The Bank of England is leaving the door open to a new year £200bn money expansion programme after revealing that it remains unconvinced about the economy's ability to emerge from the deepest and longest recession on record. Minutes of the December meeting of Threadneedle Street's monetary policy committee indicated that the nine-strong body is adopting a watch-and-wait approach amid concerns that an unrelenting credit crunch and a fresh wave of financial unrest abroad could put paid to Britain's recovery hopes. The MPC said evidence that the economy was on the up after six successive quarters of falling activity were matched by downbeat signs. All nine members of the committee voted to keep borrowing costs on hold at 0.5% and to keep the quantitative easing programme - due to end in February - under review. Sterling fell following publication of the minutes, with many City analysts convinced that interest rates will remain on hold at their lowest ever level.
Minutes of the December meeting of Threadneedle Street's monetary policy committee indicated that the nine-strong body is adopting a watch-and-wait approach amid concerns that an unrelenting credit crunch and a fresh wave of financial unrest abroad could put paid to Britain's recovery hopes.
The MPC said evidence that the economy was on the up after six successive quarters of falling activity were matched by downbeat signs. All nine members of the committee voted to keep borrowing costs on hold at 0.5% and to keep the quantitative easing programme - due to end in February - under review.
Sterling fell following publication of the minutes, with many City analysts convinced that interest rates will remain on hold at their lowest ever level.
Minutes from the Monetary Policy Committee's December meeting show that all nine members elected to leave interest rates at their historic low of 0.5pc and to maintain the Bank's quantitative easing (QE) scheme. Economists said the decision made it increasingly likely that the Bank would begin monetary tightening next year. "[The minutes are] consistent with our view that they will finish QE at the end of January and won't do any more," George Buckley, chief UK economist at Deutsche Bank, said. The Bank is widely expected to begin winding down QE and raising rates by the final quarter of next year.
"[The minutes are] consistent with our view that they will finish QE at the end of January and won't do any more," George Buckley, chief UK economist at Deutsche Bank, said. The Bank is widely expected to begin winding down QE and raising rates by the final quarter of next year.
The prospect of a fresh bout of quantitative easing receded yesterday, after it emerged that the Bank of England's Monetary Policy Committee (MPC) voted unanimously against extending the programme this month. All nine members of the committee, including the Bank's Governor, Mervyn King, pictured, voted to maintain the £200bn asset-buying scheme announced in November, as well as deciding to keep interest rates at 0.5 per cent. While the MPC acknowledged that several setbacks had recently threatened global financial stability - above all the crisis in Dubai - the committee did not believe enough had changed in the past month to extend quantitative easing. The previous month, the MPC was split over how much money to print, with one member, David Miles, calling for an additional £40bn.
All nine members of the committee, including the Bank's Governor, Mervyn King, pictured, voted to maintain the £200bn asset-buying scheme announced in November, as well as deciding to keep interest rates at 0.5 per cent.
While the MPC acknowledged that several setbacks had recently threatened global financial stability - above all the crisis in Dubai - the committee did not believe enough had changed in the past month to extend quantitative easing.
The previous month, the MPC was split over how much money to print, with one member, David Miles, calling for an additional £40bn.
-David Kuo is director at the Motley Fool. The opinions expressed are his own.- If you thought 2009 was as bad as things will get, then think again: 2010 could be worse. It is likely to be a year of enforced austerity with both the government and households making obligatory cuts to their budgets. High on the government's agenda will be reducing the Budget deficit, if the UK is to avoid the embarrassment of having its sovereign debt rating cut by rating agencies. This will have a knock-on effect on households, which could see their disposable incomes slashed by hikes in both direct and indirect taxes. There are two possible ways for the government to reduce the Budget deficit. The first is to increase tax revenues and the second will be to slash expenditure - both of which will have an adverse impact on the economy. There is a third, which is to raise revenue through the sale of state assets. These may include the Royal Mint, the nations stake in part-nationalised banks, and anything else the Chancellor might find lurking at the back of the wardrobe.
