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Thursday, July 15, 2004

Sixty Years on, the Australians Take the Bait 

The US Catches Another Poor Fish on its FTA Line
James Cumes
July 15, 2004
Ever since 1948, when they sent a special negotiator to Australia to try to conclude a Treaty of Friendship, Commerce and Navigation with Australia, the Americans have sought this kind of free entry into the Australian market - or, more correctly, into the Australian economy.
Now at last they have got what they want and this dumb Australian
Government - seeking image rather than substance - has given it to
them on a platter.
Both economies are in deep trouble - trouble that, in many ways, has the same poor-policy origins. Neither acknowledges - or even
understands - just how much trouble it is in. Both would have been
much wiser to resolve those problems or at least to confront them
squarely, than to seek "strength" through the conclusion of
an agreement with a weak partner - a partner that has been, for the
last thirty years, as wrong-headed as itself.
One of the more brilliant of our political leaders, many years ago,
in speaking of our immigration policy as it was then, said, "Two
wongs don't make a white." Certainly, in the case of the
US/Australia FTA, we can adjust that gem to its original concept and suggest that "two wrongs don't make a right policy."
What the US/Australia FTA illustrates is the inadequacy of the
political and, indeed, the mainstream intellectual leadership in
both countries - and in the West generally. We are preoccupying
ourselves with expedients that cannot resolve the real and
fundamental issues that confront us and we are pursuing goals and
doing it in ways that, if anything, can only make things worse.
The "pre-emptive" invasion of Iraq was one such
issue. This FTA is another.

James Cumes

Congress approves trade deal
From correspondents in Washington
July 15, 2004
US Congress moved today to approve a free trade agreement with
Australia.
The US sees Australia as an important market for US manufactured
goods and a strong ally in the war against terrorism that has "been
there when it counted most".
The House voted 314-109 to make Australia only the seventh nation to
enjoy a bilateral free-trade relationship with the US.
The Senate is expected to follow suit tomorrow with a vote to
implement the agreement signed by the two countries in February.
"It will expand one of the most important bilateral relationships
that exists," said Representative David Dreier as the House took up
the agreement.
The measure had robust bipartisan backing because Australia, unlike
less developed free-trade partners, has strong labour rights and
environmental laws and poses no threat to US jobs.
"If you can't agree with this trade agreement, I don't know what
trade agreement you're ever going to agree with," said
Representative Jim Moran.
But there were some detractors, mainly among members concerned about
a gradual increase in Australian beef and dairy products and a
provision in the bill that some say could impede future legislative
efforts to permit the reimportation of prescription drugs.
Under the agreement, 99 per cent of American manufactured goods and
all agriculture exports would immediately gain duty-free access.
Other provisions give increased protection for intellectual property
such as movies and video games.
Estimates are that it would result in a nearly $US2 billion ($2.77
billion) increase in US exports, which include motor vehicles,
aircraft, chemicals, plastics and medical equipment.
Current two-way trade in goods and services is about $40.11 billion,
with the US enjoying a $12.45 billion surplus.
Moreover, the agreement would reward Australia for its support of US
military actions in Afghanistan and Iraq. The economic pact, said
House Ways and Means Committee Chairman Bill Thomas
is "strengthening an alliance that is as strong as any in the world".
"Australia has been a true friend and ally," said Jennifer Dunn.
"They've been there when it counted the most, on the shores of
Normandy, on the streets of Baghdad."
Much of the debate in the House was over language under which
Australia has promised to be more transparent and accountable in
operating its government-run pharmaceutical benefits scheme.
The Associated Press

http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org


Friday, July 09, 2004

Who Wants Freedom - All of It? 

"...Total freedom...and damn the torpedoes"
Very, very good.
"Come as you like" is the toughest invitation ever issued.
"Black tie only" makes life dead easy.
Diplomats are about the greatest nongs you'd ever find in a seven-day
exploration of the universe in a jet that regularly breaks the sound
barrier.
They know that they'd never cope with what they call their job if they
didn't have a set of rules - a protocol - that tells them what to do every
moment of the day from toilet in the morning to tumble into bed at night.
Of course, if all of us can live what John Howard called "comfortably" only
with clear rules, what if we don't get the right rules, laid down by the
right geysers?
Then we might end up with "Heil Hitler" - or George W - or a bible-banger
like Peter Costello - or.....
So choice is always tough. Enlightened individuals are rare; enlightened
mobs even rarer.

http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



Who Wants Freedom - All of It? 

"...Total freedom...and damn the torpedoes"
Very, very good.
"Come as you like" is the toughest invitation ever issued.
"Black tie only" makes life dead easy.
Diplomats are about the greatest nongs you'd ever find in a seven-day
exploration of the universe in a jet that regularly breaks the sound
barrier.
They know that they'd never cope with what they call their job if they
didn't have a set of rules - a protocol - that tells them what to do every
moment of the day from toilet in the morning to tumble into bed at night.
Of course, if all of us can live what John Howard called "comfortably" only
with clear rules, what if we don't get the right rules, laid down by the
right geysers?
Then we might end up with "Heil Hitler" - or George W - or a bible-banger
like Peter Costello - or.....
So choice is always tough. Enlightened individuals are rare; enlightened
mobs even rarer.

http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



Thursday, July 08, 2004

The Banking Business 

How to deal with the banks

There are a number of legitimate reasons for concern about the banking and financial system, some trumpeted from the rooftops, some overlooked because they are more complicated:

1. The “total level of debt”
2. The “amount being borrowed on plastic”.
3. To me, the usurious rates banks can charge for lending on plastic.
(2 is of course a direct consequence of 3)
4. The fact that jerking up the interest rate does not cure inflation - it causes it.
5. The excessive profitability of banks, as compared with the profitability of, say manufacturing.
6. The greedy habit of banks of charging fees for everything they do, and hefty fees at that.
7. The growing resort to “off balance sheet” lending
8. The inability of too many finance ministers to comprehend banks, to understand their effect on the economy, or to do anything effective about them which is not counter-productive.

Underlying all this is a vital creditary principle: a rate of interest is not a tax on total economic activity, as the UK Treasury and most of its international counterparts still seem to think. The rate of interest is merely a transfer payment between borrowers and lenders. When it is very high, borrowers are impoverished; when it is very low, lenders are impoverished.

Banks are the biggest lenders, along with the elderly who have saved; traditionally the biggest borrowers are the industrial and commercial sector, and government itself - but banks have now added consumers to that list, ever since the invention of easily-used plastic. Of course governments rarely impoverish themselves with high interest rates no matter how much they borrow - they simply tax more. But such tax is still just a transfer payment, now from taxpayers to lenders.

Some suggestions:

A. Curbing excess bank profitability
I too find it objectionable that the banking cartel, essential though banking is to the economy, has emerged from the era of ultra-high interest rates with a massive panoply of (often undeclared) charges and fees. These are designed to maintain the level of profitability to which banks have grown accustomed, thanks to the era of hig interest rates.

So, a way forward on that: it would be simple enough to require every bank to publish its own ratio of fees to its net interest income, something they studiously avoid at present. The higher that ratio, the more the bank is suspect. So let a finance minister simply require the banks to publish the figure, then let them run their own fines and rewards pool, policing one another as they go.

Banks with the highest fees-to-interest ratio pay into a pot, banks with the lowest such ratio receive from the same pot. All a finance minister has to do is tell them a rate at which they should do so. Just watch the greediest banks reduce their fee income once that begins to bite.

B. Taxing banks
I do not think it sensible to seek to tax banks as if they are just another industrial corporation, and levy Corporation Tax (or its equivalent) on their published profit figure. It does not hit them in the right way, it does nothing to improve the efficiency of the banking system, nor is it beneficial effect to the economy at large.

A better way forward would be, first, to publicise the extent to which a bank’s gross interest rate exceeds Bank Rate, ie minimum lending rate. The closer a bank can steer the total price of its lending to Bank Rate, then the more efficient and desirable the bank. Of course, if a bank is already being chased by the interest-versus-fees mechanism outlined above, then simply upping its interest income to improve that ratio will mean it is caught this way round instead.

It is easy enough to calculate the average interest rate charged by a bank. Tot up all the banking assets on its balance sheet (ignore such assets as its own premises and equipment) and the divide its gross interest income by that sum.

Suddenly, all kinds of nasties would come out of the woodwork. For a start, excess interest income from too much lending to credit card users would boost the rate. Too many hidden assets (all that off balance sheet activity) would reduce the total of on-balance sheet assets, and so also boost the rate.

A really clever tax system would start from that gross interest rate figure. The higher the figure above Bank Rate (ie above minimum lending rate) then the higher should be the rate of tax. Banks would then have to think twice about lending too much on plastic at high rates, and about off-balance sheet lending. And the tax system would then push banks toward being efficient and fair.

C.
Finally, curing the inflation “problem”. Another basic creditary principle is that fresh lending to productive assets probably causes general deflation, while fresh lending which simply buys up existing assets probably causes general inflation.

