Bank of England starts to dust off its inflation-fighting credentials

Telegraph
"I'm not the only one wondering how long the Bank's Monetary Policy Committee (MPC) can hold out against raising interest rates.

On Tuesday, we got an answer of sorts. Paul Fisher, the Bank's markets director, published remarks he made in Liverpool in a speech given on June 14. They appear to show a determination to raise rates "should it appear likely that inflationary pressure is sustained at a higher level into the medium term".

David Cameron tells Gordon Brown to turn up for work

Telegraph
"When Harriet Harman asked him to give due credit to Gordon Brown for his work on development, and to condemn the failure of the G8 to live up to its Gleaneagles commitment, Jabber banged back: who was Chancellor and Prime Minister for the five years since the Gleaneagles summit in 2005, he asked? “I’d be delighted to, if he could be bothered to turn up to this House,” he said. "

We need to be candid about immigration

Telegraph
"Telegraph View: Britain must have an honest and open discussion about immigration that addresses the public's social and cultural concerns. "

The Story That Should Be on the Front Page

Donna Laframboise (Canada)
"Lawrence Solomon has an eye-opening column over at the National Post today. It describes how a ridiculous Environmental Protection Agency (EPA) rule prevented a speedier, more aggressive cleanup of the Gulf of Mexico oil spill.

It seems the Dutch government owns its own oil-spill cleanup brigade and has developed impressive expertise and technology to deal with such matters. While the US lacks equivalent resources, it nevertheless spurned an offer of help from The Netherlands because the EPA appears to live in a fantasy world rather than the real one.

This bizarre situation has been made even worse by US authorities who are now apparently more concerned with labour union rules than with implementing as quickly as possible measures to protect the coastline."

General McChrystal: the fall guy for the president's failure?

Telegraph
"In time of war – particularly one as challenging as the brutal conflict currently being fought by Nato forces in Afghanistan – you would expect an American president to give the campaign his undivided attention. But the fact that Mr Obama could hardly be bothered to contact the commander of the most important military campaign of his presidency tells its own story.

If Mr Obama had devoted more time to working with senior commanders such as General McChrystal, he would have a more profound understanding of the enormous strains and pressures they endure. He might then have been inclined to take a more lenient approach to a magazine article that did little more than reflect the every day tittle-tattle that goes on in any officers’ mess. Gen McChrystal was clearly out of order, but after he issued a fulsome apology, a severe reprimand, rather than outright dismissal, would have sufficed.

But that is not this president’s style. Ever since he entered office seventeen months ago, Mr Obama has proved to be exceptionally thin-skinned when it comes to handling criticism, as revealed by his administration’s long-running feud with the Fox News network. "

Cameron Takes Skeptical Approach to G-20

WSJ
"....Mr. Cameron, in his short time as prime minister, has shown himself as pragmatic rather than ideological on foreign policy, particularly in his Conservative Party's prickly dealings with the European Union. He has advocated pragmatic engagement rather than grandstanding rhetoric."

Barack Obama is refusing to listen to reason on economic policy

Telegraph
"Like much of what Mr Obama says and does these days, the US position is cynically political. With mid-term elections looming and the Democrats down in the polls, the administration hasn't yet even begun to think about deficit reduction. Obama is much more worried by the possibility of a double-dip recession and the damage this would do to his chances of a second term, than the state of the public finances. "

China's chief auditor warns mounting local government debt a risk to economy

Telegraph
"China's chief auditor has warned that high levels of local government debt could derail the country's economy, with some observers suggesting that a number of Chinese provinces are even more fiscally-troubled than Greece."

Budget 2010: IFS warns public services face deepest cuts since Second World War

Telegraph
"George Osborne's emergency Budget has left public services facing the "longest, deepest sustained period of cuts" since the Second World War, the Institute for Fiscal Studies said. "
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Whitehall spending to be slashed by up to a THIRD: Experts reveal true scale of Osborne's 'bloodbath' Budget (Daily Mail)

Budget: Osborne's 'tough but fair' budget

Channel 4 News
"Mr Osborne promised to balance the deficit within the next five years, saying that 77 per cent of the measures to do so outlined in the budget are spending cuts, while 23 per cent would come from tax rises."
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Bloody George wields the axe - Public spending and welfare slashed... and VAT rises to 20%(Daily Mail)
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Budget 2010: VAT rise and benefits cuts to tackle Britain's deficit (Telegraph)

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Budget 2010: VAT to rise to 20% as Osborne seeks to balance books by 2015 (Guardian)

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(Reuters) - Britain's coalition government produced the harshest budget in a generation on Tuesday, slashing spending, raising sales tax and slapping a levy on banks to cut a record deficit to almost nothing in five years.

