Good Luck to Professor Tim Congdon & That L ETTER + Departure!

Good Luck to Professor Tim Congdon & That L ETTER + Departure!

Good Luck to Professor Tim Congdon

- I believe he offers UKIP members their best hopes for the future.

Tim Congdon is an economist, educated at Oxford University, with a long record of commenting on public policy issues, including writing sympathetically about the monetarist approach to macroeconomic policy. He has considerable experience working in the City of London and was the founder of the macroeconomic forecasting consultancy Lombard Street Research. He has also held a variety of academic appointments. Between 1993 and 1997 he was a member of the Treasury Panel that advised the Conservative government on economic policy^[1]. In recent years, he has expressed considerable skepticism about the direction the European Union has been moving in.
Congdon has been a prominent defender of the UK Government's action to lend to Northern Rock claiming that it made money for the government.^[2] He is also a small shareholder in Northern Rock, a fact that he has scrupulously disclosed publicly when writing on this issue.^[3]
Since May 2008, he has been the economic correspondent for Standpoint magazine.^[4]
Professor Congdon was the unsuccessful UKIP candidate for the Forest of Dean constituency in the 2010 General Election, obtaining 5.2% of the votes cast.
UKIP members consider Tim Congdon to be the only noticeable intellect in the Party Leadership and seen as having an interest as a reformist candidate, who would try to clean up the party, you can well imagine the forces ranged against him who would welcome him with all the joy of a pig in a Mosque.
You may recall his statement in late 2009 when he sided with some of the honest members of the senior members of UKIP, whose letter is below! There was a general level of disappointment in the realisation as to just how much the MEPs and their parasites 'had been 'captured' no longer seeing that their job was in Britain for Britain, not in Brussels for themselves'
Here is the letter he signed in opposition to the changes Farage tried to force on The Party. Changes to the constitution which were designed to give dictatorial powers to the Party Chairman. Farage has never forgiven any of the signators for this challenge to his personal fiefdom and his very personal control of his 'Milch Cow'.

Dear UKIP member,

We are writing this letter more in sorrow than in anger. At a time when every effort should be directed to our June election campaign, the NEC is wasting time and money on divisive and controversial changes to the UKIP constitution. It is now holding a members' referendum on this.

What is worse, the purpose seems to be to make it easier to get rid of members at a time when we should be concentrating on the reverse - expanding our membership. The changes will stifle freedom of expression within the party and reduce and weaken the power of members:

Amendments 6 and 19 (VOTE 2) The changes abolish the annual business meeting. Members will be deprived of their current absolute right to vote annual on the Party's accounts at a meeting of all members and to receive annual reports from all national officers. Yet the Party should belong to its members and the leadership should be accountable to them.

Amendments to 14 (VOTE 4) the changes will abolish the democratic right of members to elect a Disciplinary Committee at the annual business meeting. Instead a Disciplinary Panel of three will be selected arbitrarily by the unelected Party Secretary from a "pool" of about 55 people, themselves appointed by regional committees. Further changes will give the unelected Party Chairman (appointed by the Leader) arbitrary powers to suspend temporarily any member for any reason without a hearing.

These changes are worthy of the EU itself - reducing accountability and democracy.

Given that the leadership launched this attack on members' rights and is now asking your view, we feel it right to present the case against. We ask you to vote AGAINST all changes but particularly Vote 2 and Vote 4. The other changes are simply needless.

In less than six months voters will be choosing their MEPs. UKIP should be campaigning now for a major breakthrough. Yet it is low on the opinion polls and short of campaign funds.

The NEC discussed the coming campaign for the first time only a few days ago. Meanwhile it has been wasting energy on feuding and squabbles. It then launched a witchhunt for imagined enemies within. Two NEC members elected by the members were summarily kicked off the NEC; their crime apparently being to express their own opinions (and absolutely nothing to do with the BNP as some have tried to imply). The deputy treasurer was similarly removed. Ordinary members have been thrown out without being given the right to any hearing.

We condemn this navel-gazing and misdirection of effort. It must stop. We call on the leadership to accept that any democratic party is bound to have a spread of views; that intellectual debate can be healthy and that, amazingly, the Leader, the Chairman and the NEC may not always be right.

As prominent UKIP members we call on the Party to unite, dispose of this distraction quickly by voting against these unneeded changes and concentrate on the proper task in hand.

