Sunday, 31 January 2010

MPC set to end quantitative easing this week

"The Bank of England's Monetary Policy Committee (MPC) is expected to signal a critical shift in monetary policy this week as it stops pumping emergency money into the economy.It is unlikely to extend its quantitative easing (QE) scheme on Thursday, after reaching its £200bn target of asset purchases last week."

Friday, 29 January 2010

US economy puts on shock growth spurt

Daily Mail
"Markets and analysts were caught off-guard today as official data showed the US economy grew by an annualised 5.7 per cent in the fourth quarter.The increase in gross domestic product well outstripped the previous quarter's 2.2 per cent and analysts' expectations of a 4.6 per cent expansion.The data from the Commerce Department confirms that the world's biggest economy is powering away from recession, although US GDP estimates are prone to big revisions. The third quarter estimate had been 3.5 per cent before it was revised down to 2.2 per cent."

Davos 2010: Britain falls to 15th place in globalisation rankings

"Hopes that Britain will be able to export its way out of recession have been undermined by a report showing that it has fallen five places in a new ranking of the world's most globalised economies."

US economy roars back to enjoy strongest quarter since 2003

"The US economy grew at its fastest pace in six years in the last three months of 2009, confirming that the world's largest economy had firmly exited its year-long recession.Better-than-expected figures from the US Commerce Department show that the American economy grew at an annualised rate of 5.7pc in the last quarter of last year, more than double the 2.2pc rate in the third quarter, and above the 4.7pc economists had been forecasting."

Thursday, 28 January 2010

Funds flee Greece as Germany warns of "fatal" eurozone crisis

"Germany has triggered a near-panic flight from southern European debt markets by warning that there will be no EU bail-outs, even though it fears the region's economic crisis has turned dangerous and could prove "fatal" for the entire eurozone."

Where did all the stimulus go ?

John Redwood
" The government keeps telling us borrowing more, spending more and printing more boosts the economy. They should look at the figures and ask themselves Where has all the stimulus gone? The figures are amazing.

Since 2005 the government has doubled central government borrowing (on its own understated figures ) from £469 billion to £922 billion – an injection of £452 billion.Since 2004-5 money supply (M4) has surged from £1,212 billion (£1.2tn) to £2,100bn (£2.1 tn) – it has also almost doubled. Notes and coin have gone up from £42 billion to £55 billion.And what has happened to real output? It is almost the same in Q4 2009 as it was in Q3 2005! No growth at all for 5 years.So where did all the stimulus go? Much of the public borrowing went on inefficiencies and on imports. Some of the extra money went into price inflation, and some is just circulating less rapidly now, given the poor state of the banks and the new regulatory toughness."

UK no longer among most stable banking systems-S&P

"NEW YORK, Jan 28 (Reuters) - The United Kingdom is no longer classified as being among the most stable and low-risk banking systems in the world, credit rating agency Standard & Poor's said on Thursday."

Wednesday, 27 January 2010

Don't invest in Britain: The UK economy sits 'on a bed of nitroglycerine', investors warned

Daily Mail
"Gordon Brown's election strategy was dealt a further blow today after the boss of the world's biggest bond house warned investors to avoid the UK economy.Bill Gross, who runs the world's biggest mutual fund warned the British economy was lying on 'a bed of nitroglycerine'.Britain limped out of recession yesterday with an anaemic return to growth that raised fears of a second downturn.Economists said the fragile recovery suggested a real risk of a 'double dip', in which the economy plunges back into the red."

Tuesday, 26 January 2010

Britain exits longest recession on record – just

The Times
"A change in GDP could emerge as the country gears up for a general election, which must be held before June 3, although Gordon Brown is facing calls for a poll as early as March.The ONS will publish its revised reading on February 26 and a final figure in March.The Government will have to battle even harder to sustain the recovery.The main drivers of the minimal growth in the economy came from the retail and motor sector, both of which have been propped up by government intervention.Colin Ellis, European economist with Daiwa Capital Markets, said: "These sectors will have been boosted by the pre-announced VAT rise in January and the car scrappage scheme — suggesting that, on an underlying basis, the economy only stagnated at best."
It has raised fears over the strength of the recovery as the VAT rise and the dire weather this month are likely to have hurt high street spending, and the scrappage scheme is scheduled to come to an end soon."

