Ben Bernanke is caged like a hamster

...while the Japanese roam free.

The mice are taunting Clementine, our hamster. Clementine spends her whole life gripping the bars of her cage and peering out whilst waiting for the brief time she is allowed to run around in her plastic ball each day. Our free-roaming mouse invaders have taken to standing on the edge of her cage flicking two claws at her and generally behaving like they are in Newcastle on a Friday night. Their relative positions of freedom just increase Clementine’s anguish.

It’s the sort of relationship that reminds me of the caged Ben Bernanke, chair of the US Federal Reserve and the free-roaming Bank of Japan’s Haruhiko Kuroda. America has spent the last 4 years pursuing a policy of quantitative easing, essentially a support programme that involves pumping money into the economy and which has resulted in growth this year of around 2 per cent. The Japanese, by contrast, announced a QE policy in December and have already produced annualized growth of 4 per cent. The US must feel like Clementine does – mocked and helpless; 2 per cent growth seems a meagre reward given the trouble it has caused.

At a recent grilling on Capitol Hill, Bernanke was asked whether the Fed’s quantitative easing program at $3trn had gone too far. He retorted, in words to this effect, “If you think that’s big, take a look at the Japanese…” What Bernanke is talking about is that although the scale of the Japanese target, ¥270trn or $2.6trn in today’s money, is close to the Fed in absolute terms, if you put it into the context of the relative sizes of the two economies, it is truly colossal. To match the Japanese, the Americans would have to put an astonishing $7trn into the US system, which is close to 50 per cent of US nominal GDP.  It’s enough to make you spit your sushi out.

But for America the real question is about the quality of their recovery and what the next downturn looks like. America needs jobs but not any old jobs; they need to be permanent. The measure of unemployment that includes part-time workers shows that over 13 per cent of the US is under-employed because of part-time working. Compare that to unemployment and the measure of part-time work is about 7 per cent of the working population. At the same time the bonus culture that first showed up in the 1970’s is so deeply entrenched that, to this day, about 20per cent of American’s total take home pay is variable whilst the proportion that workers are taking home of company profits has dropped to below 50 per cent. Back in the late-1920’s this was 68 per cent. No wonder Jay Gatsby threw a party.

If you take these factors together then what you find is that the combination of variable pay and uncertain employment means that US growth could be subject to vicious variability. Given that about 65 per cent of the GDP in the US is consumer spending you understand that at the heart of the US economy there is now a level of uncertainty never seen before. Effectively America needs a permanent pay rise and the transfer of profits from owners to workers. But neither of these things is going to happen whilst global competition makes the west look generous on pay and people who place their capital at risk need to be rewarded. So making policy in an economy with an unstable beating heart will remain is a high-risk game.

Head of Fixed Income and Macro, Old Mutual Global Investors

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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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