The Great Debate UK

from The Great Debate:

Conceptual problems in commodity regulation

John Kemp Great Debate-- John Kemp is a Reuters columnist. The views expressed are his own --

The financial crisis and wild gyrations in commodity prices have exposed deep conceptual flaws in the way academics and regulators think about commodity markets that will force a fundamental re-think.

In particular, they have demolished three key main planks on which the laissez-faire approach to regulation has rested:

* Fundamentals linked to physical production and consumption of commodities are the principal drivers of prices. Speculators or investors provide an important source of market liquidity, smoothing out temporary imbalances. Their activity may accelerate the adjustment, or even cause the market to overshoot. But speculative influences cannot force prices away from fundamentally determined equilibria for any sustained period.

* Commodity markets are highly competitive, with many buyers and sellers, each accounting for a small share of the overall market, unable to influence the prices set to any great extent.

from The Great Debate:

Killer robots and a revolution in warfare

Bernd Debusmann - Great Debate-- Bernd Debusmann is a Reuters columnist. The opinions expressed are his own --

They have no fear, they never tire, they are not upset when the soldier next to them gets blown to pieces. Their morale doesn't suffer by having to do, again and again, the jobs known in the military as the Three Ds - dull, dirty and dangerous.

They are military robots and their rapidly increasing numbers and growing sophistication may herald the end of thousands of years of human monopoly on fighting war. "Science fiction is moving to the battlefield. The future is upon us," as Brookings scholar Peter Singer put it to a conference of experts at the U.S. Army War College in Pennsylvania this month.

Bank of England faces dilemma on QE extension

Photo

johnkemp– John Kemp is a Reuters columnist. The views expressed are his own –

LONDON, April 9 (Reuters) – The Bank of England’s terse press statement announcing it will maintain overnight rates at 0.5 percent and continue the existing 75 billion pound quantitative easing (QE) programme gives no clue about whether the Bank intends to extend the programme when the first tranche of asset purchases are completed in June.
But officials will have to make a decision soon: unless they signal a commitment to extend QE, gilt yields will rise even further in anticipation that the major buyer in the market will withdraw.
The QE programme is dogged by ambiguity about its objectives (which a cynical observer might conclude is deliberate).
Officially, the aim is to prevent inflation falling below target by accelerating money supply growth, not manipulate the yield curve for government and corporate debt.
In this, the Bank’s avowed strategy is more conventional than the Fed’s ambitious efforts to determine the cost of credit for borrowers throughout the economy. It is a straightforward quantitative easing patterned on the Bank of Japan, rather than a credit easing patterned on the Fed.
If true, the measure of success is how much the money supply has been boosted at the end of the three month period; the Bank should be indifferent about whether ending QE causes yields and borrowing costs to rise.
So long as money supply has risen consistent with the inflation target, and the Bank can discern some green shoots of stabilisation if not recovery, officials can declare victory, end the programme, and keep the other 75 billion pounds of asset purchases authorised by the chancellor in reserve. Yields can be left to find their natural level.
But many suspect the Bank’s real objective is yield control — in which case it will have to announce another round of buy backs of gilts and corporate bonds in good time, well before the current programme is completed, to shape market expectations.
The results of the existing round have been unimpressive.
After falling initially, gilt yields are almost back up to the level they were at before the Bank’s foray into unconventional monetary policy.
The snag is that if the Bank stops buying, other investors will struggle to absorb all the new government paper on offer without a major increase in yield — pushing up borrowing costs for everyone, precisely what the Bank has sought to avoid.
The Bank’s dilemma is whether to push on (heightening fears about inflation) or call a halt (risking a spike in yields all the same).
Either way, the Bank needs to give the market, as well as the Treasury and the Debt Management Office, plenty of warning about its intentions.
(Editing by Richard Hubbard)

Investing in the women of the future: girls

Photo

currie1- Laura Currie is director of international communications at Right to Play. The opinions expressed are her own. _

On the occasion of International Women’s Day on March 8, each year, the inevitable questions always arise: Have women made enough change? Are things as good as they are going to get?

Women entrepreneurs to dispel micro myth

Photo

090301_glenda_pic- Glenda Stone is chief executive and founder of Aurora, a recruitment advertising and market intelligence company, and co-chairs the UK Women’s Enterprise Taskforce established by Prime Minister Gordon Brown. The opinions expressed are her own. -

Most venture capital and angel investment tend to go to a specific breed of entrepreneur – innovative, well networked, intelligent, confident … male. Is this the result of deep-rooted discrimination or is this simply an issue of supply and demand? Women-owned businesses are largely under-capitalised and this leads to inhibited growth.

Re-energising for change on Women’s Day

Photo

Annette Lawson- Annette Lawson is chair of National Alliance of Women’s Organisations in Britain. She has an OBE for services to diversity and is founder and Chair of The Judith Trust, which works for better lives for people with both learning disabilities and mental illness needs. Any opinions expressed are her own. -

International Women’s Day on March 8 has a contested history. Perhaps beginning with a protest of women textile and shirt makers in New York in 1857, perhaps arising from the Socialist movement in Russia, it has been marked by women more recently all over the world both to express solidarity and sisterhood and to demand afresh every year that women’s human, political and civil rights be recognised and achieved. Some might wish to argue there is no need for such an event, nor for women’s demands. In this case, ignorance brings no bliss.

from The Great Debate:

Credit control will be much more intrusive in future

John Kemp Great Debate-- John Kemp is a Reuters columnist. The views expressed are his own --

The international system of bank regulation, epitomised by the Basle II process and the light-touch principles-based regulation of Britain's Financial Services Authority (FSA) has comprehensively failed.

In too many instances, light-touch principles-based regulation with an emphasis on banks' internal risk controls turned out to be no effective regulation at all.

from The Great Debate:

A new direction in global financial regulation

John Kemp Great Debate-- John Kemp is a Reuters columnist.  The views expressed are his own --

UK Prime Minister Gordon Brown's call today for a new G20 charter of principles on financial regulation  reflects an emerging consensus among policymakers that, once the immediate crisis has passed, the regulatory framework must be fundamentally redesigned.

In particular, policymakers are concerned with how to correct the basic moral hazard problem in which bankers have an incentive to extend too much credit, while private firms and households have an incentive to take on too much debt.

  •