Global markets surge as China's yuan hits five-year high against dollar

Telegraph
"The yuan, meanwhile, climbed to 6.7969 to the dollar on Monday - the highest level against since July 2005. The currency, which has been effectively pegged at about 6.8 to the dollar since 2008, has been allowed to move within a 0.5-percent range on either side of the peg.Crude oil prices also rose strongly, nearing $80 per barrel on expectations of higher demand from Chinese consumers."

Mr Cameron must stop appeasing a shameless President

Daily Mail
"Having just returned from a trip to the U.S., I have seen first hand how successful President Obama has been in persuading his country that Britain - and Britain alone - is to blame for the Gulf of Mexico oil spill. In an act of pure spite and calculated political expediency, he has vilified BP to boost his own waning popularity.We all know how much Hollywood loves a British villain, but there's something deeply offensive about the way Obama has turned BP's chief executive, Tony Hayward, into a hate figure.Hayward's vicious treatment at the hands of the Senate Inquiry on Thursday was nothing short of disgraceful.Let's be clear: I don't defend BP's mistakes, but the oil spill was an accident, not some wilful act of malice on the company's part. And it certainly isn't remotely comparable to the September 11 attacks, as President Obama so stupidly claimed. ....Our Prime Minister should have pointed out - loud and clear - the hypocrisy of the world's worst polluting country turning on its closest ally.He should have reminded Obama, too, that the U.S. took 20 years to settle the claims from the Exxon Valdez oil spill - and even then, many of the original compensation deals were slashed by the courts.Or how about the Bhopal disaster in India, when between 2,200 and 15,000 people died after a gas leak ( depending on whether you take the U.S. estimates or the Indian government's)? That tragedy happened in 1984 and victims' families are still fighting for compensation.But perhaps what I find most upsetting about this sorry affair is how little the special relationship clearly means to Mr Obama - a relationship that has bound his country and ours through a century of war and peace, but which has recently sucked Britain into one illegal war in Iraq and an unwinnable one in Afghanistan.If President Obama really is so contemptuous of the British, perhaps he'd allow us to bring home our 10,000 troops fighting by his soldiers' side in Helmand.

'A friend who bullies us is no longer a friend': It is time Cameron stood up to Obama

Daily Mail
"Of course it is the dishonest attempts to blame us for the oil spill that has prompted more of us to spot there is a problem. He denounces 'British Petroleum'. Yet no such firm exists since the merger of BP and Amoco nine years ago. Just a slip of the tongue after oil slip? Unlikely. He is going for cheap votes by blaming foreigners. Yet 39 per cent of BP shares are American-owned - compared to 40 per cent for the British. While other firms get bailouts, in the case of BP Obama seems determined to cause as much harm to the company as possible.Where are Obama's demands for compensation from the oil rig's owners Transocean or Halliburton who did the drilling? Oh yes, both are American companies.

This scapegoating of BP shames America

Daily Mail Comment:
"It was nothing less than bear-baiting.For more than seven hours, the hapless BP chief executive Tony Hayward was humiliated, scorned and harangued by aggressively rude and, more often than not, posturing U.S. congressmen.In the gallery, members of the public behaved hysterically and histrionically and at times Mr Hayward was denied the chance to speak. It was an unedifying spectacle unworthy of the world's only superpower. Yes, BP has many disturbing questions to answer over the Gulf of Mexico oil spill, and its public relations campaign has been nothing short of disastrous.

But President Obama's behaviour has been an affront to the dignity of his office.Cynically distracting attention from his own lame response to the disaster and plummeting opinion polls, he has for weeks resorted to every cheap trick in the huckster's book to demonise British (as he stresses) Petroleum.Last night, this scapegoating appeared to have worked, with Mr Hayward stripped of direct responsibility for tackling the spill.To say that David Cameron has been muted in response is an understatement. Doubtless he has been working assiduously behind the scenes, but it is in the all-too public arena that the damage is being done to our economic interests.The Prime Minister should tell Mr Obama that when the negligence of American banks over toxic mortgages caused financial devastation, UK politicians did not stoke anti-U.S. feeling.

