The Red Top News Nov2010

Let them eat cheese:

Anger as Ireland plans handouts of cheddar to the poor.

The country may be a few heartbeats away from intervention by the International Monetary Fund but today the Irish government had a novel message for the public: let them eat cheese.



Brendan Smith, the agriculture minister, announced a European Union-funded scheme today that will enable the country to tuck into the EU's cheese mountain. 53 tonnes of fresh cheddar will be distributed from 15 November with collection centres in towns and cities around the country.

The minister said the scheme was "an important means of contributing towards the well-being of the most deprived citizens in the community".


"I am very conscious that many people find themselves in difficult circumstances at present and I want to commend the work of the many charitable organisations who are working on the front line to bring what comfort and relief they can," said Smith.


The initiative was immediately attacked by the opposition Fine Gael party, who called it an insult to the country, which is suffering the worst financial crisis in its history.


Fine Gael's agriculture spokesman, Andrew Doyle, said: "People on the breadline would rather the government's attention was on solving the economic crisis they caused and providing jobs rather than on this ridiculous announcement.


German finance minister says "With all due respect, US policy is clueless,"

Critics said the $600bn (£370bn) of QE announced by the Federal Reserve would hurt consumers by pushing up prices of soy, wheat and other staple foods, along with oil, copper and zinc.


The jump in commodity prices raised the prospect of an inflationary bubble reminiscent of 2008, when oil and other industrial raw materials struck all-time highs just before the crash.

UK food prices were 9.8% higher last month than a year ago, the biggest annual increase since October 2008, according to the Office for National Statistics. Imported food prices climbed 4.5% on the year, the fastest rate since October 2009, pushing up the price of bread and margarine. Prices are likely to be pushed higher in coming months, with refined sugar reaching a record of $783.90 a tonne today.

China, Germany and Brazil warned that QE would have far-reaching negative effects beyond US shores. They said it amounted to promoting US exporters at the expense of rival trading nations with a scheme to artificially depress the value of the dollar.





"With all due respect, US policy is clueless," said German finance minister Wolfgang Schäuble. "[The problem] is not a shortage of liquidity. It's not that the Americans haven't pumped enough liquidity into the market. And now to say let's pump more into the market is not going to solve their problems."


Symbolic moves by the Bank of Japan. Economists get their Microscopes out.


JAPAN’S economy has long been sickly. It now also has to contend with a stronger yen, thanks in part to loose monetary policy elsewhere in the rich world. That alone gave the Bank of Japan (BoJ) reason to act on October 5th. So too did criticism that it has not done enough to spur the economy, which has inspired Japanese politicians to suggest legislation to weaken the central bank’s independence.



Whatever its motivation, the BoJ this week took three modest but symbolic steps. First, it lowered its policy rate from 0.1% to a range between zero and 0.1%. That signals to the market, and to disenchanted politicians, that the BoJ cares.

The Red Top Economic correspondent comments.'That's right so low are Japans interest rate that they can't cut them anymore so they have to come up with a comment about a range somewhere between 0.1% and 0.0%. Yet the financial markets make no comment.



G20 summit at odds over global recovery pact.
"Sod globalization let national  protectionism begin."
 
Gathering on a group of three islands specially built for the summit near Seoul, leaders will spend the next two days in fraught discussions about how to iron out the growing rifts between export-rich countries and debt-laden consumer nations. Protectionism and foreign exchange rates will be central to the debate.
 

The United States wants China to allow the yuan to rise faster and believes that Beijing is keeping its currency low to gain a trade advantage. But the US negotiators face a rough ride, especially in the wake of last week's new $600bn round of quantitative easing, which has angered many G20 nations, including China and Germany, who believe the move is designed to weaken the dollar – boosting US exports – and ignores the global repercussions it is likely to provoke. Already the euro is at a two-year high against the dollar.

NEWS FLASH FROM G20

G20 DECLARE CASH FOR GOLD SCHEME

The G20 has announced a new scheme where anyone can hand in any unwanted gold and receive a cash payment. A spokesman for the G20 said 'As we represent the top 20 economies we can offer extremely good rates for the gold."

Asked by the Red Top Economics correspondent why they are offering such good rates for gold he said.

"Well we think it’s a good way of getting liquidity into the world economy. Also it means we will possess all the gold when we introduce a new world currency backed by gold. While all the little people own greatly devalued some would say almost worthless paper money.

It’s win win, err if you’re a government, bank or an investor who holds most of their assets in precious metals.”