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W E F: "britain's Economy Less Stable Than Peru"

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http://www.telegraph.co.uk/finance/economi...-than-Peru.html

Britain's economy less stable than Peru

Britain has a less stable economy than Montenegro or Peru, as a result of the mountain of government debt raised to bail out the banks, according to the World Economic Forum.

By Josephine "Jo" Moulds

Published: 7:09PM BST 08 Sep 2009

The global think-tank ranked the UK 71st in the world for macro-economic stability in a report addressing the relative competitiveness of different countries.

The slide in stability pushed the UK down one place to be ranked the 13th most competitive market in the world, after China, based on its institutions, infrastructure, health and primary education, among many other factors.

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The report's authors said: "A significant and growing weakness remains the UK's macro-economic instability, with low national savings, an exploding public-sector deficit (related in large part to recent efforts to bail out the financial sector), and consequential public indebtedness."

The soundness of British banks was ranked 126th in the world, after war-torn Burundi and only four places above Iceland.

It seems that all the propaganda about green shoots anfd return to stability is, well, propaganda. A debt based recovery is no recovery at all.

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According to the BBC interactive map the UK will have an even larger deficit than the US in 2010:

http://news.bbc.co.uk/1/hi/business/8214272.stm

13.3% deficit compared with 9.7% for the US.

We must, therefore, be experiencing a jobless, productionless, surpluss-less, recovery-less recovery?

Makes you wonder how sterling remains so strong? :blink:

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13.3% deficit compared with 9.7% for the US.

It's figures like that that keep me a bear in the midst of houses selling all around me. Any country with a deficit that large is in meltdown.

My only suggestion as to why sterling is holding up is that there is some credibility left that the government will truly reign back public spending to manageable levels. Maybe "10% dave" can become "25% dave".

VMR.

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It's figures like that that keep me a bear in the midst of houses selling all around me. Any country with a deficit that large is in meltdown.

My only suggestion as to why sterling is holding up is that there is some credibility left that the government will truly reign back public spending to manageable levels. Maybe "10% dave" can become "25% dave".

VMR.

VMR, just out of interest - how are you holding your STR fund? Sterling or diversified beyond that?

I'm currently 95% GBP cash, 5% PMs but news like this makes me very nervous to be sitting on cash waiting for the much trumpeted/imaginary "deflation" to kick in... It almost makes me want to buy an overpriced house in fact :o

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VMR, just out of interest - how are you holding your STR fund? Sterling or diversified beyond that?

I'm currently 95% GBP cash, 5% PMs but news like this makes me very nervous to be sitting on cash waiting for the much trumpeted/imaginary "deflation" to kick in... It almost makes me want to buy an overpriced house in fact :o

Meanwhile the Civil Service draw up plans for 20% cuts in public spending.

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Meanwhile the Civil Service draw up plans for 20% cuts in public spending.

Which suggests another viewpoint: why would anyone who had a choice want to own a house in this failing country over the next ten years? If I was younger and without family commitments I'd forex my STR fund and leg it this afternoon...

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According to the BBC interactive map the UK will have an even larger deficit than the US in 2010:

http://news.bbc.co.uk/1/hi/business/8214272.stm

13.3% deficit compared with 9.7% for the US.

We must, therefore, be experiencing a jobless, productionless, surpluss-less, recovery-less recovery?

Makes you wonder how sterling remains so strong? :blink:

Brown: Will not tolerate farting in Number 10

It will be the fartless recovereh!

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The strong Pound could be due to the expectation that the Conservatives will be returned to power, which I view a difficult proposition. There may not be an overall majority in the next election. That is the most likely outcome, provided that Labour can keep the boat afloat until then.

In this respect all the UK papers, front and centre and in bold headlines, are declaring the end of the recession today. Manufacturing up, employment up, housing up.

Strangely, in spite of the strong poll showing, there is a continuing decline in grass-roots membership in the Conservative party. A loss of about 100,000 members, if recent reports are believed.

Personally, I cannot see how the United Kingdom can claw back the national debt without high taxes, which appears to be David Cameron's leaning. This may crush disposable income and asset values if it comes to fruition.

The negative sentiment against the dollar is at an all time high. This is another factor that is making Sterling strong for the moment. But, for the dollar, inflation can be used as an exit strategy to reduce debt. As a world currency this inflation can be spread across the world, lessening the impact upon the American people. But Sterling does not occupy this position, and the inflation option, if taken, will still be borne by the British people. Therefore taxes will most likely be employed, provided the UK does not join the Eurozone.

This is one reason why the Chinese realize the game is up, and are accelerating their diversification away from the dollar. I expect to see the Japanese doing the same under their newly elected officials.

There will be one last, very powerful run-up of the dollar during the next year or two, then it will be bye bye, probably driven by internal political conflict.

Edited by Toto deVeer

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