Bank of England likely to follow suit with round of quantitative easing after eurozone debt crisis rattles financial markets The United States central bank has unleashed a radical $400bn plan to prevent the world’s largest economy sliding back into recession, as it emerged that the Bank of England was itself gearing up to pump billions into the British economy. Policymakers on both sides of the Atlantic are battling to prevent the current “soft patch” in the global economy turning into a full-blown slump as the eurozone debt crisis rattles financial markets, and unemployment continues to rise. Share prices fell sharply after the Fed’s announcement, with the Dow Jones industrial average on Wall Street losing more than 150 points. On the day that the deputy prime minister, Nick Clegg, told the Liberal Democrat conference that the economy was “our biggest concern”, minutes from the Bank of England’s latest meeting revealed that its nine-member monetary policy committee (MPC) came close to implementing what the City has dubbed “QEII” – a new round of the £200bn of so-called quantitative easing which the Bank carried out at the height of the financial crisis in 2009. “For most members, the decision of whether to embark on further monetary easing at this meeting was finely balanced since the weakness and stresses of the past month had significantly strengthened the case for an immediate resumption of asset purchases,” the minutes said. Just one MPC member, the US economist Adam Posen, voted for an immediate extension of QE, but it was clear that others came close to joining him. “For some members, a continuation of the conditions seen over the past month would probably be sufficient to justify an expansion of the asset purchase programme at a subsequent meeting.” Samuel Tombs, UK economist at Capital Economics, said the MPC minutes “strongly suggest that QEII is set to be launched in the very near future”; analysts at Goldman Sachs said a decision would probably come as soon as next month. With interest rates already close to zero, central banks have few weapons left, and have been forced to resort to unconventional measures. The fact that the MPC came close to starting QEII, just months after some were calling for a rise in interest rates to choke off inflation, underlines how rapidly the health of the economy has declined since the start of the year. It has also increased pressure on the coalition to come up with an alternative plan to its deficit cutting strategy, but Clegg was forced to quash talk coming from his cabinet colleagues of a multibillion capital spending boost to revive the flagging economy. He told the Liberal Democrats’ party conference in Birmingham that deficit reduction was “the essential foundation for growth”. In a sombre closing speech to conference, Clegg warned of “a long hard road ahead”, and said the economy was our biggest concern due to the fragility of the recovery. Meanwhile in the US, under “Operation Twist”, named after a similar measure launched in the 1960s under President Kennedy, the US Federal Reserve said it would buy $400bn (£258bn) of long-term Treasury bonds by June 2012, funding the purchases by selling shorter-term debts. The measure is aimed at driving down long-term interest rates across the economy, helping to cut the cost of borrowing for debt-burdened homeowners and struggling firms. In another effort to help the ailing US housing market, the Fed chairman, Ben Bernanke, said that as the mortgage-backed securities it owns mature, it will reinvest the proceeds in buying new mortgage bonds. Bernanke’s announcement came after the International Monetary Fund, which is holding its annual meetings in Washington, warned that the world financial system is, “back in the danger zone”. “Financial stability risks have increased substantially – reversing some of the progress that had been made over the previous three years. So we are back in the danger zone,” José Viñals, the IMF’s financial counsellor, told journalists in Washington DC, as the IMF launched its Financial Stability Report. Viñals cited a trio of financial system shocks: unequivocal signs of a broader global economic slowdown, turbulence in the euro area and the US credit downgrade. “This has thrown us into a crisis of confidence, which is being driven by three main factors: weak growth, weak balance sheets and weak politics.” In its statement, the Fed’s Open Markets Committee said the economic outlook had deteriorated sharply. “Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated.” In the UK, the slowdown is taking its toll on George Osborne’s efforts to fix the public finances. Public borrowing hit a record high for August last month, according to the Office for National Statistics. On the Treasury’s preferred measure, which excludes the cost of bank bailouts, borrowing rose to £15.9bn last month, compared with £14bn a year ago. The ONS also reported that the government