It's been quite the week for the mass forecasting of fighting in the streets among angry peasants with pitchforks. To set the tumbrils rolling, in the first instance will the UK really go bankrupt, asks Camilla Cavendish of the Times? She reprints the charming Jim Rogers’ assertion that sterling is 'finished' and we Brits should all learn Mandarin and head for China, or maybe Singapore, Rogers’ chosen bolthole. She adds pointedly that we can be quite sure Rogers and other outspokenly apocalypic hedge funders are ‘profiting handsomely by shorting sterling.’ ‘But’, she laments, ‘the nervy media gave their words considerable prominence, partly because a British bankruptcy is a ghoulishly fascinating possibility...’
Well, not just 'the nervy media', Ms Cavendish, but you too, it seems. (Perhaps she’d rather be thought of as a ghoul than a nervous wreck.)
Cavendish then expresses concern that ‘a vicious circle has taken hold in which sterling falls in value, amplifying liabilities, and bank share prices fall as liabilities mount.’ Yes, troublesome indeed, so one might want to refrain from abetting the flight out of sterling that Rogers & Co are so keen upon...
What, then, is to be done? ‘Technically’, writes Cavendish, in her view the government ‘has mostly made the right moves on the banks… The only thing that could push Britain into bankruptcy would be a full-scale panic. So it is strange - and exasperating - that the Government keeps inadvertently fanning the flames of panic.’
And how do they do so? ‘First, the bailout announcement was overshadowed by reports of Mr Brown's populist “anger” with the banks. This helped to spook investors into fearing that full-scale nationalisation is on the cards…’
No, no, this is getting us nowhere, surely we’re back to the fault of that nervous media, who have now gone and reported the wrong blasted thing?
Cavenish eventually winds round to blasting ‘Mr Brown's spending spree as Chancellor, and the remarkably lax regulation by the tripartite system he put in place’ and observing that ‘it is surely not long before Gordon Brown (Titanic) Enterprises are bought out by Cameron Inc.’ So we see where she's coming from, but not whether we're supposed to feel better...
Okay then, so ‘the pound is plummeting, the once booming financial services sector has never been weaker and some investors are losing confidence in the UK.’ Ross Walker of the Royal Bank of Scotland warns that ‘The credit boom went a long way to disguising the mediocrity of the UK.’ (One could say it went a fair old way to disguising the mediocrity of the RBS too.) But actively trying to make us feel better, and in the course of the same piece from which I took those two quotes above – a piece entitled ‘New look UK economy to emerge from gloom’ – is the FT’s Economics Editor Chris Giles.
The FT’s experts suggest that some of the elements of that ‘new look’ will be ‘a slimmer financial services industry, lower house prices [and hence consumption], higher borrowing costs, fewer migrants and lower growth rates.’ The ‘big losers’ of the current crisis will be ‘those who bought property at the height of the market or are close to retirement without final salary pensions, the newly unemployed and the very rich, whose incomes tend to be correlated with the stock market.’ So on that basis I would feel not so very terrible, but that I bought in early 2006. But then you gotta go when you gotta go...
Giles has found a particular booster for the piece's general tack in ‘Britain’s chief cheerleader abroad’, Sir Andrew Cahn, chief executive of UK Trade & Investment. ‘The most important benefit [of the sterling slump] is that our exports are more competitive’, says Sir Andrew, ‘and we are continuing to attract inward investment as [UK] assets are cheaper to buy.’
But what are Britain’s major exports? Aren’t we in a real poke here too, because of the sorry state to which Thatcher reduced our manufacturing base? Well, Sir Andrew mentions some ‘unlikely sectors’ to be cheerful about, chiefly security – ‘a growth area.’ He insists that security is ‘not just defence equipment but airport protection systems, protective clothing, and security advice and services at sporting venues…’
Oh Jesus, so much for the good cheer. What we have arrived at, then, the sum of all our hopes, lies in the silver lining to the global jihad...? I need a drink.