The Fed plans to inject $1.15 trillion (£808bn) into the US economy in an effort to reflate it's stalling economy.
That is a HUGE amount of money to be pumping into the system, it’s approximately ~10% of GDP!!
What a trillion dollars actually looks like.
Hopefully Bernanke and the other members of the Federal Open Markets Committee (FOMC) know what their doing. These efforts are to ward off the dangers of deflation; however such a surge in the money supply could lead to inflation accelerating inflation in the future, if this excess money is not ‘sucked out’ of the system when markets and the economy begins to recover. Quantitative easing now could be storing up inflation problems in the future. This coupled with higher taxes to pay off deficits that have been allowed to spiral, is not a pretty picture.
Showing posts with label recession. Show all posts
Showing posts with label recession. Show all posts
Wednesday, 18 March 2009
2m+ Unemployed & the IMF slam UK growth prospects
UK unemployment last month jumped at the fastest pace since records began
Not really all that surprising, what goes up inevitably must come down. And employment certainly is continuing that age-old trend. Unemployment will continue to rise for quite a while as time progresses and the recession deepens. That is the nature of the beast. 6.5pc is not all that high in comparison to France (7.9pc), the USA (7.6pc) or Germany (7.2pc) although we will catch up over the coming months.
Britain will take longer to recover from the recession than any other major economy, according to a leaked International Monetary Fund report.
Again this forecast does not surprise me, two of the main drivers of UK growth over the past decade have been in financial services and housing. Both of these sectors have so far bared the brunt of the downturn and will remain injured for some time. Where will growth come from for the recovery? I don’t know, but it is unlikely to come from the banks, seeing as the Government now has it’s grubby fingers clasped around them and will likely to be unwilling to release it’s grip soon, or from the housebuilders who are going to wait a while before the start new projects, as prices continue to head southwards.
The future doesn’t look too good at the moment, but we can be reassured by the fact that recessions do end, growth does pick up, unemployment falls and hopefully Brown & Darling are gone, before they can cause any more damage.
Not really all that surprising, what goes up inevitably must come down. And employment certainly is continuing that age-old trend. Unemployment will continue to rise for quite a while as time progresses and the recession deepens. That is the nature of the beast. 6.5pc is not all that high in comparison to France (7.9pc), the USA (7.6pc) or Germany (7.2pc) although we will catch up over the coming months.
Britain will take longer to recover from the recession than any other major economy, according to a leaked International Monetary Fund report.
Again this forecast does not surprise me, two of the main drivers of UK growth over the past decade have been in financial services and housing. Both of these sectors have so far bared the brunt of the downturn and will remain injured for some time. Where will growth come from for the recovery? I don’t know, but it is unlikely to come from the banks, seeing as the Government now has it’s grubby fingers clasped around them and will likely to be unwilling to release it’s grip soon, or from the housebuilders who are going to wait a while before the start new projects, as prices continue to head southwards.
The future doesn’t look too good at the moment, but we can be reassured by the fact that recessions do end, growth does pick up, unemployment falls and hopefully Brown & Darling are gone, before they can cause any more damage.
Tuesday, 17 February 2009
Brown on bonuses
Over at the Times our Dear Leader is empathising with the "millions of hard-working people" about how those nasty bankers that he claims have ruined the economy (No, it couldn't perhaps be anything to do with him, him being the Chancellor under Bliar) are now getting bonuses for their misdeeds. Obviously, our Dear Leader wants to distance himself from the fact that now UK PLC has a significant shareholding in many of the UK's highstreet banks, and so is in effect paying these nasty bankers such sums.
However, his analysis forgets to mention one crucial nugget of information. If it had not been for his Government's insistence that all the banks needed saving by partial nationalisation, then there would not be such a 'moral hazard' of taxpayers paying bonuses. He has created this situation.
Also, if those nasty bankers realised that the taxpayer would not jump straight in when things had gone a bit pear-shaped, then perhaps the remuneration structure would have been slightly different. Bonuses might have been awarded for long term performance, as they would have known that in order to keep the gravy train rolling, the bank paying their bonus still had to be solvent!
Oh well, we can rest assured that "we are taking further steps towards building a successful, competitive and responsible financial sector of the future." Whatever that will mean.
However, his analysis forgets to mention one crucial nugget of information. If it had not been for his Government's insistence that all the banks needed saving by partial nationalisation, then there would not be such a 'moral hazard' of taxpayers paying bonuses. He has created this situation.
Also, if those nasty bankers realised that the taxpayer would not jump straight in when things had gone a bit pear-shaped, then perhaps the remuneration structure would have been slightly different. Bonuses might have been awarded for long term performance, as they would have known that in order to keep the gravy train rolling, the bank paying their bonus still had to be solvent!
Oh well, we can rest assured that "we are taking further steps towards building a successful, competitive and responsible financial sector of the future." Whatever that will mean.
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