern history after new figures showed that the economy unexpectedly shrank last quarter. ... looks at the emergency measures still in place."

Friday, 23 October 2009

UK economy overtaken by Italy

Telegraph
"Britain's economy has been overtaken by Italy for the first time in a decade and a half, after official figures showed that the UK is now in the longest recession in recorded history....In 1987, the first time Italy overtook Britain’s economy, the landmark moment was dubbed “Il Sorpasso” and prompted wild celebrations in the streets of Rome. The UK then regained its prominence in the mid-1990s, and by 2000 its economy was some 35 per cent bigger than Italy’s."

Longest recession on record grips UK

Independent
"And it shows the UK lagging behind other major economies such as France and Germany, which both emerged from recession in the second quarter of the year. ....But the pound sagged against the dollar and euro on the hugely disappointing figure as markets bet on more support for the economy from the Bank of England with an extension of the QE programme to as much as £250 billion.Economists warned of a potential deflation risk and said it could take at least six years to make up the output gap left by the recession."

SIR ANDREW GREEN: We must halt this conspiracy of silence over our immigration crisis

Daily Mail
"They are the last estimates that will be made public before the election - and they make grim reading. Mass immigration, which has been encouraged by Labour's policy of open borders, has already brought three million immigrants to Britain since it came to power in 1997.These projections confirm that immigration is driving our population to new heights. If nothing is done, we will have an extra 10million people within 25 years - and nearly 70 per cent of them as a result of new immigration."

This recession just became a depression

Telegraph
"The GDP fall, as you may have seen elsewhere, means that this is now the longest technical recession since at least 1955 (and most probably since the 1930s, though the ONS doesn’t have figures on this) at six quarters, or a year and a half, long. The late 1970s/early 1980s slump was deeper, but was not a long uninterrupted period of economic output falls. ......It shatters any delusions that Britain is “well placed” to withstand the recession".
---------------------------------

Britain is still mired in recession, latest numbers show

UK economy shrinks in third quarter

FT
"From a peak in the first quarter of 2008 the economy has now contracted by 6 per cent, the Office for National Statistics reported. The recession has now lasted for six quarters, the longest downturn since the Second World War. The size of the recession is now on a par with that of 1979-81."

The debt crisis of 1976 offers a vision of the blood, sweat and tears facing David Cameron

Telegraph
"Whether he relies on a sofa or a full Cabinet, a star chamber or even a focus group, the one lesson Mr Cameron can draw from 1976 is the one about leadership. Ultimate responsibility rests with the prime minister. What awaits him if he wins next year is an exhausting, ultimately solitary test of political will and stamina that, like Callaghan before him, could leave him feeling deathly before his first term is up."

Britain is still in recession: decline continues

Telegraph
"Britain hopes of escaping recession were dashed today after figures showed that the economy is stuck in its worst recession on record. ..."The worst thing is that every single component of gross domestic product that was published did not rise," said George Buckley, an economist at Deutsche Bank. "It's a bad number."

Thursday, 22 October 2009

Recession and unemployment: the worst is yet to come

The Times
"To date, the decline in GDP we have seen is similar to that of the recession of 1979-81, when GDP fell by 6 per cent. Unemployment surged from 1.4 million to 2.5 million people. The recession of 1990-91 saw a fall in GDP of only 2.5 per cent but a 700,000 increase in the unemployed. .....The performance of the public finances during this recession has been shocking, deteriorating by about £130 billion a year. Adjusting for differences in the scale of the economy suggests that government borrowing increased by £38 billion in the 1979-81 recession and by £53 billion in the 1990-91 recession. Much of the worsening is related to the collapse in taxes from the financial and housing sectors, which had proved to be particularly important sources of revenues to the Exchequer. ....From the perspective of unemployment, the worst is probably still to come. As the UK recovered from the recession of 1979-81, unemployment continued to rise, peaking at 3.3 million people in 1984. It was not until 2000 that the unemployment rate finally returned to its 1979 level.