Nor did this country seek to apportion blame for the many environmental and energy disasters involving U.S. firms.It is perhaps unfair to point out that hundreds of British soldiers have died supporting America in its misguided incursions into Afghanistan and Iraq.It is, however, entirely fair to say that if America's leaders devoted as much energy to solving the BP tragedy as they are now spending on demonising the company, it would be better for everyone.

The real reason President Obama loathes the British...

Daily Mail
"..So has Obama's memory of his grandfather's treatment influenced his aggressive reaction to BP over its handling of the Gulf of Mexico oil spill? The Government has become increasingly concerned by Obama's anti-British rhetoric. For example, he has often referred to the global company as 'British Petroleum', although it changed its name to BP more than a decade ago, and even compared the disaster to 9/11. But this is not the first time he has paid little heed to the so-called Special Relationship. When he entered the Oval office, he immediately returned a bust of Winston Churchill that was on loan from Britain.And during the recent stand- off between Britain and Argentina over oil rights around the Falkland Islands, America was less than supportive."

Deepwater Oil Exploration Realities

Roger Pielke Jr.'s Blog
".. The Gulf of Mexico is still under a drilling moratorium after the BP oil spill but plans to step up deep-water exploration on the other side of the world, in the South China Sea, remain largely unchanged.

CNOOC, the Chinese state-controlled company with exclusive rights to develop China’s offshore resources, ordered safety checks on all its rigs after the BP disaster. But long-term plans still aim to step up deep-water exploration.

“Offshore and especially deep-water oil and gas discoveries have great significance for replenishing China’s and the world’s oil resources,” said Zhou ­Shouwei, CNOOC vice-president, in comments posted on the company’s website on June 10.

“We can’t cancel or stop deep-water oil and gas extraction because of the accident in the Gulf of ­Mexico.” . . ."

Obama Twists Arms at BP, Setting Off a Debate on Tactics

New York Times
"Against that backdrop, forcing BP to take a $20 billion bath — even before the inevitable lawsuits are filed — seemed an easy decision. Mr. Obama had no legal basis for the demand, but concluded he did not need one. “He had a power other presidents have used — you call it jawboning,” Mr. Emanuel said.

The question is whether the cumulative effects of these actions create an impression that, over the long run, may make it harder to persuade both American and foreign corporations to cooperate with Mr. Obama’s program to reinvest and reinvigorate the American economy.

“He’s walking a very fine line here,” said Jeffrey Garten, a professor of trade and international finance at the Yale School of Management and a former top official in the Clinton administration’s Commerce Department. “He is taking each case on the merits as he sees it, but he runs the risk of sowing a level of mistrust about all big companies. And it’s those companies — not small businesses — that he will need to invest and innovate for the kind of recovery he wants.”

Budget 2010: The days of spend now and pay back later are over. Later is now

Telegraph
"To appreciate the scale of Britain's economic problems, imagine what would happen if, over the course of five years, your expenditure went up by about 40 per cent but your income remained roughly the same. For many, the outcome would be unavoidable: an early appointment with the bankruptcy court.

This is the task facing George Osborne, as he prepares next week's emergency Budget. Since 2005, government outlay has ballooned from about £500 billion to £700 billion, while tax revenues (forecast to be £541 billion in 2010-11) have barely increased. We, as a nation, have lived beyond our means for so long – the last balanced Budget was 2001 – that spending more than we earn has become an accepted, albeit perverse, feature of public finances."

ECB must buy 'hundred of billions' of bonds to tame Europe's debt crisis

Telegraph
"Fitch Ratings has warned that it may take massive asset purchases by the European Central Bank to prevent Europe's sovereign debt crisis escalating out of control. "

George Osborne unveils new regulatory powers for Bank of England

Telegraph
"The Bank of England will gain new powers to curb credit binges and prevent another crisis as it takes over control of financial regulation in Britain, George Osborne told Parliament on Wednesday. "

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Bank Of England could cap mortgage lending under shake-up by Osborne (Daily Mail)

I admit it: I was wrong to have supported Barack Obama

Telegraph
"..All these things are minor irritants compared to the way the Obama administration is backing Peronist Argentina’s claim to the Falkland Islands – or, as Obama’s people call them, “the Malvinas”. British troops were the only sizeable contingent to support the US in Iraq and Afghanistan. We have fought alongside America in most of the conflicts of the past hundred years. Yet, when the chips are down, Obama lines up with Hugo Chávez and Daniel Ortega against us.

