If you are in Jackson Hole, stop digging

 

                   The world awaits the word of Ben. Will it be helicopter Ben Bernanke, commanding another drop of dollar bills on a slow growth country? Or will it be inflation fighting Ben, newly steeled for the fight by tea party poopers and the growing demand for public austerity?

                I suspect this year’s Jackson Hole speech will be carefully crafted, leaving it open to interpretation from both growth hawks and inflation eagles. I will be suprised if the word from Wyoming is to print much more money  immediately. Republican candidates are out and about condemning the Fed for daring just that. The Fed itself will be worried, with core inflation rising, lest they do more to stoke it. Some critics think it was Fed action with QEII which helped the spurt in commodity prices. If your money printing pushes prices up too much, it can negate the favourable impact on demand and confidence that you want from the extra cash. Nor do I expect him to dash all hopes of more bond buying round the corner. The expectation might help markets as he sees it. The administration might get quite demanding early next year if growth has stayed low or stalled.

                The truth is the authorities are running out of options to keep the show on the road without sorting out the underlying problems. Some day the US does have to rein its public sector deficit – both US parties now agree in principle. The Federal deficit last year was a lively $1.3 trillion. More than one dollar in 3 spent by the national government was borrowed. The politicians are still arguing over whether to cut spending more or raise taxes more, but they know they need to do something. That’s not easy in an election year.

               Some day the US – like much of the rest of the west – has to make more things for itself, or find some other way to pay for the imports from China.

               These fundamental imbalances – large deficits to you and me – will not simply go away. They need fixing.  Mr Bernanke can agonise over how much to print, but in the end the bigger calls will be made by the President and the Congress on how to get the US out of the red. The last lot of printing boosted markets for a bit, then they collapsed again when they saw it had not provided a permanent solution.

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53 Comments

  1. Samuel
    Posted August 25, 2011 at 6:27 am | Permalink

    Quantitave easing doesn’t work because for a start the new counterfeit money can be hoarded

    • Mike Stallard
      Posted August 25, 2011 at 3:54 pm | Permalink

      A very encouraging piece of news on the ghastly Radio 4 yesterday was that over £1 billion has been saved recently by UK people desperately paying off their debts.

      • alan jutson
        Posted August 25, 2011 at 8:15 pm | Permalink

        Mike

        Interesting that the general Public ” get it” and are paying down their debt, but the government (worried about public opinion) so far have not got it.

        Methinks the general public and their commonsense (we cannot continue to borrow for ever) are being underestimated by the government.

    • John Moore
      Posted August 26, 2011 at 12:44 pm | Permalink

      Why would anyone want to hoard counterfeit money? Until it’s exchanged with another sucker its worthless.

  2. Mike Stallard
    Posted August 25, 2011 at 6:35 am | Permalink

    If the dollar goes, then heaven help us all!
    The USA has made all the usual mistakes that world powers make – arrogance, not studying other people’s beliefs, exclusion of different ideas and peoples and so on. But, do you know what? I would rather they ran the world than that China or Russia did.
    We need a few more robber barons of the 1890s to make the thing work again!

  3. Ralph Musgrave
    Posted August 25, 2011 at 7:15 am | Permalink

    Any analysis of the debt and deficit which fails to distinguish between the structural deficit and, secondly, the part of the deficit supposed to bring stimulus is not worth the paper it is printed on.

    Re the structural part, as long as inflation exceeds the yield on the debt, the relevant government makes a PROFIT on the debt. This is currently the case with the US government. Put another way, it is laughing all the way to the bank. So why worry about the structural deficit?

    Re the “stimulus” deficit, that needs to be whatever is required to maximise employment while keeping inflation to acceptable levels. If that happens to be a big deficit, so be it. If it happens to be a surplus, so be it.

    At the moment, the US private sector is accumulating cash as never before, rather than spending it. See: http://macromarketmusings.blogspot.com/2011/08/other-side-of-households-balance-sheets.html

    Given the latter phenomenon, the US government / Fed absolutely has to print money and distribute it, i.e. run a deficit, else there will be a double or treble dip.

