A year ago David Cameron had this to say to the Conservative Party conference:
There's an academic called Richard Murphy. He's the Labour Party's new economics guru, and the man behind their plan to print more money.
He gave an interview a few weeks ago. He was very frank. He admitted that Labour's plan would cause a “sterling crisis”, but to be fair…
…he did add, and I quote, that it “would pass very quickly”.
Well, that's alright then.
This morning David Cameron's folly on Brexit has resulted in a 31 year low for the pound against the dollar. I would call that a sterling crisis that is likely to continue.
And I have not caused one.
Maybe that's why David Cameron has no job and I am still doing mine.
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to what extent is this devaluation a message that the markets think the UK economy will shrink substantially once Brexit has actually happened. Are they pricing in future shrinkage now?
It’s never been a vote of confidence
But the pound is safe in your pocket, hang on a minute……
Demetrius
Made me laugh I admit.
Not for long though. As a resident in a Eurozone country, I’m laughing on the other side of my face because a major portion of my income is paid in sterling – ouch!
Whereas the pound in *your* pocket on the other hand (assuming you to be living in UK – do you?) has not suffered from any depreciation in its value *domestically* since June nor will it unless and until sterling’s devaluation works through into domestic inflation (all other things being equal).
So while I’m around 19% poorer *now* than I was in June, for you there’s no difference and possibly might never be. Harold Wilson’s claim didn’t deserve all the mockery it attracted. methinks.
He was no oracle, I think it’s fair to say. An abysmal PM with a flair for rhetoric and broken promises, whose achievements were few but his failures were extrordinary.
Have you ever been in a position to cause a run on Sterling?
David Camweron said I might
But he definitely did
“Because I think I’d be rather good at it.”
David Cameron, when asked why he wanted to be Prime Minister.
The sterling crisis seems to be the cherry on the cake – the filling of which comprises of the following ingredients:
Cameron enabled tenants to be unable to pay their rent; he enabled an as yet unknown number of disabled people to commit suicide; he ensured that many workers – public and private – lost their jobs as his best mate Osbourne cut public sector budgets and investment; he enabled public assets to be undersold to the markets and then caused ‘hard-working’ people to face cuts to their pensions and jobs; he quite happily sold the British public’s labour on the global market for the lowest price and he put VAT up to 20%. His first 2 years in power caused the economy (already in trouble post 2008) to contract badly.
Cameron may be gone but I will not forget him nor forgive him either.
His ability to reach the top as a politician shows us how money and vested interests are all you need in modern Britain. You don’t even have to be intelligent if you move in the right circles.
That, and a guillible, ignorant electorate enough of whom are conned by the gutter press and conmen like Lynton Crosby into voting against their own (and most other) people’s best interests.
Like most politicians David Cameron was several levels above his natural pay grade. It’s now become a sad pastime in the UK and US to watch and wait for pompous politicians take a major fall and be forced to eat humble pie or crow as they say in America.
The appropriate rejoinder to Cameron’s jibe “Well, that’s all right then” would be:- “Yes of course it is” (paranthetically: “you ignoramus”).
To become obsessed with the £ exchange-rate as a primary measure of this country’s virility has been a recurring trap into which politicians of both major parties have fallen time after time – always with disastrous consequences. Most notable was going back on the gold-standard after WW I at the same rate as before it (to demonstrate that the British Empire was as great testosterone-fuelled as it had ever been – which of course was self-delusion, and hubris to boot). Next was (out of the same mind-set) to delay going off the gold-standard when the Great Depression really hit home, until after people had already endured a great deal of unnecessary harm and misery. And so on…
Cameron’s mind-set (and, to be fair, that of nearly all British politicians in all parties) is no less atavistic in this regard than that of nearly all of his predecessors. Crazy!
And to cap it all the £ has undergone a nearly a 20% devaluation since the Brexit vote, and with what result? The best economic-indicator figures (including exports and export-orders) than for a long time past. It won’t necessarily last but at least it demonstrates yet again that there is a multiplicity of factors in play of which the exchange-rate is but one.
Blame it on #Brexit. Last Saturday, October 1st , the IMF included the Chinese Yuan into the basket of world reserve currencies. To achieve this the British pound & other currencies had to give up a percentage of their holdings. This inevitably will lead to currency adjustments & the Pound is expected to drop as a result of this. However the Deutch Bank is on the verge of collapse which could bring down the Euro dramatically. And the Dollar debt of $20 Trillion is about to self destruct their economy, so the collapse of the other western currencies could make the British Pound stronger over the next year.
A weak pound is generally considered good for the Real Economy but bad for the Corporate (Fraud) Economy.
Why is US debt about to self destruct when much is US owned and there seems no limit to demand for the dollar?
What do you know?
A weak pound is good for exports. Hence good for the real economy. Exporters, not dependent on high value imports are doing well, that part of the economy is growing strongly. But #Brexit hasn’t happened yet and it seems our manufacturers and service industry need to start to prepare for the dislocation of leaving the single market. Prepare for it without even knowing what our trading relationship with the world will be.
This is why, despite strong export growth the pound isn’t recovering?
And when the inflation from a weak pound comes? Who will protect those who might suffer from that?
Thanks Vernon for the IMF information. I can’t claim to have my head around Special Drawing Rights – but I recognise that we can be too quick to jump to one particular proximate cause by way of explanation of happenings in the markets.
We have been through / are in an era of competitive devaluation / currency war. It’s in that theatre that I place the weapon of negative interest rates. There is only one way that a given banking sector can collectively escape them.
And didn’t the Bank of England recently drop ( halve ) the base rate when it announced more QE? And as North Sea oil declines, which way is our trade deficit going?
Is a devaluation for an ex manufacturing nation in decline necessarily a Bad Thing?
But yeah, I guess it’s all about Brexit.