The Great Debate UK
Breaking up banks is not so hard to do
-Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
As far as I am aware, you cannot buy insurance against speeding tickets (please, someone let me know if I am wrong!).
This is so because motorists who were insured would be more likely to ignore the speed limit and hence cause more accidents, which is bad for society and bad for insurers.
It would also have the drawback that, however finely the insurers calibrated their quotations, the more patient driver would end up having to pay a higher premium so as to subsidise the less patient.
Sovereign default risk, fact or fiction?
-Jane Foley is research director at Forex.com. The opinions expressed are her own.-
If a gauge is needed to measure how concerned investors are at about sovereign default risk, we need look no further than the price of gold which has made fresh all time highs this week.
New UK coalition deserves 7 out of 10
– Hugo Dixon is a Reuters Breakingviews columnist. The opinions expressed are his own –
The new UK coalition deserves 7 out of 10. The pact between the Conservative and Liberal Democrat parties, led by David Cameron as the new prime minister, seems determined to address the country’s most important problem — the deficit. This is vital given that the euro zone debt crisis could still prove contagious. It should also be positive for sterling.
Gordon Brown: flawed saviour of financial system
– Hugo Dixon is a Reuters Breakingviews columnist. The opinions expressed are his own –
Gordon Brown may go down in history as the flawed saviour of the global financial system. Brown had many faults including overseeing a public spending splurge in his decade as the nation’s finance minister. But he did make one big contribution. He galvanised other leaders to save the bank system during the post-Lehman <LEHMQ.PK> meltdown.
Inflation impoverishes Britons the easy way
– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –
Critics might say the UK’s inflation target is just for fun. Consumer prices were 3.4 percent higher in March than in the previous year, well above the 2 percent target rate, but the Bank of England will do nothing at all.
If the central bank were serious, shouldn’t it raise interest rates and crush every bit of life out of the UK economy? Not really. The UK has above target inflation because world oil prices are high, the pound is low and VAT is up. But it has inflation for poorer and richer.
Election may be fought on peak between dips
By Ian Campbell
LONDON, April 13 (Reuters Breakingviews) – Gordon Brown says his Labour party will “secure the recovery” if it wins the UK election in May. The opposition Conservatives would kill the upturn, he says. Brown is right in one sense: the “recovery” can easily be broken. But only because it is so fragile in the first place.
The UK’s data looks more encouraging than it actually is. The UK needs exports and production to surge ahead. Trade figures released on April 13 might appear to herald that: February’s trade deficit was its smallest since June 2006.
Greenspan and the curse of counterfactual
- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
Suppose that, instead of appeasing Nazi dictator Adolf Hitler at Munich in 1938, Neville Chamberlain had taken Britain to war, what would today’s history books say about the episode?
from Breakingviews:
Bank of England turns more radical on bank terror
Central bankers' speeches tend to be dry affairs. For this reason alone, Andrew Haldane's latest thoughts on the financial crisis deserve attention. In a discussion about size in banking, the Bank of England's executive director in charge of financial stability makes reference to the structure of al Qaeda, the limits of Facebook friendship, and the world domino-toppling record. Rhetorical flourishes aside, Haldane's comments contain a serious message: regulators are thinking increasingly radical thoughts about tackling big banks.
Haldane is not in an academic ivory tower. If the Conservative opposition wins Britain's general election, the Bank of England will become directly responsible for regulating the country's lenders. Moreover, he has come up with some startling numbers. Using credit ratings to help quantify the implicit support that banks enjoy from the government, Haldane estimates that the UK's largest lenders benefited from an average taxpayer subsidy of 55 billion pounds a year over the past three years. An alternative approach, looking at the relative funding costs of big and small banks, suggests the annual subsidy is worth 30 billion pounds.
QE pause shows there is a long way to go
- Mark Bolsom is the Head of the UK Trading Desk at Travelex, the world’s largest non-bank FX payments specialist. The opinions expressed are his own. -
Thursday’s decision by the Bank of England to keep both interest rates and its asset purchasing programme on hold was hardly a surprise and had been largely priced in to markets.
Little chance of a rate hike until at least Q3
-Jane Foley is research director at Forex.com. The opinions expressed are her own. -
Bank of England Governor Mervyn King’s speech this week was well timed insofar as it has nipped in the bud a growing fear that inflation in the UK could be lurching higher.
