With the Bank of England already deep into the process of printing money by buying back the government’s debt, The Fed has yet to attempt this operation, preferring to buy corporate bonds instead.

The potential inflationary effects are the main are of concern. Others take the line that the Bank in the UK could do little else to boost the money supply, while a few politicians have pointed out that broad money (M4) is already rising by 20+ percent.

The BBC’s Economics Editor, Stephanie Flanders, weighs in with an informative piece on how the Americans are doing it — mainly by buying corporate bonds, not Treasuries:

Ahead of the curve

A good primer on the pros and cons is given by the BBC’s Business Editor, Robert Peston on his blog:

Will QE work?

My favourite is by the Daily Mail’s City Editor, Alex Brummer, who today gives an emphatic thumbs down to the whole operation.

Bank’s great experiment may prove gamble too far

Syntagma also greeted the “new dawn” of lumpen monetarism with incredulity:

Watch out for the mashed potato machine

Food for thought.

The International Monetary Fund expects the U.S. economy to contract 1.6 percent this year.

According to the global bank, British GDP will contract 2.8 percent this year, worse than the U.S., the eurozone and Japan, which will shrink 2.6 percent and the eurozone decline 2 percent. Overall, the IMF expects the global economy to expand 0.5 percent, its weakest showing since the Second World War.

Economists at the IMF also estimated that bank losses may reach $2.2 trillion, almost twice the $1.4 trillion the organization predicted in October.

It warned that, “unless stronger financial strains and uncertainties are forcefully addressed, the pernicious feedback loop between real activity and financial markets will intensify, leading to even more toxic effects on global growth.”

In Britain, the bank bail-out is already projected to take national debt to 8 percent of GDP, and today the Institute Fiscal Studies warned that national debt levels are unlikely to return to the pre-crisis levels for more than 20 years.

Just about everyone in the financial services sector has been blamed for the credit famine that has almost brought the entire world to its knees. But who really is to blame?

Over at Syntagma, John Evans lays the “seed culpability” on President Carter and President Clinton for forcing banks to lend to people who could never afford the houses they bought.

After much digging around, we can report that, contrary to many attempts to blame investment bankers, as well as retail banks and their customers for the financial fiasco, real seed culpability lies with politicians of the left interfering in the workings of what are sometimes laughingly called “free markets”.

Here’s the timeline:

1977. President Carter passed the Community Reinvestment Act …

Read the whole article here.

If you were an investment banker, the chances are you’ve already lost your job. If you were something less than a Master of the Universe, yours may have disappeared without a splash on CNN.

Is there any consolation for losing a job or a career, even in an economy on the brink of a slump? Paul Graham makes a great case for it.

“Our bodies weren’t designed to eat the foods that people in rich countries eat, or to get so little exercise. There may be a similar problem with the way we work: a normal job may be as bad for us intellectually as white flour or sugar is for us physically.”

But don’t jobs and food actually go together?

“The root of the problem is that humans weren’t meant to work in such large groups. … Though they’re statistically abnormal, startup founders seem to be working in a way that’s more natural for humans.”

Paul Graham — who is a venture capitalist — is right. You can buck the system and you owe it to yourself to make the attempt.

Incidentally, a recession is a great time to go it alone. Venture capitalists have money burning a hole in their vaults, there’s a surfeit of experts going cheap, and opportunities for anyone with a great idea or a new approach.

Innovation is at a premium during a downturn. Many of the biggest names in corporate America began in a garage during a recession when there was little else to do.

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