Bank of England Raises Interest Rates to 0.5%

THE GUARDIAN: Rise aims to combat soaring inflation despite faltering economic recovery from pandemic and deepening cost of living crisis

The Bank of England has raised interest rates to 0.5% to tackle soaring inflation amid intense pressure on households in Britain’s cost of living crisis. » | Richard Partington, Economics correspondent | Thursday, February 3, 2022

Bitcoin Could Become ‘Worthless’, Bank of England Warns

THE GUARDIAN: People investing in the cryptocurrency should be aware of risks, central bank says

Bitcoin peaked above $67,000 a piece in early November but could ‘practically drop to zero’, said the Bank of England’s deputy governor, Sir John Cunliffe. Illustration: Dado Ruvić/Reuters
The Bank of England has said that bitcoin could be “worthless” and people investing in the digital currency should be prepared to lose everything.

In a warning over the potential risks for investors, the central bank questioned whether there was any inherent worth in the most prominent digital currency, which has soared in value this year to close to $50,000 (£37,786) a piece.

The cryptocurrency peaked above $67,000 in early November, but suffered a sell-off after news first broke of the Omicron variant of coronavirus, before stabilising around its current level in the past week.

The Bank’s deputy governor, Sir Jon Cunliffe, said it had to be ready for risks linked to the rise of the crypto asset following rapid growth in its popularity. “Their price can vary quite considerably and they [bitcoins] could theoretically or practically drop to zero,” he told the BBC.

The market capitalisation of crypto assets has grown tenfold since early 2020 to about $2.6tn, representing about 1% of global financial assets. About 0.1% of UK households’ wealth is in bitcoin and similar crypto assets, such as ethereum and Binance coin. As many as 2.3 million people hold crypto assets, at an average amount of about £300 each. » | Richard Partington, Economics correspondent | Tuesday, December 14, 2021

Bank of England’s Rate Decision Leaves Many Economists Gasping for Air

THE GUARDIAN: Analysis: decision to keep rates on hold is not unpopular but governor’s signalling is roundly criticised

The Bank expects the base rate to be 1% by the end of 2022. Photograph: Leon Neal/Getty
It is “compulsory for the Bank of England governor to be an unreliable boyfriend”, Andrew Bailey joked during a press conference to explain why the central bank he runs kept interest rates on hold when action of some kind was expected.

As quips go, it fell flat in financial markets, where currency traders sold the pound, knocking more than 1% from sterling’s value against the US dollar.

It also left many economists gasping for air as the full implications of Bailey’s refusal to turn up to his own party began to sink in. He had stressed last month that monetary policy “will have to act” if there is a risk of inflation. Those words were not followed by action on Thursday, despite the rising wages and prices.

Gerard Lyons, a former candidate for governor and a former adviser to Boris Johnson, described the governor’s signalling as “appalling”, adding that by not correcting how the market or the media interpreted his comments he encouraged “hawkish expectations ahead of this meeting that was not merited by the recent data”.

Lyons went on to say the bank needed to learn from the US Federal Reserve, “to be on top of the data” and “guide” the market. » | Phillip Inman | Thursday, November 4, 2021

Bank of England Will Have to Act to Curb Inflation, Says Bailey

THE GUARDIAN: Governor signals central bank is preparing to raise interest rates amid surge in energy prices

The Bank of England governor, Andrew Bailey, said he continued to believe the recent jump in inflation would be temporary. Photograph: Hannah McKay/Reuters
The governor of the Bank of England has warned it will “have to act” to curb rising inflation, sending a new signal that it is gearing up to raise interest rates.

Andrew Bailey said he continued to believe the recent jump in inflation would be temporary, but he predicted a surge in energy prices would push it higher and make its climb last longer, increasing the risk of higher inflation expectations.