Not that we should feel singled out. The Obama administration has scorned America’s other established friends. It has betrayed Poland and the Czech Republic, whose Atlanticist governments had agreed to accept the American missile defence system at immense political cost, only to find the project cancelled. It has alienated Israel and India. It has even managed to fall out with Canada over its “Buy American” rules and its decision to drill in disputed Arctic waters. Never has there been a worse time to be a US ally.

No one denies that Obama was dealt a rotten economic hand; but he has played it ineptly. His policies are serving to make his country poorer, less free and less respected. And that is a problem for all of us ."

Government's task in eliminating the deficit just got more challenging still

Telegraph
"At first glance, forecasts for the economy and the public finances from the Government’s new Office of Budget Responsibility do not look quite as alarming as widely billed. But then first impressions can always be deceptive. Scatch the surface, and the challenge facing the Government on deficit reduction still looks quite bad enough. .....I guess all this will be siezed on as vindication by Alistair Darling, after allegations by the new Government that he had cooked the books. Unfortunately, the rest of it doesn’t look too good for “honest” Alistair.

Lower growth means that the size of the structural deficit – that is the amount the Government still has to borrow to fund spending even after the economy has returned to normal – will remain stubbornly high. Indeed, according to the OBR it will still be at 2.8 per cent by 2014/15, with the actual deficit at 3.9 per cent way in excess of the European Union limit of 3 per cent.Given the Government’s aim of eliminating the structural deficit in one parliament, that means there is even more work to be done than previously thought. Or put another way, more spending cuts and more tax increases. If the Government embarks on such an implied squeeze in next week’s Budget, that in turn may cause the OBR further to trim its growth forecasts.

Investors are betting on a Black Monday-style collapse, BoE warns

Telegraph
"In a survey of markets, the Bank warned that widespread fear over the possible collapse of a sovereign debtor, including Greece and Portugal, had sparked a mass of bets on a 20 per cent fall in the FTSE 100.The warning coincides with calculations from the Bank for International Settlements (BIS) showing that Britain has major exposure to the Irish and Spanish banking systems, which many fear could be at risk in the next round of the financial crisis."

Labour's growth forecast downgraded to 2.6% for 2011 as Clegg warns of decades of debt unless spending is cut

Daily Mail
"Labour's rose-tinted economic growth forecasts were today drastically downgraded in a move that revealed the true scale of Britain's debt woes.The new Office for Budget Responsibility predicted the economy will grow by 2.6 per cent next year, significantly below the 3.25 per cent figure put forward by former chancellor Alistair Darling.Although less than the one percentage point reduction some experts had feared, the downgrade will still add billions to the shortfall in public finances and make the battle to sort out the nation's debts even tougher."

Gordon Brown's henchmen are rewriting history as we sink into the red

Telegraph
"..As for the nation's finances, only now, it seems, when the damage has been done, and the taxpayer condemned to long-term impoverishment, do we hear voices of dissent emerging from the ranks of Labour's placemen. One month after Mr Brown threatened to cling on to power as the senior partner in a soi-disant Progressive Alliance, Lord Myners is recanting. "

Doomed Labour's £1.3 TRILLION last spending spree revealed: As the economy nosedived, your millions were wasted on grandiose schemes

Daily Mail

"The extraordinary extent of Labour's final spending spree - which cost the public purse £1.3trillion even as the economy was sinking - was laid bare for the first time last night.Bills included £50million to promote ballet and music, £5.6million for pensions for the Royal Household and £38.4million for gipsy encampments.Details of the spending - which saw public expenditure rise by 15 per cent over two years - are contained in a vast Treasury database which the Coalition has made public."

