Bursting bond bubble will destroy wealth on a giant scale January 21, 2013 ONE of the greatest risks facing the world economy is a wholesale crash in government bonds markets. Yields on UK gilts, US Treasury bonds and others are still much too low – and that means that capital values are too high (the price of fixed income securities move inversely to their yield). Given the extraordinarily [...]
From Britain’s triple-dip to a three-speed global economy January 20, 2013 BUSES come in twos – when there is no snow involved, that is – but economics in 2013 seems to be all about threes. Britain is dangerously close to being in a triple-dip recession – and partly as a result we are now seeing a three-speed world economy. We will know on Friday whether UK [...]
Why sterling’s decline could push up inflation once again January 17, 2013 THERE was a time when a weaker pound used to boost exports. These days, it doesn’t appear to make a noticeable difference, in the short term at least. Last year’s brilliant growth in car exports – the UK sold more cars abroad than ever before in its history, one of the most cheerful news stories [...]
Internet is the new meteorite that extinguished the dinosaurs January 16, 2013 IN the grand scheme of things, the news that JP Morgan’s profits hit a record high, while Goldman Sachs massively smashed expectations, was the most significant business story of the week. Wall Street is back; the US financial system is in much better shape than Britain’s. At the same time, the fact that Jamie Dimon, [...]
Forget Europe: our only hope is to trade with emerging giants January 15, 2013 BY 2050, the largest European economies will be ranked just ninth and tenth globally; and the UK will have fallen to 11th, behind Germany and France – or so says PwC. This leads to two conclusions: first, we really need a supply-side revolution to boost long-term UK growth as there is no reason why the [...]
HMV’s demise shows why even giant firms have feet of clay January 14, 2013 SO that’s it, then: HMV has finally gone into administration, the latest, most tragic victim of the revolution that is sweeping away erstwhile giants. This comes just days after Jessops, the camera firm, was liquidated, and after the demise of Comet, the electrical retailer. So who’s responsible? Quite simply, all of us. Consumers are all-powerful, [...]
Why the European dream has gone sour for so many firms January 13, 2013 WHEN it comes to the European Union, there is the good, the bad and the ugly. The free movement of goods, capital, services and people – the four freedoms – are a great, visionary, cosmopolitan and truly liberal idea in the classical, libertarian sense of the word; the only downside is that one of them, [...]
Our struggling retailers face years of creative destruction January 10, 2013 WE are now reaching a tipping point for British retailers. A combination of historically weak growth in consumer spending and a new phase in the digital revolution is on the verge of destroying many business models. As online sales continue to boom, and those from stores start to slide, rather than merely grow more slowly, [...]
Forget rebalancing: the City is becoming even more important January 9, 2013 PEOPLE, companies and countries should play to their strengths. They should do what they are good at. This is the principle of comparative advantage – the formal version of which states that we should specialise in what we can produce at a lower opportunity cost than our competitors. That doesn’t mean that we should not [...]
Vested interests will fight to block necessary spending cuts January 8, 2013 GIVEN the fury surrounding the welfare debate in Parliament yesterday, you would be forgiven for believing that this was about a major downsizing of the welfare state. In reality, the coalition will be capping the increase in most working age benefits to 1 per cent for the next three years, ensuring a real terms cut [...]