I just have time for a short blog before the second part of my shift.  Yesterday the FTSE fell by some 90 odd points.  About time too I say.  Interestingly for the first time in a long time the futures are at a small (2 points) premium over the cash – its been negative for a long time.

What caught my eye this morning though was two small snippets in larger articles on Bloomberg.  In the first, Bill Gross, the founder of Pacific Investment Management Co, advised the holders of US dollars to diversify before central banks and sovereign wealth funds ultimately do the same amid concern about surging deficits.

The second article was about Ben Bernanke.  He said large US budget deficits threaten financial stability and the government can not continue to borrow at the current rate to finance the shortfall.  He went on to say “Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth.”

Further on in the article he said “Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation.  The Fedral Reserve will not monetize debt.”  Hmm…

Now what politician is going to vote for increased taxes or reduced spending.  Reduced spending is OK as long as its not in my state they will say.