“Monetary policy cannot solve supply-side problems – but it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations,” Bailey said on Sunday during an online panel discussion organised by the Group of 30 consultative group. » | Guardian staff and agency | Monday, October 18, 2021

Bank of England ‘Addicted’ to Creating Money, Say Peers

THE GUARDIAN: BoE must be more transparent and justify use of quantitative easing, says Lords report

The Bank of England risks becoming addicted to creating money and needs to come clean about how it plans to unwind its £895bn bond-buying programme, the House of Lords has warned.

A report from a Lords committee – the members of which include the former Threadneedle Street governor Mervyn King – said there was a threat of quantitative easing (QE) leading to higher inflation and causing damage to the government’s finances.

The Bank started using QE, a process whereby it creates money by buying government and corporate bonds, in 2009 during the global financial crisis, but has stepped up its use during the coronavirus pandemic.

But the Lords economic affairs committee said the Bank had become too dependent on the use of QE, which it said was widening Britain’s wealth gap by boosting asset prices.

Michael Forsyth, the committee’s chairman, said: “The Bank of England has become addicted to quantitative easing. It appears to be its answer to all the country’s economic problems and by the end of 2021, the Bank will own an eye-watering £875bn of government bonds and £20bn in corporate bonds.” » | Larry Elliot, Economics editor | Friday, July 16, 2021

The clowns of Threadneedle Street! The fools don’t understand the first principles of sound economics! It’s all to do with Economics 101! They must have missed those lectures at university! We are being led by fools! We really are! By creating a distortion in the market—in this case, the distortion of super cheap money, brought about by setting extremely low and unhealthy interest rates, and for such a protracted period of time (11+ years)—they have unwittingly enriched the already superrich, the squillionaires, and impoverished the rest. In fact, it has been made virtually impossible for the less-than-privileged young to gain a foothold in the housing market unless, of course, Daddy is able to help darling son or darling daughter along the way with a generous pecuniary gift! Alas, for many of our young people today, such a scenario is a pipe dream. There is one thing that our central bankers need to understand: The economy should be run for the benefit of the many, not the few! – © Mark

UK Banks Given Six Months to Prepare for Negative Interest Rates

THE GUARDIAN: Bank of England’s monetary policy committee votes to keep rate at 0.1% but gives banks six-month deadline

The Bank of England took a step closer to introducing negative interest rates for the first time on Thursday, after it gave lenders six months to prepare for such a move.

Threadneedle Street’s monetary policy committee (MPC) voted unanimously to keep the official interest rate at historically low levels while it agreed to set the deadline for banks to prepare themselves after policymakers said they were ready to make negative lending rates part of their toolkit.

According to the minutes of the MPC meeting, officials were split over asking lenders to put in place the measures needed to facilitate negative rates on loans and mortgages, with some fearing it would signal to investors that the central bank planned to move ahead in the next few months. » | Phillip Inman | Thursday, February 4, 2021

The Irresponsible Bank of England Keeps Interest Rate Down At Record Low

Simon Rose of Save Our Savers, interviewed on Sky News after the Bank of England's MPC announced the 60th month of base rate at 0.5%.

BBC: UK interest rates kept at record low: UK interest rates have been held at 0.5% for another month, the Bank of England has said. » | Thursday, March 06, 2014

Mark Carney: No Need for an Immediate Rate Rise

Mark Carney, Canadian Governor of the Bank of England

THE DAILY TELEGRAPH: Bank of England governor seeks to reassure markets that interest rate rise is not imminent, saying he doesn't want to focus on one indicator

Bank of England Governor Mark Carney has pledged there will be no “immediate” increase in interest rates as unemployment nudges closer to the 7pc threshold in an apparent softening of his forward guidance policy.

He said Bank of England policymakers look at “overall conditions in the whole labour market”, rather than just one indicator, and that any change, when it comes, would be “very gradual”.

The governor, who said that the UK economy was "in a different place" to when he introduced the guidance, added: “We don’t see an immediate need to change monetary policy."

Asked if he would consider lowering the 7pc threshold, Mr Carney added: “There are a broad range of things we could do, I wouldn’t jump to that conclusion … we’re trying to get across is that it’s all about overall conditions in the labour market.