Unemployment 'will soar to 3m' as 725,000 public sector workers lose their jobs

Daily Mail
"Spending cuts will push up unemployment to almost three million as vast numbers of public sector workers lose their jobs, experts warn today.The respected Chartered Institute of Personnel and Development claims a massive 725,000 state jobs - nearly one in eight - will be axed.Chief economic adviser Dr John Philpott says state workers, who currently account for one in five of the workforce, should brace themselves for compulsory redundancies, vacancies left unfilled and recruitment freezes. Many, he says, face little prospect of finding another job with a bleak prediction that unemployment will soar to 2.95million."

Britain will struggle to handle 'catastrophic' population growth unless changes are made

Daily Mail
"Britain will struggle to handle 'catastrophic' population growth in future unless urgent action is taken, a report has warned.The predicted increase to 70million by 2029 will put unsustainable pressure on housing, schools and hospitals as well as natural resources such as food and water, experts said.Current trends will see a city the size of Bristol added to the population of the UK every year for the next two decades. ...The number of people in Britain shot up by more than three million under 13 years of Labour government.Around 70 per cent of the increase was due to immigration - either directly through new arrivals or their children.The count is now 61,398,000 - up by 3,084,200 since 1997."

David Cameron is right: unless tackled the deficit will become very dangerous

Telegraph
"A little while back, the Governor of the Bank of England, Mervyn King, warned that we are still only halfway through the world's worst ever financial crisis. ....As it happens, there was nothing particularly new, or "worse" about the numbers he quoted in his speech. On the present trajectory, he said, the British government would within five years be spending £70bn a year on interest servicing costs alone. .....Unfortunately, Mr Cameron is right. There may be nothing new in the numbers, but the substance of his warnings are no exaggeration. "

How Frank Field can fix the Welfare system – and keep Britain happy

Telegraph
"Frank’s back and not a moment too soon. The appointment of Frank Field to, in his own words, “think the doable” is a signal that the Coalition might just be serious about being progressive Conservatives. As a veteran, as I am, of the failed Blair experiment in welfare reform in 1997, Frank Field is well placed to give the right guidance to Iain Duncan Smith on how to tackle poverty."

Austerity Europe: where the axe falls

Channel 4 News

Osborne unveils plan to slash deficit as Britain is told to cut faster or risk AAA credit rating

Daily Mail
* Fitch: UK needs more ambitious deficit-cutting plans
* Welfare, tax credits and pensions on chopping block
* Public to be consulted about public spending choices
* Ministers to confront star chamber to justify budgets
* £60bn could be slashed from annual expenditure

Cameron says deficit is even worse than thought as he warns debt charges could top £70bn

Daily Mail
# Prime Minister warns drastic cuts must be implemented
# Double-dip fears in Europe sends FTSE 1.6% lower
# Treasury looks to Canada for help on deficit reduction

"David Cameron warned today that Britain's deficit was 'even worse' than thought - and the action needed to tackle it would change everyone's way of life.In a major speech on the economy, the Prime Minister accused Labour of 'reckless' spending and said the public sector had to be brought 'back into line'.If drastic cuts were not implemented, the Treasury would be spending an annual £70 billion on debt interest within five years - more than on schools in England, transport, and fighting climate change put together.Mr Cameron cautioned that the 'inevitably painful' cuts programme could be felt for decades, such is the scale of the debt crisis facing Britain.But as Mr Cameron prepared to swing the axe, markets tumbled over renewed concerns over Europe and fears for global economic recovery."

Euro unlikely to last five more years: Currency hits new low as economists predict break up

Daily Mail
* Euro starts week at four-year low against the dollar
* Currency will not survive coalition term - economists
* Greek sovereign debt crisis 'has not gone away'

Euro 'will be dead in five years'

Telegraph
"The single currency is in its death throes and may not survive in its current membership for a week, let alone the next five years, according to a selection of responses to the survey – the first major wide-ranging litmus test of economic opinion in the City since the election. The findings underline suspicions that the new Chancellor, George Osborne, will have to firefight a full-blown crisis in Britain's biggest trading partner in his first years in office. "

Quangos: the more we pay, the less we get

Telegraph
"An understandable wave of shock ran through Britain last week when our new Government revealed the explosion in recent years of the pay given to our top public officials, 170 of whom now allegedly earn more than the Prime Minister. But the other side to this grotesque inflation in salaries is that it has been accompanied by a corresponding deterioration in the performance of almost every public body one can think of.

