Revision webinars from tutor2u

please use the link to check dates and times for different topics; all units will be covered:

http://beta.tutor2u.net/economics/blog/economics-revision-webinars-with-geoff-riley

I hope you are all...

Enjoying the sun, getting decent amounts of exercise - and revising. You need to be on top of the news, to be sure to have some great context for essays. Take this morning's policy comment from Labour, and the response from the newspapers & commentators - excellent material for any question on how to reduce the deficit:

Morningbriefing   ASA BENNETT ASSISTANT COMMENT EDITOR   FOLLOW US TAXODUS Good morning. Ed Miliband's pledge to abolish the "non-dom" tax status has already sparked a maelstrom of controversy, with experts warning that the "cataclysmic" plan would drive out tens of thousands of entrepreneurs and business leaders. "Labour tax plan to spark exodus", is our take, Tweeters coined the term "#NonDomniShambles", while the Sun branded Miliband and Ed Balls "dom & dumber" over their policy "chaos". Will it raise much? Labour don't seem to know. Jolyon Maugham, a tax barrister who helped Labour develop the policy, admitted that it may result in an "enormous flight" of wealthy taxpayers from Britain. The policy, he estimated, could raise up to £1 billion, but he admitted there was a risk of a "negative tax yield". Footage also emerged of Ed Balls, back in January, warning earlier that abolishing the non-dom rule would cost Britain money. "That self-inflicted wound was particularly egregious given that at the time the interview was given, Mr Balls was one of few Labour figures who knew that the non-dom announcement was being prepared," my colleague James Kirkup notes.Labour also got into a muddle over whether they want to abolish the non-dom status outright, or just tighten the rules a bit. The Tories are now trying to take the sting out of their plan, with George Osborne - according to the Times - considering stopping children from being able to inherit non-dom status. What many won't mention is that non-doms pay as much tax as 10 million low-income families, and the wealthy are paying more than they ever did under Labour. Miliband's announcement is a "cheap election stunt", our view is. Despite the fuss, ConservativeHome's Mark Wallace notes: "Most voters will simply hear "Labour plan to tax the rich", if they hear anything of the story at all." And so the Tories are moving the debate on, launching an offensive today against Miliband on defence policy and whether Labour would work with the SNP in government. Defence Secretary Michael Fallon will warn that Britain will be open to "nuclear blackmail by rogue states" because Ed Miliband is "would be prepared to trade Britain's national security just to get his hands on the keys to Downing Street" by dumping the UK's Trident nuclear deterrent as part of a deal with the SNP.  The Tories are turning the screws on Labour by making a £100 billion manifesto pledge to build a new generation of four nuclear submarines, coming after Nicola Sturgeon said Trident was a "red line" in any coalition talks and Ed Balls admitted that he would "of course" be looking at whether to have three, or four, subs. Defence, as I've argued before, is a good topic for the Conservatives to attack Miliband over, as the polls show David Cameron is significantly more trusted on the issue than his Labour rival. The Tories' tactics feed into their much-beloved "competence vs chaos" narrative. Floating voters, they hope, will ask themselves in the polling booth: "Who do I trust to keep Britain safe?" TO RUSSIA WITH LOVE Greek Prime Minister Alexis Tsipras ramped up his defiance towards eurozone creditors on Wednesday, using a visit to the Kremlin to assert that his country’s sovereignty remained undiminished in the wake of its protracted debt crisis.. The Leftist premier hailed a "new spring" in Greco-Russian relations. "We are a sovereign state and we can sign agreements in our common interest in order to combat the crisis in our country. This is why we came here. We want to create bonds of trust with Russia," he said. Mehreen Khan has more. ELECTION FATIGUE It's one thing trying to get children to read when its term time, it's another when they're at school during the Easter holidays. David Cameron encountered this on Wednesday when six-year-old schoolgirl Lucy Howarth from the Sacred Heart Roman Catholic Primary School in Westhoughton, Bolton seemed rather bored and ended up resting her head on the desk. You can watch what happened here.THE TONY RICH PROJECT Tony Blair has insisted he is not among the "super-rich", despite reports that he has been earning around £20 million pounds a year since leaving office. Speaking to Newsweek magazine, Mr Blair said his high earnings went towards the "infrastructure" for his work around the world. He added: "Am I better off than most people? Yeah, I'm very lucky. Am I in the league of the super-rich? Absolutely not, though you will have to make up your own mind about that." The Daily Mail's James Chapman has more. CLEGG ISN'T YAPPY Nick Clegg has insisted, in an interview on ITV's Tonight programme, that he "rarely" thinks of himself as a "Chihuahua in David Cameron's handbag", after a Lord Ashcroft focus group with floating voters led to him being described in these terms. ONE INDYREF, NO REDOS Prime Minister David Cameron has ruled out agreeing to a second