So tell a bank’s Asset and Liability Committee to publish a monthly analysis, a very simple analysis:

i.
How much fresh money has been lent for the purposes of industrial expansion, typically in a commercial bank’s case, by lending working capital to an enterprise. Merchant banks, investment houses, lend longer for actual project investment;

ii.
How much fresh money has been lent for house mortgages, takeover bids and all other activities leading to asset price inflation;

iii.
How much fresh money has been lent for consumer spending, which is difficult to analyse into either of the above categories but probably shares between the two.

I suspect a bank would need to do no more than publish such figures, and then leave commentators and analysts, now appraised of the creditary implications of those figures, to do the rest. None of these forms of lending is especially desirable or undesirable as such. It is the balance between them which is in question.

I doubt it would ever be possible to run an economy at exactly zero inflation, nor do I think it would be desirable. Personally I believe it would be better to err on the side of mild inflation than deflation, so a sensible proportion of category ii

The Banking Business 

How to deal with the banks

There are a number of legitimate reasons for concern about the banking and financial system, some trumpeted from the rooftops, some overlooked because they are more complicated:

1. The “total level of debt”
2. The “amount being borrowed on plastic”.
3. To me, the usurious rates banks can charge for lending on plastic.
(2 is of course a direct consequence of 3)
4. The fact that jerking up the interest rate does not cure inflation - it causes it.
5. The excessive profitability of banks, as compared with the profitability of, say manufacturing.
6. The greedy habit of banks of charging fees for everything they do, and hefty fees at that.
7. The growing resort to “off balance sheet” lending
8. The inability of too many finance ministers to comprehend banks, to understand their effect on the economy, or to do anything effective about them which is not counter-productive.

Underlying all this is a vital creditary principle: a rate of interest is not a tax on total economic activity, as the UK Treasury and most of its international counterparts still seem to think. The rate of interest is merely a transfer payment between borrowers and lenders. When it is very high, borrowers are impoverished; when it is very low, lenders are impoverished.

Banks are the biggest lenders, along with the elderly who have saved; traditionally the biggest borrowers are the industrial and commercial sector, and government itself - but banks have now added consumers to that list, ever since the invention of easily-used plastic. Of course governments rarely impoverish themselves with high interest rates no matter how much they borrow - they simply tax more. But such tax is still just a transfer payment, now from taxpayers to lenders.

Some suggestions:

A. Curbing excess bank profitability
I too find it objectionable that the banking cartel, essential though banking is to the economy, has emerged from the era of ultra-high interest rates with a massive panoply of (often undeclared) charges and fees. These are designed to maintain the level of profitability to which banks have grown accustomed, thanks to the era of hig interest rates.

So, a way forward on that: it would be simple enough to require every bank to publish its own ratio of fees to its net interest income, something they studiously avoid at present. The higher that ratio, the more the bank is suspect. So let a finance minister simply require the banks to publish the figure, then let them run their own fines and rewards pool, policing one another as they go.

Banks with the highest fees-to-interest ratio pay into a pot, banks with the lowest such ratio receive from the same pot. All a finance minister has to do is tell them a rate at which they should do so. Just watch the greediest banks reduce their fee income once that begins to bite.

B. Taxing banks
I do not think it sensible to seek to tax banks as if they are just another industrial corporation, and levy Corporation Tax (or its equivalent) on their published profit figure. It does not hit them in the right way, it does nothing to improve the efficiency of the banking system, nor is it beneficial effect to the economy at large.

A better way forward would be, first, to publicise the extent to which a bank’s gross interest rate exceeds Bank Rate, ie minimum lending rate. The closer a bank can steer the total price of its lending to Bank Rate, then the more efficient and desirable the bank. Of course, if a bank is already being chased by the interest-versus-fees mechanism outlined above, then simply upping its interest income to improve that ratio will mean it is caught this way round instead.

It is easy enough to calculate the average interest rate charged by a bank. Tot up all the banking assets on its balance sheet (ignore such assets as its own premises and equipment) and the divide its gross interest income by that sum.

Suddenly, all kinds of nasties would come out of the woodwork. For a start, excess interest income from too much lending to credit card users would boost the rate. Too many hidden assets (all that off balance sheet activity) would reduce the total of on-balance sheet assets, and so also boost the rate.

A really clever tax system would start from that gross interest rate figure. The higher the figure above Bank Rate (ie above minimum lending rate) then the higher should be the rate of tax. Banks would then have to think twice about lending too much on plastic at high rates, and about off-balance sheet lending. And the tax system would then push banks toward being efficient and fair.

C.
Finally, curing the inflation “problem”. Another basic creditary principle is that fresh lending to productive assets probably causes general deflation, while fresh lending which simply buys up existing assets probably causes general inflation.

So tell a bank’s Asset and Liability Committee to publish a monthly analysis, a very simple analysis:

i.
How much fresh money has been lent for the purposes of industrial expansion, typically in a commercial bank’s case, by lending working capital to an enterprise. Merchant banks, investment houses, lend longer for actual project investment;

ii.
How much fresh money has been lent for house mortgages, takeover bids and all other activities leading to asset price inflation;

iii.
How much fresh money has been lent for consumer spending, which is difficult to analyse into either of the above categories but probably shares between the two.

I suspect a bank would need to do no more than publish such figures, and then leave commentators and analysts, now appraised of the creditary implications of those figures, to do the rest. None of these forms of lending is especially desirable or undesirable as such. It is the balance between them which is in question.

I doubt it would ever be possible to run an economy at exactly zero inflation, nor do I think it would be desirable. Personally I believe it would be better to err on the side of mild inflation than deflation, so a sensible proportion of category ii. lending is desirable.

Problems only arise when banks, seeking an easy way to boost their profits, indulge in too much category ii. lending. That causes excessive inflation. By contrast, category i. lending is much more difficult to manage, because it is rarely asset-backed, and because the customers (unlike consumers in category iii.) cannot afford usurious rates of interest anyway. Enterprises, which actually do sums before they borrow, cannot make their figures add up when interest rates are too high. They are the first to suffer when, in a healthy economy, they should be the last.

Chris Meakin

The Banking Business 

How to deal with the banks

There are a number of legitimate reasons for concern about the banking and financial system, some trumpeted from the rooftops, some overlooked because they are more complicated:

1. The “total level of debt”
2. The “amount being borrowed on plastic”.
3. To me, the usurious rates banks can charge for lending on plastic.
(2 is of course a direct consequence of 3)
4. The fact that jerking up the interest rate does not cure inflation - it causes it.
5. The excessive profitability of banks, as compared with the profitability of, say manufacturing.
6. The greedy habit of banks of charging fees for everything they do, and hefty fees at that.
7. The growing resort to “off balance sheet” lending
8. The inability of too many finance ministers to comprehend banks, to understand their effect on the economy, or to do anything effective about them which is not counter-productive.

Underlying all this is a vital creditary principle: a rate of interest is not a tax on total economic activity, as the UK Treasury and most of its international counterparts still seem to think. The rate of interest is merely a transfer payment between borrowers and lenders. When it is very high, borrowers are impoverished; when it is very low, lenders are impoverished.

Banks are the biggest lenders, along with the elderly who have saved; traditionally the biggest borrowers are the industrial and commercial sector, and government itself - but banks have now added consumers to that list, ever since the invention of easily-used plastic. Of course governments rarely impoverish themselves with high interest rates no matter how much they borrow - they simply tax more. But such tax is still just a transfer payment, now from taxpayers to lenders.

Some suggestions:

A. Curbing excess bank profitability
I too find it objectionable that the banking cartel, essential though banking is to the economy, has emerged from the era of ultra-high interest rates with a massive panoply of (often undeclared) charges and fees. These are designed to maintain the level of profitability to which banks have grown accustomed, thanks to the era of hig interest rates.

So, a way forward on that: it would be simple enough to require every bank to publish its own ratio of fees to its net interest income, something they studiously avoid at present. The higher that ratio, the more the bank is suspect. So let a finance minister simply require the banks to publish the figure, then let them run their own fines and rewards pool, policing one another as they go.

Banks with the highest fees-to-interest ratio pay into a pot, banks with the lowest such ratio receive from the same pot. All a finance minister has to do is tell them a rate at which they should do so. Just watch the greediest banks reduce their fee income once that begins to bite.

B. Taxing banks
I do not think it sensible to seek to tax banks as if they are just another industrial corporation, and levy Corporation Tax (or its equivalent) on their published profit figure. It does not hit them in the right way, it does nothing to improve the efficiency of the banking system, nor is it beneficial effect to the economy at large.

A better way forward would be, first, to publicise the extent to which a bank’s gross interest rate exceeds Bank Rate, ie minimum lending rate. The closer a bank can steer the total price of its lending to Bank Rate, then the more efficient and desirable the bank. Of course, if a bank is already being chased by the interest-versus-fees mechanism outlined above, then simply upping its interest income to improve that ratio will mean it is caught this way round instead.

It is easy enough to calculate the average interest rate charged by a bank. Tot up all the banking assets on its balance sheet (ignore such assets as its own premises and equipment) and the divide its gross interest income by that sum.