    • norman
      Posted August 25, 2011 at 7:53 am | Permalink

      So why doesn’t government simply print vast amounts, employ virtually everyone and run a centralised command economy?

      Stimulus has failed so far why should we think it will work in the future? We’ve, and particularly the USA, stimulated like never before seen in history (e.g. shovel ready jobs – which Obama later bizzarely joked about and said that there wasn’t actually any shovel ready jobs) and yet things have got worse.

      The so-called stimulus is now built into the US budget so they’ll be stimulating forever more.

      Controlled inflation may well be a friend as far as government debt goes but what about ordinary citizens who are also getting lower yields than inflation, are they laughing all the way to the bank? How about the poor prole on £23k pa getting a pay freeze while inflation is running at 5.5% – is he laughing all the way to the bank?

      Government should be here to serve the citizenry and provide for us, not the other way round.

      • norman
        Posted August 25, 2011 at 7:55 am | Permalink

        Re-reading my comment the last line should be ‘serve us’ not provide for us – now I sound like a statist!

      • uanime5
        Posted August 25, 2011 at 3:02 pm | Permalink

        Or better yet print vast amounts of money and use it to pay the taxes of the poor to encourage them to spend more money.

        • alan jutson
          Posted August 25, 2011 at 3:50 pm | Permalink

          uanime5

          I thought Bush did something similar to what you suggest, gave lots of people money to spend (tax rebates), but for some reason that did not work either.

          Surprise, surprise.

  4. Stuart Fairney
    Posted August 25, 2011 at 7:18 am | Permalink

    Oh dear. China is not the major buyer of US T-bills at present having gorged on them previously. Nor is Saudi Arabia. It is in fact….the US federal reserve. (I know, buying your own bonds with printed money, no problem there!)

    So, yes, obviously there will be QE3, especially in the run up to 2012 regardless of what gentle Ben says. The alternative?

    The President goes on TV and says “My fellow Americans, I now need to cut federal spending by about 30%, so expect your salaries cut significantly if you work for the government and services to go to hell for everyone. Taxes will also have to rise quite a bit for everyone, because the non-voting Chinese need their money back”

    So again, obviously, yes, Ben will reach for the printing presses, and Ron Paul aside, don’t expect the Republicans to do any better if they win in 2012 because these clowns haven’t balanced a budget since Eisenhower.

    • Mike Stallard
      Posted August 25, 2011 at 3:56 pm | Permalink

      1812 – war with England by the new colonies. They tried QE then. The new paper currency crashed and they had to go back into specie.
      2012 – war with ………………………….

  5. lifelogic
    Posted August 25, 2011 at 7:44 am | Permalink

    “Some day the US – like much of the rest of the west – has to make more things for itself, or find some other way to pay for the imports from China.”

    These ways will indeed be found, but not by government, by the government getting out of the way with its over regulation, daft employments laws and over taxation.

    In your radio 4 interview yesterday you suggested it would be nice to get down to rates of tax that at least raise maximum revenue and they we are well over this currently. Indeed they are, with 52% on income with NI. This is just pointless vandalism by the Coalition or Libdems for reasons of superficial political appearance – not even raising more tax or achieving anything and damaging all in the process. Rather like Hunhne’s ECO house bling in fact.

    We should however be striving for much lower rates than the (say 40%) that perhaps optimises tax revenues. Aiming for ones that optimise the economy and real benefits to people. Clearly governments spent their own money far less efficiently than people and businesses spend it (probably far less than half as efficiently).Governments should only spend on the few things the people cannot organise for themselves defence, law and order, property rights and overseeing fair trade systems, accounting standard and ensuring stable banks and insurance company systems – not really very much more at all.

    20% of GDP should be more than sufficient in normal times – if we could just organise a well run state that was under control. Controls to ensure that it ran for the benefit of voters not simply the benefit of its employees or state sector unions.

    The problem, as always, is how to get to this happy position from the current absurdly undemocratic position and political mechanisms to sensible ones. Rather inpossible with the usual crop of MP’s we get in power with our “not very sensible or even democratic” voting systems in place.

