Oct. 20 (Bloomberg) -- Chancellor of the Exchequer George Osborne detailed the deepest budget cuts ever in Britain, eliminating 500,000 public-sector jobs and imposing a levy on banks to extract the “maximum sustainable” revenue.Unfortunately, just a couple days later, Cameron and Osborne started pressuring the BoE (as if they needed to be pressured to do so...) to print, print, and print:
Osborne said he agreed with the Office for Budget Responsibility estimate that 490,000 public-sector workers will lose their jobs over four years. He said much of that will be achievable by not filling vacant posts.
Oct. 22 (Bloomberg) -- Bank of England Governor Mervyn King is under pressure to show just how far he’s willing to go to support Prime Minister David Cameron’s once-in-a-generation austerity drive.This is one of these OMG!!!! moments... Low inflation? Economic growth? Then, out of the blue, the worst in a lifetime crisis? There was no economic growth to begin with, there was just massive, historic credit inflation. Sometimes, reporters should just avoid putting in there own analysis when the subject is beyond their understanding...
Cameron, 44, has broken with the convention established by the previous Labour government and publicly put the onus on the Bank of England to shore up Britain’s economy. Finance minister George Osborne, 39, said as recently as yesterday that the central bank can “deploy monetary policy tools” to offset the budget squeeze he unveiled this week to cut half a million jobs.
“I’ve always been, if you like, a fiscal conservative but a monetary activist,” Cameron said this month.
King said in early 2008 that it would be “foolish” for politicians to try to influence monetary policy. The financial crisis has nevertheless reshaped the relationship between the central bank, based in London’s eastern financial district, and the Treasury in Westminster.
At stake is the independence that King says helped foster the longest streak of uninterrupted economic growth in two centuries and low inflation in the decade before the crisis hit.
Just about two weeks ago, I wrote my Thoughts on the never seen before actions of the Bank of Japan:
The actions of the Bank of Japan, besides being completely wasteful and destructive, just confirm some of the many facts that we already knew:
- Complete lack of independence from the political power
- Complete lack of understanding of economics
- Complete of integrity