The cost of China’s excess capacity

FT
"In China’s current development model, household income is taxed, to support corporate profits. Corporations now generate more than half of China’s huge savings. Since consumption tends to grow more slowly than GDP, excess capacity can only be used up via yet more investment or exports. This year, economic crisis has made the latter impossible. But China desperately needs to expand its exports once again. The result may well be a crisis in the trading system."

Morgan Stanley warns UK risks full-blown debt crisis

The Times
"Economists from Morgan Stanley said that if next year’s elections resulted in a hung Parliament, the country could face losing its AAA debt rating as investors panicked over whether the majority party had the authority to push through the fiscal tightening needed to get the UK’s finances back on track."

The leaks that prove how worried the Treasury is

Telegraph
"The significance of this should not be underplayed. The Treasury, it appears, is going to the extent of leaking market-sensitive details of the forecasts in the PBR because, one presumes, it is extremely worried about the market’s reaction to the red book itself. This probably shouldn’t be surprising: we all know full well that the UK is heading into unknown territory when it comes to its fiscal position: total UK net debt is set to rocket from around 50pc of gross domestic product to close to 100pc in the next few years."

Morgan Stanley fears UK sovereign debt crisis in 2010

Telegraph
“In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe pound weakness and a sell-off in UK government bonds. The Bank of England may feel forced to hike rates to shore up confidence in monetary policy and stabilize the currency, threatening the fragile economic recovery,” they said."

Fears stalk global markets on Dubai debt crisis

The Times
"Masayoshi Okamoto, head of dealing at Jujiya Securities in Tokyo, said: “I think we won’t know the full impact of Dubai until Monday after we see what happens in New York, where bank shares are likely to be hit pretty hard.”

Treasury 'forced' to reveal secret £62bn loan for banks

Telegraph
"Edward Leigh, Conservative chairman of the Public Accounts Committee, and John McFall, Labour chairman of the Treasury Select Committee, indicated that the prospect of this information being "outed" had been the primary reason why the news was finally released this week."

Dubai's ruling family moves to calm debt fears as global markets slide

Telegraph
"Dubai's ruling family has attempted to calm international fears over its economic stability, saying its rescue package for its most indebted state company was "carefully planned"."

Why was I kept in the dark over £61bn loans - asks Leigh

FT
"Edward Leigh, chair of the public accounts committee, has written an angry letter to the Chancellor demanding to know why the £61bn loans to HBOS and RBS have only just been made public."

Treasury rift with Bank deepens over secret loan

The Times
"Relations between the Governor of the Bank of England and the Chancellor hit a new low today after Alistair Darling faced a barrage of criticism from both sides of the Commons over the emergence of a £61.6 billion secret loan to RBS and HBOS."

As one crisis recedes, the fiscal one may be only beginning

Telegraph
"It is hard to recall a time when opinion on asset markets was more sharply polarised between bulls and bears. But then it is also hard to recall a time when the future course of the world economy looked so uncertain."

How the Bank of England made £62bn 'disappear'

Telegraph
"In order to hide the emergency loan, all it had to do was, when printing the details of its balance sheet, to plop the loans in the same category as these currency swaps. Voila, no-one could be sure that all that fizzing in the Bank’s accounts wasn’t just due to those volatile currency swaps."

Bank of England propped up RBS, HBOS with £61.6bn in emergency loans at height of crisis

Telegraph
"Royal Bank of Scotland and HBOS received £61.6bn in emergency loans last October, the Bank of England said as it revealed for the first time the scale of crisis that brought Britain's financial system close to collapse."
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Bank gave RBS and HBOS 'secret' £62bn loan (The Times)
"Royal Bank of Scotland (RBS) and HBOS were secretly kept afloat with £62 billion of emergency Government support at the height of the credit crisis last year, it was revealed today.The Bank of England kept the massive liquidity injections secret until today, when it judged calm had been restored and there was no longer any need for secrecy."
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Bank of England gave RBS and HBOS £61.6bn in 'secret' loans at height of credit crisis (Daily Mail)
"The Bank revealed for the first time the details of its Emergency Liquidity Assistance (ELA) to both banks in a submission to the Treasury Select Committee."