One glaring example, not on last week’s list because it is not a government body, is the BBC, the head of which, Mark Thompson, now receives a staggering £834,000 a year. Twenty-odd years ago, as I learn from one of Mr Thompson’s predecessors, my old friend Alasdair Milne, the salary of the director-general was a mere £80,000, less than a tenth of what his successor now takes home in his wheelbarrow. "

Poverty is about much more than money

Telegraph
"Increased public spending doesn’t always help poorer children to succeed in life, says Frank Field. "

Global markets tumble on US jobs and Hungary crisis fears

Telegraph
"In Hungary the Prime Minister's official spokesman said the economy was in a "grave situation" and said a default on its debt was possible. The comments ignited fears that a debt crisis could be brewing in Eastern Europe.

"In Hungary, the previous [Socialist] government falsified data," said the spokesman. "In Greece, they also falsified data. In Greece the moment of truth has arrived. Hungary is still before that."

The Hungarian currency, the forint, fell about 2pc against the euro following the comments. "More news on specifics is expected this weekend, and the news is not likely to be pretty, as the previous administration was obviously up to no good, and as the PM will likely try to firmly pin as much of the situation on his predecessors as possible," said John J Hardy, currency consultant at Saxo Bank. He said the situation was "reminiscent of Greece", but different, partly because Hungary can devalue its currency.

A story of two public sector owned banks

John Redwood
"This week the Bank of England published figures to show just how its balance sheet has changed between 2008-9 and 2009-10. Its balance sheet has been swollen to a massive £223 billion, supported by just £4.2billion of shares and shareholder reserves. It is 50 times leveraged. ..."

UK families face highest inflation in Western World as food prices rocket and pound plunges

Daily Mail
"Rising food bills have driven Britain's inflation rate to the highest in the Western World.The UK's Consumer Price Index (CPI) figure of 3.7per cent is two or three time higher than similar economies across Europe and beyond.New figures from the Organisation for Economic Co-operation and Development (OECD) suggest British families are suffering far more than counterparts across the globe.The 3.7per cent figure compares to just 1per cent in Germany, 1.1per cent in the Netherlands, 1.5per cent in Italy and Spain, 1.7per cent in France, 1.8per cent in Belgium.The figure has actually fallen by 2.1per cent in the past year in Ireland and by 1.2per cent in Japan."

Britain is full up - Cameron must act to stem the tide of immigration

Telegraph
"It is still just about possible to go through life without spotting how Britain is being changed by immigration – if you are a hermit, or live on one of the more remote of the Hebridean islands, or are insulated from the realities of everyday life by money or power. .....The latest figures from the Office for National Statistics, released last week, show that long-term immigration is down, but still running at 503,000 a year. Even more telling, the number of people applying for British citizenship in 2009 was 24 per cent higher than the previous year, at 193,810. And the number who were granted it was up by 58 per cent, from 129,375 to 203,790.

Jill Matheson, the National Statistician, predicts that within less than 20 years, the population will rise from 61 million to 70 million. Nearly three quarters of that increase will be made up of immigrants. Already one in 10 of those living in Britain was born abroad. These are all whacking great numbers, which tell us that if one strips out the momentary effects of the downturn, immigration continues to outpace our capacity to cope."

Bank of England made £8bn profit from quantitative easing fund

Telegraph
"The Bank of England is sitting on an £8bn net profit from its £200bn quantitative easing (QE) fund. .....Simon Ward, chief economist at Henderson Global Investors, said that although the fund is currently running an unprecedented level of profit, this would not last for ever."The Bank will be under no illusions that the programme will remain in profit once it tries to sell its gilts," he said. "A rise in yields of half a percentage point would be sufficient to wipe out the current surplus."

The profit on the QE account does not have any benefit for the Government, which is looking for means of reducing its £156bn budget deficit, since the money is merely a transfer of cash from one part of the public sector to another. In fact, the Bank has signalled that it expects to make a small loss from the QE investment by the time it sells the gilts off. But it stresses that this loss will be far outweighed by the economic benefits of the policy.

Euro slides, stock markets fall as China, Europe fuel fears for world recovery

Telegraph
"Focus is back on to euro zone problems this morning and it is the bad loans story that is weighing on the euro in early trading," said Audrey Childe-Freeman, currency analyst at Brown Brothers Harriman. "