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Frances Coppola

Frances Coppola

I’m Frances Coppola, writer, singer and twitterer extraordinaire. I am politically non-aligned and economically neutral (I do not regard myself as “belonging” to any particular school of economics). I do not give investment advice and I have no investments.Coppola Comment is my main blog. I am also the author of the Singing is Easy blog, where I write about singing, teaching and muscial expression, and Still Life With Paradox, which contains personal reflections on life, faith and morality.

Articles by Frances Coppola

Trade, saving and an economic disaster

16 days ago

The UK is running a trade surplus. No, really, I am not joking. This is from the ONS’s latest trade statistics release:The UK total trade surplus, excluding non-monetary gold and other precious metals, increased £3.8 billion to £7.7 billion in the three months to August 2020, as exports grew by £21.4 billion and imports grew by a lesser £17.5 billionIt’s the first time the UK has run a trade surplus since the late 1990s: And if you were thinking this was because of the lockdown, you would be wrong. The UK has been running a trade surplus since the beginning of 2020:Admittedly, the trade surplus widened under lockdown. But the UK economy reopened to some degree from June to August – and yet the trade surplus continues to widen. This is no doubt music to the ears of balance of payments

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A Financial View of Labour Markets

25 days ago

We are used to thinking of workers as free agents who sell their labour in a market place. They bid a price, companies offer a lower price and the market clearing rate is somewhere between the two. Free market economics, pure and simple. But actually that’s not quite right. The financial motivations of workers and companies are entirely different. To a worker, the financial benefit from getting a job is an income stream, which can be ended by either side at any time. But to a company, a worker is a capital asset. This is not entirely obvious in a free labour market. But in another sort of labour market it is much more obvious. I’m talking about slavery. Yes, I know slavery raises all sorts of emotional and political hackles. But bear with me. I am only going to look at this financially.

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Statistics for state pension age campaigners

September 22, 2020

Another day, another takedown of claims made by women’s state pension age campaigners. This time, it’s figures for benefit claims by women in their early 60s. David Hencke claims that sharp rises in the number of women in this age group claiming unfit-for-work benefits (ESA and legacy incapacity benefits) proves that losing their state pension entitlement is wrecking the health of women in this age group. And he argues that this calls into question the DWP’s recent victory in the Court of Appeal:The disclosure of these figures -obviously not available at the time of the hearing – does undermine the forceful case made by Sir James Eadie, QC, who represented the Department of Work and Pensions, that any poverty or ill health suffered by these women could not be linked to the rise in the

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The inhumanity of Ofqual’s algorithm

August 24, 2020

To everyone’s relief, the Government eventually caved in over the awarding of grades to A/AS level and GCSE students who had not been able to take their exams. The algorithm that awarded aspiring young people grades they did not expect and did not deserve was discarded in favour of grades set by their schools and colleges. But only if the grades awarded were too low. Those to whom the algorithm awarded over-high grades got to keep them. As a result, the rampant "grade inflation" that the Education Secretary was so desperate to prevent is now even worse than it would be if only the centre-assessed grades were used. What a mess. But it is not the current mess that bothers me, bad though it is. Nor even the mess there will probably be next year, when universities are faced with cramming

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What went wrong at intu?

July 11, 2020

In June this year, a company called intu (no capitalisation) collapsed. Most people had never heard of it. But they knew what it did. It was the owner of many of the UK’s biggest shopping centres. Lakeside in Thurrock, Metro Centre in Newcastle, and the Trafford Centre in Manchester – all of these were owned by intu. Indeed, they still are. At the time of writing, no disposals have been made. So intu is the landlord of a significant part of the UK’s retail sector. And it is dead, killed by the pandemic. But like many of those killed by the pandemic, intu had underlying health issues that made it especially vulnerable. Long before the pandemic struck, the retail sector was in trouble. Over the last few years, a stream of household names have gone to the wall: Woolworths, Toys R Us,

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Britain was not “nearly bust” in March