Suddenly, all kinds of nasties would come out of the woodwork. For a start, excess interest income from too much lending to credit card users would boost the rate. Too many hidden assets (all that off balance sheet activity) would reduce the total of on-balance sheet assets, and so also boost the rate.

A really clever tax system would start from that gross interest rate figure. The higher the figure above Bank Rate (ie above minimum lending rate) then the higher should be the rate of tax. Banks would then have to think twice about lending too much on plastic at high rates, and about off-balance sheet lending. And the tax system would then push banks toward being efficient and fair.

C.
Finally, curing the inflation “problem”. Another basic creditary principle is that fresh lending to productive assets probably causes general deflation, while fresh lending which simply buys up existing assets probably causes general inflation.

So tell a bank’s Asset and Liability Committee to publish a monthly analysis, a very simple analysis:

i.
How much fresh money has been lent for the purposes of industrial expansion, typically in a commercial bank’s case, by lending working capital to an enterprise. Merchant banks, investment houses, lend longer for actual project investment;

ii.
How much fresh money has been lent for house mortgages, takeover bids and all other activities leading to asset price inflation;

iii.
How much fresh money has been lent for consumer spending, which is difficult to analyse into either of the above categories but probably shares between the two.

I suspect a bank would need to do no more than publish such figures, and then leave commentators and analysts, now appraised of the creditary implications of those figures, to do the rest. None of these forms of lending is especially desirable or undesirable as such. It is the balance between them which is in question.

I doubt it would ever be possible to run an economy at exactly zero inflation, nor do I think it would be desirable. Personally I believe it would be better to err on the side of mild inflation than deflation, so a sensible proportion of category ii. lending is desirable.

Problems only arise when banks, seeking an easy way to boost their profits, indulge in too much category ii. lending. That causes excessive inflation. By contrast, category i. lending is much more difficult to manage, because it is rarely asset-backed, and because the customers (unlike consumers in category iii.) cannot afford usurious rates of interest anyway. Enterprises, which actually do sums before they borrow, cannot make their figures add up when interest rates are too high. They are the first to suffer when, in a healthy economy, they should be the last.

Chris Meakin

Australian Neo-colonialism 

The very serious thing about the Australian Government's recent policies is our reversion to a neo-colonial status. We are just as we were more than sixty years ago, with our cult figure and our narcissistic transference object the United States instead of Britain. Of course, Britain has recently - through Blair though not through its people - been doing a fair job of cult fanaticism and narcissistic transference itself.
So what could be better for us?
We get two for the price of one.
But what a price!
Let's just remember that, in the terrible days of the Second World War, after Pearl Harbous, we DID stand up instead of cravenly kneeling before our colonial masters - or security providers, if you like.
Not in all things. Curtin gave in to Macarthur, for example, on some points of military leadership. But the since-much-maligned Herbert Vere Evatt - the Doc - created not only an Australian Foreign Service but a real Australian foreign policy to go with it. Sometimes the British didn't like it. Often the Yanks didn't like
it; but, looking back, that policy, in its broad lines and most if not all of its detail, was smack on for a country that wanted to pursue enlightened domestic policies and equally enlightened foreign political, strategic and economic policies, in its own interests and in the interests of a stable, peaceful and progressive world community.
How wonderful it would be if we could see even the glimmerings of those Curtin/Chifley/Evatt policies in the attitudes of our present so-called "leaders"?
We talk so much about "identity."
Instead of being a craven lot of crawlers, can't we stand up - not as a comic echo but as a voice of reason - and tell our friends what we want, why we want it and - sometimes, and perhaps quite often - why our friends are dangerously, perhaps tragically, wrong?



James Cumes
http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org

Wednesday, July 07, 2004

Cold River: A Book We All Should Read 

This is the Escape that will Never Be Duplicated: The Seventh of July of Our Tragic Escape: Declaring Independence From Fear...
It is important from time to time to remember that some things are worth getting mad about. The cold hard truth is that power corrupts, and absolute power corrupts absolutely, so we should not be surprised if or when Madmen Run the Asylum...
Once Upon A Bad Time, the lives of Eastern Europeans were dominated by leaders with aristocratic manners appropriate for the stone age. Thank your lucky stars you were not one of us. We have to remind ourselves that those born and bred in the Eastern parts of Europe were the Western European equal in their desire for life, their longing for liberty, their passion for happiness.
7/7 of 1980 enlarged the meaning of escape across the Iron Curtain as the crossing has no exact precedents or parallels. Even after 24 years, the scent of horror is still impossible to wash away.
In death, Cold Rivers’s characters find an extension of life: they live in death and we, the readers, actively participate in keeping them alive, even if only during our reading. Nothing was as it seemed and the more mundane the surface, the more layers there appeared to be; we are peeling a true literary onion, multi-layered myths and realities that are quite able to bring literal tears to your eyes.
There is no history, only biography of divine discontent. It was Philosopher Ralph Waldo Emerson who first coined the phrase divine discontent. Characterized by a yearning for greater meaning in life, this restlessness and dissatisfaction with the status quo is often an impetus to escape to the world that is more soul-satisfying... What could possibly impel three twenty-two-year-old Czechoslovaks, who just completed two year compulsory service in the communist army, to swim across the Morava River to Austria? How are we to understand their decision to forsake the land of their birth and build a new life in the far way world?
The ghost of the Central Europe tends to breathe confused life into every boy born into the communist system. In childhood we harboured fantasies that when we go to sleep at night our toys would magically come alive and carry us across the borders to the New World. Alas, it never happened, but that did not mean that one day we would not discover a mystical passage to the land of our dreams. One of the great things about life under communism was that it could always get worse, just when you thought it couldn't...
Those who know what it was like to be twenty-two-years young in communist Czechoslovakia might understand that some of us had absurd and impossible aspirations and we believed that we could achieve them. We used to dream of dancing at the Beatles' concert and marrying Olivia Newton-John ... Then we transferred our dreams to crossing the Iron Curtain.
There is a theory going around on the net that everything you need to know about divine discontent, and even life, you can learn from the drops of lessons in the Cold River. There is a lesson for teens, there is a lesson for adults, there is a lesson on having fun, there is a lesson on being serious, there is a lesson on soulful friendship, there is a lesson on dancing, there is even a lesson on how not to escape across the Iron Curtain. Moreover, there is a lesson how to make you feel like a lost Central European.
Unlike myth, history is not tidy, and the wall that became known as the Iron Curtain is complex as any genuine tragedy. Cold River is a chilling image of a totalitarian world without breathing space, where ideology has no outside and even an unborn child is already a subject.
When something is wrong, you know it. Deep inside, even if everyone around you tells you it is not, you still know the truth. Few would dare dream about crossing such a border, unless, of course, you have inside knowledge and contacts. Milan has both. They will have only one chance to disarm the army guards at the gate and drive through an army barracks without alarming others. Their set day is sunny. Not one of them, even for a moment, thinks it might rain. But it does and the swollen river makes it impossible for them to cross, yet it is impossible to go back...
You didn't care if you were brave or weak. You just became nothing!
The character in the Quiet American said, Sooner or later, one has to take sides. If one is to remain human.
In some ways, it was a selfish act. We had in a small way done our duty to our people and our country. We crossed the uncrossable Iron Curtain so we could sleep at night. True happiness calls for courage and a spirit of sacrifice, the rejection of any compromise with evil empire, and readiness to pay in person, including with death...

Contact Jozef Imrich at jozefimrich@authorsden.com

Tuesday, July 06, 2004

Kokoda and Haverleigh 

Kokoda
Peter FitzSimons is in the process of publishing another of his distinguished books. This one describes one of the most crucial campaigns of World War Two - Kokoda.
Kokoda has a special fascination for me personally.
On 6 June 1942, as a teenage soldier, I disembarked in Port Moresby, from the old Bass Strait ferry MV Taroona, to join New Guinea Force. We were regularly bombed and strafed. Twelve days later, Japanese bombers sank the Macdhui in Moresby Harbour, with some fine young Australians from the 39th Battalion aboard. Six weeks later, a Japanese force of some 10,000 crack troops, already battle-hardened in post-Pearl Harbour campaigns,landed at Buna/Gona on the north coast of Papua.
They quickly advanced south, massacring some civilians, including nuns, on the way.
What I have called "a handful of brave kids" confronted them at Oivi and delayed their advance to Kokoda. At Kokoda, numbering only about 80 officers and men, they fought a courageous battle and inflicted heavy casualties on the vastly larger and better armed Japanese force. Their CO, Lt-Colonel Owen, was killed in battle, hurling grenades at the enemy as they climbed the slopes to the Kokoda plateau. A youngster, Snowy Parr, deployed their only Bren brilliantly - and with great personal courage - to cut down the attackers and allow time for his surviving comrades to withdraw into the mountains, where they fought stubbornly until reinforcements could arrive, laboriously, over the Kokoda Track.
This is a grand story, to be read by every Australian. If you would like to read it in the form of a novel, with the events as I saw them, back in 1942 and afterwards, send me a message at -

cresscourt@chello.at

and I will give you further details.
Through that e-mail address, you may also order a copy of the novel - called Haverleigh - which tells how the "handful of brave kids, hungry, buggered and poorly armed" saved their country from invasion.
Of the RAF, victorious in the Battle of Britain, Churchill said, "Never in the field of human conflict was so much owed by so many to so few." Much the same may be said of those kids - in the 39th Battalion, their average age was only 18 - who fought and, incredibly, against all the odds, won the Battle for Australia in 1942.