Alistair Darling admits recession likely to return as Britain crawls out of longest downturn in history

Daily Mail
# UK economy grew by just 0.1% in last quarter of 2009
# Chancerllor predicts a 'double dip' recession
# Upturn driven by hotels and restaurants
# CBI boss warns recovery could take two more years

Chancellor Alistair Darling admits recession could return

"Alistair Darling, Chancellor of the Exchequer, has admitted Britain could slip back into recession before the next election, after figures revealed a disappointing 0.1 per cent growth in the last quarter."

Britain exits recession: how we compare with rival economies

"Britain has at last emerged from recession. This is how the economy now compares with the world's other major powers."

Britain exits worst recession in decades

"Britain has joined the list of countries out of recession, with official figures marking the end of the economy's worst slump since the 1930s."

Britain crawls out of recession as longest downturn in history finally comes to an end (but only just) Daily Mail
"Britain's hopes of a quick and decisive recovery from the recession were dealt a major blow today after new figures showed the economy grew by just 0.1 per cent from October to December. The data brings the UK's s longest-ever recession to an end, but the minuscule nature of the rise - lower than the 0.4 per cent predicted - will raise fears the country could slip back into a 'double dip' recession and heap further pressure on Gordon Brown.Official confirmation of economic growth ended six straight quarters of shrinking output and means that the UK is the last of the major G7 economies to leave recession."

Economic gloom recedes - by 0.1% (Independent)

"The UK's longest and deepest recession finally came to an end in the last three months of 2009. But only just, official figures showed today.A 0.1 per cent expansion in the economy between October and December ended six straight quarters of shrinking output, according to first estimates from the Office for National Statistics (ONS).Overall, the economy slumped 4.8 per cent last year - the biggest annual contraction since records began in 1949 - and it has lost 6 per cent since the recession began in 2008."

Monday, 25 January 2010

The Californian solution for the Club Med

The Californian solution for the Club Med
(By Charles Goodhart and Dimitrios Tsomocos)
"Greece and Portugal have two severe economic problems. These are, first, a fiscal position, deficit and debt ratio verging on the unsustainable, and, second, a serious lack of competitiveness (a real exchange rate which is much too high). Italy and Spain may also soon face a similar precarious situation. These countries’ membership of the eurozone constrains the solution to this joint problem."

Saturday, 23 January 2010

Spartan solutions from Brussels will be fought by Athens

"The Greek crisis goes back a long time. The country entered the eurozone in 2001 with the help of some creative accounting. These accounts suggested that the country met the various entry criteria for membership, when in fact it did not. Successive Greek governments, on the left and the right, have since misrepresented the country’s fiscal position. The reported 2009 budget deficit, a 12.7 per cent of gross domestic product, is obviously unsustainable. I say “reported” because I do not trust even this high number. As far as I can tell, nobody in Brussels does so either. This lack of trust has in itself become an obstacle to the resolution of the crisis."

Friday, 22 January 2010

UK car production jumps but retail sales disappoint

"Colin Ellis, European economist at Daiwa Capital Markets Europe, described the retail sales figures as "poor" and said they served "as a timely reminder that in some sense the hard work is just beginning. Even if Tuesday's GDP data do report positive growth, the UK economy still faces several sizeable challenges."

The rise and rise of China

John Redwood
"Nor should we think China’s arrival in second slot marks an end to this period of rapid change. Whilst it is going to take a good few years for even China to catch up with the size of the US economy, we could well see India from just outside the top ten and Brazil from tenth slot advance up the rankings. Going in the opposite direction could well be Spain and Italy as well as the UK, as all suffer from economic weakness in an ever more competitive world."

Thursday, 21 January 2010

Bank of England independence is a cause of immense frustration for Gordon Brown

"If there were any mobile phones, staplers or printers still intact in 10 Downing Street on Tuesday, it's a good bet they found themselves being hurled towards the nearest cowering staffer that afternoon. For it was then that Gordon Brown learned of the contents of a speech that the Governor of the Bank of England was about to read out that evening. Despite private remonstrations with the Bank, despite Mr Brown having thought he had secured Mervyn King's agreement to refrain from barbed economic comments until the election was over, the turbulent Governor had gone and done it again.

In the space of one relatively short speech, Mr King managed single-handedly to undermine almost every element of Labour's early-stage election campaign, warning homeowners that the next two years will be tainted with economic hardship, and ruling out any hopes for a Budget giveaway this spring.