had borrowed less in previous months than originally thought; but analysts said the chancellor still looked likely to miss his deficit target for this year. “A significant pick-up in tax receipts over the coming months or an undershoot on investment spending could lead to the OBR’s forecast still proving correct, but it is also possible that the deficit this year could even exceed the deficit last year,” said Rowena Crawford, research economist at the Institute for Fiscal Studies. A Treasury spokesman insisted the chancellor’s plans were on track, while conceding that, “these are challenging times.” Borrowing in the financial year so far was revised down by £4.6bn to £51.5bn, mainly due to a recalculation of local government data and income tax receipts. Last year’s total figure was revised down to £136.7bn. Chris Williamson, chief economist at Markit, said: “There seems little hope that the government will hit its spending targets this year, as slower growth means less tax revenues and higher welfare spending,” he said. The worse-than-expected budget figures came as some Lib Dem cabinet members are claiming the party can boost capital spending without harming the government’s chief fiscal mandate of eradicating the current structural deficit by 2015. The argument was backed in principle by Sir Alan Budd, first interim chairman of the Office of Budget Responsibility: “The main government target relates to the current balance of the budget – that does not include capital spending so the government could in principle increase capital spending by adding to its plans or bringing forward its public spending without in that way harming its established fiscal target”. The CBI also called for a quick construction programme, including tolls to finance private sector road building. Global recession Recession US economy Financial crisis Quantitative easing European debt crisis Economics Global economy Bank of England European banks Banking United States Heather Stewart Patrick Wintour guardian.co.uk
Continue reading …French President Nicolas Sarkozy and US President Barack Obama plan to heap pressure on their Palestinian counterpart today in a concerted push to persuade Mahmoud Abbas to end his bid for full UN membership and to instead seek upgraded status in the world body. The presidents will make their pitches…
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The group of childhood friends once hailed for taking indie music into the mainstream are to split after three decades For three decades REM evolved. They were a group of childhood friends, hailed for taking indie music into the mainstream. Later, they filled stadiums. Yet they were consistently regarded as one of the world’s most significant rock acts In an unexpected statement on their website on Wednesday though, REM announced they were splitting up. The end came with a simple message. It read: “To our fans and friends: As REM, and as lifelong friends and co-conspirators, we have decided to call it a day as a band. “We walk away with a great sense of gratitude, of finality, and of astonishment at all we have accomplished,” the statement continued. “To anyone who ever felt touched by our music, our deepest thanks for listening.” The band , formed in Athens, Georgia in 1980, originally consisted of the singer, Michael Stipe, the guitarist, Peter Buck, the bassist, Mike Mills and the drummer, Bill Berry, although Berry quit in 1997 two years after suffering a brain aneurysm. The group released a series of records and were cult heroes on the US college rock circuit before finding worldwide fame in the 90s with the multiplatinum selling albums Out Of Time, Automatic For The People and Monster. Their hit Everybody Hurts – written as a plea to suicidal teenagers to reconsider ending their lives – became a generational anthem. Speaking about the split, Stipe said: “I hope our fans realise this wasn’t an easy decision but all things must end, and we wanted to do it right, to do it our way.” According to Mills the decision was amicable: “There’s no disharmony here, no falling-outs, no lawyers squaring off.” In recent years, the band’s fortunes have waxed and waned with 2004′s Around the Sun becoming their first studio album to miss the US top 10, although it still hit No
Continue reading …Yep, it’s official: The birther movement is still not dead . Pat Boone, who was a heartthrob in the ‘50s and who more recently led an evangelical Christian tour of the holy land with Mike Huckabee, proudly came out as a birther to the San Francisco Chronicle at the recent California…
