Bank of England prescribes 'boredom'
Will sliding pound make exciting IT kit more expensive?
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Sterling hit a five-year low against the dollar this morning after Mervyn King, the Bank of England’s governor, admitted that Britain was headed for a recession.
The pound is currently resting at just over $1.60, well off its $2.11 12 month high. The slide in sterling will likely make IT products more expensive in the UK, as kit and component prices are generally set in dollars.
Which is a pity, as cheap electronic goodies would be one of the few bright spots in what promises to be the grim, and boring economic downturn King has predicted.
The governor said the UK had taken a huge economic blow in recent weeks and pointed to the collapse of the Lehman Brothers in September that triggered “an extraordinary, almost unimaginable, sequence of events”.
“Not since the beginning of the First World War has our banking system been so close to collapse,” admitted King, who was speaking (pdf) to the CBI, Institute of Directors and the Leeds Chamber of Commerce last night.
King added that the economy has been in a tumultuous state since August 2007 – a period of time when many businesses were seemingly ignoring the credit crunch warnings haemorrhaging out of financial institutions last year.
The City’s fall from grace has been swift and dramatic. King said a number of factors have exacerbated Blighty’s current economic plight.
Growth in secured lending to households fell to an annualised rate of 1.9 per cent in the three months to August – its lowest level in more than a decade.
Meanwhile, banks have tightened the screws on credit to companies, and in some instances supply of finance to the UK corporate sector has ground to a halt, King noted.
All of that combined with rising food and energy costs led the Bank of England governor to conclude that “taken together, the combination of a squeeze on real take-home pay and a decline in the availability of credit poses the risk of a sharp and prolonged slowdown in domestic demand.
“Indeed, it now seems likely that the UK economy is entering a recession.”
King is now calling on bankers to be patient after the “excitement” of the past few weeks.
“I have said many times that successful monetary policy would appear rather boring,” he said. “So let me extend an invitation to the banking industry to join me in promoting the idea that a little more boredom would be no bad thing. The long march back to boredom and stability starts tonight in Leeds.” ®
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COMMENTS
They don't even know how to play the game
Fine, the UK does need to take a battering, primarily because the value of it has been so reduced under Labour dictatorship, that we need to look at the reality of the real value of this island.
But, it does take a complete gibbon in a position of responsibility to really screw it up with words of foreboding doom. Here's an idea if you want it to be boring, then don't open your gob to the world's press :)
This is the effect of credit economies, this is the effect of land prices being inflated too high, this is the effect of an uncontrolled immigration policy, it is just plain and simple maths. I am not sure the Tories can even sort out this mess, they seem to think that people actually agree with Labour policy.
It is very simple to sort out this mess, but it requires some bravery by the leaders, it requires a freer society, it requires less government involvement at all levels, it requires less taxation, and it requires laws that work for the people not against them.
We are not after safety, we are after fairness, that is the crux to all of this. Order via fairness not fear.
Dollar...
The dollar is in the process of being watered down to the tune of 700 billion thanks to the US Gov and Fed.... wont be long before it starts falling again.
What annoys me is that it is meant to be a free efficient market but in times of trouble governments step in and bail out the people who caused the problem and ends up dumping the problem on the taxpayer (you dont actually think that the government actually has this money really? They create it out of nothing and it is paid for out of future debt).
Either they markets should be left to run efficiently without interference and let the greedy bastards fall when the markets fall or else nationalize the lot and we can all walk around in fur hats and queue for bread with our food coupons (because the government is incapable of running a nationalized economy without FUBARing it.
The Dollar?
USA is not exactly the beacon of economic stability and growth just now --- why would anyone want dollars?
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