Should we abolish the Monetary Committee

John Redwood
"..The MPC remit is to control inflation. They have failed to do this. They need to think again about why they have got it so wrong, and try to do better in the future. Who are they kidding with their current 0.5% interest rate? Have they not noticed that everyone else has to use much higher rates than their recommended rate, and even the government now has to pay a lot more for most of its money."

One in five adults in Britain not working

"There are over eight million people who are "economically inactive", a record number according to the Office for National Statistics.These include students, retired, parents staying at home to look after children, long-term sick and those who have simply given up looking for a job – "discouraged" in the euphemistic language of the statisticians."

China's growth surges to 10.7 per cent

"China's economic growth accelerated to 10.7 per cent in the final quarter of 2009, adding to pressure on Beijing to cool inflation pressures while keeping the country's recovery on track. ..."At present, the base of the world economic recovery is relatively weak. There are uncertainties in domestic economic development," Ma Jiantang, commissioner of the National Bureau of Statistics, said at a news conference. "We should ... maintain consistency and stability of macroeconomic policy."

Chinese economy records fastest growth since financial crisis erupted

Wednesday, 20 January 2010

EU should clearly lay out Greek alternative

"Greece could do with some better allies. EU politicians haven't been any help. The country faces a financial crisis, but the region's leaders have managed only to send conflicting and distant signals that they are "monitoring" the situation closely."

Fantasy budgeting

"Over the past year, British politicians have mastered the art of talking about fiscal policy without saying anything. But keep an eye on them. The parties are shifting, albeit at glacial pace. A debate about the fiscal deficit – projected to be 12.6 per cent of output this year – may yet break out before this year’s general election. ...."

Tuesday, 19 January 2010

Inflation soars

John Redwood
" December’s inflation figure was as bad as I feared – and that’s before the force of higher VAT kicks in in January.
The Consumer Price Index, the government’s preferred measure, rose by 2.9%, just a whisker below the level where the Bank of England has to write a letter of apology and explanation to the Chancellor. The Retail Price Index (including mortgages) rose to 2.4%, whilst the RPI excluding housing hit an alarming 3.8%.
The Monetary Policy Committee has a lot of explaining to do. Why were they still worrying about falling prices during 2009 when they were helping unleash this fast rise in prices? Why couldn’t they see the impact of the devaluation of sterling on prices, and the impact of easy money on asset and commodity prices?
As I feared, they have lurched too far again for the third time. Between 2005 and 2007 they kept rates too low, encouraged easy credit and set up the loan bubble. Between 2007 and the end of 2008 they set rates which were too high, presided over a massive contraction of credit and helped bring the economy from boom to bust. Now in 2009-10 they have again set rates that are too low and backed them up with massive quantitative easing. No wonder inflation has gone up."

Record rise in inflation last month

PA/Yahoo News
"The Consumer Prices Index (CPI) hit 2.9% last month - much higher than expected by the City - compared with just 1.9% in November.The surge was because VAT was unchanged last month compared with the Government's temporary cut to 15% to help the economy a year earlier, the Office for National Statistics (ONS) said."

Monday, 18 January 2010

Ominous lessons of the 1930s for Europe

"The Great Depression taught us several lessons. The first one is that central banks must be ready to provide ample liquidity to save the banking system. Present-day central banks did exactly that. They did not repeat the mistakes of the 1930s when their predecessors tightened money in the face of a banking crisis. The second lesson is that governments should not try to balance the budget when economic activity collapses. Governments today did not repeat the mistakes made by many governments in the 1930s that desperately tried to balance their books when the economy crashed. is remarkable to see that the same mistakes are being repeated today involving some of the same countries as during the 1930s. ....."

Sunday, 17 January 2010

ECB prepares legal ground for euro rupture as Greek crisis escalates

"Fears of a euro break-up have reached the point where the European Central Bank feels compelled to issue a legal analysis of what would happen if a country tried to leave monetary union."

UK faces ‘decade-long recession threat’

Daily Mail
"Britain faces 'ten years of hard slog' to pay off towering public and private debts and fight its way back into export markets, a report will claim this week. ...The forecast noted: 'Government support is being withdrawn and the economy must learn to stand on its own two feet. This balancing act is going to be difficult and heavily dependent on an upturn in the world economy. Companies have to chase overseas customers after a decade of relying on the domestic consumer."

