Monday
27Oct2008
THE GREAT BAIL OUT - MONDAY UPDATE
Monday, October 27, 2008 at 08:59AM As we all know, the financial bail out put forward by UK PM Gordon Brown is the template which the world has adopted and it seems apt to provide a Monday morning update as to how all those BILLIONS of our money that Brown has lavished on the banking system is working.
"Sterling plunged again against the dollar this morning, having fallen through $1.60 for the first time in five years on Friday. The pound lost a further 3 cents to $1.542 amid mounting fears of a prolonged UK recession. The same fears forced down the FTSE 100, which plunged 185 points, or 4.7 per cent, after the opening with banks and insurance companies leading the way."
Yip - the plan is working REAL well. Now, which part of the economy shall we socialise next....?
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Reader Comments (12)
David -
You can't buck the markets, as someone said. Whatever else, they reflect sentiment and what we're seeing from them is a flight of capital.
Iain Martin sums it up well enough in the Telegraph. A fairly large chunk because it all applies (my emphasis):
http://blogs.telegraph.co.uk/iain_martin/blog/2008/10/27/gordon_browns_keynesian_con
"The truth is that he [Brown] and his Chancellor have been so bone-headed with their predictions - on growth, borrowing etc, as recently as the budget in March - that they are now forced to borrow a dramatically increased amount just to cover their existing positions. It is predicted that annual borrowing will hit £70bn, although it could quite easily go much higher.
So rapid is the fall off in tax receipts and resulting deterioration in the public finances that Brown has to borrow like crazy just so the government can stand still (or grow slightly, as was always envisaged in the government's spending plans).
But while Brown has been happy to give the impression to his MPs, and voters, that this is Keynes Mark II, he's having no joy fooling the markets. One of the reasons the pound is being dumped by traders, and it's approaching a level at which this might be termed a run on the pound , is that they have worked out correctly that the British government is incontinent - borrowing faster, and faster, to keep the show on the road. (The markets are also reacting to fears that the recession here will be worse than feared previously.)
This is why the Chancellor, Alistair Darling, has been briefing in the last few days - in contrast to the PM, and Darling's own comments a week ago - that no, there would not actually be any increases in spending, above what was always planned. He's clearly nervous after a week watching the pound fall. His priority, with the pound in much trouble, is to reassure the markets that the government has not lost control of the public finances.
That impression is out there, largely thanks to a PM who does not want to confront the consequences of his forecasts, or even his entire economic analysis, having been wrong.
This two step by the Chancellor and the Prime Minister is extremely dangerous. Saying one thing for domestic consumption and another for international markets might convince a few voters for a short period. Markets spot such inconsistencies and punish those responsible."
Pete,
Exactly. The UK government cak-handedness is now exposed and we all pay for it even as Gordon bathes in the reflected glory. What a goon.
Has anyone else ever been in a pub or club and used a cubicle in the toilets and the guy who comes out just dropped a bomb which stinks to high heaven. But your desperate and need to go and so use the cubicle anyway. But when your finished the previous guys lingering stink is still very much there. You open the cubicle door and there is someone else waiting to use it and no amount of excuses will convince them otherwise that your not responsible for the smell. That must be how Messers Lenihan and Darling must be feeling at present.
Hong Kong down 12.7%!!!!!!
US bail-out money is being released this week- so that might hold the US markets from plunging.
However, I saw a nice piece of news on a stock I have been watching closely.
BUT, hold onto your hats- the PPT remains on a sell signal-so keep watching- and our pennies in our pockets.
Who was it who told us here about two weeks ago that the markets had fallen so low that now (=then) was a good time to buy?
David, my life's savings - gone!
'Who was it who told us here about two weeks ago that the markets had fallen so low that now (=then) was a good time to buy?
David, my life's savings - gone!'
Noel, the markets have gone nowhere near their low yet. There are some stocks to watch, there always are, even during the volatility. But watch only.
--Who was it who told us here about two weeks ago that the markets had fallen so low that now (=then) was a good time to buy?--
It was. And is. For the long term, for terrific companies. ( including some European companies that are further cheaper to US investors due to the rise of the dollar vs the pound and euro )
Nobody, not Buffett, not anyone can predict where the exact bottom will be. I try to think on a two to five year time frame, minimum. And I will continue to buy!
If the US is screwed, why is the $ strenthening? The bail out working?
Charles
I think that the largest factor in the really big rise in the dollar has been the collapse in the price of oil. There's a huge link in the minds of investors and currency speculators. For once reason, it improves the balance of payments situastion dramatically .
As the bailout unfolds, that should also help restoring confidence in the dollar and the US economy
'If the US is screwed, why is the $ strenthening? '
All currencies are seeing serious fluctuations and it is not alone the US that is screwed.
A strong dollar is not necessarily a good thing for the US, particularly at this time, Charles, some might argue.
The Dollar is weakening on the back of decades of inflation and this absurd bail out.
If it looks strong against other currencies it's only because others are sinking even more rapidly.
Noel,
Haven't you seen some shares go up? LOL - share can go up as well as down - caveat emptor. Nice profits for the discerning.