Kokoda and Haverleigh 

Kokoda
Peter FitzSimons is in the process of publishing another of his distinguished books. This one describes one of the most crucial campaigns of World War Two - Kokoda.
Kokoda has a special fascination for me personally.
On 6 June 1942, as a teenage soldier, I disembarked in Port Moresby, from the old Bass Strait ferry MV Taroona, to join New Guinea Force. We were regularly bombed and strafed. Twelve days later, Japanese bombers sank the Macdhui in Moresby Harbour, with some fine young Australians from the 39th Battalion aboard. Six weeks later, a Japanese force of some 10,000 crack troops, already battle-hardened in post-Pearl Harbour campaigns,landed at Buna/Gona on the north coast of Papua.
They quickly advanced south, massacring some civilians, including nuns, on the way.
What I have called "a handful of brave kids" confronted them at Oivi and delayed their advance to Kokoda. At Kokoda, numbering only about 80 officers and men, they fought a courageous battle and inflicted heavy casualties on the vastly larger and better armed Japanese force. Their CO, Lt-Colonel Owen, was killed in battle, hurling grenades at the enemy as they climbed the slopes to the Kokoda plateau. A youngster, Snowy Parr, deployed their only Bren brilliantly - and with great personal courage - to cut down the attackers and allow time for his surviving comrades to withdraw into the mountains, where they fought stubbornly until reinforcements could arrive, laboriously, over the Kokoda Track.
This is a grand story, to be read by every Australian. If you would like to read it in the form of a novel, with the events as I saw them, back in 1942 and afterwards, send me a message at -

cresscourt@chello.at

and I will give you further details.
Through that e-mail address, you may also order a copy of the novel - called Haverleigh - which tells how the "handful of brave kids, hungry, buggered and poorly armed" saved their country from invasion.
Of the RAF, victorious in the Battle of Britain, Churchill said, "Never in the field of human conflict was so much owed by so many to so few." Much the same may be said of those kids - in the 39th Battalion, their average age was only 18 - who fought and, incredibly, against all the odds, won the Battle for Australia in 1942.

Kokoda and Haverleigh 

Kokoda
Peter FitzSimons is in the process of publishing another of his distinguished books. This one describes one of the most crucial campaigns of World War Two - Kokoda.
Kokoda has a special fascination for me personally.
On 6 June 1942, as a teenage soldier, I disembarked in Port Moresby, from the old Bass Strait ferry MV Taroona, to join New Guinea Force. We were regularly bombed and strafed. Twelve days later, Japanese bombers sank the Macdhui in Moresby Harbour, with some fine young Australians from the 39th Battalion aboard. Six weeks later, a Japanese force of some 10,000 crack troops, already battle-hardened in post-Pearl Harbour campaigns,landed at Buna/Gona on the north coast of Papua.
They quickly advanced south, massacring some civilians, including nuns, on the way.
What I have called "a handful of brave kids" confronted them at Oivi and delayed their advance to Kokoda. At Kokoda, numbering only about 80 officers and men, they fought a courageous battle and inflicted heavy casualties on the vastly larger and better armed Japanese force. Their CO, Lt-Colonel Owen, was killed in battle, hurling grenades at the enemy as they climbed the slopes to the Kokoda plateau. A youngster, Snowy Parr, deployed their only Bren brilliantly - and with great personal courage - to cut down the attackers and allow time for his surviving comrades to withdraw into the mountains, where they fought stubbornly until reinforcements could arrive, laboriously, over the Kokoda Track.
This is a grand story, to be read by every Australian. If you would like to read it in the form of a novel, with the events as I saw them, back in 1942 and afterwards, send me a message at -

cresscourt@chello.at

and I will give you further details.
Through that e-mail address, you may also order a copy of the novel - called Haverleigh - which tells how the "handful of brave kids, hungry, buggered and poorly armed" saved their country from invasion.
Of the RAF, victorious in the Battle of Britain, Churchill said, "Never in the field of human conflict was so much owed by so many to so few." Much the same may be said of those kids - in the 39th Battalion, their average age was only 18 - who fought and, incredibly, against all the odds, won the Battle for Australia in 1942.

Kokoda and Haverleigh 

Kokoda
Peter FitzSimons is in the process of publishing another of his distinguished books. This one describes one of the most crucial campaigns of World War Two - Kokoda.
Kokoda has a special fascination for me personally.
On 6 June 1942, as a teenage soldier, I disembarked in Port Moresby, from the old Bass Strait ferry MV Taroona, to join New Guinea Force. We were regularly bombed and strafed. Twelve days later, Japanese bombers sank the Macdhui in Moresby Harbour, with some fine young Australians from the 39th Battalion aboard. Six weeks later, a Japanese force of some 10,000 crack troops, already battle-hardened in post-Pearl Harbour campaigns,landed at Buna/Gona on the north coast of Papua.
They quickly advanced south, massacring some civilians, including nuns, on the way.
What I have called "a handful of brave kids" confronted them at Oivi and delayed their advance to Kokoda. At Kokoda, numbering only about 80 officers and men, they fought a courageous battle and inflicted heavy casualties on the vastly larger and better armed Japanese force. Their CO, Lt-Colonel Owen, was killed in battle, hurling grenades at the enemy as they climbed the slopes to the Kokoda plateau. A youngster, Snowy Parr, deployed their only Bren brilliantly - and with great personal courage - to cut down the attackers and allow time for his surviving comrades to withdraw into the mountains, where they fought stubbornly until reinforcements could arrive, laboriously, over the Kokoda Track.
This is a grand story, to be read by every Australian. If you would like to read it in the form of a novel, with the events as I saw them, back in 1942 and afterwards, send me a message at -

cresscourt@chello.at

and I will give you further details.
Through that e-mail address, you may also order a copy of the novel - called Haverleigh - which tells how the "handful of brave kids, hungry, buggered and poorly armed" saved their country from invasion.
Of the RAF, victorious in the Battle of Britain, Churchill said, "Never in the field of human conflict was so much owed by so many to so few." Much the same may be said of those kids - in the 39th Battalion, their average age was only 18 - who fought and, incredibly, against all the odds, won the Battle for Australia in 1942.

Monday, July 05, 2004

The US: Five Years to a Soviet-like Collapse? 

Dissing the Republic To Save It - A conversation with Chalmers Johnson
by Marc Cooper
http://www.laweekly.com/ink/04/32/features-cooper.php

In the darkest days of the Cold War, UC Berkeley professor and sometimes consultant to the CIA Chalmers Johnson heartily denounced anti-Vietnam War protesters as misguided. Nowadays, Johnson is a hero to a new generation of peace protesters. One of the most outspoken critics of the Bush administration, his 2000 best-seller, Blowback, decried the boomerang effect
the U.S. suffered by supporting Islamic fundamentalists in the 1980s. And his new volume, Sorrows of Empire, is a timely denunciation of the militarization of American foreign policy. The L.A. Weekly's Marc Cooper spoke with Johnson recently as he passed through Los Angeles.

L.A. WEEKLY: Your view of American policy has completely reversed itself since the 1960s. But what about your feelings about your country? Can you still be
patriotic while being such a fierce critic?

CHALMERS JOHNSON: Of course! As Lord Byron said, "I would have saved them if I could." I mean, I like living here. But I think we are trending like the
Soviet Union was in 1985. If I had said then that the Soviets were five years away from extinction, you'd have said I had spent too much time inhaling exotic substances around Berkeley.

L.A. WEEKLY: What provoked your political shift?

CHALMERS JOHNSON: After the Soviets, who I thought were a real threat, collapsed, I expected a much greater demobilization, a pullback of American troops, a real peace dividend, a re-orienting of federal expenditures to domestic needs. Instead, our government turned at once to find a replacement enemy: China, drugs, terrorism, instability. Anything to justify this huge
apparatus of the Cold War structure.

L.A. WEEKLY: So where does that leave today's authentic patriots?

CHALMERS JOHNSON: The role of the citizen now is to be ever better informed. When Benjamin Franklin was asked, "What have we got, a republic or a monarchy?" he replied: "A republic if you can keep it." We've not been paying attention to what we need to do to keep it. I think we made a disastrous error in the classic strategic sense when in 1991 we concluded that we "had won the Cold War." No. We simply didn't lose it as badly as the Soviets did. We were both caught up in imperial overreach, in weapons industries that came to
dominate our societies. We allowed ideologues to capture our Department of Defense and lead us off - in a phrase they like - into a New Rome. We are no
longer a status quo power respectful of international law. We became a revisionist power, one fundamentally opposed to the world as it is organized, much like Nazi Germany, imperial Japan, Bolshevik Russia or Maoist China.

