Sorry to hear you lost your job.  I presume it was a "last in, first out" situation. I wondered where you'd been.  As I have argued elsewhere (with Jerome) being right too early doesn't really help you in (bureaucratic) business.  (It can help you as an entrepreneur).  Even Obama is appointing Summers rather than Stiglitz. The alacrity with which the neo-libs have become neo-Keynesians also seems to have disconcerted the Germans.  Career management is about re-inventing your brand to suit changed circumstances.  The most successful are also the most shameless.  Principles tend to get in the way.  I hope you find something else soon - perhaps start your own consultancy - how about one specialising in "surviving disaster Capitalism"?

notes from no w here

Willem Buiter goes through the process and alludes to this.  However he sees many of the effective benefits of the Euro applying even during this transitionary phase.  Perhaps I should amend the poll to reflect this distinction.

notes from no w here

Thanks - it had looked fine for me but then I have a wide screen laptop.  Now it looks like it needs a centre spacing column but I'm not sure my HTML is up to it.

notes from no w here

My take on the internal UK politics would be similar, but the Diary is written more from an Irish/Eurozone perspective.  Would the Eurozone countries really want to take on the grief of Brits whingeing at ECB polices in the way that they whinge at Brussels now?  Hell, even if the Eurozone rescued the UK from an Iceland meltdown (geddit) they would get nothing but grief in return.  I suspect Merkel would let the UK stew in its own juice - and as you suggest - the Tories would be more inclined to that POW as well.  The real question is whether the City would have the clout to call the shots - especially if London was losing its position as a centre for global capitalism to Frankfurt/Paris.

My suspicion is that the UK will join the Euro far too late, if at all, and that the Germans will not be over eager to accommodate them - as they are not now over eager to adopt the Brown strategy for European recovery.  Bottom line - Germany will call the shots.

notes from no w here

Can't have Britain suffering the indignity of shacking up with the Cheese-Eating Surrendermonkeys under a single currency.  Read my lips: Naaah gaaah do it.

Be nice to America. Or we'll bring democracy to your country.

Which in turn requires that Eurozone countries have confidence in UK fiscal/economic policies in the first place - which won't happen under current policies - and current policies won't be changed at the behest of the Germans - which means that ERM won't happen short of a post Iceland melt-down rescue package and radical political culture/ policy change.

notes from no w here

You could also read the graph since 1995 as representing a dip in the Euro/Deutschmark post German re-unification which has now been corrected - and the longer term Deutschmark/Sterling trend is reasserting itself.  Perhaps devaluation has been an ongoing UK strategy since ww2/loss of empire to compensate for ongoing de-industrialisation/loss of competitiveness.

Why change now?  There are no structural factors to offset that long-term decline, and some which will accelerate it, at least in the short term.

notes from no w here

I'm trawling across some older news at Bloomberg, and found this gem:

Bloomberg.com: News

``The bleak outlook for the economy has led to a lot of disappointment and that's putting pressure on the pound,'' said Lutz Karpowitz, a currency strategist in Frankfurt at Commerzbank AG, Germany's second-biggest lender. ``Whichever way you look at it, there's no good news from the U.K.''

The pound traded as low as 82.38 pence per euro... The pound may depreciate to 84 pence in the next ``couple of weeks,'' Karpowitz said.

...Last Updated: November 12, 2008 03:27 EST

My bolding. It actually weakened that low the same day. In an article later that day, the same quote is included -- I wonder if the editor felt funny or just didn't pay attention:

Bloomberg.com: News

The pound traded as low as 84.12 pence per euro, the weakest since the single currency's introduction in 1999, and was at 83.82 by 4:27 p.m. in London. It fell to $1.4972, dropping below $1.50 for the first time since June 2002, from $1.5384. The pound may depreciate to 84 pence in the next ``couple of weeks,'' Karpowitz said.

...Last Updated: November 12, 2008 11:28 EST

_{*Lunatic*, n.
One whose delusions are out of fashion.}

LTE?

