By DUNCAN SCOTT 05/11/2010
U.S. Midterms bring a shake-up to American politics
This week saw the Midterm elections in the U.S. deliver a substantial blow to the Obama administration. In the biggest swing of votes since 1938, the Republican party took control of the House of Representatives with a majority of 239 seats to the Democrat’s 186. President Obama narrowly retained control of the Senate however, with 52 seats to the Republican’s 47. Riding a wave of anger over the sluggish economy and high unemployment, the Republican Party returned to Tea Party politics, campaigning for a smaller government and lower taxes. In response to the election results, the President blamed a lack of communication with the American public for the slip in support, but stated the Tea Party movement sought to undo any progress made in the last two years. The two parties will now have to work together on contentious issues, yet Congressional Republicans have already started flexing their newfound political strength. They have pledged $100 billion in federal spending cuts and hope to force repeated votes on repeal of Obama's prized health care overhaul when they take control of the House of Representatives in the new session in January.
Mixed opinions over QE2
A division of opinion opened up over the Atlantic this week regarding a second phase of Quantitative Easing in the U.S. and UK economies. On Tuesday, the Federal Reserve announced their plans to purchase upwards of $600 billion in U.S. Treasury obligations in order to stimulate growth and tackle unemployment. This is to be accomplished between now and next summer at a pace of $75 billion per month. This contrasted starkly with the decision of the Bank of England (BofE) to continue shunning the prospect of the QE2, as the BofE held interest rates on hold. The no-change decision was widely expected, however, particularly given recent strong UK gross domestic product figures for the third quarter and above-forecast purchasing managers' surveys on manufacturing and services sector activity. The sterling hit a 9-month high.
US payrolls increase
Confidence may now be growing in the US as this week saw figures released that employment rose in October, the first time in 5 months. Forecasters predicted that unemployment would remain at 9.6% but gains in the Service sector and Construction industry meant that this figure fell. Looking a little deeper at the statistics shows that average hourly earnings also increased as did the average working week. The Dollar climbed on the back of this news though the US markets remained flat in early trading on Friday.
Britain and France join forces
David Cameron shook hands with French President Nicolas Sarkozy this week to signify a joint defence treaty, months after planning begun by the two leaders. The treaty comes just a week after the defence budget was cut in the spending review and this move is seen as sensible way of smoothing this into the system. The sharing agreement could see us using French aircraft carriers as well as joint training regimes and deployment in the event of crisis. The move could have an impact on our ‘special relationship’ with the US, but so far they have welcomed the news.
And finally,
With Halloween at the forefront of peoples mind, it couldn’t be a better time to launch the latest instalment of the Harry Potter franchise. UK Scientists this week joined the hype by publicising that they can create a real invisibility cloak. The fabric ‘Metaflex’ is said to be able to manipulate light by bending and channelling wavelengths so the light behind travels around the fabric. With a Harry Potter style wand being manufactured earlier this year, we are starting to wonder whether J K Rowling has simply shown us a path to future technology. If it continues, I might pre-order a broomstick to avoid the inevitable future tube strikes that are likely to continue for the foreseeable future.