Watch and see as the rest of the central banks try to save the day by following Bernanke & Co. in going close to or all the way to zero. This is why betting against the USD may be a bad move. Everything is relative in good times and bad. Inflate or die! is the mantra around the world. When formerly bloated and cash-flush consumers, now busted and broke, pull back though - reflation is not such an easy task no matter how much printing you do. http://news.bbc.co.uk/2/hi/programmes/moneybox/7955537.stm Deflation fears The latest inflation figures will be released on Tuesday and the Retail Prices Index - on which wages, many state benefits, tax allowances and financial products like annuities are linked - is expected to fall to zero or go negative. The current headline RPI rate of 0.1% is already at its lowest level since 1960. So what happens to those crucial state benefits and other financial items when inflation actually falls? Will they go down too? Or will they be frozen? Money Box asks Andrew Leicester, from the Institute for Fiscal Studies; John Whiting from PricewaterhouseCoopers; Tom McPhail from Hargreaves Lansdown and and Dax Harkins from NS&I. Debt collection As the number of people with serious debts continues to rise, the powers given to bailiffs and their conduct when recovering money is likely to come under greater scrutiny. The government has announced bailiffs will not be given greater powers to force entry but also said a scheme to regulate the sector will not begin for another three years. Bob Howard has been out in East London witnessing the work of a bailiff working with the sanction of the High Court. And Paul Lewis speaks to Justice Minister Bridget Prentice about the government plans. Banking reform Plans to overhaul the banking system and prevent a repeat of the current financial crisis have been announced by the head of the City watchdog. Lord Turner's proposals include intense supervision of the banks and a tightening of rules on lending during boom years. We hear from Lord Turner and speak to Kay Blair of the Financial Services Consumer Panel about what it means for you. Financial compensation Building societies are angry that they are being asked to pay for the failure of Bradford & Bingley and the Icelandic banks. Under the terms of the Financial Services Compensation Scheme both building societies and banks have to contribute to compensate customers of banks that went bust last year. Nationwide, Britain's biggest building society, has said it expects to pay £250m over the next three years. The Yorkshire Building Society has also seen its profits fall because of the scheme. We speak to its corporate development director Andy Caton about why he feels building societies are being treated unfairly.
http://www.bankofengland.co.uk/publications/inflationreport/ir09feb2.pdf .... Increased uncertainty about job prospects may cause households to lower spending in order to reduce borrowing and build up savings: the household saving rate picked up a little during 2008 to 1.8% in Q3, but remained at a historically low level. ... http://www.bankofengland.co.uk/publications/speeches/2008/speech364.pdf The household savings rate in the U.K. has been low and falling as shown in Chart 6. In this context, the U.K. was able to benefit from overseas finance to support our housing market by selling mortgage-backed securities to investors abroad, supporting rapid growth in RMBS issuance as shown in Chart 7.
A reminder: BoE began monetizing gilts (a.k.a. UK government bonds) 2 weeks ago. http://www.bankofengland.co.uk/publications/news/2009/019.htm. Whats more, the UK's Corporate Bond Secondary Market scheme is directly tethered to the gilt monetization. http://www.bankofengland.co.uk/publications/news/2009/025.htm It doesn't matter whom follows who. All ARE failing. ALL will fail. Bretton Woods II coming in April. Just coincidental in London. Once unthinkable, now unstoppable. obama-lama
No taxpayers worldwide must feel more ripped off and speechless than the Germans. They're are going to pay the price for the debt addiction of the rest of the globe even though they themselves lived well within their means. 1918 = the chains of Versailles 2009 = the chains of Maastricht
I'm from Germany and I can tell you that you don't have a clue. Germans took on a lot of debt to pay for the American lifestyle.
bullshit....you don't have a clue...you took on a lot of debt so that you can continue to sell your high end cars and other exports to America. If it wasn't for America buying your goods, YOUR lifestyle would be reduced.
At 0.1% that's $1 off a $1000 item, hardly earth shattering. But we should all listen to the current lot of experts, they've done such a good job so far. Here are the conclusions of a paper from January 2004 by the Minneapolis Fed. http://www.minneapolisfed.org/research/sr/sr331.pdf II. The Findings A. The Great Depression Episode We start with the Great Depression episode, 1929â34. The data for this episode do seem to show a link between deflation and depressionâbut not an overwhelmingly tight link. In Figure 1, we plot average inflation and output growth for the 16 countries for which we have data for this period. In 1929â34, all 16 countries had deflation, 8 had deflation and depression, and the other 8 had deflation but no depression. III. Concluding Remarks The data suggest that deflation is not closely related to depression. A broad historical look finds many more periods of deflation with reasonable growth than with depression and many more periods of depression with inflation than with deflation. Overall, the data show virtually no link between deflation and depression. This study simply characterizes the relation in the raw data between deflation and output growth, with no attempt to control for anything, like the type of monetary regime or the extent to which the deflation was anticipated. Perhaps a link between deflation and depression could be teased out of the data with a well-motivated set of controls. Our contribution here is to note that without such controls, the data show no obvious relationship. The bar has thus been raised for those who claim that deflation and depression are closely linked. It's a shame that Bernanke had to be at the helm during this crisis as he is perhaps too focussed on the deflation-depression link in the one time period where it could be argued for and has decided to run with it. Maybe he should have studied more than just one event in history before making sweeping judgements.
deflation is and has been gripping everyone for some time now and perhaps because the US system is State oriented rather than national as in the UK, little info is appearing in the US national media about cutbacks and how they are reducing services and how those reductions are impacting everyone in a variety of ways this weeks PBS 'NOW' program was about how the Nevada Medicaid funding cutback eliminated chemotherapy for 40 patients per day and high risk pregnancy ward; the program focused on a woman who'd had a radical double mastectomy as the example of how the economics affected her: http://www.pbs.org/now/shows/512/index.html