_{*Lunatic*, n.
One whose delusions are out of fashion.}

MarketTrustee:

It adds up to 300% of GDP

Fuck.

Rancid shark steak - here we come.

I don't see the bank nationalisations as a problem - as long as they're paying their way, they're not a key debt.

More worrying is the long-term PFI fix, which was was always designed to take government borrowing off the official balance sheet, but will have the unfortunate effect of back loading repayments so that various councils and social services become less and less able to afford them.

If the short term debt figures are accurate - and bear in mind the Spectator is a Tory rag - that's quadruple plus ungood.

Wow - thanks for erudite comment

MarketTrustee:

I would suggest that Ireland's miracle industrial growth over the past decade is vulnerable to the similar credit dependencies more so than ForEx ties to the UK.

Although the Sterling area is our biggest single market, the Eurozone, taken as a whole, is much bigger.  I suspect most Irish corporate borrowing is in Euros - interest rates have been low, and why take on exchange risk?

The problem for the Brits is that with so much of their borrowing denominated in $ and €, they have to pay back so much more as Sterling depreciates.

Longer term this can be offset by the improved competitiveness of Sterling based companies, but short term it must make their borrowings look pretty scary.

For many companies, there may be no long term.


notes from no w here

Ireland's miracle industrial growth

Where industy == (services||construction) pretty much.

MarketTrustee:

I would suggest that Ireland's miracle industrial growth over the past decade is vulnerable to the similar credit dependencies more so than ForEx ties to the UK.

This article re Ireland is first rate: McWilliams is excellent.

Brace yourself now for the Deckland Depression

In fact Ireland is the most exposed EU country of all, and what is coming there will test the Euro to destruction, I think.

Unlike the UK, where housing values are underpinned by a shortage of building land, Ireland has a huge oversupply of newly developed property, developments in progress, and overpriced "banked" land zoned for building.

Irish land prices have collapsed - and the decline has been accelerating, I was told. Virtually all Irish banks - but the "Builders Bank" Allied Irish in particular - are sitting on time bombs.

Several people I talked to in Dublin when I gave

this lecture

think that there will be carnage when auditors get to grips in earnest with this year's set of bank accounts.

McWilliams sets out brilliantly how viciously he sees a depression kicking into the Irish private sector in the DeckLand suburbs...

Brace yourself now for the Deckland Depression - David McWilliams - Independent.ie

Commuter towns such as Naas, Arklow and Navan are likely to be hit hardest and the people who will lose their jobs and, eventually, their homes are the very ones who bought into the boom most. They are the young working families, largely employed in white-collar jobs, who believed the hype and bought the new houses, complete with decking and barbeques, close to the top of the market. They are the Decklanders and Ireland is about to endure the great "Deckland Depression".

A few years ago, it was all so different. Deckland, that vast expanse of new suburbs, which emerged in the past 10 years, was the most optimistic place in the country. It was young, energetic and despite the snobbishness of many commentators who believed that these new towns were soulless, Deckland was as vibrant and community-focused as any new suburb has ever been. If you dispute this contention, look at the growth of community organisations like the GAA or new school rolls in the commuter counties. Deckland was Ireland's "Babybelt"; and for many thousands of people, Deckland represented a New Ireland, where people could settle, own their own houses and begin the great Irish process of trading up. Deckland embodied the essence of the New Irish Dream, where the population was on an upwardly mobile conveyor belt, propelled by the twin forces of easy credit and rising house prices. Everyone could be a winner.

Now all that is shattered and the dream is over. Unemployment is rising fastest in these areas, house prices are falling quickest and a recent survey indicated that the most insecure part of the workforce are young, heavily committed white collar workers.

