The Great Debate UK

A hung parliament offers sterling little comfort

May 7, 2010

Mark Bolsom is head of the UK Trading Desk at Travelex, the world’s largest non-bank FX payments specialist. The opinions expressed are his own.-

from Breakingviews:

How to tell you’re not Greece — yet

By Rob Cox
April 12, 2010

By Rob Cox and Agnes T. Crane

Greece may be enviable as the ancient cradle of democracy -- but no country wants to emulate its contemporary fiscal troubles.

from Breakingviews:

Markets right to take Fed move badly

February 19, 2010

The Federal Reserve deserves some sympathy. The U.S. central bank did everything it could to stage-manage its minimal tightening moves, announced late on Feb. 18. But markets reacted as if to serious bad news.

from MacroScope:

Britain heading for rude awakening?

January 20, 2010



There is a divisive election ahead for Britain, the threat of a ratings downgrade on its sovereign debt and a deficit that has ballooned into the largest by percentage of any major economy.  UK stocks, bonds and sterling, however, are trundling along as if all were well. What gives?

Light at the end of the tunnel for the U.S. economy?

December 18, 2009

Kully Samra

– Kully Samra is UK Branch Director, Charles Schwab. The opinions expressed are his own.-

Economic outlook remains fragile

September 26, 2009

John Monks-John Monks is general secretary at the European Trade Union Confederation. The opinions expressed are his own.-

Lehman sparks a year of trading opportunities

September 15, 2009


-Angus Rigby is CEO of TD Waterhouse. The opinions expressed are his own.-

Volatility has been the name of the game since Lehman’s collapse, an event which sent shock waves through the global financial markets. The ripple effect on correlated sectors sent share prices on a roller coaster ride of unpredictable fluctuations throughout the year – and yet at the same time this very volatility paved the way for the profit-taking retail trader, if they got their timing right of course.

Government must act on bold promises to UK manufacturers

August 5, 2009

radley1– Steve Radley is Director of Policy at EEF, Britain’s manufacturers’ organisation. The views expressed are his own.

Liquidity & inflation, lessons from the 1940s

April 24, 2009

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

LONDON, April 24 (Reuters) – Comparisons between the current downturn and the Great Contraction of 1929-33 have multiplied as commentators and investors have tried to forecast the recession’s likely depth and duration. But as the U.S. economy shows signs of stabilising and attention switches to future inflation the more useful comparison is actually with the 1940s.
The massive build up of highly liquid assets (cash and bank balances) during the Second World War is the closest parallel to the current escalation of bank reserves as a result of quantitative easing programmes in the United States and elsewhere around the world. The relatively modest pick up in consumer prices after the war ended may hold lessons for the outlook for inflation over the next five years.
There is a risk the commodity markets may have over-estimated the speed with which excess liquidity will be transformed into higher inflation and higher prices.
The outbreak of war was accompanied by an unprecedented build up of liquidity in the U.S. financial system. Deficit-financed spending on armaments and the war effort finally eliminated the persistent under-employment of the previous decade and ensured strong growth in corporate revenues and household incomes.
At the same time, households and firms had little opportunity to spend the money. The Federal Reserve imposed strict limits on consumer credit from September 1941 onwards. Consumer durables disappeared from the shops as the government first restricted then banned production of motor vehicles, refrigerators, washing machines and other electrical appliances for civilian use to conserve output capacity for the war effort.
The result was a massive increase in cash and bank balances. After having been flat for the previous 20 years, the amount of cash in circulation quadrupled from $6 billion to $25 billion between 1939 and 1945. Bank deposits more than doubled from $43 billion to $101 billion (    But while inflation rose when wartime price controls were lifted, the increase was nowhere near as much as expected given the massive overhang of liquidity which had built up.
To paraphrase Arthur Conan Doyle about the dog that did not bark at night time, the surprise was not that inflation rose so much after the war, but that it rose so little.
Consumer prices rose just 8 percent in 1946, 14 percent in 1947 and 8 percent in 1948, and actually declined in 1949 — and this was after the removal of extensive price controls that had limited increases for 5 years. There was no inflation outbreak.