Brown spurns King call to put brakes on the casino bankers

Daily Mail
"Gordon Brown and Alistair Darling launched a war of words with the Governor of the Bank of England yesterday, sparking claims of chaos at the heart of the Government's economic policy.The Prime Minister and Chancellor slapped down Mervyn King after he called for ministers to break up the banks or risk a financial crisis 'even worse' than the credit crunch."

Mervyn King is right - the economy is changing and we're blindfolded, without a map

Telegraph
"Mr King raised two issues: first, we are missing an opportunity to overhaul the structure of the banking system; second, we have yet to work out how we will run our economy in the future. ......So, the argument goes, casino and utility should be separated. That this is a problem, and that something needs to be done about it, is hardly new. Such was the idea that underpinned America's Glass-Steagall Act of 1933, which split investment banks from their main street counterparts, until it was repealed during the Clinton administration. It was one of the key issues raised in a report written for Gordon Brown by the industry expert Don Cruickshank, back in 2000 – and conveniently ignored."

Wednesday, 21 October 2009

Why banks need to be boring again

Daily Mail
"Mr King made it clear that he regards the damage rendered by the bankers worldwide as unconscionable.It has resulted in the loss of 6million jobs in the U.S., 2.5million in the euro area and 2.5million in Britain.The £1trillion of assistance provided by Britain to its ailing banks has contributed to a rapidly rising national debt which will have a terrible impact on the public finances for a generation."

How to manage the gigantic financial cuckoo in our nest

FT
"According to the IMF, writedowns on UK bank assets are going to be $604bn, against $814bn for the eurozone and $1,025bn for the US. Yet the US economy is roughly six times as large as the UK’s. The UK’s cuckoos are too big. Regulation must take these differences into account."

Is Labour setting us up for the next crisis? King thinks so

Telegraph
"Yet, there is no doubting the intellectual appeal of Mr King's ideas. The problem he addresses is that of banks whose trading and international activities have reached a size which dwarfs the capacity of national governments to underwrite them."
--------------------------------
Mervyn King: bail-outs created 'biggest moral hazard in history'

Cowardice on immigration has allowed the BNP to flourish

Telegraph
"Statistics don't usually set the blood racing. But here are a few, published yesterday by the Office for National Statistics, that might shake you. In the next 20 years, the population of the UK will rise from 61 million to 70 million – and then go on rising. The bulk of that growth will be due to immigration, which will have added seven million – seven cities the size of Birmingham – to our population by 2034. In the next 10 years alone the British population will rise by four million."

Mervyn King: 'Never has so much money been owed by so few to so many'

Independent
"Mervyn King described the £1 trillion of support given to banks by the taxpayer as "breathtaking" and "unsustainable". He said: "To paraphrase a great wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform." Mr King argued that banks took huge risks because they knew they would be bailed out and because they were seen as "too big to fail". He called for sweeping reforms to the way they are supervised."

Tuesday, 20 October 2009

Euro at $1.50 is 'disaster' for Europe

Telegraph
"France has given its clearest indication to date that the surging euro is a threat to Europe's fragile recovery and will not be tolerated for much longer. ...What concerns European policymakers most is the lockstep rise against China's yuan. Beijing has clamped the yuan firmly to the weak dollar for over a year, quietly benefiting from the export advantages. It accumulated $68bn (£41bn) in reserves in September alone as a side-effect of holding down the currency. Fresh reserves are mostly being invested in eurozone bonds, pushing the euro higher."

Home Office has lost track of 40,000 rejected migrants

The Times
"The Home Office has lost track of tens of thousands of migrants who were refused extensions to their visas more than six years ago, it emerged today. ....The Agency is currently working its way through a backlog of between 400,000 - 450,000 old asylum cases and is now preparing to start work on the 40,000 backlog of old immigration cases. ...Ms Homer said most of the files related to cases dating back before 2003 and were immigrants who have been refused an extension to their visa allowing them to remain in the UK."

