Saturday, Aug 16, 2008
Service economy blues
BBC News: Sterling: Pound slumps against dollar as analysts predict UK rate cuts and recession
Fears that the UK economy is heading into recession sent sterling tumbling against the dollar for the eleventh day in a row yesterday - its longest losing streak since the break-up of the Bretton Woods fixed exchange system in 1971.
Posted by quiet guy @ 10:52 PM (624 views) Add Comment
7 Comments
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1. stillthinking said...
Well. "Careful what you wish for" is true. I am quite sad about the UK economy, and the saddest part is how disconnected I am from the UK apart from paying taxes. Even in a recession, I think, for me personally, I will do better than if things had continued as they were. I could transfer 9x my salary to the demographic above myself, or just take part in a huge roll of the dice embarked on by the country at large while we all get considerably poorer.
Stakeholder society. You can understand the meaning of this. If you have a house here and kids here then you have a considerable stake in the prosperity of the UK. If you don't have a house and you are saving up for kids, then the UK only involves you in so far that you can't move somewhere else.
What a huge pointless mess up. Thank god Labour voters will get the knife stuck in twice.
2. whiteknight said...
rate cuts - i don't think so
3. Imhal said...
Rate cuts? If the BoE do this then we will get inflation like you will not believe. I would think that the BoE next job is to protect the £.
HAL
4. alan said...
@stillthinking
When Tony came to power, I thought we would get a "more equal" society. There were opportunities for the country and I accepted a few downsides presented in the NuLabour package.
After seeing the NHS repeatedly re-organised and the Education system subjected to political correctness gone mad, I'm not so sure. Iraq was a big disappointment but I guess the flagship Financial Services industry hitting the (Northern) Rock was the wake-up call that many of us needed. The regulations and controls imposed do no good, they just keep people in work - form filling.
Unless UK PLC produces stuff people want to buy, we won't get out of recession. Someone needs to be thinking of that right now. Maybe that's why the outlook is so gloomy for the Pound ?
5. hpwatcher said...
I'm not so sure.
I'm completely sure that Nu Labour were nothing but impostors....I can't think of any aspect of UK life that they haven't infected with their incompetent, daft and misguided ideas.
There are many tough years ahead of us. First step, is to get rid of this tax and spend government AND all the individuals associated with it.
6. need-a-crash said...
@stillthinking
I know what you mean it is kind of weird to be so disconnected from the fortunes of your fellow countrymen and that our chances of getting on with our lives are inextricably linked to other peoples misery but as you say we didnt create this situation...
7. paul said...
The pound's slide will create more inflation, and the MPC knows it.
The current inflationary surge is mostly a direct consequence of the MPC trying to reflate the housing market with the flurry of rate cuts in the housing market's last few months of growth. I would bet that if the country were still importing at pound values this time last year, we wouldn't have so much upwards inflationary pressure.
Every time the MPC ignores inflation and cuts rates (usually to pursue some other politically-motivated goal), the pound gets cheaper, and inflation gets locked in.
The media might not be able to bring themselves to point this out right now (I've mentioned it elsewhere only to see the comments rejected or not printed), but that's how history will judge the MPC's most recent decade - misguided.
As I've said before, there are no check in place to make sure that the MPC are doing their job correctly, and that their remit is not being compromised by backdoor political influence. In the past, the influence was direct and politicians took direct responsibility for the BoE's interest rate decisions.
Now of course, with an "independent" MPC we have something far less honest and much more opaque.