Eject Greece if you want to save the euro from sinking, warns a leading economist September 20, 2011 RATINGS agency Fitch was reported yesterday as predicting that Greece would default but not leave the euro. The reality now is that the kind of long-term solution that will be necessary to save the euro requires a euro of which Greece is not a member. The longer a Greek default and euro exit are delayed [...]
We need growth, minister: get off your hobbyhorse September 20, 2011 DURING his speech to the Liberal Democrats in Birmingham, business secretary Vince Cable warned that we are facing a crisis “the economic equivalent of war”. While that might be an overstatement, we can’t argue with the facts. Unemployment stands at 2.51m, inflation is at 4.5 per cent, and a Eurozone crisis threatens the confidence of [...]
Politicians don’t know how incentives work September 20, 2011 THE chancellor George Osborne and business secretary Vince Cable believe that Britain’s economic problems are partly to be blamed on poorly designed incentive schemes. They believe that senior businessmen are “rewarded for failure”. If this were true, it would indeed be a problem. But the idea is preposterous. Why would the owners of a company [...]
RAPID RESPONSES September 20, 2011 Euro exhaustion We need long term economic restructuring to make the euro function by assisting struggling countries – flogging them through zero-growth austerity is pointless. I’m not sure the degree of political understanding or will to make the euro work is present any more. Chronic electoral and investor fatigue is making us too weary. If [...]
A former Liberal Democrat spin-doctor says Cable’s off message on executive pay September 19, 2011 THE Liberal Democrats have spent much of their conference getting themselves into a sweat about the rich. Both Nick Clegg and Danny Alexander have signalled their reluctance to scrap the top rate of income tax, with the latter announcing the creation of 2,000 new tax collectors to ensure compliance among high earners. Don’t expect that [...]
Why Ocado isn’t delivering as the markets hoped September 19, 2011 WHEN Ocado came to the market in July 2010, to some (its investors) it was a great opportunity to buy into a growth online market with a unique business model and amazing technology. The company had been going for ten years and was just about to break through the tipping point, which would lead profits [...]
We need banks to fail more often – not less September 19, 2011 THE Independent Commission on Banking (ICB) has spoken, but not too loudly and with no real urgency. Even if its main recommendations are eventually adopted (such as ring-fencing the retail and investment arms of banks and raising capital requirements), few people feel that this will fix the banking sector’s problems. Even if these measures work, [...]
RAPID RESPONSES September 19, 2011 ICB bright side The ICB report was puerile: a politically-inspired piece of financial vandalism. But with regulatory damage both capped and deferred, notwithstanding the dire macro outlook and dysfunctional political landscape, we still believe that we are into a (bumpy) period of UK bank share price recovery, but one in which, in relative terms, the [...]
We need a new capitalist revolution: A young writer presents his provocative manifesto for free markets September 19, 2011 MORE people have climbed out of poverty in the past 50 years than did so in the 500 years before that. Life expectancies across the world have doubled in the last one hundred years. The global poverty rate has fallen from 25 per cent in 2005 to 12 per cent today. By 2015, it will [...]
Britain is not a safe haven in Osborne’s hands September 19, 2011 The shadow chancellor calls for a change in the UK’s course THE global economy has entered a dangerous new phase. It’s now more vital than ever that countries have credible economic plans to ensure economic growth and get deficits down. I believe there are three tests for a credible economic plan. First, there has to [...]