    • Javelin
      Posted August 25, 2011 at 6:20 pm | Permalink

      A good question for the left is to ask if they would be happy if Government spending went up by 30%. I assume yes.

      Then to ask if they would be happy if private sector tax went down to 10% – assuming incomes rose.

      I think most of the left would be clawing like greedy kitten for more of the private sector salaries – even though they were better off. The left are more about greed than the private sector.

  6. lojolondon
    Posted August 25, 2011 at 8:36 am | Permalink

    The average American voter is a pragmatic realist, who is deeply wedded to Capitalism, and hates Big Government and the implied taxes, and knows that the bills always have to be paid at some stage.

    I actually think you could cut public spending in an election year and gain respect and votes in the USA. (just watch Chris Christie on youtube!) Likewise, I am ashamed to admit that Crash Gordon nearly secured the last election by threatening our dim electorate with ‘Tory cuts’, our population is far more comfortable with state control of our lives.

    • lifelogic
      Posted August 25, 2011 at 12:47 pm | Permalink

      I am not sure about “our population is far more comfortable with state control of our lives.”

      Perhaps after the government having taken nearly all their cash (taken at source) they just feel very vulnerable for any crumbs of education or health care they can get back off the state.

      This is further compounded by Cameron offering a left wing agenda, government and BBC propaganda endlessly doing the same.

      • Bazman
        Posted August 25, 2011 at 8:32 pm | Permalink

        Taken all their cash and sick of left wing agendas and the state? I bet they can’t wait. Lets look at this fantasy.
        If a person earned £7.50 an hour and paid no tax or NI they would get to keep £300. Even if they paid no VAT or other taxes they would have £300 or £15600 per year. The health care, education and housing they receive would hardly bee seen as ‘crumbs’ and this being taken away in return for no tax would hardly compensate for this loss. Minimum wage is £5.93 for over 21 and £4.92 for 18 – 20 year olds which you are against. Without adequate wages how are they supposed to acquire the means to pay for crumbs? Not to mention other crumbs of food/ travel/clothing and anything else you think they should be ‘free’ from tax to pay for. As employers only pay the minimum they can afford or get away with maybe they could all become self employed and then they could earn what they like within the competition of other crumb seekers and eat ideology in the meantime.

        • norman
          Posted August 26, 2011 at 7:38 am | Permalink

          Something would have to be done for people on minimum wage, of course, some sort of voucher scheme for health and education. Bear in mind a lot of families now have two people working in the family so in a lot of cases you could double that.

          Also bear in mind that everything in the shops would be a lot cheaper. Imagine VAT at 5% if we had small government, there’s a 15% saving right away, in effect a 15% pay rise to your imaginary worker. If businesses didn’t have to pay employers NI on that person, that’s another pay rise he could have. It’s easy to say ‘businesses only pay what they can get away with’ but if we had a more competitive market they wouldn’t get away with slave labour wages. Immigration plays a part here too naturally.

          If a corporation paid less tax it could use that to fund higher wages, or help pay for the health care of employees.

          The pie isn’t going to get smaller because government takes less (those of us on the right argue it will get bigger) and in this day and age no sane person would want to see anyone in the UK go without health care, housing, education, etc. it’s just that big government isn’t the best way to go about it.

          We need to stop thinking that we’re incapable of looking after ourselves and need government to do it for us, we’re more than capable of running our lives and communities better than remote politicians.

          • Bazman
            Posted August 26, 2011 at 5:41 pm | Permalink

            Most people do not live off the governments they take what they are given.
            The idea that if companies paid less tax and made more profit and a more competitive labour market would would lead to higher wages to the employee is laughable Pay for healthcare? Are you a fool? All past evidence has proved otherwise especially in big business and of course the smaller employer could not ‘afford’ it. Neither is going to share any profits for sure. Often both adults in a family work because they have to due to low wages and high living costs it is not double income as you would have us believe.

  7. Brian Tomkinson
    Posted August 25, 2011 at 8:37 am | Permalink

    JR: “The politicians are still arguing over whether to cut spending more or raise taxes more, but they know they need to do something. That’s not easy in an election year.”