Record in public sector borrowing

BBC
"The UK's public sector net borrowing reached £14.8bn last month - a high for September, official figures have shown. ....Net borrowing for the six months of the financial year so far now stands at £76.2bn - the worst figure for the April-to-September period on record.
The government expects borrowing to hit £175bn this year. Its overall debt now stands at £824.8bn, or 59% of GDP.That includes about £142bn as a result of banking bail-outs.Economists had expected borrowing to come in at £15.3bn in September.The figures raise speculation that the government may have to revise its forecasts on borrowing."
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UK government borrowing hits record £77bn (Telegraph)
"Public borrowing in Britain ballooned to a record £77.3bn in first six months of the financial year - the highest half-yearly figure since the end of the Second World War."
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Public borrowing soars to worst level on record (The Times)
"Just to meet interest payments on its mounting debt pile, the Government paid out £5.9 billion - 43 per cent more than the same month last year and the highest monthly payout on record."

Monday, 19 October 2009

More than 700 migrants a day have been let in to Britain since Labour came to power

Daily Mail
"Out of a population of 60.4 million, there is now a total of 6.6 million immigrants in the UK, according to the Daily Express. ...The findings were slipped out without notice last month and only revealed yesterday after academics discovered them and reported them to an immigration think-tank. ....Among the 1.5million people who have arrived since 2004, 620,000 are from Poland and other Eastern European countries who joined the EU that year, the report added.Home Office projections issued before the borders were opened said numbers arriving from Eastern Europe would be 13,000 a year.On top of the 2.3million migrants said to have arrived since 2001, it is thought around 700,000 arrived between 1997 and 2000.Migration information collected by the Office for National Statistics has been discredited since the disastrous national census of 2001 missed a million people."
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Immigrant Population Has Increased By More Than Two Million In Eight Years (MigrationWatchUK)
"The number of immigrants in the UK has increased by more than two million in the last eight years, says a Government sponsored report – that is nearly 700 a day - entirely consistent with the figure predicted by think tank Migrationwatch in 2002 which at the time was vilified by critics.The report by Oxford Economics, was quietly slipped out on the website of the Department for Communities and Local Government last month with no attention drawn to it.‘The report has confirmed that what Migrationwatch has been saying for seven years has turned out to be pretty accurate,’ said Chairman Sir Andrew Green."

Gordon Brown, the banks and the survival of the fattest

Daily Mail
"Writing in the Mail on Sunday, Gordon Brown says: 'Britain needs to emerge from recession with financial services that work for you, not for them. Banking for people, not for bankers.' Yes! But what does this mean? Precisely nothing. It is empty, political gibberish."

Countdown to the next crisis is already under way

FT
"We did not need to wait until the Dow Jones Industrial Average hit 10,000. It has been clear for some time that global equity markets are bubbling again. On the surface, this looks like 2003 and 2004 when the previous housing, credit, commodity and equity bubbles started to inflate, helped by low nominal interest rates and a lack of inflation. There is one big difference, though. This bubble will burst sooner."

A sterling crash is a godsend

Telegraph
"Britain has twice averted disaster over the past century by a timely – if humiliating – crash in sterling. In neither case was it obvious that this would lead to a decade-long revival in British fortunes. .....This is not to underplay the gravity of Britain's crisis. We are in a worse state today than in 1992 or 1931. Our budget deficit is 13pc of GDP. We are living £175bn a year beyond our means."

Sunday, 18 October 2009

Britain's secret weapon against a fiscal crisis

Telegraph
"What I hadn’t realised was that the UK’s debt market is peculiar. In the US, average length of the existing Treasury bonds was, at recent count, 4.7 years and falling. Because this is such a short maturity, it means the debt has to be rolled over far more often, and at every point the government runs the risk of setting in stone any changes in interest rates. In France, the average maturity is 7.1 years, in Italy 6.9 years, in Germany 6.35 and in Japan 5.7 years.In Britain, the weighted average maturity of government bonds is a whopping 14.2 years. Admittedly, as the IMF points out this is slightly lower in the wake of the crisis, but it is still significantly longer than any other major economy."