Yours sincerely

Sir Richard Body, was MP for 39 years

Tim Congdon CBE, leading economist

Roger Knapman MEP, former Party Leader and MP

Dr. Eric Edmond, elected NEC member

Piers Merchant, former UKIP Chief Executive and MP

Bruce Lawson FCA, former UKIP Treasurer

Martin Haslam FCA, former UKIP deputy treasurer

Del Young, elected NEC member

Dr. David Abbott, elected NEC member

Unfortunately despite his high level of academic economics and his consumate ability at critique of economics for worthy journals and the media Tim Congdon has one very big drawback as a leader - he is not a good speaker and suffers from quite surprising nerves which he has a tendency to calm before hand and at times excessively calm afterwards! Sadly despite his experience he is rather uncharismatic, typifying the accountant, mathematician, statistican, economist stereotype of a boring bean counter!
The inability to communicate with ease leads some of this propensity to explosive temper tantrums but perhaps the calming of nerves before hand may explain why this is apparent - some may remember Tommy Cooper whose nerves eventually led to full blown alcoholism and vodka on his cornflakes!
Tommy Cooper was by far a better commedian but as an economist of some repute I would assume Tim Congdon would count his shots and ensure he kept his powder dry ;-)
That said it would be a pleasant change to have an honest man in office who had an interest in Britain, the Party has survived to date without ever having a competent leader but there is at least every reason to believe Tim Congdon could be trusted.
If for no other reason than this report in: 
The Telegraph in May 2009

"Meanwhile, one of its most distinguished former supporters, the economist Tim Congdon, has left Ukip, claiming that it has been "captured by the European institutions" and neglects its British Eurosceptic supporters."

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"A really powerful way for the Fed to boost the economy ......." Tim CONGDON

US Treasury yields fall to record low on Fed's 'QE lite' plan

Yields on short-term US Treasury debt have fallen to the lowest in history on mounting expectations of extra stimulus from the Federal Reserve.

 

By Ambrose Evans-Pritchard
Published: 11:15PM BST 03 Aug 2010
Comment

Ben Bernanke needs fresh monetary blitz as US recovery falters 

  Photo: GETTY IMAGES

Two-year rates fell to 0.52pc after a further batch of grim data hinted at a sharp slowdown in the second half of the year. Factory orders fell 1.2pc in June, while consumer spending fell flat.

The savings rate has risen to a one-year high of 6.4pc as Americans adapt to the new era of austerity and build a safety buffer against unemployment. "Households are repaying debt at a rapid clip," said Gabriel Stein from Lombard Street Research. "With an output gap at around 3pc, the US economy could move into outright deflation in 2011 for the first time since records began."

 

The latest figures follow a sharp drop in GDP growth to 2.4pc in the second quarter, prompting fears that the economy may stall altogether as the boost from fiscal stimulus and inventory cycle both fade.

The data has strengthened the hand of the Fed board led by Ben Bernanke as it pushes for a return to quantitative easing (QE), against fierce resistance from the Fed's regional hawks.

A closely-scrutinised article by the Wall Street Journal – described by some analysts as kite-flying by the Fed board – said the bank may announce some form of compromise at its crucial meeting next week, agreeing to roll over bonds purchased during the credit crisis rather than letting them expire gradually as previously planned. This would entail a slow shift from mortgage debt to Treasury bonds.

The Fed would keep its balance sheet steady at $2.3 trillion (£1.44 trillion). The effect would be neutral rather than adding any fresh stimulus. It has already dubbed 'QE lite' by Barclays Capital, as opposed to full 'QE2'. However, Fed watchers say it would be a crucial first step in a broader shift in policy.

The bank has bought $1.7 trillion in bonds. Experts say key governors have been mulling a net increase to stave off possible deflation, pencilling in a rise in the balance sheet to $5 trillion in extremis.

Mr Bernanke said on Monday that US states have been "battered" by a budget crisis, forcing them to cull staff. This is holding back recovery. "We need to be careful about tightening too quickly," he said.

Jan Hatzius, chief US economist at Goldman Sachs, said fiscal policy is turning contractionary, draining 1.7pc of GDP next year after adding 1.3pc in early 2010. This leaves the Fed as the last line of defence.

"The disappointing economic data has clearly taken a toll on the confidence of at least a few Fed officials," he said, citing warnings by James Bullard from the St Louis Fed that the US risks a Japan-style deflationary trap. As the keeper of the monetarist flame within the Fed family, Dr Bullard is usually viewed as a hawk.

However, the Fed presidents from Richmond, Philadelphia, Kansas, and Dallas fear that US monetary policy is moving into dangerous waters, stoking asset bubbles rather than letting the debt purge run its course. The risk of moral hazard is growing as markets assume they will be rescued. "I don't think there is any role for the Fed at least in the near term," said Philadelphia chief Charles Plosser last week.

Tim Congdon from International Monetary Research said the Fed has been wasting its powder by using the wrong mechanism to inject monetary stimulus. Instead of buying bonds from pension funds, insurance companies and other bodies outside the banking system, as the Bank of England did with its £200bn gilts purchase, it has been buying from banks. This method has different effects. It has gained less traction because banks have sat on "dead cash". This has not increased the deposits held by companies and households.