June 23, 2020

"Britain nearly went bust in March, says Bank of England", reads a headline in the Guardian. In similar vein, the Telegraph’s Business section reports "UK finances were close to collapse, says Governor":Eh, what? The Governor of the Bank of England says the UK nearly turned into Venezuela? Well, that’s what the Telegraph seems to think: The Bank of England was forced to save the Government from potential financial collapse as markets seized up at the height of the coronavirus crisis, Governor Andrew Bailey has said. In his most explicit comments yet on the country’s precarious position in mid-March, Mr Bailey said ‘serious disorder’ broke out after panicking investors sold UK government bonds in a desperate hunt for cash. It left Britain at risk of failing to auction off the gilts needed

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The true story of NI autocredits

June 18, 2020

There’s yet another bizarre claim doing the rounds in Waspiland. Or, more correctly, among the hardline Back to 60 fringe of the broader women’s state pension movement. I try to ignore most of the ridiculous claims made by Back to 60 campaigners, because they aren’t going to listen to me and I will simply end up with a sore head and a very frayed temper. But this one is more complex – and confusing – than most, and it doesn’t only affect women. So it is worth explaining. As always, the story starts with the unequal state pension ages of men and women. When the present state pension system was introduced in 1946, women’s state pension age was set at 60, and men’s was 65. To qualify for a full state pension, women had to make 39 years of NI contributions: because their state pension age was

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Pandemic economics: the role of central banks and monetary policy

June 15, 2020

Below are the slides from my presentation at Beyond Covid on 12th June. The whole webinar can ve viewed here.The pandemic seems to me to resemble the "nuclear disaster" scenarios of my youth: hide in the bunker, then creep out when the immediate danger is over, only to find a world that is still dangerous and has fundamentally changed in unforeseeable ways. Rabbits hiding from a hawk is perhaps a kinder image, though hawks don’t usually leave devastation in their wake. And I like rabbits. So this presentation is illustrated with rabbits, not nuclear bombs. This is where we were in March/April/May. Hiding in our homes, waiting for the danger to pass:And this is what central banks should have been doing then:To their credit, this is exactly what they did. By supporting sovereign finances

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So when did this recession start, exactly?

June 9, 2020

Is the U.S. in recession? If so, when did the recession start, and what caused it? The usual economic definition of "recession" is two successive quarters of negative GDP growth. But in Q1 2020, growth was positive, though it was apparently slowing sharply (more on this shortly):So using the standard economic definition, the U.S. is not yet in recession.But according to the Business Cycle Dating Committee of the National Bureau for Economic Research (NBER), the U.S. entered recession in February: The committee has determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. February? The New York Fed’s nowcasting report for February showed no sign of

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The Cummings Show

May 27, 2020

Monday afternoon, 25th May 2020. A beautiful, warm day on which to watch our new overlord make his first speech to the nation. I refer, of course, to Dominic Cummings’s press conference.The Daily Mirror and the Guardian had revealed that Cummings had gone to stay in a family cottage near Durham at the end of March, and that he had also been seen in Barnard Castle, about 30 miles from Durham. The country was under full lockdown at the time, with non-essential travel completely banned, so both trips appeared to break the law. Furthermore, his wife, Mary Wakefield, had published an article in the Spectator magazine towards the end of April which said that she had developed CV-19 symptoms on 27th March and he became ill with suspected CV-19 the following day. Wakefield described him as "lying

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Coronavirus’s priceless gift

May 2, 2020

The freesias that my daughter sent me are long dead, but the clematis in my garden is in full flower, and the flowers smell of vanilla. It has taken over six weeks for my sense of smell to return. But I was only mildly ill. For many people, the road to recovery is much longer.Initially, coronavirus was thought to be a respiratory illness causing cough, fever and breathing difficulties. But the range of symptoms that the virus produces is now known to be much wider. Headache, muscle pains, fatigue, nausea, diarrhoea are all now recognised as symptoms of coronavirus infection. There is growing evidence that it disturbs the blood clotting mechanism and can trigger heart attacks or strokes. It also seems to have caused renal or liver failure in some patients. And there are worrying reports

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Doing “Whatever It Takes”

April 27, 2020

The economy slumbers in its induced coma. Businesses are closed, workers furloughed or laid off. But the astonishing headline falls in economic indicaters such as GDP and PMI conceal a grim reality. Businesses are closing not just because they have been ordered to do so, but because they are running out of money. And people who have lost their jobs or become ill are also running out of money. If businesses fail instead of being mothballed, the eventual economic recovery will be slow. And if people die of starvation or untreated disease, what is the point of the lockdown?Everyone agrees that there is an urgent need to get money to people and businesses so they can stay alive. But the waters are being muddied by terms such as "helicopter money" and "people’s QE" being bandied about with