L.A. WEEKLY: Indeed, your thesis is that since September 11, the U.S. ceased to be a republic and has become an empire.

CHALMERS JOHNSON: It's an extremely open question if we have crossed our Rubicon and there is no going back. Easily the most important right in our Constitution, according to James Madison, who wrote much of the document, is the one giving the right to go to war exclusively to the elected representatives of the people, to the Congress. Never, Madison continued,
should that right be given to a single man. But in October 2002, our Congress gave that power to a single man, to exercise whenever he wanted, and with
nuclear weapons if he so chose. And the following March, without any international consultation or legitimacy, he exercised that power by staging a
unilateral attack on Iraq.

The Bill of Rights - articles 4 and 6 - are now open to question. Do people really have the right to habeas corpus? Are they still secure in their homes from illegal seizures? The answer for the moment is no. We have to wait and see what the Supreme Court will rule as to the powers of this government that it appointed.

You know from your study of history that when we traditionally speak of empire, we have in mind the model of European colonialism - the Brits in India, the French in Algeria and Indochina. Surely that's not what you mean when you refer to an American empire.

By an American empire I mean 725 military bases in 138 foreign countries circling the globe from Greenland to Asia, from Japan to Latin America. This is a sort of base world - a secret, enclosed, separate world where our half-million troops, contractors and spies live quite comfortably around the world. I think that's an empire. Granted, the unit of European imperialism was
the colony. The unit of American imperialism is the military base.

These American bases are an outgrowth of U.S. containment policy from the Cold War. What's their role now? Are they just pork? Or are they there to defend
U.S. investment?

What they don't do is defend U.S. security. They just grew, whether or not they had or have strategic value. We have 101 bases today in Korea even though the war has been over for 50 years. Once created, the military is endlessly creative in finding new functions for them, long after their real value has evaporated. This base world becomes part of the vested interest we associate not with security but with militarism, the danger of the military-industrial complex that Eisenhower warned against.

L.A. WEEKLY: You're saying the real impetus here is more a self-perpetuating military bureaucracy rather than some grand rational strategy?

CHALMERS JOHNSON: Right. I think Eisenhower was right when he spoke of how we didn't recognize the unwarranted power of the arms industry. You know, a piece of the B-2 bomber is built in every one of the continental states.

L.A. WEEKLY: What are the costs of this empire to democracy and the republic?

CHALMERS JOHNSON: There's the literal cost. We are flirting with bankruptcy. We are not paying for what is now a $750 billion tab. The defense appropriation itself is about $420 billion. That doesn't include another $125 billion, which is the cost of Afghanistan and Iraq. Then another $20 billion for nuclear weapons in the Department of Energy. Add in another $200 billion
or so for military pensions and for health benefits for our veterans. Together, that's three-quarters of a trillion dollars.

We are putting it on the tab, running up some of the most extraordinary budget and trade deficits in history. If the bankers of Asia and Japan should tire of
financing this, if they notice the euro is now stronger than the dollar, then all this ends - whether or not they like the Boy Emperor from Crawford. We would face a terrible crisis.

The greater cost is what the public will lose, if they haven't already lost it: the republic, the structural defense of our liberties, the separation of powers to block the growth of a dictatorial presidency.

L.A. WEEKLY: But American history didn't begin on January 20, 2001, or on 9/11. Isn't much of what you describe a situation that dates back a full century or more? Why blame so much of this on George W. Bush?

CHALMERS JOHNSON: Yes, this goes back a long way - to Teddy Roosevelt acquiring colonies from the Spanish. But Bush dropped the mask. He comes out and says we are a New Rome, we don't need the U.N. or any friends. We now put countries on hit lists. Certainly, if there were some steering committee for an American imperial project, it would consider Bill Clinton a much better
imperial president than George W. Bush. It's always better strategy to not show your hand, to take an indirect approach but to know exactly where you are going.

L.A. WEEKLY: In a recent review of your book, leftist writer Ian Williams chides you for investing too much belief in the evil of the Bushies. Williams argues that, looking at Iraq, one might conclude that rather than grand imperialists, the Bush folks are instead spectacular screwups.

CHALMERS JOHNSON: Well, undoubtedly they bungled things in Iraq, from not using enough troops to misreading the intelligence, and there is more evidence of it every day. But there was never a plan to leave Iraq because there is no intention of leaving Iraq. We are currently building 14 bases there. Dick Cheney can't imagine giving up that oil. And the military can't imagine giving up those bases. That's why they can't come up with a plan to leave.

L.A. WEEKLY: Yet Bush's policies have provoked international and domestic backlashes. Does that make you hopeful?

CHALMERS JOHNSON: The political system alone can no longer save the republic. Even if Congress wanted to exercise real oversight, how can it when 40 percent
of the military budget is secret? All of the intelligence budget is secret. The only hopeful sign I saw was a year ago when 10 million people demonstrated
in the streets for peace. We also saw the recent election in Spain as a response to what is happening. If we can see that now in the U.S., in the
U.K., in Italy, then maybe we can have some hope. Otherwise we will soon be talking about the short happy life of the American republic.


http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



Kokoda 

Peter FitzSimons is in the process of publishing another of his distinguished books. This one describes one of the most crucial campaigns of World War Two - Kokoda.
This book has a special fascination for me personally.
As a teenage soldier, I disembarked in Port Moresby on 6 June 1942 to join New Guinea Force. Six weeks later, a Japanese force of some 10,000 crack troops, battle-hardened already by post-Pearl Harbour campaigns,landed at Buna/Gona on the north coast of Papua.
They quickly advanced south, massacring some civilians, including nuns, on the way.
What I have called "a handful of brave kids" confronted them at Oivi and delayed their advance to Kokoda. There - numbering only about 80 officers and men - they fought a courageous battle and inflicted heavy casualties on the Japanese. Their CO, Lt-Colonel Owen, was killed in battle, hurling grenades at the advancing enemy. A youngster, Snowy Parr, used their only Bren brilliantly to cut down the attackers and allow time for his comrades to withdraw into the mountains and fight stubbornly until reinforcements could arrive over the Kokoda Track.
This is a grand story, to be read by every Australian. If you would like to read it in the form of a novel, with the events as I saw them, back in 1942 and afterwards, send me a message at -
cresscourt@chello.at
and I will give you further details.
You may also order a copy of my book, Haverleigh, which tells the story of how the "handful of brave kids, hungry, buggered and poorly armed" saved their country from invasion.

The Chronic Blockheadedness of Interest-Rate Policy 

In what is almost certainly the most threatening economic and financial situation, world-wide, in my lifetime and perhaps since the beginning of the Industrial Revolution, we find ourselves in the hands of policymakers and "experts" who have no idea either of the nature of the problem - or the complex of problems - or the way in which it/they should be addressed.
The suggestion that a hike in interest rates - that simplistic and what has now, over the decades, become one of the most dangerous of all reflexive "weapons" - is the way to win whatever battle we are fighting, would be hilarious if it were not so terrifying.
I can see only one possible "benefit" emerging from the looming crisis and the fecklessness with which it is being addressed.
I have just been reading a speech by Bill Moyers on "The Fight of our Lives." It is well worth the few minutes it takes to read.
What now seems likely is that there will be such a collapse of the United States and the world economy - and the world society - that those who won what Buffet called the class war - his class - will be shattered along with the rest of us.
From the shambles, we will have to re-build everything from the rubble up, clinging as much as we can to some of the principles and ideas that helped us in such desperate crises as that after 1929.
From that, we might get some new "New Deal" and some new "economists" and policymakers who will - slowly, no doubt - lead us in more positive directions. If we don't, survival might be precarious for us all - perhaps physical survival but, at best, survival at anything that we can call, in the short to medium term, comfortable and civilised.
Just one last point: I can understand the fatuous inadequacy - the reckless incompetence - of people like the general manager of the BIS only in the context that we've known all of it, more as the rule than the exception, in the past. We were led by donkeys before and after 1929; we're being led by donkeys still.



James Cumes
http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



----------
From: "Arno Mong Daastoel"
To:
Subject: [gang8] Darling BIS...
Date: Sun, Jul 4, 2004, 5:24 pm

"The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."

Arno


The Fed finally turns

Compiled by Anna Fifield, Economics Reporter

Published: July 1 2004 20:10



The turning of the interest rate cycle was cemented this week when the US Federal Reserve raised interest rates by a quarter point to 1.25 per cent, its first increase in more than four years. The Bank of England also signalled that rates are likely to continue climbing, but the European Central Bank bucked the trend again by leaving its main rate on hold.



The Fed finally turns

The Fed's decision to raise interest rates to 1.25 per cent this week was widely expected after its careful efforts to prepare the ground for higher rates. But it kicked off what economists say is likely to be a long, tightening cycle fraught with risk, following a period in which households, businesses and investors have become used to cheap credit.

The Federal Open Market Committee again altered its statement to give itself greater flexibility to respond to events. As expected, the Fed maintained its judgment that inflation risks remain balanced. But while re-iterating the committee's belief that it can raise rates "at a pace that is likely to be measured," the FOMC added the qualifier that it would "respond to changes in economic prospects as needed to fulfil its obligation to maintain price stability".