    That is the nub of the problem. It’s time for politicians to realise that the electorate wants leaders who have the determination to stop the rot, not to simply keep delaying the inevitable action and consequently making things worse. Unfortunately there is a real lack of political leadership in the USA, the EU and the UK.

  8. javelin
    Posted August 25, 2011 at 8:48 am | Permalink

    Rumor from the Bundesbank treasury traders is they are preparing for an overnight exit.

    When the President starts saying the ECB bond buying is illegal and only tolerable in the short term, then it’s going to be in their interests to bail out before they have to pay for Italian and Spainish debt.

  9. Gary
    Posted August 25, 2011 at 9:16 am | Permalink

    Well said.

  10. Peter Campbell
    Posted August 25, 2011 at 9:21 am | Permalink

    There is no chance of Obama or anyone else stopping the deficit growing. It would require the US to pull out of it’s 7000 military bases across the world and the Pentagon and the industry that supplies it will not allow that. The American empire will go on until the moment it no longer can. In the meantime we may see QE3 or not, we’ll see shares going up and down, big swings in currencies, gold, silver, oil and other commodities (good times for day traders). The end destination is the same, fiat currencies are doomed. No politicians are capable of restraining the calls for government cash and so they print money, either blatantly by QE1,2 or 3 or quietly through bond sales and banks. At some point people will realise that paper money has an intrinsic value of zero. When that happens there will be panic on all markets and times will get very interesting.

  11. oldtimer
    Posted August 25, 2011 at 9:27 am | Permalink

    I am curious to know if part of the original US calculation about QE2 was to provoke a faster upward revaluation of the Renminbi (I think it now deserves a capital R). Apart from the obvious domestic issues for both parties, the last few years have seen a very high stakes game between China and the US over this very issue. Do you have any views on this aspect?

  12. Susan
    Posted August 25, 2011 at 9:49 am | Permalink

    If I were Mr. Bernanke I would do very little. Certainly I do not believe rushing into more QE would be a good idea. This would smack of both panic and would probably do little good other than to increase inflation. QE up to now has not produced the desired results and was never likely to. There are limitations as to how much you can stimulate an economy and gain any result. People should always worry any time they see a Government running large deficits and debt using QE and inflation begins to enter the picture. In time it is possible that this Government will not be able to raise tax high enough to pay off its obligations. Investors may start to believe that Government is therefore using QE merely to pay its debts. This then in turn ruins the economy completely.

    To my mind an economy has to be pulled back into balance, otherwise the fundamentals are wrong in the first place. This should be more in the form of spending cuts than tax rises, as high taxation will only lower demand in an economy as people have less available money.
    Politics, however will always get in the way of this happening, as certainly Obama would not risk so much pain on his voting public.

  13. javelin
    Posted August 25, 2011 at 11:16 am | Permalink

    What he will do is borrow long – I could give you lots of technical explanations on bond yields and near term interest rates being near zero, but the semantics are very simple.

    He has used up all his options and the only way left to stimulate the US economy is to borrow money way into the future. He has cleared his bank accout out, pawned the silver now he has to remortgage.

    QE1 – put the US adults in more debt
    QE2 – put the US children in more debt
    QE3 – put the US unborn in more debt

    For those in the US with a pro-life stance QE3 will be hard to take.

    I think the markets will react well to the news but then will come to the realisation that the US is now so fully and deeply immersed in debt beyond any reasonable hope of paying the debt off. Moreover it will will realise the debt levels are out of control and getting bigger.

    Over the next two weeks analysts will start to form a picture of an absolute inevitable decline in the US global position, as the key currency, as a military power, as having the power to stimulate the world economy.

    • sm
      Posted August 25, 2011 at 3:39 pm | Permalink

      Borrow long and lots – and let inflation rip and then ramp up interest rates and take the hit?

      • StevenL
        Posted August 25, 2011 at 11:14 pm | Permalink

        No, borrow long and keep writing the paychecks, and hope one of the richer states doesn’t decide to break away.

