Britain can afford to live with high debt ‘forever’, says IMF – Telegraph

Olivier Blanchard, the International Monetary ...

Olivier Blanchard, the International Monetary Fund’s Economic Counsellor and Director of Research, during the World Economic Outlook (WEO) press conference, October 8, 2008 at the IMF Headquarters in Washington DC. (Photo credit: Wikipedia)

This is a must-read article from the Telegraph, citing latest research evidence from the IMF.

via Britain can afford to live with high debt ‘forever’, says IMF – Telegraph.

It looks like Oliver Blanchard, Chief Economist at the IMF is promoting his Keynesian values again. Originally, the high-priest of austerity, the IMF is now promoting the benefits of massive public sector investment in infrastructure – the cost at the margin is higher levels of national indebtedness. Watch out for big name economists to pile in to the debate (it will help sell their latest books).

Of course, these viewpoints are highly politically charged too. It puts the likes of UK Chancellor, George Osborne, on the back foot – critics will argue that Osborne’s austerity is politically motivated in favor of a smaller government.


What will happen to markets when QE ends? | FT – Gavyn Davies

Looking back, this is worth a read. It’s one of my most popular blogs.

Dr Alf's Blog

Bank of England Bank of England (Photo credit: Wikipedia)

This is an excellent article from the respected macro-economist, Gavyn Davies, writing in his FT blog. If you are financially literate, it is well worth a read. Check it out!

via What will happen to markets when QE ends? | Gavyn Davies.

My simple conclusion from reading the article is that we should not necessarily expect markets to crash when QE ends (quantitative easing); there will obviously be a period of adjustment as highlighted by Mervyn King, outgoing head of the Bank of England. However, in my view, by the time QE ends, economic fundamentals will be on a stronger footing. This is good news.

Hopefully, major corporations will start to invest some of their piles of cash soon? When big corporations start investing in major capital spending and acquisitions, it will filter through the economic food chain…

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