"The future is already here -- it's just not very evenly distributed" William Gibson

The true extent of Britain's debt | Coffee House

P.S. To answer CoffeeHousers' query, this is "external debt" by the IMF definition, which is gross. (And does not include contingent liability, just debt). One must take into account that Britain is likely to have proportionately greater net assets whose value would be amplified by sterling's plunge. But how much greater? I'll keep hunting. Every crisis is different, and each has its own metrics. It was our concentration on the metrics of the last crisis (inflation) that blinded so many to the causes of this crisis (debt).

Frank Schnittger:

"All this will do is raise Britain's debt to a level that will take a whole generation to work off. The same people who would never touch deficit spending are now tossing around billions. The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking."

Thus spake Steinbrück!

Independent assessment of the UK government's total budget (not just the VAT decline) by the IFS (no friends of the Labour party, I would note):

BBC NEWS | Business | Economic slowdown hits borrowing

And overall government debt will rise rapidly from the current level of 40% of GDP to peak at nearly 60% by 2013/14 before the government believes it can stabilise the budget gap.

German government borrowing as a percentage of GDP?

Well, in 2007, it was estimated at...

CIA - The World Factbook -- Rank Order - Public debt

20

Germany

64.90 %

2007 est.

Never had the (dubious) pleasure of being there...  The fact you still have a job there is impressive enough.  Perhaps they will redevelop some of the impressive buildings into apartments for the poorer neighbours?

You don't seem to have got the message that the stimulus package is for the rich, not the poor.  The poor need to have an incentive to work, so you can't give them any handouts...

notes from no w here

Britons back euro, NOP poll suggests - UK Politics, UK - The Independent

The Government would win a referendum on the euro if it came out in favour of British membership of the single currency, an influential poll showed yesterday.

The Government would win a referendum on the euro if it came out in favour of British membership of the single currency, an influential poll showed yesterday.

Britons would vote narrowly to abolish the pound provided the Government said its tests for the euro were met and the country's leaders campaigned in favour of joining.

An NOP poll for the investment bank Barclays Capital found that under those conditions, 40 per cent would support UK membership of the euro, and 39 per cent would vote against.

Barclays said it was the first time an independent UK survey had found a majority in favour of the euro. Opposition to entry without government backing also softened. A net balance of 27 per cent would oppose joining, compared with 31 per cent last month.

"It is very clear from our research that there has been a major shift in attitudes towards the euro in the last few months," David Hillier, Barclays Capital's chief UK economist, said.

The poll triggered a fresh row between the lobby groups on either side of the euro debate. Britain In Europe said the launch of euro notes and coins had reduced opposition. The No Campaign said it was always possible to get a "funny result" from a hypothetical question. "The public are two to one against, despite distorted media coverage of the euro launch being a success," a spokesman said.

Patricia Hewitt, Secretary of State for Trade and Industry, became the latest cabinet minister to back the euro. In a speech on the manufacturing industry, she said the pound's exchange rate against the euro was "causing difficulties" for British firms.

"The potential benefits of euro membership in terms of trade, transparency, costs and currency stability lead us to support it in principle," she said.

In the autumn of 2007, just over a third (34%) of UK citizens believed
that membership of the European Union was a good thing with 31%
taking a neutral view and 28% saying that membership was `a bad thing'.   http://ec.europa.eu/public_opinion/archives/eb/eb69/eb69_uk_exe.pdf

notes from no w here

Weell, not all ET'ers' opinions are created equal. If all the actual economists say 1.3 and only n00bs like myself say parity or below-parity, then the poll might not say all that much...

For myself, I just pretty much took a shot in the dark saying that the UK is monumentally screwed, but the rest of the Union will cut a deal to keep it in the ERM at roughly around parity - in exchange for a boatload of concessions on other points.

I expect much wailing and gnashing of teeth.

- Jake

Friends come and go. Enemies accumulate.

Which of course raises the question of whether the US wants them... and can afford them. But certainly, it's an - ah - interesting idea... Would be a pain in the neck for the Union in the long term too, to have an American colony right on our Western border...

- Jake

Friends come and go. Enemies accumulate.