If you thought 2009 was as bad as things will get, then think again: 2010 could be worse. It is likely to be a year of enforced austerity with both the government and households making obligatory cuts to their budgets.
High on the government's agenda will be reducing the Budget deficit, if the UK is to avoid the embarrassment of having its sovereign debt rating cut by rating agencies. This will have a knock-on effect on households, which could see their disposable incomes slashed by hikes in both direct and indirect taxes.
There are two possible ways for the government to reduce the Budget deficit. The first is to increase tax revenues and the second will be to slash expenditure - both of which will have an adverse impact on the economy. There is a third, which is to raise revenue through the sale of state assets. These may include the Royal Mint, the nations stake in part-nationalised banks, and anything else the Chancellor might find lurking at the back of the wardrobe.
The first is to increase tax revenues ....which will have an adverse impact on the economy
how blandly this idiocy is slipped into the narrative. It is somehow so obvious that it is unquestioned keep to the Fen Causeway
Prime Minister Matti Vanhanen will not be seeking a new term as leader of the Centre Party at the Party Conference in Lahti in June 2010. The announcement that he is planning to step down from the chairmanship came in this morning's edition of the party's main mouthpiece Suomenmaa. Vanhanen said his decision had been influenced by a leg operation that has been scheduled for next autumn, and which carries with it such a long post-op recuperation period that it would affect his ability to handle the joint tasks of party chairman and Prime Minister. He also noted that the timing of this surprise announcement was deliberate: he feels that Christmas and the New Year will give everyone concerned in the Centre Party a chance to think about their next move in relative peace, without journalists pestering them on their intentions.
OSLO (AP) -- Norway on Saturday stepped up its efforts to make its boardrooms more gender-neutral by introducing a new law requiring at least 40 percent of its municipal-owned company boards to be female.
The amount will narrow to $160 billion from an estimated $198 billion this year, Lu Ting, a Hong Kong-based economist for Merrill, said in an interview today. <...> "The key factor in the narrowing of the surplus will be the increase in imports, driven by rising domestic demand," Lu said. In 2010, imports may climb 16 percent, outpacing a 9 percent gain in exports, he added, forecasting an economic expansion of 10.1 percent. China's trade surplus, a record $295 billion in 2008, was slashed in 2009 by the collapse in global commerce caused by the worst economic slump since World War II. Imports climbed for the first time in 13 months in November, jumping 27 percent because of the low base a year earlier and extra demand created by stimulus spending and record lending.
The amount will narrow to $160 billion from an estimated $198 billion this year, Lu Ting, a Hong Kong-based economist for Merrill, said in an interview today.
<...>
"The key factor in the narrowing of the surplus will be the increase in imports, driven by rising domestic demand," Lu said. In 2010, imports may climb 16 percent, outpacing a 9 percent gain in exports, he added, forecasting an economic expansion of 10.1 percent.
China's trade surplus, a record $295 billion in 2008, was slashed in 2009 by the collapse in global commerce caused by the worst economic slump since World War II. Imports climbed for the first time in 13 months in November, jumping 27 percent because of the low base a year earlier and extra demand created by stimulus spending and record lending.