“We wouldn’t want to detract from that focus by unnecessarily focusing on one indicator.” » | Denise Roland | Thursday, January 23, 2014

My comment:

"No need for an immediate rise [in interest rates]" – Mark Carney

No, there is no need for him. He's sitting pretty with his huge salary and exorbitant expenses. The rest of us have to make ends meet from our savings. What a thoughtless, unreasonable man Carney is!

Never in my lifetime can I remember not being able to get interest on my capital that at least equates to the rate of inflation, and then some. Does this man have no sense of true capitalism? Does this man have no sense of economic history?

What an utter disappointment this Governor is! – © Mark

This comment appears here too.

Queen Talks of 'Lax' Bankers and 'Toothless' Regulators behind Financial Crisis

THE DAILY TELEGRAPH: The Queen has spoken about "lax" City workers and a banking regulator which "didn't have the teeth" to intervene as she discussed the causes of the financial crisis during a visit to the Bank of England

With her face on every banknote and coin in circulation, it is only natural that the Queen takes a sharp interest in the nation's finances, as she showed on a visit to the Bank of England today.

Her Majesty suggested the financial crisis of 2008 had happened because the Financial Services Authority “didn’t have the teeth” to rein in the biggest risk-takers.

The Duke of Edinburgh, meanwhile, had a typically blunt piece of advice for the Bank’s executives: “Don’t do it again!”

The Queen and the Duke grilled Bank of England staff during a visit which included a tour of a vault stacked with £27 billion worth of bullion.

Suit Kapadia, one of the Bank’s financial policy experts, said he wanted to answer a question the Queen asked academics at the London School of Economics in 2008 about why no one saw the financial crisis coming.

“Oh!” said the Queen, looking slightly taken aback.

Mr Kapadia said the City had got “complacent” because it thought risk was being managed better than it was, and the financial system had become too interconnected.

The Queen agreed: “People got a bit lax … perhaps it was difficult to foresee.”

She asked if the financial system was less interconnected now and concurred with a suggestion that part of the problem had been the lack of powers given to the Financial Services Authority. “They didn't have the teeth,” she said. » | Gordon Rayner, Chief Reporter | Thursday, December 13, 2012

Occupy Protesters Were Right, Says Bank of England Official
THE DAILY TELEGRAPH: The anti-capitalist protesters who occupied St Paul’s Cathedral were both morally and intellectually right, a senior Bank of England official said last night.

Andrew Haldane, a member of the Bank’s financial policy committee, said the Occupy movement was correct in its attack on the international financial system.

The Occupy movement sprang up last year and staged significant demonstrations in both the City of London and New York, protesting about the unequal distribution of wealth and the influence of the financial services industry. Members of the movement occupied the grounds of St Paul’s and remained camped there for more than three months until police evicted them in February last year.

“Occupy has been successful in its efforts to popularise the problems of the global financial system for one very simple reason; they are right,” Mr Haldane said last night. Mr Haldane, the Bank’s executive director for financial stability, was speaking to Occupy Economics, an offshoot of the Occupy movement, at an event in central London.

In a speech entitled Socially Useful Banking, he said the protesters had helped bring about a “reformation” in financial services and the way they are regulated.

Partly because of the protests, he suggested, both bank executives and policymakers were persuaded that banks must behave in a more moral way, and take greater account of inequality in wider society. » | James Kirkup, Deputy Political Editor | Monday, October 29, 2012

Bank of England Must Raise Interest Rates Before Its [sic] Too Late, Warns Chief Economist Spencer Dale
THE DAILY TELEGRAPH: The Bank of England is at risk of gradually losing public confidence due to persistently above-target inflation, posing an upward risk to future prices, the central bank's chief economist, Spencer Dale said on Thursday.

Mr Dale – who voted for higher interest rates this month and last – broadly defended the BoE's past policy decisions in a speech to asset managers, but said it was now time to tighten what he described as "extraordinarily loose" monetary policy.

