Posts Tagged ‘Banks’

Recent posts.

July 7, 2017

Globalised labour keeps wages down, stimulus from central banks goes into asset bubbles, and trouble builds up before inflation emits warning signals. After a decade of ultra-loose money, normalisation is an unprecedented challenge. “Loose Money”, in The 2008 crash: Recovery, June 2017.

The Treasury is no longer part-owner of Lloyds Banking Group. The profit on its rescue investment in 2008 was £0.9 billion. But the profit on the same money invested for the same period in a FTSE tracker fund would have been £25.7 billion. “UK banks”, in The 2008 crash: Recovery, May 2017.

Is Germany a currency manipulator? Germany insisted on fiscal austerity during the eurozone crisis, and recorded the world’s biggest trade surplus last year. Criticism of Germany by the US will get louder, and unlike the European Commission, the US has leverage. The euro and the pound, February 2017.

The concept of altering the human germline in embryos for clinical purposes has been debated over many years from many different perspectives, and has been viewed almost universally as a line that should not be crossed. Genetic modification, April 2015.

Referendum diary.

September 20, 2014

May 2011. The Scottish National Party won the Holyrood Scottish Parliament election.

May-June 2012. Yes Scotland and Better Together were launched.

October 2012. The Edinburgh agreement was signed. In the agreed referendum there was to be no third “devo-max” option on the ballot paper.

September 2013. I wrote in an email: If Scotland doesn’t choose independence, it doesn’t seem right that Scotland’s central bank should continue to be called the Bank of England.

January 2014. The Bank of England governor commented that a durable, successful currency union requires some ceding of national sovereignty.

March 2014. The Chancellor and the Chief Secretary to the Treasury stated that there would not be a formal currency union between an independent Scotland and the rest of the UK.

April 2014. I wrote in an email: I haven’t got any strong opinions about Scottish independence and I don’t think its my business. (I’ve only lived here for a few years).

25 August. Alistair Darling’s attempt to explain the currency problem in the second leaders TV debate was swamped by interruptions from Alex Salmond and the audience. The Yes campaign appeared to think that they had won the currency argument.

6 September. In a new YouGov opinion poll, support for Yes had increased, and was now greater than support for No.

8 September. American economist Paul Krugman commented that sharing a currency without sharing a government is dangerous, and if Scottish voters really believe that it’s safe to become a country without a currency, they have been badly misled.

10 September. I emailed the Krugman link to some political friends in England.
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11 September. In a graphic of a new Survation referendum poll, in Metro, the figures were shown the wrong way round. Perhaps someone at Metro had assumed that the popularity of Yes had continued to increase. Actually the trend had reversed.

12 September. Standing up in a bus to get a Metro, I fell over. The driver and other passengers were a bit upset, and I got a big bruise. Metro had reprinted the graphic with the correct figures and an apology for yesterdays mistake. No had got 53 percent and Yes got 47 percent.

16 September. Three new opinion polls were announced, with 52 percent No and 48 percent Yes. The leaders of the three main pro-union parties promised, in “The Vow”, that if independence was rejected further powers would be devolved to the Scottish Parliament, with a fair share of resources.

18 September. Referendum day. In the middle of the afternoon I went for a walk along a cycle path and past the polling place. I knew which way I wanted to vote but still wasn’t sure that it was my business to do so.

Later. The final opinion poll, taken on voting day, was 53 percent No, 47 percent Yes.

Bedtime. There was a rumour on the radio that North Lanarkshire, which was expected to have a No majority, had voted Yes. I went to bed and left the radio turned on.

19 September, early morning. Soon after midnight the first regional result was announced. Clackmannanshire had voted No, with a larger majority than had been expected.

About 3 hours after that, 7 regional results had been declared. The City of Dundee and West Dunbartonshire both had Yes majorities. No had 50.2 percent of the total votes announced.

About an hour later, 21 of the 32 regional results had been declared, and No had 55 percent of the total vote. Orkney had the highest No vote, 67.2 percent, and North Lanarkshire had voted 51 percent Yes.

Next came the Glasgow result, 53 percent Yes. This was only enough to reduce the No share of the total vote to 54 percent. This was the moment when it became almost certain that No had won.

Next time I woke up it was daylight and No had won with a 55 percent majority.

Later I went shopping. The sky was grey, there was light rain, winter is coming on, and I’m still in the UK. I felt quite cheerful.

Monetary policy.

March 16, 2014

Inflation targeting made central banks reluctant to accommodate the deflationary effects of China’s entry into the world trading system. The excessive liquidity they created fed the credit bubble. The 2008 Crash: Causes, December 2012.

Cabinet member Vince Cable said “It would be useful . . . to take account of different forms of inflation – imported and domestic – as well as asset inflation”. “Alternative targets”, in Inflation, interest, money supply: Targets, 18 February 2013.

The governor of the Bank of England favours regulation, resolution and restructuring for banks. They should rely less on debt, a resolution mechanism is needed for failing banks, and High Street banking should be kept separate from other banking operations. “Three Rs”, in The 2008 Crash: Reregulation, 3 May 2012.

The Positive Money campaign isn’t targeting the kind of banking which was a factor in the 2008 financial crisis, and won’t stop the creation of money by private banks. Positive Money, March 2014.

Modern Monetary Theory says government deficits are always good, even when the economy is in good shape, unless there’s a risk of runaway inflation. Monetary sects, February 2012.

In the eurozone, average current account deficits between 1999 to 2007 are a better indicator of current problems than fiscal deficits or public debt. The euro and the pound. 7 December 2011.