Saturday, 17 October 2009

Another way of understanding the financial mess

John Redwood
"On Friday I was trying to explain the financial mess the UK is in now to some Councillors. I was urging them to cut their overheads by natural wastage and other measures now, as I fear whoever is in government in seven months time will tell them “the party is over” in Callaghan fashion."

UK's budget deficit will leave pound weak until at least 2014

Telegraph
"The report says that sterling could continue to weaken until 2014, as foreign investors balk at the unprecedented size of the UK's budget deficit."

Friday, 16 October 2009

Ex-FSA chief Sir Howard Davies sees 'dramatic’ risks for Britain

Telegraph
"The British people are living in a fool's paradise and have yet to understand the gravity of the economic crisis, according a former head of the Financial Services Authority.
.....What is disturbing is that the British people seem unwilling to face minimal belt-tightening. Even professors in higher education are balloting to strike, demanding a continuation of boom-time pay raises. "You have the best minds in the country planning to go on strike for 8pc. People are miles away from understanding what is needed."
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German 'Wise Men' fear credit crunch in 2010

Thursday, 15 October 2009

An easy way to save £5 billion - say no to Lloyds Bank

John Redwood
"Today I awoke to the Today programme telling me Lloyds was likely to receive another £5,000,000,000 from taxpayers to top up its capital. No, No, No. The answer must be No.
Lloyds has plenty of assets. They should sell some. Lloyds has too big a position in the UK mortgage market, thanks to the foolish acquisition of HBOS egged on by the government. It should be made to sell some of it off. Lloyds can now raise some money from private markets, so let it do so. Lloyds has enormous scope for cutting its costs, starting with the huge salaries its Board members and senior executives draw from a subsidised business."

How bad will spending cuts get? Take a look at Latvia

Telegraph
"Allow me to paint you a picture of a country mired in chaos. The unions are in open revolt. Public sector workers have just stomached their biggest pay cuts in living memory; many face losing their homes. In a desperate attempt to bring the budget deficit back under control, ministers are considering slashing child benefit by a fifth – the biggest attack on the welfare state since it was set up in the first half of the 20th century. The government's popularity is at historical lows.This is the state of affairs in one of our closest cultural and geographical neighbours. We should be watching closely, because what is happening in Ireland today is almost exactly what will happen in Britain tomorrow."

Treasury slams EU report warning Britain faces debt spiral

Telegraph
"Brussels said UK public debt will rise from around 60pc of GDP this year to 160pc by 2020, 406pc by 2040, and 760pc by 2060 unless there are drastic spending cuts."The UK's budgetary position poses severe risks to the sustainability of public finances," the EC said in its Sustainability Report."

Wednesday, 14 October 2009

Sterling is a silver lining as the dark clouds of austerity gather

Telegraph
"In reaching that point there's obviously no money left in Government coffers to spend our way out of recession. Taxes are going up, not down. Interest rates are as low as they'll go. We're fast approaching the limits of Mervyn King's ability to pump money into the economy via the banks (who don't seem to be passing much on) which leaves the currency as the final instrument we have to keep the economy off the rocks."

The rumours of the dollar’s death are much exaggerated

FT
"Finally, what can replace the dollar? Unless and until China removes exchange controls and develops deep and liquid financial markets – probably a generation away – the euro is the dollar’s only serious competitor. At present, 65 per cent of the world’s reserves are in dollars and 25 per cent in euros. Yes, there could be some shift. But it is likely to be slow. The eurozone also has high fiscal deficits and debts. The dollar will exist 30 years from now; the euro’s fate is less certain."

Tuesday, 13 October 2009

Bank will 'never know' true impact of money scheme

The Times
"The exact effect of the Bank of England's multi-billion pound scheme of quantitative easing (QE) will probably never be known Charlie Bean, the Deputy Governor, admitted today.
Mr Bean said that since it was impossible to judge what would have happened if the Bank had not decided to pump £175 billion into the economy, it would be difficult to ascertain the total effect of the policy. .....There has been unease over the success of the Bank's scheme among economists as it has so far failed significantly unlock bank lending to businesses and individuals, which threatens to keep the brakes on economic recovery."

