Wednesday, December 7, 2011

UK house prices down 16 percent from their peak

For the last two years, UK house prices have bounced around.  One month, they are up; the next they are down.  November was a down month, but who knows, January could record an increase.

Overall, house prices are down 16 percent from their summer 2007 peak.  Call me Cassandra if you want, but I don't think house prices will recover this side of 2020. 

Wednesday, November 30, 2011

Why the ECB refuses to be a Lender of Last Resort

Paul De Grauwe

The euro has a matter of weeks to save itself, with several institutions now preparing for its collapse. Given this, why does the ECB still refuse to bail out Europe’s heavily indebted countries? This column provides an explanation. It says that the ECB may well be behaving rationally but adds that such behaviour is also foolish – and dangerous.

Sunday, November 27, 2011

Thursday, November 17, 2011

Should the Bank of England mail everyone a fifty quid bank note?

The UK economy is barely growing. To stimulate demand, should the Bank of England mail out a voucher worth fifty quid to every citizen of this fair land and tell them to go out and spend it on beer, fags and cheap Chinese electronics? It sounds like a mad idea, but is it any stranger than the Bank of England printing money to buy up goverment debt?

In a recent speech to the Council of Mortgage lenders - Charlie Bean, Deputy Governor for Monetary Policy, Bank of England - seriously discussed the voucher distribution idea:

"Several commentators have suggested that the effectiveness of quantitative easing could be enhanced by spending the newly created money on something other than government debt.

Monday, November 7, 2011

Lets make some money

Jim Lacey - professor of strategic studies at the US Marine Corps War College - was recently walking through the Occupy Wall Street camp in New York. He noticed an interesting development in monetary theory.

As luck would have it, though, many of them will not have to worry about money for much longer, as several OWS occupiers had the answer to everyone’s financial problems. This innovative group, all sporting $4-bill badges, claimed to have reimagined money. Intrigued, I asked how such a reimagination worked. In short, it seems that people are to create money as they need it for their own happiness and the happiness of others.

This I liked, as I have a wonderful imagination and a deep need to use my money so as to increase my own happiness. I promptly imagined a page of my notebook into $10,000 and gave it to one of the $4 lapel-badge ladies. 

She looked at the sheet of paper and smiled at me. So far, so good. I then asked for her laptop and told her she could keep the $8,000 change I was due so as to further increase her own happiness. She quickly turned away, taking her laptop with her and leaving me short $10,000 of reimagined money.

I assume the system has some kinks that the revolution will figure out as it goes.

Before we all snicker at the naivety of the $4 demonstrators, isn't this the same idea that the Bank of England is pursuing? Aren't they printing money to try to make us happy?

Thursday, October 20, 2011

The UK Inflation-Unemployment trade-off

UK Inflation-unemployment trade off