“New Jerseyans want Mercedes Benz-level services, and they don't even want to pay Kia prices. The basic reality is, both as a nation and as a state, we have been living a lifestyle we can no longer afford. There are going to be wrenching adjustments that have to take place,” noted James W. Hughes, a Rutgers University Dean and Public Policy Expert recently.

“What is likely to happen in the coming decades is that financial business will move closer to where capital sits, be that Hong Kong, Sao Paulo or Shanghai,” noted Gillian Tett of The Financial Times.

Last year HSBC, Britain’s biggest bank, said that it would be run from Hong Kong, a sign that the world’s economic centre of gravity has shifted decisively east.

Michael Geoghegan, the group chief executive of HSBC, who arrived back in Hong Kong in the last week of January said: “We can’t get away from the fact that the East is growing at a faster rate than the UK, the US or Europe. In my time it will take over from the West as the most powerful part of the world economy.”

Stephen Green, the chairman of the bank, added:

“We, the UK and Europe, have to face the implications of the rise of the East over the next 30 to 40 years. This is the fact of the first half of this century.”

China also now has 400 million internet users, and 200 million of them have broadband, America has about 80 million broadband users.

“Now, take all this infrastructure and mix it together with 27 million students in technical colleges and universities the most in the world. With just the normal distribution of brains, that's going to bring a lot of brainpower to the market, or, as Bill Gates once said to me: ‘In China, when you're one-in-a-million, there are 1,300 other people just like you,’” noted Thomas L Friedman in the New York Times January 13th edition.

Halkin Services on 21 January 2010 wrote:

“To varying degrees, governments are grappling with an immense moral hazard problem. Safety nets that were designed as a temporary refuge for the few are in danger of becoming refugee camps. Last year's project was to head off the threat of a deflationary slump; this year's project is to stabilise public finances in a way that does not jeopardise the fragile recovery in final demand. Thirty years ago, the public sector owned significant utility and industrial assets. Today, most of these assets have migrated to the private sector. Any bright spark can figure out a way to sell off, or preferably auction, state assets; it will take a genius to devise a plan to privatise government debts.”

They went on to add that there is another kind of trust in government – trust in the independence of central banks. Many central banks in the world have spent many decades fighting for and proving their independence.

“All the central banks have lost their independence.”

Chairman Bernanke speaks and acts as if he believes that the Fed has a free pass when it comes to the inflationary threat, yet the disgust surrounding his re-nomination tells another story.

The 30 to 35 senators who oppose his nomination embody a deep-seated unease regarding the reliability of Bernanke's judgement. This principled dissatisfaction is not an attack on his character or his credentials: it asserts that he has exceeded his authority and has embarked on a dangerous and foolhardy enterprise.

When the president finds it necessary to bring back Paul Volcker to stand beside him at a press conference, the subliminal message is that the administration acknowledges a lack of substance and gravitas in economic matters. However, in all likelihood, the chairman will obtain the necessary votes to continue beyond 31 January and his flawed judgements will hold sway over the Fed for years to come.

In another nuance, the minutes leave the door open to an extension of the securities purchase program "in the light of the evolving economic outlook and conditions in financial markets". This could be read as meaning that securities purchase has become an established part of the Fed's armoury and could be redeployed at will. How long will it take the equity markets to figure out that the rhetoric of central bank tightening – in the US or China – has no real substance as yet?

One factor that is holding back the progress of equity prices in recent months is the reappearance of significant capital issuance, which is itself a symptom of easy credit conditions. The Bank for International Settlements has recently released an update of its comprehensive data on the domestic and international global bond markets and the annual growth rates remain in positive territory.

International bonds outstanding (US$27trn) increased by almost 12 per cent in the year to end-September in US$ terms and by almost nine per cent in currency-neutral terms. Notable contributions to this growth have arrived from Greece (up 33 per cent), Ireland and Denmark (28 per cent), Portugal (27 per cent), Sweden and Belgium (26 per cent) and the UK (18 per cent).

The credit markets are not closed, either to big government or big corporations, and central banks are determined to do everything in their power to keep it that way.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.