These are my links for January 2nd:
- FT.com / Companies / Financials - Danger of persistent deflation is seen as low - I agree on one condition: which is that we print a lot of money
That will permit quantative easing
And it will permit government investment in jobs
Otherwise we're in real trouble
- FT.com / Companies / UK companies - Complexity is out as banks fight to survive - "Corporate issuers will have to refinance or substitute a record €296bn ($414bn) of euro-denominated debt in the first six months of this year, more than 10 times as much as in the whole of 2000, Dealogic data shows."
Some won't manage it
That' how the recession will spread
- FT.com / UK / Economy & Trade - First shots fired in UK retail price war - This is why we didn't need the 2.5% VAT cut
But we still aren't getting the investment in jobs we need
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In reference to ‘job creation’ measures, there is a huge refusal to recognise one huge problem in this regard. That is that with the current conditions of EU membership, and the status of being a member, jobs cannot be created for the UK. The unlimited entry of EU, and mostly Eastern EU workers, cannot be stopped under these conditions.
This is not a small issue, because migrant workers and especially from poorer countries, can work for lower wages, and survive, without families and mortgages here, and being prepared eg to share lodgings densely.
The crunch will come with Olympic spending. Already there are many EE workers signed on in Newham, ready for this, whether they are currently here or not. So how many jobs will the Olympics ‘create’?
This is an issue that must be faced up to, sooner rather than later, though this government will ignore it as long as possible – certainly until they have forced a Lisbon Treaty vote on the Irish.
But this aspect, in these times, may strengthen an Irish ‘no’ vote. They do seem to be better informed across the Irish Sea.
The Lisbon Treaty allows for withdrawal from the EU.
[…] Mr. Murphy today. […]
We are already in a great deal of trouble. 😥
Printing too much money will cause inflation and collapse in exchange rates. Is there an amount of printing that is optimum, if so, how is this optimum discovered or predicted?
Marksany
Printing money through quantitative easing is necessary for two reasons. 1) As Keynes made clear, long term interest rates must be low to get out of recession, and this can’t be done without buying back government debt, which can only be done right now by letting the presses roll 2) it defeats deflation, which is a lot lot more harmful than inflation
As for those who argue that this is Friedmanite: they’re wrong. It ‘s pure Keynes, but not Keynesianism. Keyenes was not a Keynesian. A bit like some suggest Christ may well have avoided the term Christian given some of the ways in which it has been used
Richard
I think we are going to have deflation followed by inflation. There are two ways we go from here.
1) Continued and worsening deflation with more financial institution bailouts being needed – property falling by more than half from peak levels and the economy continuing to contract with recession giving way to depression.
2) The tsunami of liquidity that central governments are trying their hardest will work the oracle with deflation will at some point change the velocity of money which currently has almost stopped (hence deflation). The clue to what happens next is in the second word of the sentence. That money will inundate the real economy and devalue very quickly. The first thing that will happen is another oil price spike as soon as demand shows the slightest sign of picking up. We won’t quite be in the same position as Zimbabwe but we may have an inflation problem as big as the 70s and our situation will be made worse by imported inflation as a result of our currency devaluation, which has been as pronounced as at any time in history.
Cheery sort of chap, aren’t you Peter?
Some of us are not so worried
Richard, lucky you. I am very worried. Unemployment is stalking the country, but only for the private sector. I am likely to lose my job in the car industry, and unlikely to get another. You must be comfortable in your taxpayer funded ivory tower.
Confidence is shot, pouring taxpayers’ money in (Govt debt is deferred tax) is not going to make us all feel good and go shopping again, in fact it gives us another reason to hunker down. Peter is likely to be right, sadly.
Marksany
Clearly I am concerned about employment – that’s why i promoted job creation in the Green New Deal
I am not so worried about inflation – that was my point
And try as I might I’m looking around for the ivory tower and taxpayer funds around here – and can assure you, I enjoy neither
Richard
Richard – so you are not worried about inflation? I would have thought that you were old enough to remember what it was like when inflation ran rampant (after, guess what, a Labour Government). So you obviously have no concern to those who rely on their savings to provide them with income and who will be ravaged by its return.
Shame on you for such a comment.