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The scent of flowers

April 6, 2020

A few days ago, the vicar of my church helpfully sent me a booklet of daily meditations for Holy Week and a palm cross. Inevitably, coronavirus is a theme, and it seems appropriate: after all, the virus is so named because it resembles a "crown of thorns".  The meditation for Palm Sunday highlights Pilate’s symbolic washing of his hands, absolving himself of any responsibility for the death of another, and asks how we feel about our own virus-induced hand washing ritual:
How do you feel when you wash your hands, in the present time?

Do you pray, sing or count as you wash?

How does this influence the way you feel, as a Christian?

How can this simple act, often done in our homes in isolation, be seen as an act of service?

As I read these questions, I thought of the men I saw on

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Shut down the ratings agencies

March 28, 2020

Remember Friday Night Is Downgrade Night, from the Eurozone crisis? It’s back. Last night, Fitch Ratings downgraded the UK to AA-, negative outlook. Here’s their rationale:

The downgrade reflects a significant weakening of the UK’s public finances caused by the impact of the COVID-19 outbreak and a fiscal loosening stance that was instigated before the scale of the crisis became apparent. The downgrade also reflects the deep near-term damage to the UK economy caused by the coronavirus outbreak and the lingering uncertainty regarding the post-Brexit UK-EU trade relationship. The commensurate and necessary policy response to contain the COVID-19 outbreak will result in a sharp rise in general government deficit and debt ratios, leading to an acceleration in the deterioration of public

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When is the right time for UBI and helicopter money?

March 27, 2020

“Give me chastity and continence, but not yet,” sighed St. Augustine in his Confessions. Today, as the world reels under the impact of coronavirus, policymakers are at last reaching for tools I have long advocated: helicopter money and Universal Basic Income. And yet, like St. Augustine, I find myself sighing, “Lord, grant us helicopter money and Universal Basic Income, but not yet.”I have spent much of the last decade advocating giving people money. Helicopter money in recessions, to boost spending and kickstart recovery: and Universal Basic Income (UBI), to set a floor under incomes and ensure that no-one is ever left without the means to live. Now, because of the coronavirus, both are for the first time being widely, and seriously, considered. The US Government is about to give

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Too Good To Be True

March 5, 2020

"USD-backed stablecoin is 10x better than your savings account," runs the headline on an unsolicited press release in my inbox yesterday. And it goes on to explain:
The average interest rate for savings accounts in the US currently stands at 0.09%, with some German banks even charging negative interest rates.

Universal Protocol, a coalition of leading blockchain organizations, including Uphold, Cred, Blockchain at Berkeley, and Bittrex Global, has recently introduced interest rates of 10% p.a. for its USD-backed stablecoin UPUSD. 
Ok, so they are issuing an altcoin at high interest rates. Why are they comparing this with FDIC-insured savings accounts?
The UPUSD is a fully-transparent digital asset that is collateralized 1-to-1 with US dollars and held at US-domiciled, FDIC-insured

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Central banks and Coronavirus

March 3, 2020

Coronavirus is scaring the world. Last weeks’ stock market crash was the worst since 2008. And yields on safe assets, especially U.S. Treasuries, are crashing as investors dump anything they see as remotely risky. I suppose if you fear sudden death, you want your assets to be safe – though I sometimes wonder if investors understand that you can’t take them with you.Anyway, central banks are of course responding to the market panic. The Fed has just announced a 50 basis points cut in interest rates. Here’s the FOMC’s mercifully brief statement in full (my emphasis):
The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the

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A tale of two halves

February 21, 2020

When the banks fell over, they knocked the stuffing out of the British economy. The UK’s productivity has been dismal ever since. Unemployment has fallen to historic lows and wages are rising, but productivity growth remains near zero. This “productivity puzzle,” as it is known, has had economists scratching their heads for best part of a decade.But UK productivity is a tale of two halves. Experimental statistics recently released by the Office for National Statistics (ONS) reveal widely varying productivity levels across the UK. “Productivity grew in half of the 12 regions and countries of the UK in 2018,” says the ONS, “with output per hour increasing in both Scotland and the East Midlands by more than 2%; in contrast, output per hour fell in Yorkshire and The Humber and in Northern

