Author: |Posted: 4:31 pm on 07/11/09
Category: Faisal Islam on Economics
A windswept beach. A university town. And a few hundred protesters dressed as finance ministers symbolically burying their heads sand.
It’s a lot harder to protest against the G7 rich man’s club, now that it’s the G20.
The agenda is somewhat more murky when it is China refusing to discuss climate finance, rather than the UK or the US.
So you could pass such protests off as an irrelevance.
As it happens, within the real meeting, one of the main aims of these campaigners – the Tobin tax – was getting the biggest boost it has ever received.
The idea that global currencies trades, capital flows and other trades could be subject to a small percentage tax has been a longstanding pipedream for development campaigners. It has two purposes.
To throw sand in the wheels of speculative activities (the description of Nobel prize-winning US economist James Tobin in 1978), dampening down its worst excesses.
And also to raise around half a trillion dollars for something: global poverty, climate change, debt relief, AIDS, malaria: take your pick.
Gordon Brown’s espousal of it, among four long term responses to the credit crunch, was a shock.
It is a proposal that has long interested economists.
Lord Turner was slapped down after musing about it in the summer in an interview with Prospect.
But there was a reference to the policy at the Pittsburgh G20 leaders conference. And let’s not forget that these days with it being the G20 and not the G7, the likes of Brazil are already around the top table with policies such as a 2 per cent tax on capital flows.
Eight years ago I chanced upon an unlikely source of support for a tax on speculative activities: George Soros.
‘I’m in favour of the Tobin tax. It doesn’t happen to coincide with my personal interest, but it could be a very good source of funds for providing global [public] goods,’ he told me in 2001 when I was Economics Correspondent at The Observer.
The main critique has been that it was impractical, and impossible to enforce if not agreed by the whole world.
Well, that appears to be the Prime minister’s agenda.
Though it’s worth knowing that a previous French proposal to study a Tobin tax to fund the Millennium Development Goals was vetoed at a G7 meeting, while Gordon Brown was chancellor.
Of course this is a highly political move.
George Osborne has outflanked the government on being tough on bonuses. He is desperate not to be seen as friendlier to bankers that Mr Darling and the Prime minister.
In an election Labour will be keen to paint him as an banker- loving Tory.
So he will tread carefully around this policy issue. Of course the banking lobby is against it. But the international community is not as against some form of this idea as you might think.
Author: |Posted: 6:57 pm on 06/11/09
Category: Copenhagen: Deal or No Deal?, Faisal Islam on Economics
ST ANDREWS, SCOTLAND – In the grounds of St Andrews’ famous Fairmont hotel there are some acclaimed championship golf courses. I doubt very much that the G20 finance ministers and central bankers arriving here tonight will be teeing off.
Having “saved the world economy” in Act 1, Act 2 appears to be the no less thorny task of saving the world itself.
The Chancellor has forced climate finance to the top of the agenda at breakfast tomorrow. The UK/EU plan is for finance worth $100bn per year from 2020, half of which will be raised from the private sector through carbon market mechanisms. read more
Author: |Posted: 5:52 pm on 05/11/09
Category: Faisal Islam on Economics
It’s a cosmic game of pin the tail on the donkey. The tail is the amount of money creation that the Bank of England deliberates over. The donkey is the British economy.
The Bank has just voted to increase its money creation exercise to £200 billion. A £25 billion increase is a little less than had been expected.
The Monetary Policy Committee is marginally less worried than thought about last month’s shock news that the economy is still in recession. It may be marginally more worried about the prospective inflationary consequences of its epic money creation scheme than the City believed. read more
Author: |Posted: 1:14 pm on 03/11/09
Category: Faisal Islam on Economics
Just over a year ago we thought that the £37bn injection of equity by the government into Lloyds and RBS was the landmark, never-to-be-repeated event. Bailout 1.0 literally saved the banking system from collapse, and was copied around the world.
Then, in January, came Bailout 2.0, which we were told would be a bailout not of the banks, but of the economy. That bailout was to enable the banks to continue lending to prospective homeowners and to businesses.
Author: |Posted: 1:43 pm on 02/11/09
Category: Faisal Islam on Economics
The independent panel of scientists argues that various illegal drugs are less harmful than legal ones, or even horse riding. The chief gets sacked by the home secretary, and apparently the rest of the panel are considering their positions.
So why doesn’t the home secretary appoint a panel of independent economists to advise on drugs policy instead? At the moment drugs policy seems to be authored by a coalition of tabloid headline writers and frightened politicians.
An economic take would be a forensic and brutal assessment of some unpalatable trade-offs.
Author: |Posted: 2:59 pm on 29/10/09
Category: Faisal Islam on Economics
So the US is out of recession. Unlike last Friday’s spectacular misprediction, the economists got this one right. In fact the markets shot up because the US’s 3rd quarter GDP figure showed 3.5 per cent growth (annualised).
So on an internationally comparable definition of recession (multiple consecutive quarters of contraction) the US has exited recession. It’s worth noting that within the US itself the NBER defines recessions in a different way, and is yet to pass judgement on this matter. What we can definitively say is that growth has returned to America, in a way that it hasn’t returned, for example, to Britain. read more
Author: |Posted: 2:18 pm on 28/10/09
Category: Faisal Islam on Economics
There’s £8bn more loans from the government to Northern Rock to let them lend it to all of you. On top of that there’s another £4bn of liquidity arrangements.
This takes the loan that had gone down to £15bn back up to £27bn, which will take “around a decade to pay off”, says the Rock’s chief executive.
Author: |Posted: 3:50 pm on 23/10/09
Category: Faisal Islam on Economics
I was returning from holiday this morning through Miami airport expecting to report on the end of the British recession.
In the US, the economic situation is now commonly referred to as “The Great Recession”. I think on that basis, following today’s third quarter GDP numbers our own quagnmire can confidently be termed “The Greatest Recession”. read more
Author: |Posted: 12:24 pm on 19/10/09
Category: Faisal Islam on Economics
Havana, Cuba seems an oddly appropriate place to be hearing the unsurprising renewed furore over bank bonuses in state-helped banks.
I’m holidaying here, but there’s much to remind of home.
Author: |Posted: 7:49 pm on 06/10/09
Category: Faisal Islam on Economics
Robert Chote was arguably the most dangerous man here at the Conservative Party conference. He was working through George Osborne’s speech at a fringe meeting alongside some journalists when his mobile rang. It was one of Mr Osborne’s lieutenants.
When a shadow chancellor is trying to prove his credibility and judgement to the nation, it’s no surprise that the chief of the fiscal watchdog the IFS, is directly lobbied by Tory hierarchy.
The £13bn number for the move to raise in the state pension age to 66 is in Mr Chote’s view ‘debatable’. read more