Unlike some of his colleagues on the nine-strong Monetary Policy Committee, Mr Dale said he was wary about the apparent stability of public medium- and long-term inflation expectations in surveys.

"I'm cautious about how much comfort we can take from the relative stability in these measures," he said.

"Although some economists may like to think otherwise, most companies and households have far better things to do than spend time formulating detailed expectations of the rate of inflation likely to prevail in five or 10 years time."

He said the bank's credibility could dissipate slowly over time, posing a major upside risk to the BoE's current forecasts of inflation falling back to target.

Specifically, the risk was that the public would think the BoE was prepared to tolerate very lengthy periods of above target inflation, rather than take rapid action to bring prices back to target, Mr Dale said. Read on and comment » | Thursday, March 24, 2011

Britain at Risk of Another Financial Crisis, Bank of England Chief Warns
THE DAILY TELEGRAPH: Britain risks suffering another financial crisis without reform of the country’s banks, the Governor of the Bank of England warns today.

In an interview with The Daily Telegraph, Mervyn King says that “imbalances” in the banking system remain and are “beginning to grow again”.

Mr King urges high street banks to take a better, longer term view towards their customers and to stop focusing on the need to “simply maximise profits next week”.

He accuses them of routinely exploiting their millions of customers. “If it’s possible [for financial services firms] to make money out of gullible or unsuspecting customers, particularly institutional customers, [they think] that is perfectly acceptable,” he says.

The Governor criticises the “weight put on the importance and value of takeovers” and raises concerns that companies with good reputations have been “destroyed” in the search for short-term profits.

Mr King expresses regret for not sounding a louder warning over his concerns before the last banking crisis.

The Governor’s remarks are a warning to George Osborne, the Chancellor, as a government commission considers whether to force high street banks to sell off their investment banking arms. Continue reading and comment >>> Robert Winnett, Deputy Political Editor | Friday, March 04, 2011

Anger at the Banks Is Justified, Mervyn King Says
THE DAILY TELEGRAPH: The Governor of the Bank of England, Mervyn King, has expressed "surprise" that the public is not more angry with the bankers who caused the recession.

In some of his strongest language yet, Mervyn King today claimed the fall in households' living standards was the fault of the financial services sector and he expressed sympathy that innocent families paying the price.

"The people whose jobs were destroyed were in no way responsible for the excesses of the financial sector and the crisis that followed," he told MPs on the Treasury Select Committee.

In most aspects, he said, the economy had been on a sound footing before the crisis. Previous downturns were often caused by inefficiencies or weak management and were useful opportunities to improve systems. "None of that applied in this crisis," he said. "We had quite a successfully operating economy."

The people who are now suffering "did not get bonuses of the scale people in the financial sector got". The financial crisis may have occurred two years ago but, as austerity measures kick in, "the cost is now being felt", he said.

It remains "a big political problem", he added: "I'm surprised the real anger hasn't been greater than it has." >>> Philip Aldrick, Economics Editor | Tuesday, March 01, 2011

Mervyn King Warns of Inflation for Next Three Years
THE DAILY TELEGRAPH: Mervyn King, the Governor of the Bank of England, has warned that inflation could remain high for the next two to three years, leading to a substantial fall in many people's real incomes.

With the average worker's salary forecast to tick up by little more than 2 per cent a year, unable to match the escalating the cost of living, millions of families will feel significantly worse off, experts warned.

Mr King's warning came as official data revealed that inflation, as measured by the Consumer Prices Index, climbed from 3.7 per cent in December last year to 4 per cent in January, the highest level for over two years.

The surging price of oil, petrol and the increase in the rate of VAT, which pushed up the price of alcohol and restaurant meals, were the main reasons for the jump.

The Retail Prices Index, a measure of inflation that many believe more accurately reflects the true cost of living because it contains housing costs, increased from 4.8 per cent to 5.1 per cent.