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Travellers at disputed Essex site face courts again but temporary bar to eviction has lifted spirits As the noise increased at the Travellers’ site at Dale Farm on Monday morning three people slipped away, unnoticed by the media crowd gathered to watch what was going to be one of the biggest evictions in UK history. Mary Sheridan, a 34-year-old mother, known to everyone on the site as Michelle; Candy Sheridan, a Gypsy who had been helping Dale Farm since 2007; and Stuart Carruthers, an expert in IT communications, made their way to Basildon crown court, then Chelmsford county court, then the Royal Courts of Justice, in London. “I was so frightened,” said Michelle Sheridan. “I knew we were fighting for our homes and our communities.” Michelle’s case, compiled by Carruthers and Sheridan without the help of lawyers, was a last ditch attempt to stop bulldozers moving on to Dale Farm, where she had lived with her family for 10 years and given birth to two of her four children. While protesters at the site at Crays Hill, Essex, chained themselves to gates and burnt-out cars, and bailiffs battled abuse to reach the gates of the barricaded plot, the trio made their representations. And just before 5pm the news came through that they had achieved the seemingly impossible: a last-minute stay of execution for Dale Farm. On Friday a judge will look at the case, at the Royal Courts of Justice, brought by Michelle Sheridan and based on the minutiae of the planning processes, and decide if Basildon council has the right to evict 86 families from their homes and clear the former scrapyard. By this stage, the council had expected the eviction to be well underway. Michelle’s case, compiled by Carruthers and Sheridan without the help of lawyers, was a last-ditch attempt to stop bulldozers moving on to Dale Farm, where she had lived with her family for 10 years and given birth to two of her four children. Carruthers, who joined the Travellers’ campaign in March, recalled a sleepless weekend compiling 10 years’ worth of documents – reports, he insists, will reveal that the council did not have the power to clear the Dale Farm site. He argues that the eviction notices handed out by the council are incomplete and do not specify removal of everything from the land. There are reportedly 51 unauthorised home plots at Dale Farm. Though Carruthers is neither Gypsy nor Traveller, he has helped individuals with planning disputes before. “I help people who can’t read and write, and I’m quite good at it,” he said. “I just work out how systems work.” He decided the only way of saving the Dale Farm site was by focusing on the enforcement notices. “Everyone has been forced on the Human Rights issue, without actually asking if the council had the right to do what they said they were going to do. When it became clear no one was going to take up the issue of the eviction notices, we decided to do it ourselves.” With Candy Sheridan he worked throughout the weekend on the injunction application. “My little inkjet printer takes a long time to spit stuff out, there were a few trips to Tesco for more paper, and my fingers were covered in ink from filling the printer up,” said Carruthers. “At about 3am I put it in my rucksack and drove to Basildon.” After arriving at Basildon county court at 8.30am the trio were told to go to Chelmsford, to see a circuit judge. But, fearing the issue was too political to be dealt with at county level, that judge sent them to the high court. “I thought ‘that’s it, we’ll be too late’, said Michelle. “But the judge said calm down, and that we’d been booked in.” Carruthers added that one concern was for his car. “I was more worried about parking than anything else, I was parked on double-yellow lines because all the car parks were shut.” A train trip to London and a dash across the capital by taxi and they were standing before Mr Justice Edwards-Stuart – even as the bailiffs were approaching the Dale Farm gates to issue a notice for the families to leave. “Before we went in I was on the phone to my sister and she said the bailiffs were coming towards the gate. I could hear screaming. It was awful,” said Michelle. By a twist of fate, Basildon’s barristers were in a nearby court for the case of the Dale Farm resident Mary Flynn, whose application against eviction on grounds of her own ill-health had been rejected. “They thought they were winning, but they were losing next door,” said Carruthers. But getting wind of the trio’s case, the council’s legal team briskly entered the court, bringing to the judges’ attention the effect on the public purse – estimated by Carruthers to be £1.2m a day – that each day of delay was costing. The judge ordered an emergency injunction because of fears the council might “go further” than the eviction notices allowed. “We wanted to jump for joy,” said Sheridan. “But we’d all agreed to hold our heads up high and walk out calmly, we wanted to show we were sensible people.” Michelle Sheridan added: “It was a wonderful feeling. We’d got an extra five days to call off the dogs, that felt good.” They might not be held back for long. Basildon council’s leader, Tony Ball, says he is sure the council’s actions will be upheld and that Dale Farm will then have to meet the