UK faces another quarter of recession

Independent
"The accountant Pricewaterhouse Coopers also released its latest forecasts yesterday, highlighting the need for the Government to plug a £43bn hole in the public finances, even if Britain does return to some kind of growth. It dismissed the Government's announcement of a £16bn sale of public-sector assets as not being sufficiently large to alter its "fundamental view", and pointed out that the broad outline of the policy already been announced in the Budget by the Chancellor, Alistair Darling. The BCC's poll will dash hopes that the UK will indeed be shown to have returned to positive growth this quarter when official figures are released in ten days' time."

Monday, 12 October 2009

Britain must raise taxes by £26bn a year to repair the economy

The Times
"Britain must raise taxes by £26 billion per year or cut public spending by 17 per cent in the three years to 2013-14, over and above the measures proposed in this year’s Budget, a report published today warns."

Heckuva Job, Barack

New York Times
"Here was a chance to establish himself, definitively, as an American president — too self-confident to accept an unearned accolade, and too instinctively democratic to go along with European humbug.

He didn’t take it. Instead, he took the Nobel Peace Prize.

Big mistake."

Sterling hits six-month low on Brown sell-off

The Times
"Investors were selling the pound today in reaction to Gordon Brown's plans to raise £16 billion in the sale of a string of central and local government assets including the Tote, Urenco, the nuclear fuel agency and the Dartford Crossing. Sterling fell to its lowest level in nearly six months against a basket of currencies. "
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Less family silver – more of a car boot sale (Independent)

Sunday, 11 October 2009

Energy crisis is postponed as new gas rescues the world

Telegraph
"The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected. .....This is almost unknown to the public, despite the efforts of Nick Grealy at "No Hot Air" who has been arguing for some time that Britain's shale reserves could replace declining North Sea output."

'Benign currency neglect' could spell real danger for US economy

Telegraph
"Many American economists say the greenback is falling because the global economy is recovering – so investors no longer need the dollar as a "safe haven".That's nonsense. The reality is that "safe haven" status has shifted away from the dollar and towards tangible assets that the US government can't debauch by printing more of them.That's why gold just hit a fresh all-time high of well over $1,000 per ounce. That's why commodity-backed currencies like the Australian dollar are now soaring – causing howls of protest from Aussie exporters. Meanwhile, global investors are quitting the US currency because they're worried it's a sinking ship."

Gold price 'set to double in four years'

Telegraph
"Analysts at Edison Investment Research have predicted that the price of gold price could hit $1,879 (£1,185) an ounce by 2013, driven by the aggressive monetary policy of central banks around the world and a chronic shortage of the precious metal."

Saturday, 10 October 2009

You haven't seen anything yet

Frank Field MP
"George Osborne gains marks for being the first front bench politician of either of the two main parties prepared to spell out the details on the cuts which will have to be made to balance the budget in the longer term. Brave certainly, but not brave enough.
The Government is spending way beyond the revenue it raises. It calculates that when the economy has returned to growth a £90bn deficit will remain despite the increases in revenue that growing economic activity will bring. .....Full credit to George Osborne for starting the debate on the theme ‘we are all in this together', but these spelled out savings are tiny in comparison with what is required. The next big cuts speech better take the theme: you haven't seen anything yet."
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David Cameron and George Osborne offer a surprisingly radical agenda (Daily Mail)
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Gordon Brown favours optimism over Tory austerity - interview (Telegraph)
{Gordon Brown missed David Cameron’s conference speech.}

Has anyone seen the pound recently?

John Redwood
"Since I drew attention to the pound’s plight again in the third week of September the devaluation has continued apace."

Comment made on article:
"Since the UK banking crisis started in mid-2007, the pounds has fallen by:-

75% versus japanese yen
50% versus the Czech Koruna
49% versus Swiss Franc
39% versus Singapore Dollar
37% versus Brazilian Real
36% versus Euro
33% versus Australian Dollar
28% versus the Thai Baht
27% versus US Dollar
21% versus South African Rand
21% versus Polish Zloty
4% versus Mexican Peso

It has increased in value versus only the Zimbabwean Dollar , Ukrainian Hyrvnia and Icelandic Krona.