Friday, 15 January 2010

Trade gap narrows thanks to non-EU business

"Britain's goods trade deficit with the rest of the world narrowed more than expected in November, after the country's deficit with non-EU countries fell to its lowest since late 2005, official data showed on Tuesday.The Office for National Statistics said that Britain's global goods trade gap narrowed to 6.784 billion pounds in November from 7.016 billion in October, after imports dropped 0.8 percent over the month while exports rose 0.1 percent.Economists had forecast a deficit of 7.0 billion pounds. ..."The UK trade figures continue to disappoint," said Vicky Redwood at Capital Economics. "Although the trade deficits narrowed slightly in November, they reversed only a small part of the deterioration seen over the previous couple of months."

Thursday, 14 January 2010

Chinese slowdown is biggest threat to prosperity, says WEF

The Times
"A sharp slowdown in China is one of the biggest threats to future prosperity, the World Economic Forum said in its latest assessment of the risks that mankind faces.A slowdown could lead to serious unemployment and social unrest in China and badly hit the country’s trading partners, as well as global commodity and capital markets, the WEF warned yesterday."

No minister, this disaster began years before the credit crunch

"Britain is in a financial mess because of a spending binge that stretches back to 2002...
The last time a British Chancellor delivered a balanced budget – or better, one in surplus – was 2001, the year of Tony Blair's second general election victory. Much has changed since then, especially for those with red rosettes. That year, Liverpool lifted the FA Cup and Red Marauder (an omen of things to come at Number 11?) won the Grand National. Confident of victory at the polls, Mr Brown labelled his Budget "Investing for the Long Term". His plans included annual spending of £394 billion and income of £398 billion.
It was his last dance with pretty Prudence. Thereafter she was ditched in favour of her ugly cousin, Profligacy. In each of Labour's eight subsequent Budgets, expenditure has exceeded revenue."

IMF and Sweden to delay Iceland loans

"Iceland cannot agree how much it owes for the failure of Icesave's parent, Landsbanki, which meant the UK Treasury had to rescue 300,000 savers in October 2008.Both the International Monetary Fund and Sweden signalled that their hands were tied by the fact that Iceland is unlikely to reach an agreement before a a review of aid for the country is completed later this month."

'Significant chance' of second financial crisis, warns World Economic Forum

"Investors must steel themselves for the possibility of a second leg to the financial crisis, and should be equally prepared for a fiscal crisis, in which a major economy faces either default or a "sudden stop" in financing themselves on capital markets, according to the World Economic Forum. ....The report, which in previous years had been among the first to cite the prospect of a financial crisis, the oil crisis that preceded it and the ongoing food crisis, included a list of growing risks threatening leading economies. Among the most likely, and potentially most costly, is a sovereign debt crisis, as some countries struggle to afford the unprecedented costs of the crisis clean-up, the report said, specifically naming the UK and the US."

Britain is finally out of recession... but only just

Daily Mail
"The respected National Institute of Economic and Social Research said that between September and December the economy grew by 0.3 per cent, its first quarter of growth since the beginning of 2008."

Wednesday, 13 January 2010

Greece and Portugal face 'slow death' over debt crisis

"Greece and Portugal are likely to suffer a "slow death", as higher debt costs cause the economy to "bleed" economic potential, Moody's credit ratings agency has warned. ..Moody's Investors Service said unless the two countries reverse their large current account deficits, wealth generated would increasingly have to be used to pay off rising debt costs as investors demand more to hold Greek and Portuguese bonds."

Tuesday, 12 January 2010

China heightens bubble fears as it tightens monetary policy

"Fears that China could fall victim to a speculative bubble resurfaced on Tuesday as country's authorities ordered its banks to set aside more reserves in a precursor to a full-blown interest rate increase."

A global fiasco is brewing in Japan

"..The only reason why this has not yet blown up is because investors (mostly Japanese) have not yet had the leap in imagination required to understand their predicament, and act on it. That roughly is the argument of Dylan Grice from Societe Generale in his latest Popular Delusions note released today. “A global fiasco is brewing in Japan.”Japan’s deficits are already within the hyperinflation “red flag” zone identified by historian Peter Bernholz (”Monetary Regimes and Inflation” .. the Bible on this subject). As you can see from the charts below, prices start to spiral into the stratosphere once the deficits as a share of government expenditure rises above a third and stays there for several years."