  14. Acorn
    Posted August 25, 2011 at 11:21 am | Permalink

    As the US is one of the few countries with a deficit that is still increasing each year, I would not hold out much hope of congress voluntarily reducing it. The super committee of twelve, will probably be buried by lobbyists looking for exemptions from austerity for their vested interests.

    When you have a current account in a hole; foreign exchange reserves in a hole and large lumps of your debt are payable in foreign currencies; Jackson Hole, Wyoming is probably the appropriate place to be. You can look up from the valley airport(the “Hole”) at the Grand Teton mountain and visualise the size of your problem. (Did the Rodeo there on the way up to Montana many years ago.)

  15. zorro
    Posted August 25, 2011 at 11:28 am | Permalink

    I am human and not a spambot!

    Zorro

  16. zorro
    Posted August 25, 2011 at 11:43 am | Permalink

    John, your spam engine seems to be rejecting linked quotes from the Beeb (very discerning). In case it got rejected, I wanted to draw attention to the Coalition commitment/pledge/aspiration to reduce net migration…..Obviously on course along with the pro business growth policies as the BBC tells us that net migration increased by 21% over the last year…..oh wait!

    Zorro

    • lifelogic
      Posted August 25, 2011 at 2:38 pm | Permalink

      Yes all is going very smoothly on the bridge of “HMS Coalition” but alas all at in the completely wrong direction.

      Might not a Liberal/Labour government now with at least the hope of a sensible Tory one to come in a few years have been better than the current socialist mess – to be followed by Labour shortly for many years to come?

  17. Bernard Otway
    Posted August 25, 2011 at 11:51 am | Permalink

    it will become the DISUNITED STATES,most of the west [excluding California] such as Washington,Oregon,Montana, Idaho,Nevada,Wyoming,Arizona,New Mexico,Utah,Colorado are
    Fed up and that is stating it mildly.Find me a Ghetto or it’s kind in any of these states,the citizens are fed up with SUBSIDISING the mostly Feckless East and some of the south
    ie Louisiana.Each of the states mentioned is big enough to be a country on its own,lump together Holland and Belgium and see how many times they fit in any one,plus they have small populations relative to their size,look at how many of the Hollywood elite live in either Wyoming or Montana when not working, safety/wide open spaces namely QUALITY OF LIFE.The Federal Government has sown the seeds of the possible break up of the USA by it’s own PROFLIGACY,and by the same woolly headed and downright STUPID mindset that James Delingpole’s letter to Cameron shows in the latest Spectator,
    the USA has to be very very careful there are maybe more Oklahoma city,Ruby Ridge and
    Waco’s out there waiting to happen.ALSO what about ALASKA if it was a country on it’s own it would command enormous respect,three states Wyoming/Colorado and Utah have enough oil shale that oil extracted from it is estimated conservatively to be able to supply the entire current usage of the USA for 800 [YES EIGHT HUNDRED] Years.last year I attended a Church in San Antonio called Cornerstone it’s pastor is John Haggee,Have any of you been in a congregation of about 12000? it was inspiring ,that is it’s size always you should have seen Pastor Haggee and his son also Pastor RIP the Federal Government to shreds to absolute acclamation,there are Millions in these states who feel the same way.

  18. scottspeig
    Posted August 25, 2011 at 11:59 am | Permalink

    I always find it strange that governments are even allowed to borrow long as doesn’t this in effect tie the hands of the next government? Maybe once the books are balanced (if ever) then an Act can be passed to cease it working. Then at least we’d have sensible financial restraints on the government.

    As it is, I imagine someone will go to a backed currency (but I doubt gold) perhaps a heavy element that is controlled by China?

  19. rose
    Posted August 25, 2011 at 12:05 pm | Permalink

    Some day the Western world has to learn once again to save. Printing money and keeping down interest rates in an attempt to punish savers into spending their money is the road to ruin. Zero growth plus stability is healthier in the long term. But we must stop importing people.

