Funding for Lending isn’t working: Why the Bank is missing the point April 29, 2013 IN THE debate about why Britain’s monetary policy is not working, there has been too much focus on whether the Bank of England should buy more government bonds or move to negative interest rates. Both miss the point. The primary reason monetary policy is not working is that the transmission mechanism is broken. There is [...]
Why Osborne’s housing subsidies feel right out of the 1970s March 24, 2013 IT is all too easy to make comparisons between the behaviour of current politicians and those of their historic predecessors. But basic economic errors seem ingrained in the nature of those in positions of power, and keep happening in almost cyclical fashion, albeit always in superficially very different circumstances. I have previously compared George Osborne [...]
Osborne’s gambled on the wrong policy March 23, 2013 THERE is a striking paradox at the heart of George Osborne’s approach to the economy, as demonstrated yet again in yesterday’s Budget. He was remarkably risk-averse with his tax and spend policies, refusing to embrace the kinds of shock and awe tax reforms many of us wanted, or to cut spending faster, though he did [...]
Tax onslaught from Labour and Brussels will destroy jobs February 14, 2013 IF it moves, tax it; if it doesn’t, subsidise it; and above all make sure the tax system is as complicated as possible. That, and a nasty dose of class war and anti-finance prejudice, has become the new modus operandi for many in Britain and Europe. As a result, yesterday was one of the worst [...]
Jenkins slashes jobs and pay to shore up profit February 12, 2013 BARCLAYS shares soared as the bank announced a major cost-cutting plan yesterday, shutting four business units and shaking up another 32 of its 75 units to streamline the institution and shore up profits in the face of a weak economic outlook. Chief executive Antony Jenkins announced 3,700 job cuts – well above the 2,000 expected [...]
Markets cheer bumper profits at Hargreaves February 6, 2013 FINANCIAL adviser Hargreaves Lansdown was the FTSE’s biggest blue chip riser yesterday after reporting record revenue and profit for the second half of last year. However it warned a new government initiative to boost lending would compress revenue margins for the outfit over the rest of this year. The company, co-founded by Peter Hargreaves and [...]
US growth falls off a cliff again January 30, 2013 THE US economy shrank unexpectedly in the final three months of 2012, official figures showed yesterday, taking markets and analysts by surprise. Ben Bernanke at the Federal Reserve responded by holding interest rates at record lows and continuing to print $85bn (£53.8bn) a month to buy government bonds and mortgage backed securities. Stocks dipped on [...]
Flawed government policy is wiping out struggling savers January 30, 2013 ONE of the government’s daftest policies is its underpinning of bank lending, a nationalisation of credit in all but name. The biggest losers from the funding for lending scheme have been savers. The effective average savings rate for new deposits has collapsed from 2.75 per cent in September to a miserable 2.11 per cent in [...]
Fed is ahead in the battle of the central banks January 29, 2013 ALTHOUGH the US has shown signs of rebounding, a scratch beneath the surface reveals that there are still issues dragging on the world’s largest economy. By historical standards, the pace of its current recovery is feeble. Research from Bank of America Merrill Lynch points out that the average annual growth rate of this recovery is [...]
Austerity can’t have hurt UK growth because austerity hasn’t yet begun January 28, 2013 IN ORDINARY parlance, “austerity” means a period of cutbacks, spending reductions, and debt being paid down. So when voters hear talk of government austerity, most of them assume that’s what the government is doing. When they hear (a few) economists saying that weak growth has resulted from “austerity”, voters think cuts to public sector pay [...]