By DEAN BAKER
The Senate Banking Committee overwhelmingly voted to approve Federal Reserve Board Chairman Ben Bernanke for another 4-year term. This is a remarkable event since it is hard to imagine how Bernanke could have performed worse in his last 4-year term. By Bernanke's own assessment, his policies brought the economy to the brink of another Great Depression. This sort of performance in any other job would get you fired in a second, but for the most important economic policymaker in the country it gets you high praise and another 4-year term. There is no room for ambiguity in this story. Bernanke was at the Fed since the fall of 2002. (He had a brief stint in 2005 as chair of President Bush's Council of Economic Advisors.) At a point when at least some economists recognized the housing bubble and began to warn of the damage that would result from its collapse, Bernanke insisted that everything was fine and that nothing should be done to rein in the bubble. This is worth repeating. If Bernanke knew what he was doing, he should have been able to see as early as 2002 that there was a housing bubble and that its collapse would throw the economy into a recession. It was also entirely predictable that the collapse could lead to a financial crisis of the type we saw, since housing was always a highly leveraged asset, even before the flood of subprime, Alt-A and other nonsense loans that propelled the bubble to ever greater heights. Of course as the bubble expanded, and the financial sector became ever more highly leveraged, the risks to the economy increased enormously. Through this all, Bernanke just looked the other way. The whole time he insisted that everything was just fine. To be clear, there was plenty that the Fed could have done to deflate the bubble before it grew to such dangerous proportions. First and foremost the Fed could have used its extensive research capabilities to carefully document the evidence for a housing bubble and the risks that its collapse would pose to the economy.
There is no room for ambiguity in this story. Bernanke was at the Fed since the fall of 2002. (He had a brief stint in 2005 as chair of President Bush's Council of Economic Advisors.) At a point when at least some economists recognized the housing bubble and began to warn of the damage that would result from its collapse, Bernanke insisted that everything was fine and that nothing should be done to rein in the bubble.
This is worth repeating. If Bernanke knew what he was doing, he should have been able to see as early as 2002 that there was a housing bubble and that its collapse would throw the economy into a recession. It was also entirely predictable that the collapse could lead to a financial crisis of the type we saw, since housing was always a highly leveraged asset, even before the flood of subprime, Alt-A and other nonsense loans that propelled the bubble to ever greater heights. Of course as the bubble expanded, and the financial sector became ever more highly leveraged, the risks to the economy increased enormously.
Through this all, Bernanke just looked the other way. The whole time he insisted that everything was just fine.
To be clear, there was plenty that the Fed could have done to deflate the bubble before it grew to such dangerous proportions. First and foremost the Fed could have used its extensive research capabilities to carefully document the evidence for a housing bubble and the risks that its collapse would pose to the economy.
YOU might think that board members overseeing businesses that cratered in the credit crisis would be disqualified from serving as directors at other public companies. You would, however, be wrong. Directors who were supposedly minding the store as disaster struck at companies like Countrywide Financial, Washington Mutual or Fannie Mae have not all been banished from other boardrooms. In many cases, directors just seem to skate away from company woes that occurred on their watch. To some investors, this is an example of the refusal of those involved in the debacle to accept responsibility for it. Whether you are talking about top executives loading up on leverage, regulators who slept while companies took on titanic risks or mortgage lenders that made thousands of dubious loans, few in this crowd have acknowledged culpability. Taxpayers and shareholders, meanwhile, who had nothing to do with the problems, are left holding the bag. "None of these directors have stood up and said, `We made a mistake here by not calling management to account,' " said Paul Hodgson, senior research associate at the Corporate Library, a corporate governance research firm. "They have certainly avoided the limelight as far as blame is concerned."
Directors who were supposedly minding the store as disaster struck at companies like Countrywide Financial, Washington Mutual or Fannie Mae have not all been banished from other boardrooms. In many cases, directors just seem to skate away from company woes that occurred on their watch.
To some investors, this is an example of the refusal of those involved in the debacle to accept responsibility for it. Whether you are talking about top executives loading up on leverage, regulators who slept while companies took on titanic risks or mortgage lenders that made thousands of dubious loans, few in this crowd have acknowledged culpability. Taxpayers and shareholders, meanwhile, who had nothing to do with the problems, are left holding the bag.
"None of these directors have stood up and said, `We made a mistake here by not calling management to account,' " said Paul Hodgson, senior research associate at the Corporate Library, a corporate governance research firm. "They have certainly avoided the limelight as far as blame is concerned."
... they will have To Be Disqualified, just as soon as the regulators find spines.