independence referendum for Scotland, telling the House magazine that the issue is now "settled", just 24 hours after SNP first minister Nicola Sturgeon hinted that her party would put another referendum in their manifesto. Read more here.REEM TEAM Nigel Farage was joined by reality TV star Joey Essex on his campaign trail in Grimsby on Wednesday. The Ukip leader described the reality TV personality as an "icon of youth" who could help inform youngsters' opinions on politics. You can watch what happened when they met here. LOVE BITES Justin Thornton says she fell in love with Ed Miliband when he bandaged her hand after she was bitten by a dog while out canvassing for him. The 44-year-old lawyer says she was leafleting in Runcorn in 2005 when she was attacked by the animal. She told the Mirror: "I’d been bitten by a Doberman. Ed bandaged me up and I fell in love with him." Nicola Harley has more. COBURNED The BBC hosted a leaders' debate between the six party leaders in Scotland, which quickly turned into a shouting match between Labour's Jim Murphy and Ukip's David Coburn, as the Ukip MEP attacked "open door immigration". Murphy mockingly characterised the Ukip argument as "the immigrants are to blame for everything". HuffPostUK's Ned Simons has more.THINGS GETS NAZTY A Welsh politician was slammed on Wednesday for comparing the English to "Nazis". Plaid Cymru candidate Mike Parker said that rural Wales had been invaded by "gun-toting Final Solution crackpots" from over the border. Here are more details. THAT'S WEL-UNFAIR Rachel Reeves has claimed that the Conservatives are planning to fill their welfare ‘black hole’ by taking child benefit away from millions of middle class families. Speaking to The Telegraph's Rosa Prince, the shadow work and pensions secretary said the refusal by George Osborne earlier this week to rule out a reduction in child benefit by wrapping it into the Universal Credit showed the party was planning to "clobber" middle class families. THE BOYS ARE BACK IN TOWNDavid Cameron, Nick Clegg, Ed Miliband and Nigel Farage have joined together in a boyband, as depicted in a Green Party video in an attempt to urge voters to "change the tune". The video, which is due to be aired on BBC 2 at 5.55pm on Thursday, feature actors dressed as the four leaders singing about their shared love of austerity and agreement on other policies in "party political harmony". Mad, or just bad? You can watch their coalicious broadcast here. HE'S NOT A FIRESTARTER... Pub landlord Al Murray kicked off his official election campaign in South Thanet official by handing in his nomination papers at the local council's offices in Margate, Kent. He also unveiled his campaign vehicle, a fire engine, which he had converted into a mobile pub. Thanet Extra's James Rose has more.MAKING YOUR MIND UP Not sure who to vote for yet? The Telegraph has teamed up with Vote Match, the UK's biggest voting advice app, in order to help you find the party that best matches your views. The app is quick and easy to use, and the results may surprise you... POLL POSITION Average of polls as of Monday, April 6: Lab: 34%, Conservative: 33%, UKIP 14.1%, Lib Dem 8.4%, Green 5%. The data is from: YouGov, Populus, Opinium, ComRes, Survation, Ipsos MORI, ICM, TNS-BMRB. TOO MANY TWEETS… @JamesCleverly: Farage meets Joey Essex. One is pretending to be thick, saying increasingly outrageous thing to get headlines, the other is Joey Essex! COMMENT From The Telegraph James Kirkup - Tory scaremongering is playing into the hands of the SNP and putting the Union at riskSimon Walker - Why scrapping non-doms would be a terrible mistake From elsewhere Mark Wallace - On non-doms, the two parties play tennis with their shoelaces tied together Joe McGuffin - I’m mad as hell and Ed Balls needs to stay out of my eyeline AGENDA 0830 UKIP deputy chairman Suzanne Evans announces the party's policies for women 09:00 Nick Clegg's weekly phone-in on LBC 09.00 Ed Miliband makes an education manifesto announcement in central London. 12:00 UK interest rate decision from the Bank of England 12.00 David Cameron is giving a PM Direct Q&A in Nottinghamshire.1500 Shadow education secretary Tristram Hunt and shadow business secretary Chuka Umunna speak in London on Labour’s priorities for education and skills 1900 LBC Women Leaders Debates with Education Secretary Nicky Morgan, shadow deputy prime minister Harriet Harman, Crime Prevention Minister Lynne Featherstone and Suzanne Evans, moderated by Iain Dale. 19:30 Nick Clegg to feature on a special edition of ‘Tonight’ on ITV 22:40 Ed Miliband is to appear on ITV's ‘The Agenda’ alongside actor Brian Cox, actress and comedian Katy Brand and CEO of Newton Investment Management, Helena Morrissey.22:45 ‘Question Time’ from Bristol. On the panel: Lib Dem Business Secretary Vince Cable, Conservative Environment Secretary Liz Truss, Labour's shadow foreign secretary Douglas Alexander, Green MP Caroline Lucas and Telegraph journalist Tim Stanley General election candidate declaration deadline, four weeks ahead of polling day Greece is scheduled to make a €450m payment to the IMF as part of its bailout agreement TODAY IN PARLIAMENT HOUSE OF COMMONS No business WESTMINSTER HALL No businessHOUSE OF LORDS No businessThanks very much for reading, I can be reached via email at asa.bennett@telegraph.co.uk, or on Twitter @AsaBenn Follow Telegraph Politics   Sign Up  |   Unsubscribe

David Smith looks at deflation & inflation

Economic Outlook: Bubbles can still blow up with zero inflation

David Smith Published: 29 March 2015

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A big fat zero. No inflation at all. Though it is not guaranteed, a run of deflation — prices lower than a year earlier — seems highly likely in the next two to three months.

For many people, this is uncharted territory. Though retail price inflation fell to zero in February 2009, and was negative for the following eight months, this reflected the sharp reductions in interest rates at the time. Inflation as measured by the consumer prices index (CPI) remained positive throughout.

You have to go back 55 years, I suspect before many readers were born, for anything like this. The Office for National Statistics (ONS) has modelled the current CPI back to January 1950. It shows inflation last fell to zero in December 1959 and was negative by 0.5%-0.6% for three months.

Zero inflation is good news for the economy. Retail sales volumes rose 0.7% last month and were a booming 5.7% up on a year earlier. As far as retailing is concerned, deflation is not merely on the way — it has been with us for some time.

So the ONS’s average store prices fell by 3.6% in the 12 months to February, a record. Stores include petrol stations, so much of this reflected the drop in fuel prices over the past year. But prices were also modestly lower for both food and non-food stores. Falling prices genuinely are putting money into people’s pockets.

At this point it is customary to warn that, while a temporary bout of deflation is a good thing, you would not want to make a habit of it. Indeed. There are, however, a couple of other aspects to this. History rarely repeats itself, but if we look at what happened when inflation last fell to zero and turned negative, it did not usher in prolonged deflation.

By the end of 1960, inflation was heading back up towards 2%. By the end of 1961 it was 4% and by the middle of 1962 it was 5.6%. The 1960s were not a particularly high inflation period, but even with a very low start, prices rose by an average of 3.4% a year over the decade.

Not only that, but it is easy to forget how recent this experience of ultra-low inflation is in Britain. After four years above the 2% official target, inflation dropped below it only at the beginning of last year. As recently as September 2011, Britain had an inflation rate of 5.2%, and as recently as late 2013, the country’s “natural” or normal inflation rate seemed to be 3% rather than 2%. It is too early to say anything fundamental has changed.

The bigger danger is that this brush with deflation will take central bankers’ eyes off the ball. Before the crisis, the criticism was that the obsession with inflation targets allowed a toxic build-up of risk in the financial system and a huge rise in asset prices, particularly house prices.