This kind of currency collapse is not consistent with low inflation."

A strong US needs a weakened dollar

FT
"It would actually be rather helpful if the dollar were to weaken further. Politicians everywhere see strong currencies as national virility symbols, but the effect of a cheaper dollar would be to help American exporters while making imports to the US dearer.
This is what America – and the world – needs. In the medium term, as Mr Summers put it earlier this year, “the rebuilt American economy must be more export-oriented and less consumption-oriented”. In short, the US must start living within its means, and the rest of the world must stop relying on its profligacy."

Crisis Leaves Europe in Slow Lane

New York Times
"Despite losses on both American subprime debt and local loans in boom-to-bust economies in Spain, Ireland and the Baltics, “the banking system has not really been restructured,” said Nicolas VĂ©ron, a research fellow at Bruegel, a policy center in Brussels. As a result, Europe runs the risk of repeating Japan’s “lost decade” in the 1990s, when huge losses clogged bank balance sheets and inhibited new lending. .....And there are signs that Europe’s anemic economic performance will translate into less political power. European countries had an outsize voice in the Group of 7, the world’s principal economic forum since the mid-1970s. But late last month, world leaders said that elite club would soon be eclipsed by the Group of 20, a much more global assembly that includes emerging economic giants like Brazil, China and India. ....What is more, the economic crisis has also paralyzed European efforts to come to grips with longer-term factors inhibiting growth, like an aging work force and slowing population growth in many countries."

Friday, 9 October 2009

Bank’s wait-and-see on QE divides opinion

The Times
"The Bank’s Monetary Policy Committee (MPC) adopted a wait-and-see approach on Thursday, keeping interest rates on hold at 0.5 per cent and continuing with its £175 billion scheme of quantitative easing. However, there have been calls for the Bank to pump more money into the economy."

UK beats US as world's top financial centre

Independent
"However, Kevin Steinberg, the WEF's chief operating officer, said the biggest lesson of the survey was that while "the UK and US may still show leadership, their significant drops in score show increasing weakness and imply their leadership may be in jeopardy".

Thursday, 8 October 2009

Latvia fears lead to bank protection in Sweden

The Times
"A Latvian government plan to protect homeowners from full repayment on their mortgages drew an angry response from Sweden yesterday as it extended an SEK1.5 trillion credit guarantee to the Swedish banking system."

BoE leaves interest rates and QE on hold

Telegraph
"The Bank of England's Monetary Policy Committee (MPC) has left interest rates on hold and kept its quantitative easing (QE) spending target unchanged at £175bn, following a two-day meeting."

Asia acts to support the downcast dollar

Telegraph
"The reason? They are worried about what the weak dollar might do to exports. They also worry about the damage the shifting exchange rate does to the portfolio value of their foreign exchange reserves, which are largely held in dollars. .....There has been much talk of the death of the dollar in recent weeks, but the fact of the matter is that Asia isn’t yet quite ready for it. It will be ten years or more before China is fully weaned off its dependence on the American consumer."

US budget deficit balloons to $1.4 trillion

Telegraph
"The US government spent a record $1.4 trillion (£800bn) more than it collected in the fiscal year that ended on September 30, congressional analysts said in their final estimate before the official numbers are issued."