costs of the delay. “We know what we can do and what we can’t. I’m completely clear that what we are doing is absolutely right. To turn a blind eye to law-breaking is not something I want to be party to.” For the council, victory on Friday is crucial. “If Dale Farm is lost I would not want it to become a case for others to refer to. It’d be a massive blow to the council. We want this to come to a peaceful conclusion but the law must be enforced and Dale Farm must be cleared.” The decision, whether it signals the start of evictions, or another legal delay as the details of the case are once again examined, will be closely watched the world over. The stakes could not be higher, according to Sheridan. “To lose Dale Farm would be heartbreaking,” she said. “But it also sends a message about my community, it sends a message to councils that we don’t need to be tolerated.” Michelle, who moved back to Dale Farm this week in her caravan to await the judgment, feels the decision will affect the rest of her life. “I’m nervous and very worried. Everyone wants this to end now. It’s like we’re in a cage and everyone is watching us, but if we win – I can’t describe it – it would change the lives of lots of Travellers. It would be absolute history.” Dale Farm Roma, Gypsies and Travellers Protest Human rights Housing Communities Local government Alexandra Topping guardian.co.uk
Continue reading …Victoria Beckham is, shall we say, committed to losing her baby weight, a source tells the Sun . After giving birth to daughter Harper Seven in July, Posh Spice started rising at—brace yourself—7am and walking seven miles per day in two treadmill sessions while also doing yoga. “She’s had…
Continue reading …Former workers at a vast Amazon warehouse in eastern Pennsylvania say the LeHigh “fulfillment center” was a hellish place to work, finds a lengthy exposé by the Allentown Morning Call finds. Workers—most of whom were employed by a temp agency instead of Amazon itself—say they had to endure…
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Campaigners condemn private meeting to discuss use of Official Secrets Act against reporter who revealed Milly Dowler phone hacking The Metropolitan police is to be allowed explain to MPs in private why it threatened to invoke the Officials Secrets Act in an attempt to force the Guardian to hand over notes and reveal sources behind its phone-hacking coverage. The hearing on Friday is both official and secret, leading to condemnation by campaigners for media freedom, which threatens to dash the Met’s hopes that the furore over their alleged attempt to strike at media freedom will die away. On Tuesday, the Met announced it would end its attempt to get a court order forcing Guardian reporter Amelia Hill to hand over notes and reveal sources behind the revelation that Milly Dowler’s phone had been hacked by the News of the World. It then said MPs had invited them to give a briefing in private. it was not clear who had asked for Friday’s session to be held behind closed doors. John Kampfner, chief executive of Index on Censorship , said: “Holding this hearing behind closed doors would be a damaging move for parliament and the Metropolitan police. It is important that the police explain their actions openly. “The attempt to use the Official Secrets Act on a journalist was an outrageous attack on free speech and those responsible should explain themselves not just to parliament but to the country.” The powerful home affairs committee has already investigated hacking and lambasted the Met for its failings. Deputy assistant commissioner Mark Simmons , who leads on professionalism issues for the Met, will appear before the committee on Friday to answer questions. Keith Vaz, chair of the committee, said: “I have asked the Metropolitan police to give the committee a full explanation of why they took this action and to provide us with a timeline as to exactly who was consulted. It is essential that we get the full facts.” The attempt by Scotland Yard to get a production order, requiring the Guardian to hand over sensitive material, was roundly condemned by other news organisations – the first crisis for incoming commissioner Bernard Hogan-Howe, who formally takes office next week. The Met insists the decision was taken by a relatively junior officer in its directorate of professional standards, who was investigating a detective accused of leaking information from the hacking investigation to the media. The Met says Hogan-Howe knew nothing of the original decision, even though he is overseeing the investigation into phone hacking in his role as deputy commissioner. Simmons used a radio interview to admit that invoking the Official Secrets Act in an attempt to make the Guardian reveal its confidential sources for stories relating to the phone-hacking scandal was “not appropriate”. Simmons told the BBC: “We’ve acknowledged and I’ve acknowledged the role the Guardian has played