The Fed is going to have scant and unreliable data to hand

Consequences of the shutdown.

"There’s many a slip twixt cup and lip". Shakespeare’s aphorism sums up very neatly the likelihood of a near term deal to get America’s government back to work and to raise the debt ceiling, which is officially due to expire on 17 October.

As I write, (Monday 14th), the talk is of a short-term bill which would do both, but the Republicans haven’t abandoned hopes that they can come out of all this having forced reductions in spending, (maybe even on Obamacare), and agreement to tax reform. Although they might send a so-called "clean bill" extending the debt ceiling to November 22nd to the Senate, which would be acceptable to the Senate and the President, they also want to tie agreement to re-opening the government, via a "continuing resolution" (CR), to a successful conclusion to the spending and tax negotiations. The President has said he won’t yield to threats and he’s unlikely to agree to negotiations without a "clean" CR, and Senate Democrats want to raise the debt ceiling until the end of 2014, but they insist that budget negotiations should be for another day.

Washington’s impasse can be having nothing but detrimental effects upon the real economy. Consumer sentiment is certainly taking a hit; the daily Rasmussen Survey of same has fallen off a cliff, falling to 92.8 yesterday, from 103.0 on 1st Oct. This takes us back to average readings last seen in November 2012.

As a result of the Federal shutdown the Fed is going to have scant and unreliable data to hand at best when it meets in December, having had next to nothing for the October meeting.

In addition to the new Chairman’s accession, the other change in January will be the annual rotation onto the FOMC of four new Regional Fed Presidents as voting members. Uncomfortably for the probable new Chairman, uber-dove Janet Yellen, the newcomers are of a distinctly more hawkish hue than those departing. On the other hand, one of the Governors of the Federal Reserve Board, (who are permanent FOMC voters for their full 14-year terms), Jerome H. Powell, leaves at end January, and he leans more towards hawkish judgements than dovish. The President will want to select a suitably dovish replacement, and we know the type of candidate that Yellen will propose if he consults her.

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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Leader: The divisions within Labour

Labour’s divisions have rendered it unfit for government at a moment of profound political change.

Labour is a party torn between its parliamentary and activist wings. Since Jeremy Corbyn, who this week appealed desperately for unity, was re-elected by a landslide last September, Labour has become the first opposition in 35 years to lose a ­by-election to the governing party and has continually trailed the Conservatives by a double-digit margin. Yet polling suggests that, were Mr Corbyn’s leadership challenged again, he would win by a comfortable margin. Meanwhile, many of the party’s most gifted and experienced MPs refuse to serve on the front bench. In 2015 Mr Corbyn made the leadership ballot only with the aid of political opponents such as Margaret Beckett and Frank Field. Of the 36 MPs who nominated him, just 15 went on to vote for him.

Having hugely underestimated the strength of the Labour left once, the Parliamentary Labour Party (PLP) will not do so again. In the contest that will follow Mr Corbyn’s eventual departure, the centrists could lock out potential successors such as the shadow business secretary, Rebecca Long-Bailey. Under Labour’s current rules, candidates require support from at least 15 per cent of the party’s MPs and MEPs.

This conundrum explains the attempt by Mr Corbyn’s supporters to reduce the threshold to 5 per cent. The “McDonnell amendment” (named after the shadow chancellor, who failed to make the ballot in 2007 and 2010) is being championed by the Bennite Campaign for Labour Party Democracy and Jon Lansman of Momentum, who is interviewed by Tanya Gold on page 34. “For 20 years the left was denied a voice,” he tweeted to the party’s deputy leader, Tom Watson, on 19 March. “We will deny a voice to no one. We face big challenges, and we need our mass membership to win again.”

The passage of the amendment at this year’s Labour conference would aid Mr Lansman’s decades-long quest to bring the party under the full control of activists. MPs have already lost the third of the vote they held under the electoral college system. They face losing what little influence they retain.

No Labour leader has received less support from his MPs than Mr Corbyn. However, the amendment would enable the election of an even more unpopular figure. For this reason, it should be resolutely opposed. One should respect the motivation of the members and activists, yet Labour must remain a party capable of appealing to a majority of people, a party that is capable of winning elections.

Since it was founded, Labour has been an explicitly parliamentary party. As Clause One of its constitution states: “[The party’s] purpose is to organise and maintain in Parliament and in the country a political Labour Party.” The absurdity of a leader opposed by as much as 95 per cent of his own MPs is incompatible with this mission. Those who do not enjoy the backing of their parliamentary colleagues will struggle to persuade the voters that they deserve their support.

Labour’s divisions have rendered it unfit for government at a moment of profound political change. Rather than formalising this split, the party needs to overcome it – or prepare for one of the greatest defeats in its history.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution