The Times Online is reporting Ministers admit that tax rises will follow Gordon Brown’s tax cuts.
Tax rises are set to follow next week’s tax cuts, ministers admitted yesterday as Gordon Brown raised the spectre of deflation in Britain for the first time.
David Cameron predicted a tax-raising “bombshell” after Lord Mandelson, the Business Secretary, spoke of the need for “structural adjustments later on” and Mr Brown himself accepted that the Pre-Budget Report (PBR) stimulus would be “temporary”.
As the Prime Minister, reporting back to MPs from the Washington summit, predicted that governments across the world would soon be cutting taxes or raising spending, Mr Cameron told him to come clean and admit that his higher borrowing meant “higher taxes tomorrow”.
But the Prime Minister accused the Tories of failing to understand that, while the problem in recent years had been inflation, next year the problem was “deflation and the problem of inflation close to zero”. Deflation means a period of consistently falling prices that can stall economic activity and eventually lead to depression.
Flashback June 30, 2008: Deflationary Hurricanes to Hit U.S. and U.K.
Barclays: Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. “This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that’s possible. It has lost all credibility,” said Mr Bond.
Mish: If Barclays is betting on six interest rates hikes in the US with its own money it will likely get carted out in a coffin. Property values are crashing, unemployment is rising, wages are falling, global wage arbitrage is king, and most importantly Peak Credit Has Arrived.
Barclays Attempts To Placate shareholders
Bloomberg is reporting Barclays Changes Share-Sale Plans, Puts Board to Vote.
Barclays Plc, the U.K.’s second biggest bank, offered institutional investors as much as 500 million pounds ($750 million) of stock reserved for Persian Gulf funds and said management will stand for re-election next year.
Barclays rose as much as 4.9 percent in London trading after sovereign wealth funds in Qatar and Abu Dhabi each agreed to release as much as 250 million pounds, or 17 percent, of the 1.5 billion pounds of preferred stock they had planned to buy, the London-based bank said today in a statement. Barclays’s entire board will be up for re-election next year, and executive directors agreed to waive bonuses.
Chairman Marcus Agius is trying to placate investors after Barclays agreed to sell about a third of itself to Persian Gulf investors to meet new U.K. capital requirements. Shareholders have complained that Barclays, which avoided the government’s bailout plan and its restrictions on dividends and executive pay, is paying too much and diluting other stakeholders by selling to Mideast funds.
Free Money In Japan
Competitive currency debasement is now underway with the US, UK , China, and now Japan all giving away money in economic stimulus plans. One irony is that Japanese citizens don’t want the money as noted in Free Money? In Japan, Most Say They Will Pass.
Japan is having trouble giving away a free lunch. To perk up the fast-shrinking economy, Prime Minister Taro Aso announced late last month that his government would give everybody money. A family of four would get $600.
Then the trouble — and the confusion — started. Should rich people get it? How rich is rich? Who decides who is rich, and how long will it take to decide?
Kaoru Yosano, the minister for economic and fiscal policy, said that perhaps the rich should not get any money.
Then his finance minister, Shoichi Nakagawa, said that figuring out who is too rich for a handout would create an excessive workload for local governments.
Now it turns out that voters do not want the money.
Sixty-three percent said they think that a handout is unnecessary, according to a poll published Wednesday in the Asahi, a national daily. Every age group opposes it, as does a majority in Aso’s ruling party, the poll found.
On Wednesday, senior lawmakers in Japan’s ruling coalition decided to punt on the question of giving all citizens a free lunch.
They announced at a news conference that the national government will let local governments decide whether rich people should get the money.
No one wants the money in Japan. Meanwhile back in the US, most have a butterfly net in both hands waiting for a helicopter drop to come their way.
Mike “Mish” Shedlock
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