Archive for the Debt Category

Britain’s debt dilemma: Not too high, not too low or the UK economy risks disaster

Britain’s debt dilemma: Not too high, not too low or the UK economy risks disaster

The Bank of England Financial Policy Committee (FPC) has signalled that it has become worried again about debt. Its specific focus is households.Consumer credit, for example, grew by 10 per cent during 2016, far faster than the economy as a whole. A lot of household debt is in

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The coming explosion in natural debt is a serious risk to the economy

The coming explosion in natural debt is a serious risk to the economy

Martin Feldstein of Harvard is an economist who should always be taken seriously. Writing in 1997 about the forthcoming introduction of the euro, for example, he argued that “the adverse economic effects of a single currency on unemployment would outweigh any potential gains from trade flows”. He

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The IMF is in trouble – and not just due to its poor forecasts

The IMF is in trouble - and not just due to its poor forecasts

The International Monetary Fund (IMF) has played a prominent role in world financial affairs in the post-Second World War period. In the 1950s and 1960s, its main purpose was to support the system of fixed exchange rates. Since then its activities have evolved to embrace developing economies

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China is drowning in private sector debt: there’s no telling how this one will end

The eyes of the financial and economics worlds are now fixed on China, with focus predominantly on Chinese stock markets and the country’s GDP figures.  A fascinating perspective was provided last week in the leafy borough of Kingston upon Thames.  The university has recruited the Australian Steve Keen

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It is not just the Euro. Southern Europe faces a major structural crisis

Major shocks to social and economic systems ruthlessly expose weaknesses which can be contained in more normal times.  When the price of oil quadrupled in 1973/74, the different levels of resilience in the labour markets of Western Europe were quickly revealed.  Inflation initially rose sharply everywhere.  By

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CEO compensation and Jamaican demands for reparations: two sides of the same coin

David Cameron’s visit to Jamaica last week led to vociferous demands for the UK to pay the Caribbean island billions of pounds in reparations for slavery.  Most people here reacted with predictable eye-rolls and sighs.  Slavery was abolished throughout the British Empire in 1833, nearly two centuries

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How do you deal with someone who thinks the Earth is flat?

Imagine you are relaxing at a bar enjoying a drink after a hard day’s work.  The person next to you strikes up a conversation.  Initially he seems reasonable.  But soon he begins to go on at length about how the Earth is flat and how a misguided

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Keynesians are wrong: Cutting public spending can boost economic growth

The key aim of George Osborne’s economic policy has been to eliminate the financial deficit of the public sector.  The main way of trying to achieve has been to squeeze public spending.  The orthodox economic textbooks maintain that this withdraws demand from the economy, and so leads

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Guaranteed bank deposits and the market for lemons

One aspect of the Greek crisis which will affect many readers is the reduction in the amount of cash in a bank deposit which is protected.  The Bank of England announced that the current guaranteed amount of £85,000 will be cut to £75,000 on 1 January.  This

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Bribing the electorate: new rules of the game thanks to zero inflation

The temptation to believe in the concept of a free lunch is one which has proved irresistible to numerous governments through the ages. Henry VIII, for example, has seized popular imagination once again through the brilliant portrayal of him by Damian Lewis in Wolf Hall. Bluff King

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