Monthly Archives: November 2009

Chris Giles

Giving evidence at the Treasury Select Committee, Mervyn King, Bank of England governor, has just repeated his view that “banks that screw it up should be allowed to fail”.

You can see why. The Bank has also just revealed a few minutes ago that it engaged in secret emergency lending to RBS and HBOS at the height of the crisis last year. £61.6bn was lent between 1 October 2008 and 16 January 2009. These huge sums kept cash machines open. The alternative was very scary. No wonder King hates the banks so much.

Iran’s central bank governor says the country gained about $5 billion by shifting its foreign currency reserve basket from the US dollar to the euro, reports AFP. Mahmoud Bahmani was quoted by Iran’s state television as saying that ‘so far, we have seen a $5 billion benefit from shifting the (currency) basket to the euros from the dollar.’ He did not elaborate. Earlier this year, Iran said it was switching to the euro for its crude oil sales, which account for about 80 percent of its foreign income.

Chris Giles

Forgive me for cynicism, but both party leaders must have read the same focus group research. They have just given the same speech to the CBI annual conference, writes Chris Giles of the Financial Times. There is no point reading both leaders’ speeches. They are the same. Read more

What connects computer screens, green cars and military power? Rare earth elements, required for the manufacture of many advanced technologies, from hybrid cars to guided missiles. China enjoys 98 per cent of REE production, cornering the market after a single US mine was closed in the mid 1980s. Chinese companies have bought stakes in Australian and Canadian rare earths prospects and have tried unsuccessfully to buy the still idle US facility.

The debt load of Eastern Europe is apparently putting off investors. But there is worse news for rich countries: investors are betting that rich countries will default on their bonds Read more

Ralph Atkins

Is the economy doing better in Germany than in France? Or is it the other way around? Third quarter eurozone gross domestic product data indicated it was the former. German GDP rose by 0.7 per cent, compared with a measly 0.3 per cent in France.

But purchasing managers’ indices today still show France doing much better than its larger neighbour. The French composite index – covering manufacturing and services – stood at 59.8 in November. The equivalent reading for Germany was just 53.5. With the exception of a short burst in 2006, French private sector activity is growing at the fastest rate for about nine years Read more

Short-term interest rates in the US have turned negative. This might mean imminent disaster or it might be traders chasing safe investments as they look to secure end-of-year profits – choose between numerous explanations.

There are also competing explanations for the rise in US mortgage delinquency rates. Most of the rise is in people who are extremely late on their payments, rather than just a little: Read more

Chris Giles

The US will have a jobs rich recovery while Europe will have a jobless one. That is the unspoken conclusion of the OECD’s latest Economic Outlook, writes Chris Giles of the Financial Times. It uses some wonderful charts as evidence for its case.  Read more

Chris Giles

The Bank of England’s Mr Quantitative Easing predicted this morning normality returning to the Bank’s balance sheet “at some point”. England is likely to win the world cup “at some point” too. In contrast, Chris Giles of the Financial Times writes that normality will not return for years.  Read more

Capital control, anyone? Emerging markets are taking action to curb currency appreciation. Brazil – whose economy is recovering well – introduced a 2% tax on foreign capital inflows last month, and has just announced a further measure, effective today: there will be a tax on American depositary receipts, which allow foreigners to invest easily in Brazilian stocks. Meanwhile Indonesia has announced possible capital controls, sending its currency sharply lower.

The flight to gold continues, Read more

Mure Dickie

Ryuzo Miyao, a 45-year-old professor at Kobe University, is seen as being broadly in tune with such tenets of current BoJ policy. Read more

A report published by MIT suggests the world faces a uranium shortage from 2013. So, a few excel spreadsheets later, we have a rough-and-ready Vulnerability Index for you. Most vulnerable, by our reckoning, are France, Japan and South Korea. Most secure are Australia, Kazakhstan and Uzbekistan. More here.

Increasing use of nuclear energy requires more uranium, but we’re running out, apparently. And fast. Expect further debates on peak uranium.

The UN food security summit ends with platitudes but little action; the UN has launched a site to help the one billion internet users to feed the one billion hungry. But this is not just a third world issue: US hunger is at a 14-year high, with 49 million Americans now lacking adequate and consistent access to food.  Analysis by state shows Mississippi has the least food security.

Martin Wolf writes the speech he thinks Obama should have made to Hu Read more