No free lunch. Defaults today mean less jam tomorrow
Potential defaults in the Euro zone have been in the news again. In Portugal, the ruling coalition parties and the main opposition Socialists have been unable to agree on a European Union-led bailout plan after days of talks. Yields on the country’s 10 year bonds have approached 7 per cent, compared to the 1.5 per cent in […]
Ignore the IMF: There’s no reason for its ludicrous forecasts to change sentiment
The economics department of the International Monetary Fund (IMF) is up to its old tricks again – changing its mind. Just three months ago, the team cut its forecast for UK GDP growth in 2013 to 0.7 per cent from 1 per cent, sparking charges that George Osborne should alter his policies. Last week, the […]
Always Look on the Bright Side
The American economic recovery carries on apace, with a net rise in employment of almost half a million over the past three months. The Office for National Statistics has decided that the UK never had a double dip recession, and the texture of the economic news has turned positive. But economics is not called the […]
Banging up bankers is the wrong punishment – it won’t change behaviour
The behaviour of the banking sector in the run up to the crash is still very much in the public eye. But this is nothing new. Readers of a certain age may recall Bernie Cornfeld, and his company Investors Overseas Services (IOS). It failed dramatically in the 1970s after allegations of fraud. IOS encouraged the […]
The rapid rise of the food bank can’t just be blamed on government austerity
FOOD banks are a rapidly growing phenomenon in the UK. A few years ago, they barely existed, but an estimated half a million people now make use of them every week. On the face of it, it seems that poverty has sadly become endemic since the financial crisis, with many families unable even to feed […]
Trouble at Co-op Bank raises questions about fitness of the mutual model
IT’S not all fun and games at the Co-op Bank. Just over a month ago, the bank was serious about acquiring 632 branches from Lloyds. Now its debt has been downgraded six notches to junk status, and veteran HSBC banker Niall Booker has been brought in as replacement chief executive after Barry Tootell resigned. Inquests […]
Ignore Krugman: We’re not caught in another depression
Spotting and identifying new species is always exciting. And the last couple of years has seen the emergence of a new type of economic commentator, the recovery denier. Paul Krugman, the Nobel prize-winning economist, wrote a piece at the end of last year in which he compared the current situation to that of the 1930s. On […]
There are errors and errors. Does the Reinhardt and Rogoff miscalculation mean that Osborne should change tack?
The distinguished American academic economists, Carmen Reinhardt and Ken Rogoff, have been very much in the news. Their 2009 book, This Time is Different, was a comprehensive examination of financial crises over the past 800 years. The work received many plaudits and awards. They suggested that when the ratio of public debt to GDP in […]
How expert are experts? Time to end the independence of the Bank
The Bank of England has held short-term interest rates very close to zero for several years, with devastating consequences for the incomes of millions of frugal people. The Bank’s latest wheeze suggests that savers pay the banks for the privilege of holding their money. The Bank has pumped hundreds of billions of pounds into the […]
Springtime for America
Is America heading for a boom? Real GDP has risen for 13 successive quarters and now stands 3 per cent above its peak level. A net total of 4.8 million jobs has been created over the past three years, with a fall of half a million in the public sector being massively outweighed by the […]