"A really powerful way for the Fed to boost the economy is to buy bonds directly from the public, which will increase the quantity of broad money. They won't do that because they have a totally different model and in my view they are confused about the transmission mechanism. If they bought say $1.5 trillion of long-dated Treasuries from non-banks I believe they would get the US out of its liquidity trap very quickly," Mr Congdon said.


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"They are forcing banks to contract lending by raising their capital asset ratios ......" Tim CONGDON

Fed's volte face sends the dollar tumbling

Rarely before have a few coded words in the minutes of the US Federal Reserve caused such an upheaval in the global currency system, or such a sudden flight from the dollar.

 

By Ambrose Evans-Pritchard, International Business Editor
Published:15 Jul 2010
217 Comments

The US workforce has shrunk by a 1m over the past two months 

as discouraged jobless give up the hunt  

Photo: AP

 

The euro rocketed to a two-month high of $1.29 and sterling jumped two cents to almost $1.54 after the Fed confessed that the US economy may not recover for five or six years. Far from winding down emergency stimulus, the bank may need a fresh blast of bond purchases or quantitative easing.

Usually the dollar serves as a safe haven whenever the world takes fright, and there was plenty of sobering news from China and other quarters on Thursday. Not this time. The US itself has become the problem.

 

"The worm is turning," said David Bloom, currency chief at HSBC. "We're in a world of rotating sovereign crises. The market seems to become obsessed with one idea at a time, then violently swings towards another. People thought the euro would break-up. Now we're moving into a new phase because we're hearing alarm bells of a US double dip."

Mr Bloom said a deep change is under way in investor psychology as funds and central banks respond to the blizzard of shocking US data and again focus on the fragility of an economy where public debt is surging towards 100pc of GDP, not helped by the malaise enveloping the Obama White House. "The Europeans have aired their dirty debt in public and taken some measures to address it, whilst the US has not," he said.

The Fed minutes warned of "significant downside risks" and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.
"The Committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," it said. The economy might not regain its "longer-run path" until 2016.

"The Fed is throwing in the towel," said Gabriel Stein, of Lombard Street Research. "They are preparing to start QE again. This was predictable because the M3 broad money supply has been contracting for months."
The Fed minutes amount to a policy thunderbolt, evidence of how quickly the recovery has lost steam. Just weeks ago the Fed was mapping out withdrawal of stimulus.
Goldman Sachs said it expects the euro to rise to $1.35 by the end of the year. The yen will appreciate to ¥83, through the pain barrier for most of Japan's big exporters. The new twist is that SAFE, China's $2.4 trillion fund, has begun buying record amounts of Japanese bonds, a shift in reserve allocation away from the dollar.

The signs of a deep and sudden slowdown in the US are becoming ever clearer as the "sugar rush" from the Obama fiscal stimulus wears off and the inventory boost fades. California, Illinois and other states are cutting spending, tightening US fiscal policy by 0.8pc of GDP.

Thursday's plunge in the Philadelphia Fed's July index of new manufacturing orders to –4.3 suggests that the economy may have buckled abruptly, as it did in mid-2008. The Economic Cycle Research Institute's ECRI leading indicator has tumbled, reaching –8.3pc last week. This points to a sharp slowdown or recession within three months.

While US port data looked buoyant in June, the details were troubling. Outbound traffic from Long Beach fell from 139,000 containers in May to 116,000 in June. Shipments from Los Angeles fell from 161,000 to 155,000. This drop in exports is worsening the US trade deficit, eroding the dollar.

The US workforce has shrunk by a 1m over the past two months as discouraged jobless give up the hunt. Retail sales have fallen for the past two months. New homes sales crashed to 300,000 in May after tax credits ran out, the lowest since records began in 1963. Mortgage applications have fallen by 42pc to 13-year low since April. Paul Dales at Capital Economics said the "shadow inventory" of unsold properties has risen to 7.8m. "The double dip in housing has begun," he said.

Alcoa, CSX, Intel, and JP Morgan have reported good earnings, but they mostly did so in July 2008 just before their shares collapsed. Such earnings rarely catch turning points and can be a lagging indicator. Profits have been boosted in this cycle by cost-cutting, which is self-defeating for the economy as a whole.

The minutes confirm the Fed is split down the middle over QE. Fed watchers say the Board in Washington wants to be ready to launch another round of bond purchases if necessary, pushing the banks balance sheet from $2.4 trillion towards $5 trillion, but hawks at the regional banks are highly sceptical.

A study by the San Francisco Fed said the interest rates need to be –4.5pc to stabilise the economy under the Fed's "rule of thumb". Since this is impossible, massive QE needs to make up the difference.

Tim Congdon from International Monetary Research said the US authorities have botched policy response. "They are forcing banks to contract lending by raising their capital asset ratios. They have let M3 shrink by 1pc a month, as in the early 1930s. The solution is simple. The Fed must raise the level of deposits by purchasing bonds from the non-banking system as the Bank of England has done. They refuse to do it," he said.

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