The decision came after data this week showed consumer confidence surged in June to its highest level in two years, amid stabilising gasoline prices and a speedy revival in employment growth. At the same time, wages in the US rose faster than expected last month, raising hopes that improving employment prospects are helping to replace the boost to consumer incomes provided by tax cuts and falling interest rates.

Frankfurt floats alone

But the European Central Bank held its course on Thursday. After the Fed's decision to increase rates, Jean-Claude Trichet, the ECB president, said the Frankfurt bank was "not influenced in any respect by what has been decided across the Atlantic". Although eurozone rates were held at 2 per cent for the 13th month running, Mr Trichet appeared to take a harder rhetorical stance on inflation. In spite of the recent moderation in oil prices, he warned eurozone inflation would probably remain above 2 per cent into the first half of next year.

The eurozone's annual rate of inflation dropped to 2.4 per cent in June from 2.5 per cent in May, data showed this week, suggesting price pressures had peaked. The "flash" estimate by Eurostat, the European Union's statistical unit, appeared to vindicate the ECB's "wait and see" stance on interest rates.

But German retail sales figures showed a 5.2 per cent drop in May compared with the same month a year before, highlighting the extreme weakness of domestic demand in the eurozone's largest economy, which is relying on exports to fuel growth.



UK still ploughing its own furrow

Amid a flurry of almost universally upbeat data this week, economists in London said the next interest rate rise, the fifth since November, was only a matter of weeks away. Revisions to official data showed growth was not only anove trend but broadly based across the economy.

In an interview with the FT to mark his first year as governor, Mervyn King, of the Bank of England, said house prices were "very important" in the decisions to raise interest rates in the past couple of months. Mr King raised the prospect that the Bank's monetary policy committee could raise interest rates more sharply to curb the housing market in an attempt to reduce the risk of a crash.

"If we saw, for example, that we really were running the risk of a big deviation of inflation from target further ahead, then we could take that into account and would do so," he said.

But Mr King stressed that the MPC was not trying to target house prices, and that during the past year other factors had been more important in its decisions to raise rates, particularly the synchronised global economic recovery.



Warnings as rates rise

The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."


http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



The Chronic Blockheadedness of Interest-Rate Policy 

In what is almost certainly the most threatening economic and financial situation, world-wide, in my lifetime and perhaps since the beginning of the Industrial Revolution, we find ourselves in the hands of policymakers and "experts" who have no idea either of the nature of the problem - or the complex of problems - or the way in which it/they should be addressed.
The suggestion that a hike in interest rates - that simplistic and what has now, over the decades, become one of the most dangerous of all reflexive "weapons" - is the way to win whatever battle we are fighting, would be hilarious if it were not so terrifying.
I can see only one possible "benefit" emerging from the looming crisis and the fecklessness with which it is being addressed.
I have just been reading a speech by Bill Moyers on "The Fight of our Lives." It is well worth the few minutes it takes to read.
What now seems likely is that there will be such a collapse of the United States and the world economy - and the world society - that those who won what Buffet called the class war - his class - will be shattered along with the rest of us.
From the shambles, we will have to re-build everything from the rubble up, clinging as much as we can to some of the principles and ideas that helped us in such desperate crises as that after 1929.
From that, we might get some new "New Deal" and some new "economists" and policymakers who will - slowly, no doubt - lead us in more positive directions. If we don't, survival might be precarious for us all - perhaps physical survival but, at best, survival at anything that we can call, in the short to medium term, comfortable and civilised.
Just one last point: I can understand the fatuous inadequacy - the reckless incompetence - of people like the general manager of the BIS only in the context that we've known all of it, more as the rule than the exception, in the past. We were led by donkeys before and after 1929; we're being led by donkeys still.



James Cumes
http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



----------
From: "Arno Mong Daastoel"
To:
Subject: [gang8] Darling BIS...
Date: Sun, Jul 4, 2004, 5:24 pm

"The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."

Arno


The Fed finally turns

Compiled by Anna Fifield, Economics Reporter

Published: July 1 2004 20:10



The turning of the interest rate cycle was cemented this week when the US Federal Reserve raised interest rates by a quarter point to 1.25 per cent, its first increase in more than four years. The Bank of England also signalled that rates are likely to continue climbing, but the European Central Bank bucked the trend again by leaving its main rate on hold.



The Fed finally turns

The Fed's decision to raise interest rates to 1.25 per cent this week was widely expected after its careful efforts to prepare the ground for higher rates. But it kicked off what economists say is likely to be a long, tightening cycle fraught with risk, following a period in which households, businesses and investors have become used to cheap credit.

The Federal Open Market Committee again altered its statement to give itself greater flexibility to respond to events. As expected, the Fed maintained its judgment that inflation risks remain balanced. But while re-iterating the committee's belief that it can raise rates "at a pace that is likely to be measured," the FOMC added the qualifier that it would "respond to changes in economic prospects as needed to fulfil its obligation to maintain price stability".

The decision came after data this week showed consumer confidence surged in June to its highest level in two years, amid stabilising gasoline prices and a speedy revival in employment growth. At the same time, wages in the US rose faster than expected last month, raising hopes that improving employment prospects are helping to replace the boost to consumer incomes provided by tax cuts and falling interest rates.

Frankfurt floats alone

But the European Central Bank held its course on Thursday. After the Fed's decision to increase rates, Jean-Claude Trichet, the ECB president, said the Frankfurt bank was "not influenced in any respect by what has been decided across the Atlantic". Although eurozone rates were held at 2 per cent for the 13th month running, Mr Trichet appeared to take a harder rhetorical stance on inflation. In spite of the recent moderation in oil prices, he warned eurozone inflation would probably remain above 2 per cent into the first half of next year.

The eurozone's annual rate of inflation dropped to 2.4 per cent in June from 2.5 per cent in May, data showed this week, suggesting price pressures had peaked. The "flash" estimate by Eurostat, the European Union's statistical unit, appeared to vindicate the ECB's "wait and see" stance on interest rates.

But German retail sales figures showed a 5.2 per cent drop in May compared with the same month a year before, highlighting the extreme weakness of domestic demand in the eurozone's largest economy, which is relying on exports to fuel growth.



UK still ploughing its own furrow

Amid a flurry of almost universally upbeat data this week, economists in London said the next interest rate rise, the fifth since November, was only a matter of weeks away. Revisions to official data showed growth was not only anove trend but broadly based across the economy.

In an interview with the FT to mark his first year as governor, Mervyn King, of the Bank of England, said house prices were "very important" in the decisions to raise interest rates in the past couple of months. Mr King raised the prospect that the Bank's monetary policy committee could raise interest rates more sharply to curb the housing market in an attempt to reduce the risk of a crash.

"If we saw, for example, that we really were running the risk of a big deviation of inflation from target further ahead, then we could take that into account and would do so," he said.

But Mr King stressed that the MPC was not trying to target house prices, and that during the past year other factors had been more important in its decisions to raise rates, particularly the synchronised global economic recovery.



Warnings as rates rise

The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."


http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



The Chronic Blockheadedness of Interest-Rate Policy 

In what is almost certainly the most threatening economic and financial situation, world-wide, in my lifetime and perhaps since the beginning of the Industrial Revolution, we find ourselves in the hands of policymakers and "experts" who have no idea either of the nature of the problem - or the complex of problems - or the way in which it/they should be addressed.
The suggestion that a hike in interest rates - that simplistic and what has now, over the decades, become one of the most dangerous of all reflexive "weapons" - is the way to win whatever battle we are fighting, would be hilarious if it were not so terrifying.
I can see only one possible "benefit" emerging from the looming crisis and the fecklessness with which it is being addressed.
I have just been reading a speech by Bill Moyers on "The Fight of our Lives." It is well worth the few minutes it takes to read.
What now seems likely is that there will be such a collapse of the United States and the world economy - and the world society - that those who won what Buffet called the class war - his class - will be shattered along with the rest of us.
From the shambles, we will have to re-build everything from the rubble up, clinging as much as we can to some of the principles and ideas that helped us in such desperate crises as that after 1929.
From that, we might get some new "New Deal" and some new "economists" and policymakers who will - slowly, no doubt - lead us in more positive directions. If we don't, survival might be precarious for us all - perhaps physical survival but, at best, survival at anything that we can call, in the short to medium term, comfortable and civilised.
Just one last point: I can understand the fatuous inadequacy - the reckless incompetence - of people like the general manager of the BIS only in the context that we've known all of it, more as the rule than the exception, in the past. We were led by donkeys before and after 1929; we're being led by donkeys still.



James Cumes
http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



----------
From: "Arno Mong Daastoel"
To:
Subject: [gang8] Darling BIS...
Date: Sun, Jul 4, 2004, 5:24 pm

"The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."

