Just Another 24 Hours » gfc

Finger pointing at China won’t get us anywhere

Daniel Young — Tue, 27 Dec 2011 03:13:13 +0000

Are we Westerners in any position to lecture the Chinese on how they should run their economy?

I don’t think so.

Its a hot topic given the fact that the Chinese economy has a healthy growth outlook.

Western Europe is deep in the doldrums, the UK is about to go into its third recession in five years or something.

It’s like we Westerners were all gung-ho to take advantage of globalisation when it suited us.

But now the tables have turned.

And power is shifting.

China gets criticised for not balancing the books when it comes to trade.

The countries leveling this charge against the Chinese should be looking at the opportunities to export to China.

That’s the only solution to a trade deficit. They have to make their economy and its output attractive to what will soon by the biggest economy in the world.

There’s also the constant back stabbing about China’s human rights policies.

As if the West has that sorted.

Western systems have concentrated wealth into the hands of the 1 per cent during the last 50 years while the Chinese lifted 600million people out of poverty.

The powers that be in the UK and other Westerns economies should be providing creative solutions that will drive economic growth over the long term.

Not pointing the finger at China and being all holier than thou.

I’m ashamed by the hypocrisy of the West. Short termism and diversionary tactics will get us nowhere.

This BBC podcast (The Forum) provides an excellent example of the sort of sermons that Western experts are pumping out without providing anything constructive on the home front.

Quantative Easing is latest effort to stimulate lending in the UK

Daniel Young — Mon, 09 Mar 2009 12:37:02 +0000

My mother who lives in London tipped me off about Quantative Easing last night and I just read this story in The Guardian. The bank of England is buying gilts (Government bonds) from banks and financial institutions, which will provide the latter with the capital that they may like to use to start lending again. Apparently, even well run small businesses in the UK are having trouble getting even the most meagre overdraft or loan at the moment.

Wikipedia defines gilts as: Gilts are bonds issued by the governments of the United Kingdom, South Africa, or Ireland. The term is of British origin, and refers to the debt securities issued by the Bank of England, which had a gilt (or gilded) edge. Hence, they are called gilt-edged securities, or gilts for short. Generally, when a market participant refers to gilts, what is meant is British gilts unless otherwise specified, and the description below applies to the UK gilt market. ONS data reveal that about two-thirds of all gilts are held by insurance companies and pension funds.

It sounds to me like a gilt is another form of debt.

This practice is also referred to as printing money because the central bank will create the money in order to buy the gilts – the value of which (pounds75billion) is equivalent to one and a half times the entire stock of notes in the economy.

It all sounds very full on and risky (not to mention complicated) and is further evidence if it were needed that we are still a very long way from being out of the woods of financial crisis.