The Fed has a difficult task ahead

Careless talk costs money.

One clings to the hope that Chairman Ben Bernanke and his colleagues at the US Federal Reserve are some of the brightest economists in the world today and hence they know what they are doing because, be in no doubt, they have embarked on an ambitious journey, during which they intend to simultaneously burst bubbles, avoid a bond market rout, and maybe even at the same time encourage banks to use their cash to lend to people and businesses by making government bonds less attractive.

To achieve all of the above at the same time without causing excessive market volatility will indeed be an enormously difficult task. As Andrew Haldane, the Bank of England’s Executive Director for Financial Stability, recently observed rather pointedly, "we have intentionally blown the biggest government bond bubble in history".

Surely recent "Fedspeak", including Bernanke’s bombshell comment that Quantitative Easing, (QE), may be tapered "within the next few meetings" can’t just have been "careless talk". Given the quite extreme effect on US Treasury bond yields, (the 10-year yield climbed by 0.60 per cent in only five weeks), one can be quite certain that by now the Fed would have embarked on a coordinated program intended to correct market perceptions, if the Fed was unhappy with same. This has not happened, but there is just a chance that they take the opportunity next Wednesday at the regular meeting of their monetary policy committee, the FOMC, to do just this. However, I don’t expect this to be the case.

I feel that a large contingent at the Fed has become concerned that bubbles of the kind that brought the financial system to the brink of collapse in 2008 were re-forming and they needed to tackle this sooner rather than later.

The multiple and diverse incidental consequences of their change in rhetoric are plain to see. Credit spreads have widened, emerging markets and currencies have tumbled, and fear rather than greed has the upper hand. Most frustratingly for the Fed’s counterparts at the Bank of Japan, the Yen has strengthened, as its safe-haven status has trumped even their massive quantitative easing and this in turn has caused the Nikkei stock index to collapse.

I’m sure the Fed is watching these developments very closely, but I don’t believe they will be easily deviated from their path, as they fear delay will have far more serious consequences.

Ben Bernanke. Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

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Copeland must be Labour's final warning

Unison's general secretary says Jeremy Corbyn is a friend - but must also take responsibility for turning the party's prospects around. 

No one objective could argue that last night’s by-election results were good for Labour.

Whilst it was undoubtedly pleasing to see serial fibber Paul Nuttall and his Trumpian politics put in their place in Stoke, this was never a seat where the result should have been in doubt. 

But to lose Copeland – held by Labour for 83 years – to a party that has inflicted seven years of painful spending cuts on our country, and is damaging the NHS, is disastrous.

Last autumn, I said that Labour had never been farther from government in my lifetime. Five months on the party hasn’t moved an inch closer to Downing Street.

These results do not imply a party headed for victory. Copeland is indicative of a party sliding towards irrelevance. Worse still, Labour faces an irrelevance felt most keenly by those it was founded to represent.

There will be those who seek to place sole blame for this calamity at the door of Jeremy Corbyn. They would be wrong to do so. 

The problems that Labour has in working-class communities across the country did not start with Corbyn’s leadership. They have existed for decades, with successive governments failing to support them or even hear their calls for change. Now these communities are increasingly finding outlets for their understandable discontent.

During the 2015 election, I knocked on doors on a large council estate in Edmonton – similar to the one I grew up on. Most people were surprised to see us. The last time they’d seen Labour canvassers was back in 1997. Perhaps less surprisingly, the most common response was why would any of them bother voting Labour.

As a party we have forgotten our roots, and have arrogantly assumed that our core support would stay loyal because it has nowhere else to go. The party is now paying the price for that complacency. It can no longer ignore what it’s being told on the doorstep, in workplaces, at ballot boxes and in opinion polls.

Unison backed Corbyn in two successive leadership elections because our members believed – and I believe – he can offer a meaningful and positive change in our politics, challenging the austerity that has ravaged our public services. He is a friend of mine, and a friend of our union. He has our support, because his agenda is our agenda.

Yet friendship and support should never stand in the way of candour. True friends don’t let friends lose lifelong Labour seats and pretend everything is OK. Corbyn is the leader of the Labour party, so while he should not be held solely responsible for Labour’s downturn, he must now take responsibility for turning things around.

That means working with the best talents from across the party to rebuild Labour in our communities and in Parliament. That means striving for real unity – not just the absence of open dissent. That means less debate about rule changes and more action on real changes in our economy and our society.

Our public servants and public services need an end to spending cuts, a change that can only be delivered by a Labour government. 

For too many in the Labour party the aim is to win the debate and seize the perceived moral high ground – none of which appears to be winning the party public support. 

But elections aren’t won by telling people they’re ignorant, muddle-headed or naive. Those at the sharp end – in particular the millions of public service employees losing their jobs or facing repeated real-terms pay cuts – cannot afford for the party to be so aloof.

Because if you’re a homecare worker earning less than the minimum wage with no respite in sight, you need an end to austerity and a Labour government.

If you’re a nurse working in a hospital that’s constantly trying to do more with less, you need an end to austerity and a Labour government.

And if you’re a teaching assistant, social worker or local government administrator you desperately need an end to austerity, and an end to this divisive government.

That can only happen through a Labour party that’s winning elections. That has always been the position of the union movement, and the Labour party as its parliamentary wing. 

While there are many ways in which we can change society and our communities for the better, the only way to make lasting change is to win elections, and seize power for working people.

That is, and must always be, the Labour party’s cause. Let Copeland be our final warning, not the latest signpost on the road to decline.

Dave Prentis is Unison's general secretary.