Arno


The Fed finally turns

Compiled by Anna Fifield, Economics Reporter

Published: July 1 2004 20:10



The turning of the interest rate cycle was cemented this week when the US Federal Reserve raised interest rates by a quarter point to 1.25 per cent, its first increase in more than four years. The Bank of England also signalled that rates are likely to continue climbing, but the European Central Bank bucked the trend again by leaving its main rate on hold.



The Fed finally turns

The Fed's decision to raise interest rates to 1.25 per cent this week was widely expected after its careful efforts to prepare the ground for higher rates. But it kicked off what economists say is likely to be a long, tightening cycle fraught with risk, following a period in which households, businesses and investors have become used to cheap credit.

The Federal Open Market Committee again altered its statement to give itself greater flexibility to respond to events. As expected, the Fed maintained its judgment that inflation risks remain balanced. But while re-iterating the committee's belief that it can raise rates "at a pace that is likely to be measured," the FOMC added the qualifier that it would "respond to changes in economic prospects as needed to fulfil its obligation to maintain price stability".

The decision came after data this week showed consumer confidence surged in June to its highest level in two years, amid stabilising gasoline prices and a speedy revival in employment growth. At the same time, wages in the US rose faster than expected last month, raising hopes that improving employment prospects are helping to replace the boost to consumer incomes provided by tax cuts and falling interest rates.

Frankfurt floats alone

But the European Central Bank held its course on Thursday. After the Fed's decision to increase rates, Jean-Claude Trichet, the ECB president, said the Frankfurt bank was "not influenced in any respect by what has been decided across the Atlantic". Although eurozone rates were held at 2 per cent for the 13th month running, Mr Trichet appeared to take a harder rhetorical stance on inflation. In spite of the recent moderation in oil prices, he warned eurozone inflation would probably remain above 2 per cent into the first half of next year.

The eurozone's annual rate of inflation dropped to 2.4 per cent in June from 2.5 per cent in May, data showed this week, suggesting price pressures had peaked. The "flash" estimate by Eurostat, the European Union's statistical unit, appeared to vindicate the ECB's "wait and see" stance on interest rates.

But German retail sales figures showed a 5.2 per cent drop in May compared with the same month a year before, highlighting the extreme weakness of domestic demand in the eurozone's largest economy, which is relying on exports to fuel growth.



UK still ploughing its own furrow

Amid a flurry of almost universally upbeat data this week, economists in London said the next interest rate rise, the fifth since November, was only a matter of weeks away. Revisions to official data showed growth was not only anove trend but broadly based across the economy.

In an interview with the FT to mark his first year as governor, Mervyn King, of the Bank of England, said house prices were "very important" in the decisions to raise interest rates in the past couple of months. Mr King raised the prospect that the Bank's monetary policy committee could raise interest rates more sharply to curb the housing market in an attempt to reduce the risk of a crash.

"If we saw, for example, that we really were running the risk of a big deviation of inflation from target further ahead, then we could take that into account and would do so," he said.

But Mr King stressed that the MPC was not trying to target house prices, and that during the past year other factors had been more important in its decisions to raise rates, particularly the synchronised global economic recovery.



Warnings as rates rise

The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."


http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



The Chronic Blockheadedness of Interest-Rate Policy 

In what is almost certainly the most threatening economic and financial situation, world-wide, in my lifetime and perhaps since the beginning of the Industrial Revolution, we find ourselves in the hands of policymakers and "experts" who have no idea either of the nature of the problem - or the complex of problems - or the way in which it/they should be addressed.
The suggestion that a hike in interest rates - that simplistic and what has now, over the decades, become one of the most dangerous of all reflexive "weapons" - is the way to win whatever battle we are fighting, would be hilarious if it were not so terrifying.
I can see only one possible "benefit" emerging from the looming crisis and the fecklessness with which it is being addressed.
I have just been reading a speech by Bill Moyers on "The Fight of our Lives." It is well worth the few minutes it takes to read.
What now seems likely is that there will be such a collapse of the United States and the world economy - and the world society - that those who won what Buffet called the class war - his class - will be shattered along with the rest of us.
From the shambles, we will have to re-build everything from the rubble up, clinging as much as we can to some of the principles and ideas that helped us in such desperate crises as that after 1929.
From that, we might get some new "New Deal" and some new "economists" and policymakers who will - slowly, no doubt - lead us in more positive directions. If we don't, survival might be precarious for us all - perhaps physical survival but, at best, survival at anything that we can call, in the short to medium term, comfortable and civilised.
Just one last point: I can understand the fatuous inadequacy - the reckless incompetence - of people like the general manager of the BIS only in the context that we've known all of it, more as the rule than the exception, in the past. We were led by donkeys before and after 1929; we're being led by donkeys still.



James Cumes
http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



----------
From: "Arno Mong Daastoel"
To:
Subject: [gang8] Darling BIS...
Date: Sun, Jul 4, 2004, 5:24 pm

"The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."

Arno


The Fed finally turns

Compiled by Anna Fifield, Economics Reporter

Published: July 1 2004 20:10



The turning of the interest rate cycle was cemented this week when the US Federal Reserve raised interest rates by a quarter point to 1.25 per cent, its first increase in more than four years. The Bank of England also signalled that rates are likely to continue climbing, but the European Central Bank bucked the trend again by leaving its main rate on hold.



The Fed finally turns

The Fed's decision to raise interest rates to 1.25 per cent this week was widely expected after its careful efforts to prepare the ground for higher rates. But it kicked off what economists say is likely to be a long, tightening cycle fraught with risk, following a period in which households, businesses and investors have become used to cheap credit.

The Federal Open Market Committee again altered its statement to give itself greater flexibility to respond to events. As expected, the Fed maintained its judgment that inflation risks remain balanced. But while re-iterating the committee's belief that it can raise rates "at a pace that is likely to be measured," the FOMC added the qualifier that it would "respond to changes in economic prospects as needed to fulfil its obligation to maintain price stability".

The decision came after data this week showed consumer confidence surged in June to its highest level in two years, amid stabilising gasoline prices and a speedy revival in employment growth. At the same time, wages in the US rose faster than expected last month, raising hopes that improving employment prospects are helping to replace the boost to consumer incomes provided by tax cuts and falling interest rates.

Frankfurt floats alone

But the European Central Bank held its course on Thursday. After the Fed's decision to increase rates, Jean-Claude Trichet, the ECB president, said the Frankfurt bank was "not influenced in any respect by what has been decided across the Atlantic". Although eurozone rates were held at 2 per cent for the 13th month running, Mr Trichet appeared to take a harder rhetorical stance on inflation. In spite of the recent moderation in oil prices, he warned eurozone inflation would probably remain above 2 per cent into the first half of next year.

The eurozone's annual rate of inflation dropped to 2.4 per cent in June from 2.5 per cent in May, data showed this week, suggesting price pressures had peaked. The "flash" estimate by Eurostat, the European Union's statistical unit, appeared to vindicate the ECB's "wait and see" stance on interest rates.

But German retail sales figures showed a 5.2 per cent drop in May compared with the same month a year before, highlighting the extreme weakness of domestic demand in the eurozone's largest economy, which is relying on exports to fuel growth.



UK still ploughing its own furrow

Amid a flurry of almost universally upbeat data this week, economists in London said the next interest rate rise, the fifth since November, was only a matter of weeks away. Revisions to official data showed growth was not only anove trend but broadly based across the economy.

In an interview with the FT to mark his first year as governor, Mervyn King, of the Bank of England, said house prices were "very important" in the decisions to raise interest rates in the past couple of months. Mr King raised the prospect that the Bank's monetary policy committee could raise interest rates more sharply to curb the housing market in an attempt to reduce the risk of a crash.

"If we saw, for example, that we really were running the risk of a big deviation of inflation from target further ahead, then we could take that into account and would do so," he said.

But Mr King stressed that the MPC was not trying to target house prices, and that during the past year other factors had been more important in its decisions to raise rates, particularly the synchronised global economic recovery.



Warnings as rates rise

The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."


http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



The Chronic Blockheadedness of Interest-Rate Policy 

In what is almost certainly the most threatening economic and financial situation, world-wide, in my lifetime and perhaps since the beginning of the Industrial Revolution, we find ourselves in the hands of policymakers and "experts" who have no idea either of the nature of the problem - or the complex of problems - or the way in which it/they should be addressed.
The suggestion that a hike in interest rates - that simplistic and what has now, over the decades, become one of the most dangerous of all reflexive "weapons" - is the way to win whatever battle we are fighting, would be hilarious if it were not so terrifying.
I can see only one possible "benefit" emerging from the looming crisis and the fecklessness with which it is being addressed.
I have just been reading a speech by Bill Moyers on "The Fight of our Lives." It is well worth the few minutes it takes to read.
What now seems likely is that there will be such a collapse of the United States and the world economy - and the world society - that those who won what Buffet called the class war - his class - will be shattered along with the rest of us.
From the shambles, we will have to re-build everything from the rubble up, clinging as much as we can to some of the principles and ideas that helped us in such desperate crises as that after 1929.
From that, we might get some new "New Deal" and some new "economists" and policymakers who will - slowly, no doubt - lead us in more positive directions. If we don't, survival might be precarious for us all - perhaps physical survival but, at best, survival at anything that we can call, in the short to medium term, comfortable and civilised.
Just one last point: I can understand the fatuous inadequacy - the reckless incompetence - of people like the general manager of the BIS only in the context that we've known all of it, more as the rule than the exception, in the past. We were led by donkeys before and after 1929; we're being led by donkeys still.