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Much Ado About Nothing

February 17, 2020

The Fed’s interventions in the repo market are attracting considerable comment. A lot of people seem to think the Fed has embarked on another QE program without Congressional approval. And the usual suspects are complaining that the Fed is pumping up stock prices and debasing the dollar.  Stocks are indeed heading for the moon – though so is the dollar, which rather undermines those who think it is being debauched. But the Fed’s interventions in the repo markets have nothing to do with stock prices. They are all about banks.Last September, sudden spikes in the Fed Funds Rate (FFR) and its repo market equivalent, the Secured Overnight Funding Rate (SOFR), caught the Fed off guard. It  acted quickly, injecting copious quantities of reserves to bring the rates down. But this was by any

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The NI Fund’s reserves don’t pay down the National Debt

January 13, 2020

The NI Fund discussed in this post covers England, Wales and Scotland only. Northern Ireland has a separate NI Fund, which is excluded from the figures given in this post. However, it works in exactly the same way as the Fund discussed here. Sometimes the government is its own worst enemy. HM Treasury’s hamfisted response to this Freedom of Information request from Trudy Baddams of the pension rights campaign group "We Paid In, You Paid Out", has caused a very silly storm.Ms Baddams asked this question:
Can you confirm that the National Insurance Fund (NIF) is presently in surplus and by
how much? Can you also please confirm how much has been paid from the fund
into the National Insurance Investment Fund in the last 10 years?
In response, HM Treasury pointed her to the NIF accounts,

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The blind Federal Reserve

December 10, 2019

Ever since the secured overnight repo rate (SOFR) spiked to 10% in September, there have been dire warnings that these exceptional movements show the financial system is fundamentally broken. The story goes that the post-crisis financial system is so dysfunctional that it is unable to operate without continual injections of money from central banks. The Fed’s attempt to reduce the $4.2tn of reserves it added to the financial system in three rounds of QE has dangerously destabilised the financial system, so it has now had to re-start asset purchases to restore the lost reserves and refloat tottering banks.It’s fair to say that much has changed since the financial crisis. Prior to 2008, banks maintained far lower levels of reserves than they do now, typically at or just above their

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Hitting the wall

November 18, 2019

It is 2.30 am, and I can’t sleep. Today I must file my final piece for American Express’s FXIP blog, which is being mothballed. Writing for that blog has been my main source of income for the last four years. Once it is gone, my income will once again become precarious and inadequate, as it has been all too often in the past. Hence my sleeplessness.To be perfectly honest, I’m not sorry that the blog is closing. I’ve done some interesting work for it, and learned a lot. And it has been a reliable source of income during the difficult times of the last three years. For that, I am grateful. But I don’t enjoy writing for it. The house style is dry to the point of desiccation, devoid of all opinion, emotion and metaphor. It is also SEO-driven, so I am constantly trying to find ways of

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Quo Vadis?

October 13, 2019

When even anti-EU tabloids say the Government’s official position on Brexit is insincere, it is time to take it seriously. On Tuesday last week, The Sun reported that the European heads of government had concluded that Johnson’s latest genius plan to create a "double border" on the island of Ireland wasn’t a serious attempt to negotiate a Brexit deal. "They believe his insistence the dossier be kept secret is an effort to disguise the fact it is designed to set up a “blame game” with Brussels," it said.An hour after The Sun published its article, Sky News released a briefing from an unnamed "No. 10 source" on a phone call between Boris Johnson and the German Chancellor, Angela Merkel:
"The call with Merkel shows the EU has adopted a new position. She made clear a deal is overwhelmingly

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The high price of dollar safety

August 27, 2019

The world is saving like crazy. Corporations are building up cash mountains that they can’t or won’t invest in expanding their businesses. Individuals are building up pensions and precautionary savings. Governments, especially in developing countries, are building up FX reserves. The “savings glut,” as former Fed chairman Ben Bernanke dubbed it, shows no signs of dissipating. It is sloshing around the world looking for a productive home. But there isn’t one – or at least, not one that offers the safety that fearful investors desperately crave. That, fundamentally, is what is driving down the returns on assets.
It is also the primary cause of the wide US trade deficit. The President likes to think that the reason for the US’s persistent trade deficits is unfair trade practices and

