Bleating about mortage rate cuts

Everybody and their mother is shouting that now that base rates have been cut then so should mortgage interest rates by the same amount.

Including that economic genius who was Chancellor for a decade and that other (ahem) one who is in charge of the economy now.

There's only one slight problem with this idea though. Mortgage rates are not determined by base rates. Influenced, yes, but not determined. The Times got this right a month ago:

Gordon Brown welcomed the news but the decision by lenders to reduce rates is likely to owe as much to...

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Daily Brief

The president-elect's campaign staff motto was "no drama with Obama." But there may be some serious backstage moves by his economic team.

Timothy Geithner, the president of the Federal Reserve Bank of New York who has been designated the next Treasury secretary, is trying to oust Sheila Bair as chairwoman of the Federal Deposit Insurance Corp., Bloomberg News reports.

Bloomberg says:

"Geithner, president of the Federal Reserve Bank of New York, has argued Bair isn't a team player and is too focused on protecting her agency rather than the financial system as a whole, according to two congressional...

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A smaller world

Lou Jiwei, the head of China's CIC sovereign wealth fund, is saying some interesting things:

"Right now we do not have the courage to invest in financial institutions because we do not know what problems they may have," Mr. Lou said as part of a panel discussion on the second and final day of the Clinton Global Initiative conference here.
Asked whether China might pursue economic policies aimed at saving the world, Mr. Lou said that the country's leaders had a narrower focus. "China can only save herself because the scale of China is still rather

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Turning Japanese? I really think so

After the rate cut, one question presents itself: is the British economy turning Japanese? Now rates are at 2%, it makes you wonder how low they can go and whether we are approaching a zero-rate like Japan after its economy blew up in 1990, leading to the “lost decade”? To answer it, let’s get a doctor to take a picture so we can look at the UK economy from the inside as well (*)

The market expects rates to bottom at 0.75% next spring and then rise slowly. So those lucky...

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Mandelson's understanding

Yes, we all know, Peter Mandelson is the power behind the throne, all policies are being run through him. Rather a pity he doesn't seem to understand the world.

A society that leaves individuals to cover the costs of healthcare or unemployment will spend less collectively.

He seems to have got very confused here between a public good and a public service.

They are absolutely not the same thing.

A public good is non-rivalrous and non-excludable. Think, say, basic scientific research. OK, (for technical reasons that I won't bore you with) the argument is that people can't make any...

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