James Cumes
http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



----------
From: "Arno Mong Daastoel"
To:
Subject: [gang8] Darling BIS...
Date: Sun, Jul 4, 2004, 5:24 pm

"The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."

Arno


The Fed finally turns

Compiled by Anna Fifield, Economics Reporter

Published: July 1 2004 20:10



The turning of the interest rate cycle was cemented this week when the US Federal Reserve raised interest rates by a quarter point to 1.25 per cent, its first increase in more than four years. The Bank of England also signalled that rates are likely to continue climbing, but the European Central Bank bucked the trend again by leaving its main rate on hold.



The Fed finally turns

The Fed's decision to raise interest rates to 1.25 per cent this week was widely expected after its careful efforts to prepare the ground for higher rates. But it kicked off what economists say is likely to be a long, tightening cycle fraught with risk, following a period in which households, businesses and investors have become used to cheap credit.

The Federal Open Market Committee again altered its statement to give itself greater flexibility to respond to events. As expected, the Fed maintained its judgment that inflation risks remain balanced. But while re-iterating the committee's belief that it can raise rates "at a pace that is likely to be measured," the FOMC added the qualifier that it would "respond to changes in economic prospects as needed to fulfil its obligation to maintain price stability".

The decision came after data this week showed consumer confidence surged in June to its highest level in two years, amid stabilising gasoline prices and a speedy revival in employment growth. At the same time, wages in the US rose faster than expected last month, raising hopes that improving employment prospects are helping to replace the boost to consumer incomes provided by tax cuts and falling interest rates.

Frankfurt floats alone

But the European Central Bank held its course on Thursday. After the Fed's decision to increase rates, Jean-Claude Trichet, the ECB president, said the Frankfurt bank was "not influenced in any respect by what has been decided across the Atlantic". Although eurozone rates were held at 2 per cent for the 13th month running, Mr Trichet appeared to take a harder rhetorical stance on inflation. In spite of the recent moderation in oil prices, he warned eurozone inflation would probably remain above 2 per cent into the first half of next year.

The eurozone's annual rate of inflation dropped to 2.4 per cent in June from 2.5 per cent in May, data showed this week, suggesting price pressures had peaked. The "flash" estimate by Eurostat, the European Union's statistical unit, appeared to vindicate the ECB's "wait and see" stance on interest rates.

But German retail sales figures showed a 5.2 per cent drop in May compared with the same month a year before, highlighting the extreme weakness of domestic demand in the eurozone's largest economy, which is relying on exports to fuel growth.



UK still ploughing its own furrow

Amid a flurry of almost universally upbeat data this week, economists in London said the next interest rate rise, the fifth since November, was only a matter of weeks away. Revisions to official data showed growth was not only anove trend but broadly based across the economy.

In an interview with the FT to mark his first year as governor, Mervyn King, of the Bank of England, said house prices were "very important" in the decisions to raise interest rates in the past couple of months. Mr King raised the prospect that the Bank's monetary policy committee could raise interest rates more sharply to curb the housing market in an attempt to reduce the risk of a crash.

"If we saw, for example, that we really were running the risk of a big deviation of inflation from target further ahead, then we could take that into account and would do so," he said.

But Mr King stressed that the MPC was not trying to target house prices, and that during the past year other factors had been more important in its decisions to raise rates, particularly the synchronised global economic recovery.



Warnings as rates rise

The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."


http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



The Chronic Blockheadedness of Interest-Rate Policy 

In what is almost certainly the most threatening economic and financial situation, world-wide, in my lifetime and perhaps since the beginning of the Industrial Revolution, we find ourselves in the hands of policymakers and "experts" who have no idea either of the nature of the problem - or the complex of problems - or the way in which it/they should be addressed.
The suggestion that a hike in interest rates - that simplistic and what has now, over the decades, become one of the most dangerous of all reflexive "weapons" - is the way to win whatever battle we are fighting, would be hilarious if it were not so terrifying.
I can see only one possible "benefit" emerging from the looming crisis and the fecklessness with which it is being addressed.
I have just been reading a speech by Bill Moyers on "The Fight of our Lives." It is well worth the few minutes it takes to read.
What now seems likely is that there will be such a collapse of the United States and the world economy - and the world society - that those who won what Buffet called the class war - his class - will be shattered along with the rest of us.
From the shambles, we will have to re-build everything from the rubble up, clinging as much as we can to some of the principles and ideas that helped us in such desperate crises as that after 1929.
From that, we might get some new "New Deal" and some new "economists" and policymakers who will - slowly, no doubt - lead us in more positive directions. If we don't, survival might be precarious for us all - perhaps physical survival but, at best, survival at anything that we can call, in the short to medium term, comfortable and civilised.
Just one last point: I can understand the fatuous inadequacy - the reckless incompetence - of people like the general manager of the BIS only in the context that we've known all of it, more as the rule than the exception, in the past. We were led by donkeys before and after 1929; we're being led by donkeys still.



James Cumes
http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



----------
From: "Arno Mong Daastoel"
To:
Subject: [gang8] Darling BIS...
Date: Sun, Jul 4, 2004, 5:24 pm

"The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."

Arno


The Fed finally turns

Compiled by Anna Fifield, Economics Reporter

Published: July 1 2004 20:10



The turning of the interest rate cycle was cemented this week when the US Federal Reserve raised interest rates by a quarter point to 1.25 per cent, its first increase in more than four years. The Bank of England also signalled that rates are likely to continue climbing, but the European Central Bank bucked the trend again by leaving its main rate on hold.



The Fed finally turns

The Fed's decision to raise interest rates to 1.25 per cent this week was widely expected after its careful efforts to prepare the ground for higher rates. But it kicked off what economists say is likely to be a long, tightening cycle fraught with risk, following a period in which households, businesses and investors have become used to cheap credit.

The Federal Open Market Committee again altered its statement to give itself greater flexibility to respond to events. As expected, the Fed maintained its judgment that inflation risks remain balanced. But while re-iterating the committee's belief that it can raise rates "at a pace that is likely to be measured," the FOMC added the qualifier that it would "respond to changes in economic prospects as needed to fulfil its obligation to maintain price stability".

The decision came after data this week showed consumer confidence surged in June to its highest level in two years, amid stabilising gasoline prices and a speedy revival in employment growth. At the same time, wages in the US rose faster than expected last month, raising hopes that improving employment prospects are helping to replace the boost to consumer incomes provided by tax cuts and falling interest rates.

Frankfurt floats alone

But the European Central Bank held its course on Thursday. After the Fed's decision to increase rates, Jean-Claude Trichet, the ECB president, said the Frankfurt bank was "not influenced in any respect by what has been decided across the Atlantic". Although eurozone rates were held at 2 per cent for the 13th month running, Mr Trichet appeared to take a harder rhetorical stance on inflation. In spite of the recent moderation in oil prices, he warned eurozone inflation would probably remain above 2 per cent into the first half of next year.

The eurozone's annual rate of inflation dropped to 2.4 per cent in June from 2.5 per cent in May, data showed this week, suggesting price pressures had peaked. The "flash" estimate by Eurostat, the European Union's statistical unit, appeared to vindicate the ECB's "wait and see" stance on interest rates.

But German retail sales figures showed a 5.2 per cent drop in May compared with the same month a year before, highlighting the extreme weakness of domestic demand in the eurozone's largest economy, which is relying on exports to fuel growth.



UK still ploughing its own furrow

Amid a flurry of almost universally upbeat data this week, economists in London said the next interest rate rise, the fifth since November, was only a matter of weeks away. Revisions to official data showed growth was not only anove trend but broadly based across the economy.

In an interview with the FT to mark his first year as governor, Mervyn King, of the Bank of England, said house prices were "very important" in the decisions to raise interest rates in the past couple of months. Mr King raised the prospect that the Bank's monetary policy committee could raise interest rates more sharply to curb the housing market in an attempt to reduce the risk of a crash.

"If we saw, for example, that we really were running the risk of a big deviation of inflation from target further ahead, then we could take that into account and would do so," he said.

But Mr King stressed that the MPC was not trying to target house prices, and that during the past year other factors had been more important in its decisions to raise rates, particularly the synchronised global economic recovery.



Warnings as rates rise

The Bank for International Settlements, the "central banks' bank" this week warned that leading economies would need "an unusual degree" of tightening of both monetary and fiscal policy to give themselves room to manoeuvre in response to future shocks. Speaking on the last day of the bank's annual general meeting in Basel, Malcolm Knight, the BIS's general manager, said: "Interest rates need to go to levels that are more neutral and maybe even restrictive in some countries, depending on inflation prospects going forward."


http://www.magellanbooks.com/jamescumes.html
http://www.authorsden.com/jameswcumes
http://VictoryOverWant.org



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