  20. zorro
    Posted August 25, 2011 at 12:40 pm | Permalink

    A lot of good points by everyone, but, in short, I thik they will stick with the ‘Kalashnikov approach’ aka spray and pray for some time yet. Print the money and hope for economic growth to pick up. They do not have the political capital to do anything else.

    Meanwhile, the Germans are rattling their sabres and digging their heels….We shall see….Their Labour Minister has been saying that the basket cases must hand over their ‘gold reserves and industrial assets’ if they want support. I said that they will be holding out for gold plated beach houses….at the very least.

    Zorro

  21. Robert K
    Posted August 25, 2011 at 12:44 pm | Permalink

    I’m not sure which is worse. The US, where the federal debt and spending crisis is intractable but is being debated, or here, where the debt and spending crisis is just as proximate but isn’t being debated – at least properly.

  22. outsider
    Posted August 25, 2011 at 1:18 pm | Permalink

    Great headline, wise words. Zorro is right too. Lower growth + fewer jobs + more immigration = more public spending.

  23. Robert
    Posted August 25, 2011 at 1:36 pm | Permalink

    These two are great pieces – seeringly honest and certainly cuts out the nonsense that most seem to focus on! First I was always told you have to recognise the seriousness of a problem and then you can move forward – all in all I could not have put it better myself – Hat-Tip Richard North http://www.spectator.co.uk/columnists/all/7175043/dave-youre-a-disappointment-but-theres-still-time-to-change-that.thtml http://blogs.telegraph.co.uk/news/jamesdelingpole/100101956/an-open-letter-from-my-old-mate-david-cameron-to-the-people-of-britain/
    Depressing no, realistic yes – we/he has a big decion to make – is he up to it ? What do you think John?

  24. Steve Cox
    Posted August 25, 2011 at 1:59 pm | Permalink

    I see that Spain is now proposing a Constitutional limit on both budget deficits and the public debt.

    http://www.economist.com/blogs/newsbook/2011/08/spains-economy

    After Italy’s recent move in a similar direction, and the American brouhaha about raising the legal debt ceiling, surely it is time that we did something similar in Britain? Anyone want to start an e-petition?

    Reply: I supported a Commons Bill to do just that, but the government disagrees.

  25. uanime5
    Posted August 25, 2011 at 3:11 pm | Permalink

    As Senators and Representatives are elected every 2 years they constantly have to watch the ballot box as every other year is an election year. The US presidential election isn’t much better as it involves 1 year of voting on who will be the candidates and another year of campaigning before the election. Reform is needed so US politicians don’t spend half their term trying to get re-elected.

    • wab
      Posted August 25, 2011 at 5:45 pm | Permalink

      Representatives are elected every 2 years but Senators are elected every 6 years. The 2 year term is a problem but it is not even close to being the main reason America is heading downhill fast. The real problem is that one of the two main political parties has gone completely bonkers and is holding the country hostage (their words).

  26. wab
    Posted August 25, 2011 at 5:55 pm | Permalink

    “Republican candidates are out and about condemning the Fed for daring just that.”

    How quaint a way of putting this. What Rick Perry (the most favoured Republican candidate of the minute, if you believe the polls) said was that if Bernanke “prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas.” I would expect anyone with any sense of democratic legitimacy to condemn such inflammatory rhetoric. If the body politic does not push back against these kind of demagogues then we will all eventually suffer.

  27. Paul Danon
    Posted August 25, 2011 at 6:36 pm | Permalink

    Let’s hope neither we nor the US tries to QE our way out of this hole. QE tends to favour shareholders but doesn’t encourage business or consumers. What’s needed are tax-cuts. That’s the easing we need and the quantity has to be massive.

    • zorro
      Posted August 25, 2011 at 9:36 pm | Permalink

      I think that your hope may be in vain. As you suggest the best way to stimulate the economy would be by allowing private individuals to reinvest their own money in the economy or in creating jobs. People (generally) spend their money more efficiently than governments. Well, I can assure you that they do. There is still phenomenal waste in procuring of government services and equipment for what is produced or controlled as a result of their use. This would lessen the chance of ruinous inflation. ‘Government’ is the biggest spender/waster and needs to trim its sails.

      zorro

    • sm
      Posted August 25, 2011 at 10:27 pm | Permalink

      QE- could be used to fund tax-cuts amongst other things if no strategic investments are available which there are – but these would need to be politically saavy with an antiavoidance rule in place or similar minimum income tax % for those that can afford to seriously avoid.