This is now the 13th consecutive month that the CPI figure has been above the Treasury target of 2 per cent, prompting Mr King to write a letter of explanation to George Osborne, the Chancellor. >>> Harry Wallop, Consumer Affairs Editor | Tuesday, February 15, 2011

THE DAILY TELEGRAPH: The Bank of England has been utterly and consistently wrong on inflation: stupidity or dishonesty? >>> Daniel Hannan | Tuesday, February 15, 2011

Bank of England Chief Mervyn King: Standard of Living to Plunge at Fastest Rate Since 1920s
Households face the most dramatic squeeze in living standards since the 1920s, the Governor of the Bank of England warned, as he reacted to the shock disclosure that the economy was shrinking again

THE DAILY TELEGRAPH: Families will see their disposable income eaten up as they “pay the inevitable price” for the financial crisis, Mervyn King warned.

With wages failing to keep pace with rising inflation, workers’ take- home pay will end the year worth the same as in 2005 — the most prolonged fall in living standards for more than 80 years, he claimed.

Mr King issued the warning in a speech in Newcastle upon Tyne after official figures showed that gross domestic product fell by 0.5 per cent during the final three months last year. The Government blamed the unexpected reduction — the first since the third quarter of 2009 — on the freezing weather that paralysed much of the country last month.

But there were fears that the country was poised to slip back into recession, defined as two successive quarters of negative growth. Economists said the situation was “an absolute disaster”. Read on and comment >>> Robert Winnett, Deputy Political Editor | Tuesday, January 25, 2011

Bank of England Governor Mervyn King Warns Unions Accept Cuts or 'Fail Your Children'
THE TELEGRAPH: Meryn King, the Governor of the Bank of England, has urged the unions to accept public sector reforms and jobs cuts by warning that anything short of tackling the UK's record Budget deficit would “fail the next generation”.



Addressing the Trades Union Congress, he described the current deficit as “unsustainable” and, in an implicit defence of the Coalition's policy, argued that “the current plan ... to reduce the deficit steadily over five years [is] a more gradual fiscal tightening than in some other countries”.

“Vague promises would not have been enough,” he told the Manchester conference, where union leaders have described the Government as the “Demolition Coalition” and threatened civil disobedience in protest at the planned reforms.

“Market reaction to rising sovereign debt can turn quickly from benign to malign, as we saw in the euro area earlier this year. It is not sensible to risk a damaging rise in long-term interest rates that would make investment and the cost of mortgages more expensive,” Mr King said.

“The costs of this crisis will be with us for a generation. And we owe it to the next generation to seize this opportunity to put in place the reforms that will make another crisis much less likely and much less damaging.”

He stressed that reducing the Budget deficit, which is forecast to hit £149bn this year – the largest peacetime deficit in history and the biggest as a proportion of GDP in Europe, is one of a number of necessary reforms, and will require co-operation from the unions. >>> Philip Aldrick, Economics Editor | Wednesday, September 15, 2010

Austerity Britain Will Hate Its New Government, Says King
TIMES ONLINE: The Governor of the Bank of England was at the centre of an electoral storm last night after saying that the austerity measures needed to tackle Britain’s budget deficit would be so unpopular that whoever wins next week would not get back into government for a generation.

Mervyn King’s opinion, revealed hours before the prime ministerial debate on the economy, came as a respected think-tank predicted that taxes would have to rise by the equivalent of a 6p-in-the-pound increase in income tax over the next ten years.

The Governor’s prediction was made to the American economist David Hale, who passed on the remarks in an Australian television interview. Mr Hale, who has known Mr King for many years, was commenting on debt levels in major economies when he turned to the British election. “I saw the Governor of the Bank of England last week when I was in London, and he told me whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be,” he said.