There is a powerful echo of that today. At exactly the same moment the ONS released the latest inflation numbers a few days ago, it also published figures showing house prices up by 8.4% on a year earlier. Though this is slightly off the pace of last year, the juxtaposition neatly encapsulated the question I get asked most often: how can inflation be so low when house prices are rising so fast? Housing, after all, is a significant component of most people’s expenditure.

Inflation measures do not deal particularly well with housing costs. Those that do incorporate housing — the ONS’s CPIH measure, and the old retail prices index — while not showing zero inflation — have it very low: 0.3% and 1% respectively.

Nor is housing the only asset price that has been rising strongly. The stock market had a touch of the wobbles last week but is well up on its levels of a year ago. Government bonds (gilts) show a 12-month rise of more than 15%. The Bank of England would say some of this is deliberate. Keeping long-term interest rates low has been an aim of policy, and the counterpart to that is rising gilt prices.

The housing market has been part of the recovery story, and a deliberate policy target, and a by-product of that is higher prices. Whether or not there is a government bond bubble remains to be seen but there is not yet an obvious housing bubble. House prices in those parts of London where there was the greatest chance of it have been gently deflating.

The risk is that leaving interest rates too low too long inflates new bubbles. Already the sharp drop in inflation has persuaded the two hawks on the Bank of England’s monetary policy committee (MPC), Martin Weale and Ian McCafferty, to drop for the moment their call for higher rates.

Mark Carney, the Bank governor, having tried to pull the markets back from the view that rates were never going to go up, has in recent speeches pushed them out again, citing the threat from “persistent external deflationary forces” and the pound’s rise against the euro. Andy Haldane, the Bank’s chief economist, reckons that “policy needs to stand ready to move off either foot” and the next move in rates is as likely to be down as up.

That worries me. Kristin Forbes, another MPC member, rightly pointed out in a London Evening Standard article that most domestically based measures of inflation are stable. Service sector inflation, which is above 2%, has actually edged up in the past two months.

To be fair, Carney, along with Ben Broadbent, a deputy governor, made clear on Friday that they wlll not over-react to the drop in inflation and that they expect the next move in rates to be up.

The one-off effects of the big fall in oil prices will drop out over the next six to nine months, though second-round effects could last a little longer. Even so, the right response for the Bank to either high or low oil prices is, to quote Rudyard Kipling, “to treat those two impostors just the same”.

That means preparing the ground for a gradual “normalisation” of interest rates over the next two to three years: in other words, slowly raising them, starting later this year or early next, and forgetting talk of further cuts. After all, nobody would forgive the Bank for squandering the gift of low inflation, and for repeating the experience of the early 1960s. And nobody would forgive it for allowing dangerous bubbles to inflate again. Inflation at zero is a happy accident. It should not be allowed to develop into a nasty accident.

PS: An economic urban myth, aired in both the Financial Times and The Economist, is in danger of becoming accepted fact. This is that French workers produce as much in four days as British workers in five. They could, in other words, take Friday off and still generate as much per week as British workers.

It is time to kill it. It is true, and has been for at least 25 years, that French labour productivity is higher than British. French workers benefit from higher capital — more investment — in part because of France’s onerous labour laws. Firms prefer to invest rather than employ. So France has weak employment growth and higher unemployment, a 10.2% rate (and 24.9% youth unemployment) against 5.7% and 16.2% in Britain.

It is also true that for every hour French workers work, they produce 26% more than British workers, which is where the myth arises. But, importantly, British workers work more hours a week than French workers, whose average is just 28.6 hours. So the relevant measure is output per worker, which shows that French workers produce 13% more in a week than Britons, but the productivity gap has been narrowing in recent years.

If they worked more hours, maybe French workers would produce more in four days than Britons in five, but they don’t. As it is, they can knock off a bit earlier on Fridays. But they probably do that anyway.

Evidence that foreign takeovers aren't always good:

from The Times today (my bold/italics):

Vive la France! Almost 17 years after the (messy) merger of B&Q and Castorama the French have (finally) seized control of DIY retailer Kingfisher. Alongside full year results this morning Véronique Laury, the new(ish) chief executive of Kingfisher, has announced the departure of Kevin O'Byrne, the chief executive of B&Q and former contender for the top job. The three most senior executives at Kingfisher all now hail from France. Kingfisher has confirmed the closure of 60 B&Q stores this morning and a handful of European stores, although it is interesting to note that the UK business has actually outperformed France, with profits up 16.5 per cent in the UK and Ireland, but down 6 per cent in France. We'll have a full story shortly on the Kingfisher results and strategic review on www.thetimes.co.uk/business.