Why Greece will have to leave the eurozone

"..This experience informs me that, much like Argentina a decade ago, Greece is approaching the final stages of its currency arrangement. There is every prospect that within two to three years, after much official money is thrown its way, Greece’s euro membership will end with a bang."

BCC signals no end to recession in fourth quarter

""These figures indicate that we are not yet out of recession," said David Frost, director general of the BCC. "A lack of demand is at the heart of it. Domestically we are not seeing the level of demand required to haul us out of it."

Monday, 11 January 2010

Six steps to salvage the Treasury

"The Treasury is always at the centre of UK economic affairs. But with a debt/gross domestic product ratio that does even not peak until 2015, and with the architecture of financial regulation still incomplete, it will be more important than ever in the years ahead. So what does it need to meet the challenges of the next parliament?".

Cold snap not seen freezing economic recovery

"Weeks of arctic weather are not expected to endanger the economy's anaemic recovery but the impact they have had on productivity could push thousands of already recession-hit businesses over the edge."

New Labour realism reveals scale of UK's problems

"Alistair Darling has spoken the ugly truth – the UK faces years of austerity. ....The UK Chancellor of the Exchequer's acknowledgement of the imperative of "getting borrowing down" reflects the weakness of Gordon Brown. The problems go deep. The big spending cuts needed in the UK will take a chunk out of growth – and tax revenues. The likely result is many years of poor UK growth – just as was the case in the early 1990s, after the late 1980s housing boom under the Tories. Darling may still be underestimating the scale of the UK's rebalancing challenge – and the time it will take."

Sunday, 10 January 2010

Disappointment ahead for UK — and big test for euro

The Times
"Since the beginning of the credit crunch, most of my analysis had been based on a core assumption that appeared ridiculous in the months just after Lehman but which now looks as if it may have been right after all. I believed that the credit crunch was just an ordinary financial boom-bust cycle that happened to be blown out of all proportion by an astonishingly incompetent policy response in the United States."

It's no good, Gordon - the money's gone

Mail on Sunday
"It is the Prime Minister, Gordon Brown, who is in denial. He is determined to fight the next Election on a high-expenditure policy.Last month's Pre-Budget Report (PBR) was largely determined by Brown himself and imposed on Darling. The PBR was a fiscal disaster because it failed to give a convincing explanation of the ways in which the Government would reduce the deficit. This has undermined the confidence of the bond market.There may be worse to come. Brown has not fixed the date of the General Election, but he has virtually committed the Government to have a Budget in March. Yet a March Budget could repeat the failure of the PBR."

Britain faces bill of £7bn to bail out Greece if eurozone crisis continues

Daily Mail
"Britain could be forced to spend billions of pounds to help rescue Greece, the most crisis-hit member of the eurozone.If a rescue fund for the troubled Greek economy matched the country's towering budget deficit, the UK would be asked for £7billion, assuming contributions matched each country's share of the total European Union economy.That is the equivalent of 2p on the basic rate of income tax."

Saturday, 9 January 2010

General Election 2010: Time is running out for make-believe economics

"The election campaign began with a vengeance this week, complete with the pantomime horse of an attempted putsch, but the politicians might as well be fighting it out in Neverland for all the illumination they offer on what to do about the most important domestic issue of our times – Britain’s burgeoning budget deficit. ...But, daunted by the monstrous scale of the public debt issuance now planned, investors are fast losing their appetite. Already, we are seeing the early signs of a buyers’ strike."

Friday, 8 January 2010

Government debt mountain will consign Britain to stagnation

"This is pretty worrying news for us here in the UK, where, according to the IMF, the OECD and most independent forecasters, net debt is likely to rise to around 100pc of gross domestic product. In other words, the high level of debt we are incurring will stunt our growth, potentially for decades. Want the proof in black and white? Cast your eyes down this table."

Bank of England leaves interest rates unchanged

The Times
"Interest rates were left unchanged at 0.5 per cent by the Bank of England yesterday, as the Monetary Policy Committee (MPC) kept the price of money at record lows to stimulate the flagging economy.Members of the committee said that they intended to continue with the £200 billion programme of quantitative easing, pumping cash into the financial system until the completion of the scheme next month."

Thursday, 7 January 2010

Why is no one telling us the truth about spending cuts?

