capitulation day
+255...
...it's election time today...
...here in palookaville...
OUT BUT NOT BROWN
...nobody voted him in...
...but he's still here...
...all his ministers have gone...
...but he's still here...
...all his labour councils have gone...
...but he's still here...
...he robbed our pensions...
...let the banks bust the country...
...raised taxes...
...even on the poor...
...his agenda is...
...a client state...
...well...
NOBODY LIKES BIG BROTHER
...tax credits...
...state control...
...our money is their money...
BUY TO RUIN
...without this unfair system...
...there would have been no property bubble...
...people who lived in a town or village...
...could have afforded to buy homes where their parents lived...
...but nobody in government wanted to legislate...
...to stop this disasterous game...
...they did not want to tax it...
...they were all doing it themselves...
...big time...
PALOOKAVILLE FINANCIAL
capitulation day
+256...
...liam...
..."We're paying a heavy price for Brown's successes
Everyone knows, of course, about Gordon Brown's policy failures. During his 10 years at the Treasury, the Prime Minister clearly spent recklessly and stored up massive future liabilities (many buried off balance sheet).
It would be tough to design a worse way to tackle poverty than Brown's complex, fraud-ridden tax-credits.
His annual raid on pension schemes, a policy buried in his first Budget, has also gained pariah status – depriving our retirement funds of some £130bn and counting, a stealth tax they can ill afford.
What's happening now, though, is that even Brown's policy "successes" – the basis of any claim he has to a "legacy" – are starting to unravel.
The 1997 Bank of England Act has often been cited as his masterstroke. Handing the Bank "operational independence" to set interest rates was clearly the right thing to do.
The Monetary Policy Committee hasn't been truly independent, featuring too many of Brown's stooges for my liking, but has worked quite well. Over the past 12 years, inflation has generally been lower than it otherwise would have been because populism has been tempered by economic common sense and rates set with at least an eye on price pressures.
In recent months, though, quantitative easing has destroyed even the pretence of independence. Brown and his henchmen have yanked control back from the Bank – creating money to buy government debt, a policy doomed to backfire.
Last week the other aspect of Brown's once-lauded 1997 legislation came under attack as the House of Lords' Economic Affairs Committee laid into his decision to strip the Bank of responsibility for banking supervision and transfer it to the newly-created Financial Services Authority.
This resulted in "an inadequate definition of roles and responsibilities of the Bank of England, the Treasury and the FSA", said the committee, causing "failures of regulation and supervision that contributed to the UK financial crisis".
Their Lordships infer the Bank was deprived of crucial information about specific institutions, hindering its ability to make well-informed decisions on overall financial stability.
A separate paper on the same subject by Sir Martin Jacomb, also published last week, went further. Brown's tripartite regime has been "disastrous" said the one-time Prudential Chairman, accusing the former Chancellor of splitting supervisory responsibilities between the FSA and the Bank in order to "divide and rule".
As Sir Martin says: "Brown's desire for ultimate control was decisive, and ultimately ended in failure"....liam...
THEY STILL THINK IT'S ALL OVER...ambrose..."
Those of us who still question whether the world has purged its toxins are reduced to the same tiny band of moaning Druids from early 2007, when we shook our heads in disbelief as the carry trade swept Iceland to fresh madness and bankers laughed off sub-prime rot at Bear Stearns.
We learned then to thicken our skins with walnut juice, lie down in dark rooms, and dissent from Goldman Sachs. Such seclusion is called for once again as Goldman replays its BRIC anthem and raises its oil forecast to $85 a barrel this year, betting that the world will roar back on a tidal wave of liquidity....
...The elastic was bound to snap back, just as it did in the bear rally of early 1931. Whether the underlying economy has begun to heal is another matter. World Bank chief economist Justin Yifu Lin said capacity utilization is running at an historic low of 50pc-60pc. Companies will have to fire a lot of workers. This is where the danger lies, and why he fears that deflation is creeping up on us.Trade data from Asia are flashing warning signals again. Korea's exports were down 28.3pc in May, reversing the April rebound. Malaysia has slipped to -26pc, and India has touched a new low of -33pc.
