Friday, December 17, 2010

Link from previous article

MPC's Adam Posen tells Bank of England not to 'overreact' to high inflation

"As much as we may be tempted to demonstrate to the public or to markets how upset we are about being above target, we have to take the right lesson from our mistakes and try to forecast better in future." He urged his colleagues against tightening policy in response to the "inherently" temporary effects of VAT rising to 20pc next month. Mr Posen's comments appear particularly targeted at his colleague Andrew Sentance, who has repeatedly voted for interest rate rises to rein in inflation and avoid the need for nasty increases further down the line.

Posted by sibley's b'stard child @ 12:52 PM (1663 views)
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6 thoughts on “Link from previous article

  • Artemis fund managers view released today (vested interest in equities duly noted)

    As investors turn to 2011, what justified concerns should they have? Sovereign debt is the biggest, in our view. This is a problem which will persist for years; because whichever way you look at it, its scale is astonishing.

    Begin with Liberty’s Land. Yes, the US economy is enormous, flexible and innovative. But US national debt stands at some $13.8 trillion, and is of course rising every day – by about $4.15 billion. A trillion is an almost stupefying number. To put it in perspective, (in)famously if you had spent one million dollars every single day since Christ was born, you still would not have spent a trillion dollars – let alone almost 14 trillion.

    In the UK, our national debt is £978 billion. Albeit commendably, the coalition is merely slowing the rate at which the maw must feed; and that debt will rise to at least £1.1 trillion next year. If Ireland, meanwhile, uses all the EU’s dole then it will double its national debt to €175 billion by 2014. The interest on that will be €8.5 billion a year.

    There is only one conclusion. To reduce the real value of its debts, the West’s (and Japan’s) only option is inflation. That, of course, is a very dangerous genie to let out; and only time will tell how or whether governments manage the consequences.

    On the other hand, inflation can be good for real assets – such as equities; and although his fund invests across the spectrum, the manager of the Artemis Strategic Assets Fund, William Littlewood, still regards equities as the most attractive assets at the moment.

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  • sibley's b'stard child says:

    Well, that’s okay then. When I can’t afford to heat my gaff any longer, i’ll instead benefit from the altruistic glow borne from the thought that someone else’s assets are over-performing.

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  • Sib’s – one of my mates has just moved to a rented property which is oil heated – they are rationing supply and have doubled the price ! – of course we are all in it together hence from the Artemis release “There is only one conclusion. To reduce the real value of its debts, the West’s (and Japan’s) only option is inflation”

    My other major concern is getting the inflation genie back in the bottle – past records on this are not good.

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  • sibley's b'stard child says:

    Blimey, i’ve heard that oil heating is ludicrously expensive at the best of times but double – ouch.

    OT – ironic that Hughton and Allerdyce should both get the boot just a week apart. You could have had the walrus back had you known sooner…

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  • Sibs – we’ve had 6 managers in 3 years – I’m just wondering if we could lure Wenger up North and then sack him 6 months later and put Fergie in charge.

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  • sibley's b'stard child says:

    Nah, they’re both accustomed to managing world class clubs. I think you’ve found the right level with Pardew. Good result against the Mickey Mousers on Saturday, mind.

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