in the history of what brought us to where we are now, both in terms of its focus on phone hacking itself and indeed its focus on the Met’s response to that. “But in all the glare that has been thrown on to our relationships with the media, we have had to ask ourselves the question about how do we do more to ensure that public confidence in our officers treating information given to them in confidence appropriately is maintained. That’s why we undertake robust investigation into incidents of leakages. “I think what’s happened is it’s thrown into the spotlight the difficulty that we have in getting a new balance in our relationship with the media in the wake of all the issues that have been aired, very publicly, in recent months.” Alan Rusbridger, editor-in-chief of the Guardian, said: “I just hope that, in our effort to clean up some of the worst practices, we don’t completely overreact and try to clamp down on perfectly normal and applaudable reporting. This was a regrettable incident, but let’s hope it’s over.” The police application was formally made under the Police and Criminal Evidence Act, but with a claim that Hill had committed an offence under the Official Secrets Act by inciting an officer from Operation Weeting – the Met’s investigation into phone hacking – to reveal information. Metropolitan police London Police Phone hacking Newspapers & magazines National newspapers Newspapers Official Secrets Act The Guardian Vikram Dodd Lizzy Davies guardian.co.uk
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Federal Reserve moves to push down long-term interest rates and kickstart housing market The Federal Reserve ramped up its aid to the beleaguered US economy on Wednesday, launching an effort to put more downward pressure on long-term interest rates over time and help the battered housing sector. The Fed said it would launch a new $400bn program that will tilt its $2.85tn balance sheet more heavily towards longer-term securities by selling shorter-term notes and using those funds to purchase longer-dated treasuries – a strategy dubbed “Operation Twist”, from the card game pontoon. It will now also reinvest proceeds from maturing mortgage and agency bonds back into the mortgage market, an acknowledgement of just how weak conditions in the sector have remained. “Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated,” the Fed said in its statement. Faced with a lofty 9.1% jobless rate, consumer and business confidence sapped by a troubling US credit downgrade, and an escalating sovereign debt crisis in Europe, Fed officials have signaleld they would seek to prevent already sluggish US growth from weakening further. But although Fed chairman Ben Bernanke has indicated the central bank’s reluctance to stay on the sidelines, Fed activism has become a punching bag for politicians as an election year nears. Top Republican congressional leaders wrote to Bernanke this week urging the central bank to desist from further economic interventions, echoing criticism voiced by Republican presidential candidates in recent weeks. Fed officials, however, believe that by shifting their bond holdings they could encourage mortgage refinancing and push investors into riskier assets, such as corporate bonds and stocks, without stoking a run-up in consumer prices. The US central bank is not alone in its concerns. The Bank of England on Wednesday signalled it was ready to pump more money into the weakening British economy, potentially as soon as October. Similarly, the Norwegian central bank held its main interest rate unchanged and signaled it might refrain from rate increases for longer than previously expected due to a weaker global economy and the euro zone debt crisis. The US economy grew at less than 1% annual rate over the first half of the year, and analysts have warned of a heightened risk of recession. A report showing US employers added no new jobs on net in August provoked widespread fears growth could stall. The Fed has already embarked far down one of the most aggressive monetary easing paths on record. It cut overnight interest rates to near zero in December 2008 and then moved to more than triple its balance sheet to $2.8tn through a series of bond purchases. After its last meeting on August 9, the Fed said it expected to hold rates at rock-bottom levels at least through the middle of 2013, a decision that drew three dissenting votes. US economy Ben Bernanke US housing and sub-prime crisis United States Mortgage lending figures US politics guardian.co.uk
Continue reading …So what are people saying about “Operation Twist,” the Federal Reserve’s just-announced plan to buy $400 billion worth of long-term government bonds? Is it likely to succeed in encouraging borrowing and jolting the economy out of its rut? So far, the reviews aren’t resoundingly positive. • Dan Gross of Yahoo! Finance is underwhelmed. “This move
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