Tuesday, Sep 22, 2009

"Massive UK public-spending cuts, collapse of sterling or a strike by gilt buyers now inevitable"

FT: Artemis's Littlewood laments UK's 'broken finances'

William Littlewood, manager of the Artemis Strategic Assets fund, which gathered almost £150m during its offer period despite atrocious conditions, said the pound, the gilt market or the public sector "will go" after the government was forced to bail out the flailing capitalist system."The reason I don't like the pound is because of the broken finances in this country," he said. "You can't inflate your way out of £1,000bn in index-linked, contractually promised payments [to public sector employees]. Nor can you borrow £150bn-230bn without something at some stage giving. "For every £3 of revenue raised on taxes, the government is spending £4. This is a massive mismatch. The best you can hope for is going down the Japan route - you borrow and borrow, and the debt market doesn't care."

Posted by jack c @ 09:24 PM (1084 views)
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4 Comments

1. bellwether said...

moved quite a lot of my savings into $ at £1/$1.68 (and to an extent candian $) at the time felt quite risky but that is probably mostly psychological. I find it interesting that despite the dollar being toast these past couple of weeks, sterling has dropped against. Begs the question what happens when the current stock rally reverses - even a little.

I have some of the savings in us and canadian stocks. Us stocks look like a bit of a one way bet if you're in sterling. If the dollar tanks shares go up, if shares tank the dollar goes up. Simples!

Tuesday, September 22, 2009 09:56PM Report Comment
 

2. bellwether said...

Even having converted still hold maybe 50% in sterling, the plan was to convert if we go higher but I guess than might not happen. I probably now worry more about my sterling savings. We have a huge debt problem, and a lot if it is hidden in housing. Either we hyperinflate and currency bombs or we cut and the economy bombs.

Tuesday, September 22, 2009 10:01PM Report Comment
 

3. mander said...

Until election no real policy will be applied. There are 2 ways for the new goverment: 1. Do like Japan and wait 10 years for houses to half or 2. Half them sooner for a return to full activity and so stop unemployment carnage.

Tuesday, September 22, 2009 10:12PM Report Comment
 

4. clockslinger said...

Much as I'd love it to happen, I don't see why UK houses will ever half in value in relation to the pound, not ever! Yes, in comparison to (for example) the yen or certain stocks this has already happened, but will never be a general fall against the domestic currency to the tune of anywhere approaching 50%. This isn't Japan, (and I'm not sure the fall was generally that big there anyway) either in the way the bond market is behaving (I don't believe the BoJ has to buy it's own bonds as we do...subject to what anyone can tell me) or in the irrational cultural obsession with property ownership we have had in the UK the past forty years. And for sure, no government of any colour will institute a policy that will make property radically fall in a couple of years...why would this stop unemployment carnage? I don't get it.

Tuesday, September 22, 2009 10:50PM Report Comment
 

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