China buys Europe - contrast with China/debt post

Cohttp://www.bloombergview.com/articles/2015-03-23/china-wants-to-buy-europe?cmpid=yhoo

Read this Bloomberg post on China and debt

then compare it with the one on China purchasing European companies.

http://www.bloombergview.com/articles/2015-03-30/debt-could-derail-china-s-global-ambitions

LatAm leaders in Korea for trade talks - empty-handed:

http://www.emergingmarkets.org/Article/3440722/LatAm-leaders-seeking-to-repeat-Koreas-miracle-return-empty-handed.html?LS=EMS1147236

LatAm leaders seeking to repeat Korea’s miracle return empty handed

28/03/2015 |

LatAm delegates who struggled with the 40-hour journey to get the IADB meetings in Busan are likely to return with harsh lessons on trade tariffs rather than a recipe to replicate South Korea’s economic miracle.

Why is the IADB conference taking place in Korea this year? To those in the multilateral itself, the answer is clear: to underline what they describe as the “fast and sustained” acceleration in commerce between South Korea and Latin America.

However, in reality, the benefits for South Korea have far outweighed those enjoyed by Latin American countries. Delegates, facing the exhausting 40-hour return leg back from in Busan, are likely to arrive home with harsh lessons on trade tariffs and imbalances rather than a recipe to replicate South Korea’s economic miracle.

Two-way trade, the IADB noted in a landmark report issued in March, entitled Korea and Latin America and the Caribbean: Striving for a Diverse and Dynamic Relationship, had expanded by 17% a year since the turn of the century, hitting $54bn in 2014. Both sides had benefited, with Latin America’s mix of exports to the East Asian state becoming both more diversified [and] more weighted toward manufacturing goods”.

That’s good news — and the reason why Latin America’s leaders have made the long flight this week. One official attending the meeting, having spent 30 hours in a plane and 10 more on the ground meeting connecting flights, compared the journey to “torture”.

But there was good reason to be here. Latin American leaders have come to envy Korea’s extraordinary success story. Economic output has grown by 7% a year over the past five decades, transforming one of the world’s poorest countries into a genuinely advanced industrial nation.

Alejandro Micco, Chile’s deputy finance minister, spent the week touring the country in search of ways to replicate the Korean model. He waxed lyrical about a new Chilean “innovation agenda” based on Korean norms and aimed at boosting R&D and improving public-private dialogue. “We want to learn” from Korea’s experience, he sighed.

Yet Latin America may have to learn fast. The IADB’s report highlights the challenge of replicating the Korean model in the likes of Chile, Brazil, Colombia or Argentina. Its chief argument — that the region’s trade relationship with Korea was becoming more balanced and diverse, with Latin America exporting more higher-margin, higher-end manufactured goods — appears flawed.

The trade relationship with Latin America is becoming increasingly imbalanced in Korea’s favour. Exports of finished Latin American-made goods dipped from 28.7% of the regional export mix over the three years to end-2010, to 21.3% over the next 36 months. The net result is a clear widening of the trade deficits Latin American governments report with the Republic of Korea.

Nor is the relationship likely to become genuinely “diverse, dynamic and sustainable”, in the near future. Latin America exports low-margin raw materials to Korea, while re-exporting higher-margin televisions and smartphones.

Worse, South Korea, whose vibrant agricultural industry is stoutly defended by vociferous farmers, continues to act in a protectionist manner toward soft-commodity producers. That forces the likes of Brazil and Argentina to pay “double-digit tariffs on agricultural exports”, with tariffs of more than 750% on processed or out-of-quota goods.

The IADB report makes gloomy reading for Latin American leaders preparing to make the long journey home. Korea’s import mix of Latin American goods has become less diversified and less sophisticated in recent years, not the other way around. The only lessons they are likely to have learned in Busan this week are hard ones.