PANDIT AND COSBY SHOW (CONTINUATION)

PANDIT AND COSBY SHOW (CONTINUATION)

Kondratieff and his disciples — among whom was Joseph Schumpeter, who wrote about capitalism’s “creative destruction” — identified four stages in each cycle, corresponding to the seasons. After spurting ahead in the spring phase, they said, the economy cruises through the summer, experiences a scary drop as autumn sets in, and then — despite the TARPs, TALFs and whatever else governments do — descends into a winter phase that can last up to 20 years. However, the Austrian School is a possible rival to Kondratieff’s line of thought. Austrian economists tend to emphasize a laissez-faire approach and entrepreneurship (not the most popular policies at this moment) and strict limits on money supply growth, usually by hitching the currency to the gold standard.

“A good profession should take its outsiders more seriously; they make you look at things in different ways. The worst thing for policy makers is to think they are right.”

HBOS whistleblower: Brown must go

Sunday, February 15 09:57 am The banking whistleblower whose revelations forced the resignation of a senior Government adviser has called for Prime Minister Gordon Brown to go for his part in creating the financial crisis.  Paul Moore, who was sacked after raising concerns over excessive risk-taking at HBOS, said Mr Brown should be "held accountable for his failure to oversee the stability of the country". Following his explosive evidence to the Commons Treasury Committee last week, Mr Moore said he is planning to send the MPs a further dossier of 30 documents which will point the finger of blame for the bust at Mr Brown. After Mr Moore's revelations forced the resignation of the deputy chairman of the Financial Services Authority Sir James Crosby, Mr Brown told another parliamentary committee that HBOS's massive losses - estimated at more than £10 billion - were caused not by Government policy but by the bank's flawed business model. But Mr Moore, who was head of risk at HBOS from 2002 to 2005, told the Independent on Sunday: "The failure goes right to the heart of the system - to the internal supervisory system and right to the top of government. "Brown swaggers around holding himself out as the economic saviour of the world with a level of hubris that defies belief. But does he ever acknowledge that it was he, as Chancellor of the Exchequer, who presided functionally over the economic strategy that got us into this mess in the first place?" Mr Moore said that he had collected a "meticulous record" of his time at HBOS which will back up his warnings that the bank was "going too fast" and taking excessive risk thanks to a "sales driven culture" led by Sir James as chief executive. Sir James has rejected Mr Moore's claim that he sacked the head of risk as a result of his warnings.

ECB reticent as G7 central banks eye tools beyond rates 

Sunday, February 15 10:12 am Desperate to pull their economies out of recession, Group of Seven central bankers meeting in Rome this weekend exchanged notes on what they can do once interest rates cannot go down any further.  With U.S. and Japanese rates already virtually zero, and the Bank of England and European Central Bank heading that way, printing money is understood to be the next step -- with the banks buying assets to raise money supply and thereby boost demand in the economy. So-called quantitative easing was applied in Japan with mixed results in the early part of this decade as part of that country's long battle with deflation, a damaging spiral of descending prices which leads consumers to defer spending. It is now being considered by most of the world's major central banks as the world experiences its most significant and synchronised downturn in decades.

The U.S. Federal Reserve, which has cut interest rates to between zero and 0.25 percent, has already started what it prefers to call "credit easing" and the Bank of England could follow suit as quickly as next month. Euro zone policymakers are watching, but European Central Bank President Jean-Claude Trichet said the ECB had not drawn any particular conclusions after discussions with other central banks. "I have said that I did not exclude additional non-standard action but no decision as been taken yet on top of the non-standard action we have already decided to do and we will see," he told reporters on Saturday. "When and if (there is) something more to say we will say it."

Fellow ECB policymakers Mario Draghi, Christian Noyer and Axel Weber said the ECB was already taking non-standard steps by flooding markets with liquidity and gave no indication that they were ready to move to the next step of direct asset purchases. Noyer, who heads the Bank of France, said the action the ECB had already taken was starting to bear fruit. "If you saw tensions returning or the improvements stopping ... we would have to be ready to put in place extra measures if it was necessary," he said when asked about buying corporate debt. "Today things are working well."

TOP PRIORITY? The ECB held interest rates at 2 percent this month but is widely expected to cut them to a record low of 1.5 percent next month, especially after figures out on Friday showed the euro zone economy shrinking 1.5 percent in Q4 of 2008. Little improvement is expected in the short-term. "Looking at the evolution of the first quarter, we see (this) as negative also," Trichet said.

Bundesbank President Weber said that while monetary policy was already more accommodative than might be suggested by its headline rate, there might be room for more easing. "I do not rule out that we will try to play an active role with proactive rate-cuts to stabilise the economy," he said. Weber noted there were only 80 basis points difference between short-term market rates in the euro zone and their U.S. equivalents, and said the difference in real terms was negligible given higher euro zone inflation. The ECB's move to provide banks with all the funds they need at fixed interest rates also made the ECB's overnight deposit rate -- now at 1 percent -- the "dominant" interest rate.

"The expansionary degree of monetary policy in the short-term is a lot stronger than that which is reflected in the main refinancing rate," Weber said. "Short-term rates are at 1.2 percent, that is not noticeably higher than U.S. rates, and the difference will be reduced to minimal levels, according to future monetary policy steps." In their joint statement, the G7 said getting their economies back in order was "the highest priority" as a severe downturn looks set to last through most of 2009.

"Policy interest rates have been reduced to very low levels and unconventional monetary policy actions are being taken as appropriate," the G7 said. In line with some economists after Friday's GDP, Weber said he saw signs that the economy could bottom out in the second half of the year.

"There are indicators that give us hope," he said. "But you have to see this with caution. In the European economy the downturn will continue until the summer...After that we will probably have a slow recovery." Angel Gurria, Secretary General of the Organisation for Economic Cooperation and Development, said it was preparing to cut its growth outlook for the euro zone this year to below the most recent forecasts of bodies like the International Monetary Fund. The IMF already forecasts a 2 percent contraction.

And now a Rough Cut: Lost Bugatti sells at auction (00:42) Feb 9 - A 1937 Type 57S Bugatti that had been in left in a garage for almost fifty years was the main attraction at a Bonhams auction, selling for over 3 million euros.  The car was originally owned by racing enthusiast Earl Howe, who was the first president of the British Racing Driver's Club. In 1955 the car was bough by Dr Harold Carr who drove it for a few years until the early 1960s when it was parked in his garage until his death in 2007. His nephew then found the Bugatti still with original features and an odometer reading of just 26,284.