Wednesday, 7 October 2009

China calls time on dollar hegemony

Telegraph
"You can date the end of dollar hegemony from China's decision last month to sell its first batch of sovereign bonds in Chinese yuan to foreigners. Beijing does not need to raise money abroad since it has $2 trillion (£1.26 trillion) in reserves. The sole purpose is to prepare the way for the emergence of the yuan as a full-fledged global currency. ...."Everybody in the world is massively overweight the US dollar," said David Bloom, currency chief at HSBC. "As they invest a little here and little there in other currencies, or gold, it slowly erodes the dollar. It is like sterling after World War One. Everybody can see it's happening."
"In the US they have near zero rates, external deficits, and public debt sky-rocketing to 100pc of GDP, and on top of that they are printing money. It is the perfect storm for the dollar," he said. "

Gold hits fresh record high

Telegraph
"The gold price hit a record high for a second consecutive day on Wednesday, touching $1,048.20 an ounce in intraday trading as concerns about the prospects for the dollar and inflationary fears grew. The US dollar has been weakening after a period of quantitative easing and as the country's debt balloons."
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Miners shine as gold hits record (Daily Mail)
"Yesterday, as glittering gold soared to a record price of $1,040, or £666 an ounce, on the back of further dollar weakness and hedge buying, any company whose performance is heavily reliant on the very precious metal gave a sparkling performance."

Tuesday, 6 October 2009

Banks brace for Latvia's collapse

Telegraph
"The Baltic states are once again in the eye of the storm after leaked reports that Sweden is bracing for a full-blown economic and political "breakdown" in Latvia."

Europe’s plot to take over the world

FT
"The realisation that the G20 is Europe’s Trojan horse struck me at the G20’s last summit in Pittsburgh a couple of weeks ago. The surroundings and atmosphere were strangely familiar. And then I understood; I was back in Brussels, and this was just a global version of a European Union summit."

Picking through economic wreckage

FT
"This great recession is therefore more than a temporary setback. Some of the world’s economic output – thought to be around 10 per cent of yearly production – is lost forever and will not be made up. Where that loss falls may be one of the most consequential – and so far least discussed – political problems in the near future."

The end of the dollar spells the rise of a new order

Independent
"But the US is not the dominant power that it once was. The financial crisis has left it hobbled with significant government and household debts and sharply reduced prospects for growth. Developing nations such as China, Brazil and India, on the other hand, have weathered the economic storm significantly better. So while this latest proposal is born of financial calculation, it is also a reflection of a new economic world order."

Britain betrayed over Lisbon referendum

Telegraph
"The treaty was pushed through by the Labour Government, not only without a referendum, but without any popular debate that might have justified leaving the matter to Parliament: during the 2005 general election campaign, all discussion of the latest great leap forward in Europe (then known as the European constitution) was considered unnecessary because the matter was going to be put to a referendum. The fact that it never was is not the fault of the Conservatives, but of Labour, which reneged on its election pledge. Amid the continuing brouhaha over what the Tories should do next, this central betrayal should neither be forgotten nor forgiven."

Monday, 5 October 2009

HSBC boss warns of second global economic downturn

Daily Mail
"Nani Beccalli, head of GE International which runs the conglomerate's businesses outside the U.S., said that talk of governments preparing exit strategies for bail-out schemes was 'premature'."

Is it all over between Britain and Europe?

The Times
"The forced Yes vote in Ireland makes it respectable to ask whether the benefits outweigh the sacrifices of staying in the EU"
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It's not just the Right that's Eurosceptic (Independent)

Euro is Ireland’s life-jacket – and straitjacket

Telegraph
"It is hardly surprising that Ireland has warmed to the Lisbon treaty. Ireland is immersed in freezing waters. Europe is its life-jacket. ......But the EU’s lifejacket is also a eurozone straitjacket. The UK has its competitive, weak pound while Ireland is stuck with the super-dear euro. Ireland’s recession, deflation and budgetary deterioration resemble the Baltics’ agony because like them Ireland is locked into a fixed exchange rate."

Europe must be a priority for the Tories

Independent
"Before the 2005 election, Tony Blair gave a guarantee that there would be a referendum on the EU constitution. That helped him to win. After winning, the Government broke its word, on the pretext that the Lisbon Treaty was a significantly different document, something which no serious person believes. In order to justify this breach of faith, they misrepresented the true nature of the Lisbon Treaty. Over the centuries, not all British politicians have been honest.So Tony Blair and Gordon Brown reneged on their promise. But I cannot think of any modern instance of dishonour and dishonesty which even comes remotely close. For that, we would have to return to the reign of Charles II and the secret dealings with France, generally agreed to be one of the lowest moments in British history."

