Latest posts
Cyprus – who next?
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The starkest lesson that should be taken from the Cyprus crisis from all in the eurozone is that no bank deposit is guaranteed. It is always ultimately a loan from the depositor to the bank with the possibility that your government may mitigate...
Eur-out
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For the last quarter of a century, Germany has been open to monetary union with the rest of Europe, provided that three conditions were satisfied. These are (i) no bailouts of other countries who were also in such a monetary union, (ii) the Cen...
Q to reduce bonds
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In the 1970s, the British comedian, Spike Milligan devised the Q series. This was a surreal comedy show, which when any particular sketch had come to an end without a suitable punchline, the actors would then wander around saying “What ar...
China – now the world’s most important trading nation
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Recent data have shown that in 2012, China overtook the USA to become the world’s most important trading nation. On the basis of aggregating total imports and total exports, China’s total international trade amounted to $3.87 trillion, an...
Low growth; more jobs?
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Over the ten complete quarters that the current UK government has been in power, economic growth has been minus 3%, but total employment has risen by 1%. For the last calendar year, the data show the size of the economy as unchanged but total e...
Not so Sterling
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All three of the major credit rating agencies, Standard & Poor’s, Moody’s and Fitch, have the UK rated at AAA but with a negative outlook. A fourth, Dagong, a Chinese-owned rating agency, already has the UK at only A+, four notc...
Weak Yen weakens Germany
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Germany, the powerhouse economy of the Eurozone, recently announced 2012 GDP growth of only 0.5%, and that it expected 2013 to deliver only 0.4% growth. At a time when most of rest of the Eurozone is undergoing policies of austerity and reducti...
America’s cliffhanger
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The US fiscal cliff agreement, which passed through Congress on the first day of the year, showed most US politicians in a bad light. Only at the very last minute before significant tax increases and spending cuts would have taken effect, did all p...
2013 – Limited growth and new monetary policy regimes
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As 2012 draws to a close, three things about central banks and monetary policy are becoming more apparent. Firstly, central bankers are concerned that they are being expected to fix all the ills in their economies and they believe monetary policy can...
Review of financial markets performance – 2012
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As 2012 comes to an end, a review of the performance of financial markets indicates that it has been (at the time of writing) a relatively good year for returns. The major equity indices have managed very acceptable gains – the UK 6.5%, the U...
Eurocalm before the Eurostorm
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That the Eurozone ends 2012 in an apparently stable condition is mainly down to the work of two people. The first is Mario Draghi with his promise of potentially unlimited intervention in sovereign bond markets. The second is Angela Merkel’s with...
Business Investment: The Key to UK Economic Recovery
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Sifting through the small print of the Chancellor’s Autumn Statement, which could be summarised as very much a “steady as she goes” story, one finds the breakdown of the UK economic forecasts generated by the Office of Budget Responsibility. It...
Hello Governor
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In choosing Mark Carney as the next Governor of the Bank of England, George Osborne appears to have adopted the strategy employed by Roman Abramovitch, the owner of Chelsea Football Club, when selecting managers. Mr Osborne scoured the world for some...
Buy Asia
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It has been well understood for some years now that the driving force of global growth over the next decade is most likely to be the rise of the middle class consumer in the larger emerging economies, mostly in Asia. This argues for heavy exposure,...
“Zombie” companies: – Why corporate bankruptcies have to increase to spur recovery
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Corporate bankruptcy plays a very important role within a competitive, free-market economy. Enterprises that fail were either providing a good or service that was not in sufficient demand from the rest of the economy or were providing a good or servi...
Mario’s Magic
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Mario Draghi, the ECB President, can look back over his first twelve months in office with a great deal of satisfaction with what he has managed to achieve. What he has done has been necessary, but it is not sufficient to maintain the integrity, an...
The UK‘s choice – Perseverance or Printing
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The UK economy grew by 1.0% in the third quarter, the fastest quarterly growth rate for five years. After several quarters of negative data and a slump into double-dip recession, this would appear, at first sight, to be very good news. Though the...
The time is ripe for politicians to act
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Next month’s US Presidential election has been a very firm check on any significant economic policy action by politicians not just in America but also in Europe and China. It has been left to those in charge of the Central Banks to make all the p...
Why most economic forecasts have been so wrong in recent years
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In its recent six-monthly World Economic Outlook report, the IMF included a section examining why it, and just about all other economic forecasters, had been consistently too optimistic in its forecasts of economic growth over the last three years. T...
A layman’s guide to Quantitative Easing
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Until very recently, Central Banks generally conducted their monetary policy through changing their key reference interest rate, which was generally the rate at which they would lend to the commercial banks on a short term basis supported by acceptab...