US freight data is getting worse, not better. The Association of American Railroads said traffic was down 22pc in the third week of May from a year earlier. Canadian freight was down 34pc.
The American Trucking Association (ATA) said it saw fresh drops of 4.5pc in March and a further 2.2pc in April. Tonnage is down 13pc over 12 months. Bob Costello, the ATA's chief economist, said companies have not cut inventories fast enough to keep pace with declining sales. The contraction in truck volume has "accelerated".
Yes, the Baltic Dry Index for bulk shipping of resources has quadrupled since January, but this reflects China's bid to stockpile metals while prices are low....ambrose...
MIND THE DEBT
...irwin..."...Treasury IOUs are flooding the market to finance deficits that by White House estimates will take the national debt from 40% of GDP to 70% (the Congressional Budget Office puts the figure at 80%) by 2011, the highest level since the second world war. Throw in the printing of money to support the Fed’s efforts to prop up credit markets and investors have good reason to fear inflation and a decline in the value of the dollars with which the government will repay their loans. So they are driving up long-term interest rates. And dumping dollars.
If those trends continue, the green shoots will wither as higher rates abort the housing recovery, and make it more expensive for businesses to make job-creating investments. Bernanke told Congress that “we, as a nation, [must] begin planning now for the restoration of fiscal balance . . . [that] will require a willingness to make difficult choices”. This can only be interpreted as a warning to the administration that if it doesn’t get the deficit under control, the Fed will start contracting the money supply and allow interest rates to rise. Just how the president and Congress can be persuaded to make those “difficult choices” remains unclear.
Perhaps that friendly persuasion will come from the folks who, like the Fed, pose a threat to the Obama agenda: the Chinese who are sitting on about $1.4 trillion of America’s IOUs. On last week’s trip to China, Tim Geithner, the Treasury secretary, was greeted with derisive laughter when he assured students at Peking University that “Chinese assets are very safe”. Their elders were more polite. Guo Shuqing, chairman of the China Construction Bank, helpfully noted that the dollar will remain the world’s reserve currency “in the short term” because the American “economy is No 1 in terms of competitiveness, in terms of innovation”. Longer-term prospects are being made clear by Chinese officials who are warning that unless America puts its fiscal house in order they will seek to reduce the role of the dollar in world trade and will not buy IOUs at anything like current interest rates....irwin...
THOSE GREEN, GREEN SHOOTS OF HOME
...david..."For me, one of the central questions is whether a pick-up in growth can be sustained even when bank lending remains weak. Amid the flurry of stronger news last week was some downbeat evidence from the Bank of England on lending.
Lending to households rose a modest 0.2% in April, the Bank said, and was up by 3.4% on a year earlier. But lending to nonfinancial companies fell by 0.9% and was a tiny 0.8% up on a year earlier.
This chimed with a survey from the Engineering Employers’ Federation, which showed that 45% of firms had seen an increase in the cost of their finance and only 4% had seen an improvement in credit availability in the latest three months. It is a familiar story throughout business.
Charlie Bean, the Bank’s deputy governor, buys into the story of a resumption in growth before the end of the year, but he also warned in a recent speech that bank lending was likely to remain subdued, at best, for some time.
“We are still some way from having banks feel sufficiently secure that they can lend normally, and from investors that have enough confidence in the banks to provide them with sufficient funds,” he said.
The government’s October banking measures were a straightforward rescue operation but its subsequent actions, particularly in January, have been intended to get lending flowing again. Quantitative easing, confirmed last week at £125 billion for now, was intended to boost lending and, while it is early days, is not doing so"....david...
...petey...
...inquirin minds should visit the links an read the lot...innit!
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