Sunday, 4 October 2009

Lisbon Treaty Vote Clears Path for E.U. President

New York Times
"Olivier Ferrand, president of Terra-Nova, a center-left research institute based in Paris, said that the decision is a landmark. “The Lisbon Treaty is the first step from a technocratic Europe to a political Europe,” he said. “We have had this idea ever since the fall of the Berlin Wall and for two decades we have been struggling with it.”

The latest and most dangerous economic heresy

Frank Field
"Each week the Government's debt office offloads another huge tranche of debt. The debt is, and here it comes, largely bought by money the Bank of England is printing. Soon,we are told, there will be no more of this printing - or as we call it in polite conversation, quantitative easing - although there are already one or two voices at the Bank suggesting the policy should be extended. The crunch point will come shortly when there is no more of this funny money to buy the Government debt. At this point the Government's cuts programme will be in the dock and the jury will be composed of those countries and institutions that might lend the British Government money."

Saturday, 3 October 2009

Chinese Economic Juggernaut Is Gaining on Japan

New York Times
"China’s rise could accelerate Japan’s economic decline as it captures Japanese export markets, and as Japan’s crushing national debt increases and its aging population grows less and less productive — producing a downward spiral."

Friday, 2 October 2009

FTSE 100 tumbles below 5,000 on US jobless rise

The Times
"London's FTSE 100 share index plunged below 5,000 today after it emerged US employers cut 263,000 jobs last month, taking the jobless rate to a 26-year high of 9.8 per cent."

Gordon Brown must be mad to want to discuss his economic record

Telegraph
"In his 1998 Budget, Mr Brown declared with admirable awareness: "The Chancellor is above all the guardian of the people's money."Yes, the people's money, out of which he has now run. Britain is skint in a way that not even Mr Brown's worst enemy could have predicted."

Britain must charge for health care and raise retiring age to escape debt crisis, says IMF

Daily Mail
"In a devastating intervention, the International Monetary Fund called for radical changes to the pension system and spending cuts that go far beyond the plans outlined by the Prime Minister this week.The global watchdog said root and branch changes to public sector spending would be necessary to 'help keep a lid on the debt' and restore financial stability."

Thursday, 1 October 2009

Iceland exposed: How a whole nation went down the toilet

The Times
"A year ago this month, Iceland went bankrupt. We explain how it went from being the world’s happiest nation to one with a bleak future"

Does money contraction signal serious trouble?

Telegraph....Specifically, that contraction of credit and M3 money in both the US and Europe signals double-dip trouble ahead."

Britain's £215bn-a-year funding gap the worst in the world, says IMF

Telegraph
"The warning underlines why the Bank's Monetary Policy Committee has committed to a far bigger QE programme than any other major central bank, as it battles the deflationary forces conjured up by this lending shortage.In a speech in Belfast, new MPC member David Miles said QE "is having an impact that is relevant to economic conditions right across the country... not just in financial markets but in high streets and factories and homes throughout the UK."The IMF's calculations will undermine many economists' assumptions that the Bank will soon end its QE scheme.In a further blow to the UK in particular, the Fund said that Britain and the US are exposed to "home bias" - the likelihood that investors from around the world choose to withdraw their cash.

Gordon Brown's pat on the back from the IMF is followed by a very hard kick

Telegraph
"Oh dear. The Government gets a little praise for the policy response, but by implication is roundly blamed for allowing the credit boom and housing bubble to build up in the first place. Correcting these errors will crimp growth for years to come, the IMF implies, while getting the timing right in withdrawing exceptional fiscal, monetary and financial system support is going to prove exceptionally difficult."

Banking crisis has cost UK taxpayers more than a quarter of GDP

Telegraph
"Against this, Britain’s 26.7 per cent almost pales to insignificance, yet the UK still claims second place, a whisker ahead of Spain at 24.3 per cent. In terms of nominal tax dollars committed, as opposed to proportion of GDP, we’re third, after the United States and Germany."