      The public service quangocrats will never cut themselves, its always the frontline- the public service bit.

  28. Bazman
    Posted August 25, 2011 at 8:09 pm | Permalink

    Warren Buffet argues that billionaires have been cosseted enough by the federal government and taxes on them need to be increased. What would the average consumer spend all this extra money on? Chinese imports, that is if they chose to spend it on consumer goods and not just on higher living costs.
    The west does not produce enough goods and so spends borrowed money on them. How is lower taxes just going to produce competitive factories with real wages? The race with China when faced with production costs, and the human costs cannot be won. Who is going to live like a Chinese rural peasant who thinks he is upwardly mobile as he has got himself a job in a factory paying money instead of rice? The west has advanced countries and forcing the poor to live like peasants to compete with China and India is a fantasy, even East Europeans do not want to live like East Europeans. You work for bread if you think it is such a good idea. Like communism right wing ideas are always for the other guy. What is needed is some sort of Marshall plan for western economies. The tax cuts from Bush and the like, have just made the rich fatter and the rest of us slog all the time.

    • lifelogic
      Posted August 26, 2011 at 12:15 pm | Permalink

      I understand Warren Buffet pays tax at about 17% perhaps he should pay a bit more. But 52% is absurd.

      • Bazman
        Posted August 26, 2011 at 5:44 pm | Permalink

        Do you care if famous pop stars lose millions of their personal income due to music piracy? Having ten million a year instead of fifteen?

  29. Bernard Otway
    Posted August 25, 2011 at 10:38 pm | Permalink

    To Wab, Demagogues are created by utterly stupid policies and [other] politicians,and when they don’t listen when it is plainly obvious that you can’t spend more than you earn and keep borrowing ad infinitum into the future, to do so ,one poster above suggests we are now actually borrowing on behalf of our grandchildren to fund stupidities NOW,one day maybe they or our great grandchildren will send back in time to NOW a Terminator to put right what went wrong NOW,so as to correct the FUTURE. I at the age of 66 have become (very angry and immoderate-ed),and THIS STUPID LOT HAVE CAUSED THAT,when I actually should be in contented retirement,BUT I can’t be as I have 5 kids and 5 grandchildren ,THEIR future is at stake.

  30. StevenL
    Posted August 25, 2011 at 11:09 pm | Permalink

    If he keeps printing he can export a shed load of inflation to exporting nations via their currency pegs – that’ll sort the trade deficit out (or so they seem to think).

    Of course, these things have unintended consquences – see Egypt, Libya, Syria etc.

  31. javelin
    Posted August 26, 2011 at 4:22 pm | Permalink

    This is the key line traders are picking up on … what is Bernanke suggesting?

    http://www.federalreserve.gov/newsevents/speech/bernanke20110826a.htm

    “I have confidence that our European colleagues fully appreciate what is at stake in the difficult issues they are now confronting and that, over time, they will take all necessary and appropriate steps to address those issues effectively and comprehensively. ”

    This is my interpretation

    “I have confidence that our European colleagues fully appreciate what is at stake [THE EURO] in the difficult issues they are now confronting [BREAK UP OF THE EURO] and that, over time [IN A FEW MONTHS], they will take all necessary and appropriate steps [CREATION OF NEW CURRENCIES] to address those issues effectively [MULTI SPEED EURO INTEREST RATES] and comprehensively [FINALLY SORT OUT THE EURO]. “

    • zorro
      Posted August 26, 2011 at 8:01 pm | Permalink

      Or substitute in this order…..(the European project aka EUSSR)…….(economic crisis with EURO)…..(once Germany has got the right terms)…….(handing over family silver and economic control to Germany for support for Eurobonds)…..(stability to Eurozone and united political and economic governance)……..(single European state).

      zorro

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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