The Times has also learnt that Mr King gave a further indication of the concerns in Threadneedle Street when he recently told a senior American official that the markets would take a very aggressive view if no credible plan was contained in the Queen’s Speech on May 25. >>> Patrick Hosking, Peter Stiff, Richard Partington | Friday, April 30, 2010

Sorry, Ma’am! It’s Time for Us to Accept the Euro
Successive governments, along with the Bank of England, have shown that they are quite incapeable of taking good care of our currency. They’re obviuosly unable to maintain its value. Now, it seems, that dear Merve doesn’t even hide the fact! He wants a weak currency in order to “rebalance the nation’s economy”. What the hell does “rebalance the nation’s economy” mean anyway? It means nothing! These people are just trying to baffle us! What a load of bulldust it is! If these people had balanced the nation’s economy in the first place, they wouldn’t have to try and rebalance it now!

And what’s all this nonsense about quantitative easing? That’s a euphemism for printing money. History tells us where that leads to! It leads to hyperinflation.

It seems to me that neither the government nor the Bank of England are serious about maintaining a stable and valuable pound. People at the top of the banking sector don’t need to care about the pound’s falling value. All they have to do is award themselves hefty bonuses to make up for the lost value of their savings and salaries. For less privileged folk, this is not, alas, a possibility. So, with the pound falling dramatically in value and interest rates remaining very low, and likely to do so for quite some time to come, the people who are becoming poorer and poorer are ordinary folk, i.e. people who do not work in banks! Therefore, perhaps sadly, it is time to get rid of the pound and place our currency into good, safe hands – into the hands of the European Central Bank (ECB).

I, for one, am looking forward to the day when we shall have a stable and desirable currency. The euro must surely be the currency of the future of all European nations. It must surely also be the currency for the future of the United Kingdom, too. So let’s adopt it before we’ll be forced to do so by circumstances beyond our control. By that time the pound sterling may have have become next to worthless. – © Mark

Sterling Slides After BoE Chief Mervyn King Backs a Weak Pound
THE TELEGRAPH: Sterling fell to its weakest against the euro in more than 5½ months, pressured after Bank of England Governor Mervyn King said a weak domestic currency was helping to rebalance the nation's economy.

The UK currency also hit a near 2½-month low versus the dollar, stung by Mr King's comment to a regional UK newspaper that sterling's fall "will be helpful" to rebalance the UK economy to one focused more on exports.

While the comments reiterated the central bank's long-held view on the currency and the economy, analysts said the market considered his remarks a good opportunity to wipe out sterling's gains made the previous day.

Sterling had rallied on Wednesday after minutes from the BoE's policy meeting earlier this month showed a unanimous vote not to extend quantitative easing in September.

Market participants said those gains had been overdone, and some analysts said that even though King's comments on Thursday did not offer new insight into the BoE's position on sterling, his statement helped to revive momentum to dump the pound.

"When the market's down on a currency, it will jump on anything that justifies selling it," said Stuart Bennett, currency strategist at Calyon in London.

"Sterling is certainly the whipping boy at the moment."

The euro climbed roughly 1.5pc on the day to 91.53p, its highest since early April. Daily trade volumes surged on the move, with the number of trades executed on the Reuters Dealing system hitting its highest in at least three months.

Thursday's move put the euro on course to posting its best daily performance against the pound since late April. >>> Reuters | Thursday, September 24, 2009

Bank Calls Unprecedented Meeting of Economists
THE TELEGRAPH: The Bank of England has summoned the City's leading economists to an unprecedented meeting in Threadneedle Street, as the pound plunges amid growing confusion over its radical Quantitative Easing (QE) policy.

The Bank will host a seminar of all London's major economists next Tuesday – the first time it has invited them in en masse in recent memory – in what has been construed as a sign that it fears market participants are starting to lose faith in its efforts to pump cash into the economy. The move has also sparked speculation that it is poised to announce a major change to the monetary policy framework, although insiders dismissed such suggestions.

It came after the minutes from the Bank's latest Monetary Policy Committee meeting revealed that the idea of cutting the interest rate banks are paid on the reserves they hold there was not discussed this month. The pound has lurched lower in recent weeks, thanks in part to speculation that the Bank will impose charges on banks for holding excessive amounts of cash in reserve at its vaults. Under QE, it is pumping £175bn into the economy, but much of this cash is sitting in banks' reserve accounts rather than being recycled and flowing around the broader economy.

