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FT.com | Willem Buiter's Maverecon | Could the UK face a sterling crisis, or are we in one already?
One interpretation of the drivers of this persistent overvaluation would be a Dutch disease story, where the role of the natural resource sector in the standard version of the Dutch disease is taking by the UK banking sector.  In this interpretation, a long financial industry bubble in the UK has driven up the real exchange rate in the whole economy and crowded out other sectors producing internationally tradable commodities.  The recent sharp depreciation of sterling corrects this long-standing anomaly


notes from no w here
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Dec 12th, 2008 at 05:02:37 PM EST
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