US authorities slash base rates
US authorities have tonight cut base rates from 1% down to the 0% - 0.25% in a move which few had forecast and even fewer had thought we would see. This effectively gives the US government the opportunity to flood the money markets with 0% finance at a time when the US economy is dive-bombing to recession. The move reflects a similar situation in Japan where the economy is also in a severe downward spiral and in need of immediate help.
This opens the possibility of UK base rates falling to around 0% in the short to medium term as governments around the world continue to show all of their cards in the battle to beat the worldwide depression. There is very little left for governments around the world to do once base rates have hit 0% and the prospect of a deflationary period looms large in the background. If we have deflationary pressure we could see the worldwide economy plunged into a serious recession which could take years to work through.
It will be interesting to see how the UK government responds to this surprising moving by America as the UK economy is in as bad a situation as the US economy.
Share this..
Related stories
Wetherspoon's announces record sales
Pub group JD Wetherspoon has announced record sales with turnover up 1.2% in the year to 26 July 2009. This is a sector which has been hit very hard by the UK recession but JD Wetherspoon, which operates at the value end of the market, has been very proactive in introducing breakfast and other meals to the mix. It looks as though the attraction of cheap food and cheap drink brought together under...
Read MoreAre the unions wrecking Royal Mail?
Confirmation that there will be strike action by Royal Mail workers between now and Christmas has put the spotlight back on Royal Mail management and the unions. The company is already reeling from suggestions that Amazon is set to walk away from one contract worth £25 million year but today sees news that Argos and eBay may also be reviewing their position. Slowly but surely Royal Mail is losing...
Read MoreWill football clubs suffer in the downturn?
The last few hours have brought to light what could turn out to be a major problem for the UK sport of football with many clubs now under foreign ownership. While largely unnoticed in the UK press, last week we saw problems with players wages at Heart of Midlothian football club where the main shareholders is a Lithuanian bank. Even though the wages were finally paid at Hearts it seems that West...
Read MoreMarks & Spencer suggests high street squeeze to continue
Despite some better news on the high street over the last few days, with Tesco announcing up to 10,000 the new jobs and other companies are following suit, Stuart Rose has today stepped forward to suggest that the squeeze on the high street will continue for some time to come. His company, Marks & Spencer, has been suffering for the last few months and despite a number of highly publicised promoti...
Read MoreAlistair Darling considering super tax
It has been reported in the press today that Chancellor of the Exchequer Alistair Darling is considering a super tax on those earning over £500,000 a year. It is believed he is looking towards a 60% to 70% income tax band on earnings over £500,000 a year which could have serious repercussions for the UK business arena. So will he actually go ahead with this ambitious plan? Yet again there wou...
Read More