"In the parallel universe of Little Ed, other people's money – his
play dough – never runs out. Here on Planet Earth, however, it does – and has. Britain's coffers are empty, which explains why the Government is borrowing billions to pay the bills. The cost of this debt is rising, as lenders fret over our ability to fulfil obligations. Without tough remedial action, there will come a moment when international markets refuse to accommodate all our needs, or charge a price that is so prohibitive it will be politically unacceptable.Britain has got away with it, so far, because as the Debt Management Office pumps out Government IOUs, known as gilts, the Bank of England is furiously buying them back through its programme of so-called quantitative easing (QE). Yes, we're printing money to fund our own credit. This, I'm sure you've spotted, fails the common sense test. Were it that easy, the whole world would be at it."

Wednesday, 6 January 2010

Euro brinkmanship escalates as ECB shuts door on Greek bail-out

"The European Central Bank has given its clearest warning to date that there will be no EU bail-out for Greece if it fails to control its spiralling deficit, raising the stakes in a game of brinkmanship over the future of the euro."

Government must deliver details for deficit plan to be credible, MPs warn

"The Treasury Committee also called on the Treasury to consider publishing forecasts showing a range of possible UK debt interest rates, which many fear will rise as the Government continues to borrow heavily.John McFall, chairman of the committee, said witnesses to the PBR inquiry agreed that the Chancellor had not given sufficient detail on how a reduction in the structural deficit would be achieved."

Are the Government measures adequate?

Frank Field
"I probably sounded the most grave warnings of anyone in the debate. I am not against the Bill, but I think it is too little and far too late. I've been on about this issue following the 2008 Pre Budget Report."

Tuesday, 5 January 2010

Greece faces intrusive EU surveillance amid reports of a burgeoning deficit

"Greece is bracing itself for the most intrusive surveillance of any eurozone state since the launch of the single currency, amid reports that the country's budget deficit is spiralling further out of control."

Pimco warn of '80pc' chance of UK rating downgrade

"Britain will lose its gold-plated sovereign credit rating if Labour wins the coming election and refuses to take tougher action on the public debt, the world's biggest bond house has warned."

Iceland blocks deal to pay Britain and the Netherlands £3.6bn for losses caused by collapse of failed bank Icesave

Daily Mail
"Iceland's president today blocked a bill to pay Britain and the Netherlands £3.6billion for losses caused by the collapse of one of its banks.Olafur Ragnar Grimsson vetoed the legislation, which was passed last month by the country's parliament, after receiving a petition signed by a quarter of Iceland's 320,000 population.His decision, only the second time since Iceland's republic was founded in 1944 that the president has not signed into law a bill approved by parliament, automatically triggers a national referendum on the issue."

Monday, 4 January 2010

Beware the crisis around the corner

"The US economy is sickly, but the mood of impending doom has lifted. The response of US and other authorities to the emergency is unfinished business and needs continuing attention – but in 2010, if the crisis continues to ease, the danger is that politicians will relax and minds will wander from the need for new financial rules."

Sunday, 3 January 2010

There are tough times ahead but my money's on a resurgent UK

"In economic terms, 2009 was one of the most calamitous years in the nation's history. I suppose it is fitting that forecasters should have shared in this misery, professionally as well as personally. .....What's more, when the recovery does come, firms are likely to work existing employees harder rather than take on extra staff. I would therefore not be surprised to see unemployment rise to over 3m by the end of the year and to stay around that level for several years."

Saturday, 2 January 2010

Icelandic revolt upsets Icesave deal

"Iceland’s president will on Saturday meet activists calling on him to veto a deal that would return £3.4bn of Icesave deposits to former customers in Britain and Holland."

Iceland approves UK payout after Icesave collapse claim
"Iceland's parliament yesterday narrowly approved a Bill that will pave the way for Britain and the Netherlands to recoup the €3.8bn (£3.4bn) lost by customers of the online savings bank Icesave, which collapsed under a mountain of debt in 2008.Under the deal, which is deeply unpopular with Icelanders, the two governments will receive payments over the next 14 years after compensating the losses of more than 320,000 of the bank's customers."

Arabia takes the New Silk Road to China, spurning the West

"With hindsight we can see that two events occurring within days of each other in late 2001 brought about an epochal change in the world's strategic system, drawing China and the Mid-East oil powers into each other's arms again after five centuries of estrangement. The old Silk Road came back to life."