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Currency Wars and the Fall of Empires

August 25, 2019

This post was first published on Pieria in July 2013. I have re-posted it here on Coppola Comment because it now seems terribly, terribly timely. I have been reading James Rickards’ book Currency Wars. In this, Rickards reviews the use of fiat currency over the course of the last century, and concludes that the present global fiat currency system is inherently unstable and on the point of collapse. He calls for return of the gold standard to stabilise firstly the US dollar and, following on from that, international trade currency.I am no historian, but the first thing that struck me about this book was its partial view of history. Rickards does not discuss the reasons for the classical gold standard being abandoned in 1914. Indeed since he writes almost entirely from an American

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The Broken Contract

August 14, 2019

So the Lord God said to the serpent, “Because you have done this, cursed are you above all livestock
and all wild animals!
You will crawl on your belly
and you will eat dust
all the days of your life.
And I will put enmity
between you and the woman,
and between your offspring and hers;
he will crush your head,
and you will strike his heel.”
To the woman he said,
“I will make your pains in childbearing very severe;
with painful labor you will give birth to children.
Your desire will be for your husband,
and he will rule over you.”
To Adam he said, “Because you listened to your wife and ate fruit from the tree about which I commanded you, ‘You must not eat from it,’ cursed is the ground because of you;
through painful toil you will eat food from it

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Yield curve weirdness

July 21, 2019

Yield curves have gone mad. Negative yields are everywhere, from AAA-rated government bonds to corporate junk. Most developed countries have inverted yield curves, and a fair few developing countries do too:(chart from worldgovernmentbonds.com)Negative yields and widespread yield curve inversion, particularly though not exclusively on safe assets. To (mis)quote a famous pink blog, this is nuts, but everyone is pretending there will be no crash.Here, for your enjoyment, is an à la carte selection of the most lunatic government yield curves. You can find lots more here.Exhibit 1: Switzerland.
Negative yield already extends beyond 30 years, and markets are pricing in further interest rate cuts and/or QE, or indeed anything to stop the Swiss franc appreciating as scared investors pile into

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The Case for People’s Quantitative Easing

July 10, 2019

Last night, the Resolution Foundation hosted a debate to launch my book, "The Case for People’s Quantitative Easing". A great panel consisting of Jagjit Chadha, Director of NIESR; Fran Boait, Executive Director of Positive Money; and James Smith, Research Director of the Resolution Foundation, debated my ideas with immense verve, ably moderated by Torsten Bell, Chief Executive of the Resolution Foundation. You can watch the debate here.In 2008, QE did a great job of supporting asset prices and preventing the disastrous deflationary spiral of the 1930s. But since then, enormous quantities of asset purchases by central banks around the world have proved unable to raise aggregate demand and kickstart growth.Although central banks didn’t do a bad job in the last recession, many of the tools

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The Troubles of Kier

June 18, 2019

Yesterday, the outsourcer Kier Group announced a major restructuring. The announcement makes grim reading. The company will divest or close down three of its business lines, with the loss of 1,200 full-time equivalent (FTE) jobs, half of them by the end of this month. The dividend will be suspended for two years. Kier’s share price fell on the news, closing down 17.43%.Remarkably, some analysts took the restructuring announcement as a "buy" indication, which might explain why its share price has recovered slightly today. I wouldn’t, personally. Kier is in big trouble, and has been for some time. Admittedly, Andrew Davies, its new CEO, has wasted no time in getting to grips with the company’s problems: the proposed restructuring is certainly drastic. But given how difficult the

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European banks and the global banking glut

June 7, 2019

In a lecture presented at the 2011 IMF Annual Research Conference, Hyun Song Shin of Princeton University argued that the driver of the 2007-8 financial crisis was not a global saving glut so much as a global banking glut. He highlighted the role of the European banks in inflating the credit bubble that abruptly burst at the height of the crisis, causing a string of failures of banks and other financial institutions, and economic distress around the globe. European banks borrowed large amounts of US dollars through the money markets and invested them in US asset-backed securities via the US’s shadow banking system. In effect, they acted as if they were US banks, but in Europe and therefore beyond the reach of US bank regulation. This diagram shows how it worked (the “border” is the

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