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The deflation that isn't deflation

February 12, 2015 Comments (0)

The Bank of England expects inflation to be zero or very close to zero for most of this year, starting in March. And it says there is a greater than evens chance that it will turn negative, that prices will fall, for much of this period. But the governor, Mark Carney, insists in his letter to the chancellor that this is not deflation. This is what he says: "The UK is not...

Greece and the Eurogroup need a marriage counsellor

February 12, 2015 Comments (0)

The thing about marriages that break down is they can take an unconscionable age either to be mended or to be formally ended - because of a combination of the evaporation of trust, the tendency to blame the other for failure and the difficulty in working out who gets what of the assets and liabilities. So none of us should really have been surprised last night when Jeroen Dijssselbloem, finance minister of the Netherlands and chair of the Eurogroup of...

What is Baltic saying about global slowdown?

February 11, 2015 Comments (0)

Let's start by owning up: I am last with the news. Zerohedge and Bloomberg both noted yesterday, and I didn't, that the Baltic Dry Index has collapsed to a level we haven't seen since 1986 (a year where my memories are not exactly razor sharp, for reasons you can guess). Just in the first six weeks of this year it has fallen almost 30% and it is a third of its peak value of the past 52 weeks....

Where is the deal between Athens and Berlin?

February 11, 2015 Comments (0)

I am on my way to Strasbourg, to meet Marine le Pen, leader of the Front National, for the second time in just a few months - for a film I've been making about the significance of the surge in popularity of younger populist parties of left and right throughout Europe. Their rise and rise is both a response to the lamentable economics of Europe and - especially - the eurozone. And they will be the big influence on the region's economic future, for better...

UK plans for possible Grexit

February 9, 2015 Comments (0)

The prime minister this morning chaired a meeting of senior officials to discuss the impact on the UK of possible Greek exit from the eurozone - and to take steps to ensure British banks and companies would not be excessively damaged. Attended by the head of the Treasury, Nick Macpherson, the Treasury's director of financial stability, Lowrie Kahn, and the Bank of England's international director Phil Evans, David Cameron asked for information on the...

Little space for compromise between Athens and eurozone

February 9, 2015 Comments (0)

The onward march of the Front National in France and the implosion of France's Socialist Party seems to have been arrested, at least temporarily, with the election of the socialist candidate in a parliamentary by-election in Doubs in eastern France. The margin of victory of the PS's Frederic Barbier over the FN's Sophie Montel was slim - 51.4% to 48.6%, a difference that hardly shows a resurgence in popular support for France's political establishment....

Why has the ECB punished Greece?

February 5, 2015 Comments (0)

The most immediate and serious consequence of the European Central Bank's (ECB) decision to refuse to lend to Greek banks against the security of Greek government bonds is that it is very difficult to see how any bank over there can provide a cent of new credit to even the most deserving borrowers. Which means that if the Greek economy was growing yesterday - which it might have been, on the basis of recent statistics - it won't be any longer....

Global debts rise $57bn since crash

February 4, 2015 Comments (0)

After the explosion of borrowing in the boom years that led to the great crash and recession of 2007-08, most governments - especially those of rich developed countries - said they would embark on policies that would lead to greater saving, debt reduction and what's known as deleveraging. They implied they would encourage prudence, so that the sum of household, business and government debt would fall. So what has...

IFS spells out general election choice

February 4, 2015 Comments (0)

The IFS's Green Budget starkly illustrates the central economic choice facing voters in May: bigger cuts with a Tory or Tory-led government; higher public sector debt with a Labour one. The contest stems from their differing approaches to balancing the books: the Tories want an overall surplus by 2018 and surpluses thereafter in all "normal" years; Labour wants balance only on the current budget - that's day-to-day spending, excluding investment...

Why Syriza wants a five-month cool-off

February 3, 2015 Comments (0)

When I spoke to the Greek finance minister last night, Yanis Varoufakis said that he with his "left-wing heart" had much in common with the hedge fund managers and bankers he was wooing last night. He told me: "It's a strange kind of alliance we are forging between a left-wing government and the financial sector... When you are in a debt deflationary cycle, putting an end to it both benefits the population by bringing it out of the clasps...