The suspicion that the Bank will soon take action to mitigate this has pushed down market interest rates sharply and contributed to an almost 5pc fall in the pound against other leading currencies. It has caused gilt prices and short-term interest rates to fluctuate wildly in recent weeks. >>> Edmund Conway and Angela Monaghan | Wednesday, September 23, 2009

Quantitative easing >>>

It’s Time to Adopt the Euro >>> Mark Alexander | Saturday, September 19, 2009

Britain Showing Signs of Heading Towards 1930s-style Depression, Says Bank
THE TELEGRAPH: Britain is showing signs of sliding towards a 1930s-style depression, the Bank of England says today for the first time.

The country is displaying early symptoms of being trapped in a so-called “debt deflation trap” where families find themselves pushed further and further into the red every month, according to a Bank report published today.

The stark warning will cause serious concerns, since it was this combination of falling prices and soaring debt burdens that plagued the US in the 1930s.

The Bank is using its Quarterly Bulletin to highlight the threat posed to the economy by deflation – where prices fall each year rather than rise.

Although inflation is currently in positive territory, it is expected to become negative in the coming months.

The Bank is worried that this may combine with high levels of indebtedness to squeeze families further.

It says that families with high debts could fall prey to the debt deflation trap. This means that the cost of their debts, which are fixed, would rise compared to average prices throughout the economy. While inflation erodes debts, deflation makes them relatively higher.

The Bank’s paper suggests that Britain is particularly at risk because there is a high proportion of families with significant levels of debt, and many of them are on fixed mortgage rate, which means they will not benefit from rate cuts.

Britons’ total personal debt – the amount owed on mortgages, loans and credit cards – is, at £1.46 trillion, more than the value of what the country produces in a year.

Total personal debt has risen by 165 per cent since 1997 and each household now owes an average of about £60,000.

The Conservatives claim this is the highest personal debt level in the world. >>> By Edmund Conway, Economics Editor | Monday, March 16, 2009

The Dawning of a New Dark Age (Paperback & Hardback) – Free delivery >>>

The Bank of England's Printing Presses Are Ready to Roll
THE TELEGRAPH: The big question is whether the extra cash will actually be spent, says Edmund Conway.

As far as markets are concerned, this is World War Three. Share prices have fallen so far and fast in the United States that they are back where they were when Bill Clinton was finishing his first term and John Major was still clinging on to power. Despite a small pick-up yesterday, the sense of misery and resignation remains so pervasive that US markets are now priced for either world war or full-scale depression.

Stocks are better value than they have been for all 1,680 months since 1870 save for brief periods in 1920 (post-WWI adaptation), 1932 (Great Depression), 1942 (WWII) and 1982 (stagflation hangover), according to calculations on the US markets from Lombard Street Research.

Observing this recession is rather like watching slow-motion footage of a car crash. And at the front bumper of the vehicle are share prices and money growth. Shares started really sliding last autumn, just before the bankruptcy of Lehman Brothers coincided with a sudden and unprecedented collapse in world trade. But the impact of the collision is still travelling through the frame of the car, shattering individuals' fortunes with inexorable inevitability as it passes on. Investors have abandoned the markets because of their fright about the slide in profits and the rise in redundancies that lie ahead in the coming months.

Yet for all the sound and fury, the full scale of the impact has yet to be felt. It will only be at the end of this year, when unemployment is closer to three million than two million, that we will truly know how it feels to be in the thick of a recession. Sir Fred Goodwin may consider himself a victim of unreasonable public recrimination now, but I dread to think how the revelation of his pension would have gone down six or eight months hence with 10 per cent out of work for the first time since the 1980s. >>> By Edmund Conway | Thursday, March 5, 2009

The Dawning of a New Dark Age (Paperback & Hardback) – Free delivery >>>