MoneyWeek roundup: Should the printing presses be worked even harder?

John Stepek highlights the week's best pieces from the MoneyWeek team, including: the Holy Grail of investing; our most-commented article ever; and should we print even more money?

It's been a busy old week. The Bank of England printed more money, Europe's big fat Greek fiasco rumbled on, and a swathe of FTSE 100 companies, from BP to Glaxo to Reckitt Benckiser, reported their results.

But judging by the number of comments our most popular article of the week received, one thing affected MoneyWeek readers more than anything else: property bear Dominic Frisby's decision to consider buying a house.

You can read the piece here: Why the world's biggest property bear may be buying a house. But in short, Dominic feels pushed by the inconvenience and expense of renting in London, and pulled by the sheer cheapness of money, to consider cashing in some of his gold stash and buying a home.

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I gave Dominic a buzz on Thursday to discuss the reaction. He told me: "I must've hit some kind of nerve with that article because there were so many comments. I also had more emails than I've ever had after an article, ranging from long, intelligently-argued reasons as to why London prices will fall, to get a proper job' from an old university friend, who I had no idea was a MoneyWeek reader."

To everyone who commented, Dominic says thanks: "I really do appreciate them. There was so much interesting and thought-provoking stuff on there, it's difficult to know where to start. I was struck by how many people are in the same boat and feel a similar sense of exasperation."

So how's the property hunt going? "This week, I've been looking at properties in Clapham and Balham. There is hardly anything on the market. On a price per square foot basis, I would say Balham seems to be overtaking Clapham, which is interesting. There is certainly less for sale there. I think it's to do with Balham mostly being in the borough of Wandsworth, while Clapham is mostly in Lambeth.

"Of the ten or so properties I saw, I would say 50% of vendors were people with young children who are upping sticks and moving to the country to escape the melee of London's secondary schools. The other 50% are couples getting divorced. This is obviously a tiny microcosm of the property market ten properties in one part of London but nevertheless it's not a sign of a healthy market when the only people selling are those that have to. Everyone else is staying put. At some stage the situation may reverse and we could see a flood of properties come for sale."

And in a final twist on the topic Dominic may not be moving after all. "On a positive note, just this morning my landlord announced he was planning to extend my stay by three months, so there is no longer the same pressure to find somewhere."

I can't possibly do justice to the debate in the space here, so I'll just suggest that if you haven't already, you grab a cup of tea, read the piece and the comments, then stick your oar in here.

So back to less important matters, like the Bank of England printing another £50bn. Money printing is bad news for savers, no doubt about it. But what if the real problem is that the Bank isn't printing enough money?

MoneyWeek new recruit Matthew Partridge came out with this controversial line of argument yesterday. To be fair, it's a point that MoneyWeek regular James Ferguson has also made several times in the magazine.

The basic argument is that, whether or not you agree with quantitative easing (QE) as a policy, it's the policy the Bank is pursuing. And if the Bank is trying to drive money supply growth higher (which should normally boost the economy), then the fact is, it's not printing enough money to make a difference.

The upshot is that you get the worst of both worlds. Costs keep rising (as the weak pound drives up the price of fuel and other imports), which squeezes consumers. But at the same time, there's just not enough cash being printed to make a significant difference to the economy. Banks are still broke, and being cautious when it comes to lending.

Now, my personal view putting it as bluntly as I can is that QE is morally bankrupt. It's also corrosive of confidence in the financial system. Savers are being penalised to the benefit of debtors. The government and central banks have stepped in and changed the rules of capitalism. In short, it's not fair.

And as Tim Price says in the latest issue of MoneyWeek magazine: We're bashing the wrong bankers (you can read it now by subscribe to MoneyWeek magazine), central bankers have a great deal to answer for and yet they're being ignored in the rush to condemn the likes of Fred Goodwin. No sympathy for Fred, but as Albert Edwards from Societe Generale says, if we're taking knighthoods from those responsible for the financial crisis, then Alan Greenspan and Mervyn King should be on the hitlist as well.

What do you think? Read Matthew's piece and give us your views.

Meanwhile, my colleague Phil Oakley has been reviewing the results of some of the UK's biggest companies this week. These are companies I'm sure most of you own in your portfolio, even if it's just as part of a tracker fund. So if you missed his reviews, you should check them out. Which company is best between Glaxo and AstraZeneca? Should you buy Shell or BP or both?

Phil also took a look at a stock some of you might have your eye on Homeserve. The company is a classic example of the sort of thing lots of private investors look out for it's seen a big share price plunge, and that often gets small investors excited by the potential for a bounce. But if you're thinking of taking the plunge, I'd suggest you read Phil's piece first: Homeserve: special situation or falling knife?

On that point, we're putting a lot more original content on the MoneyWeek website every day now. If you haven't been reading it, then here are just a few of the pieces you missed last week: How to profit as the shale gas revolution disappoints, Seth Klarman the world's greatest living value investor, Alex the cartoon banker with a remarkable feel for the markets.

I normally take predictions for game-changing technologies with a hefty pinch of salt. They don't come around very often, after all. But my colleague Merryn Somerset Webb reckons she might have found one with a lot of potential: graphene.

It's a very strong, very flexible new material discovered at the University of Manchester no less. And in her Money Morning yesterday, Merryn noted that one group of researchers had suggested that it could revolutionise the global economy in the same way as electricity and the internet have.

That's a whopper of a claim. But if it's remotely true, then for anyone buying in now, graphene could turn out to be the Holy Grail of investing. Definitely one to investigate further start by reading Merryn's piece here: This miracle material could drive the next tech revolution.

Also, an interesting if slightly off-topic discussion about the role of science in the UK has broken out under Merryn's blog on Six ways that women can make it to the top. If you're interested in the UK's attitude to science, and whether we could learn from the way that other countries treat their scientists, you should give it a read.

Ah Greece. The market is no longer hanging off every development in the eurozone. You can see that investors are bored with it and would rather assume things will pan out for the best. But there's still not been a deal, and now the Greek coalition seems to be tearing itself apart.

Newspapers in Greece are openly referring to the Germans as Nazis one apparently even had Angela Merkel in a Nazi uniform on its front cover. On Friday afternoon, Matthew wrote up the latest on the situation for the MoneyWeek website: Three reasons why the Greek bail-out will fail, but there's no guarantee the situation won't have deteriorated even futher by the time you read this.

Tim Price won't be surprised by the latest developments. Indeed, "I predict recession both in the eurozone and here in the UK for 2012", says Tim in the latest edition of The Price Report newsletter. The latest rally is all about money printing, nothing more.

The eurozone has become a massive Ponzi scheme, propped up by central bank money printing. Before it all ends, Tim reckons we could see capital controls, possibly even limits to cross-border travel, taxpayers being forced to recapitalise the European Central Bank in short, a huge mess.

And just before we go, here's another video you should watch: my colleague Tim Bennett tackles "the mother of all ratios" in his latest education tutorial. Return on equity' is a vital ratio to understand, not least because it's partly to blame for the financial crisis. How so? Watch Tim's video to find out.


To hear about other bits and pieces on the internet that have amused us or made us think, sign up for our Twitter feeds we've listed them below.

Have a great weekend!


Merryn Somerset Webb

John Stepek

Tim Bennett

James McKeigue

David Stevenson

This article is taken from the free investment email Money Morning. Sign up to Money Morning here .

John Stepek

John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.