Tuesday, September 22, 2009
Mervyn and Gordon devalue their way out of recession and print their way out of debt
Why do the markets hate Sterling so much? It's pretty straightforward. The Bank of England very kindly spelled it out for the market in its latest quarterly bulletin. The Bank said that "changes to Britain's relative economic outlook, the perceived riskiness of its assets and the need for the economy to rebalance away from domestic consumption" had been the major factors in the pound's 20% slide over the past two years. In other words, Britain has fallen way down the global pecking order of economies you might want to invest in. And worse still, these changes might be permanent. The risk now is that the UK will be left behind in the global economic recovery and interest rates will be on hold for longer than most. We are in the best position to destroy the value of our currency.