It’s Time to Adopt the Euro
Staying out of the Eurozone is costing the average Brit dear. The value of the pound sterling continues to decline and decline. The pundits are now already talking of parity with the euro. This is happening because of mismanagement of our economy and mismanagement of our currency.

Gordon Brown is guilty of the mismanagement of both the economy and the currency; but he is not alone. Successive governments since World War II have allowed the value of the pound sterling to halve approximately every ten years. That means to say that what one could buy for ten shillings in 1940, one would have had to pay a pound for in 1950, two pounds in 1960, four pounds in 1970, eight pounds in 1980, sixteen pounds in 1990, thirty-two pounds in 2000, and in 2010, it will cost one a staggering sixty-four pounds.

This rule holds for so many goods and services. If you don’t believe me, ask your grandmother what she paid for goods and services back in ‘the old days’, and compare prices today. Do some research on prices inbetween. You’ll find that the rule works a treat. I should be surprised if your conclusion will not be the same as mine: namely, that the value of our beloved pound sterling has halved approximately every ten years. Interestingly, in 1961/62, there were eight US dollars to the pound, and twelve Swiss francs. How many are there now? As of writing this, the pound is worth 1.62650 US dollars, and 1.68912 CHF, or Swiss francs. (Verify these figures here.) So if this is allowed to go on, we shall all be using the currency of a banana republic in just a few years. The pound sterling is becoming worthless!

I, for one, would prefer the euro, for the euro is proving itself to be a strong currency. I would like to handle such a currency on a day-to-day basis. I would have more faith in it than I have in the pound. The British authorities cannot be trusted to manage our currency; otherwise, they would not have allowed it to go to the wall as they have.

To all the sentimental people, I say this: We can’t afford to be sentimental; there is no room for sentiment in business. And to all those naysayers who worry about our sovereignty, I say this: We lost our sovereignty when we entered the European Union. That happened long ago. That train has already left the station. It’s time to catch the next train. The one that leads to the Eurozone!

Bring on the euro, I say. I can’t wait! – © Mark Alexander

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Pound 'Will Fall to Parity with Euro'
THE TELEGRAPH: Sterling weakened yesterday to close at just over 90p to the euro for the first time in four months, amid renewed concern over the state of the British banking system.

The low came as currency experts predicted the pound would fall further and reach parity with the euro within the first three months of 2010. One euro was worth as much as 90.36p, the highest level close since May 11. A year ago a euro would only buy 79p.

Confidence about the UK currency was eroded when issues surrounding Lloyds Banking Group's participation in the asset protection scheme once again put the spotlight on Britain's financial system, highlighting the problems that remain.

The pound was also significantly weaker against the dollar, closing down almost two and a half cents at $1.6291.

Currency strategists at BNP Paribas suggested sterling's weakness was not just a short-term blip because sterling would be dragged down by ongoing loose monetary conditions in the UK, relative to the eurozone.

"Sterling is likely be the underperformer among the majors, despite a favourable global financial market environment, as the UK domestic picture is set to deteriorate, with the fiscal/monetary policy mix in particular working against sterling," they said in a note. >>> Angela Monaghan | Friday, September 18, 2009

THE TELEGRAPH:
With pound heading for euro parity, Brown's legacy will become clear >>> Damian Reece | Friday, September 18, 2009

Gold Hits Record against Euro on Fear of Zimbabwean-style Response to Bank Crisis
THE TELEGRAPH: Gold has surged to an all-time high against the euro, sterling, and a string of Asian currencies on mounting concerns that global authorities are embarking on a "Zimbabwe-style" debasement of the international monetary system.

"This gold rally is driven by safe-haven fears and has a very different feel from the bull market we've had for the last eight years," said John Reade, chief metals strategist at UBS. "Investors are seeing articles in the press saying governments should deliberately stoke inflation, and they are reacting to it."

Gold jumped to multiple records on Tuesday, triggered by fears that East Europe's banking crisis could set off debt defaults and lead to contagion within the eurozone. It touched €762 an ounce against the euro, £675 against sterling, and 47,783 against India's rupee.

Jewellery demand – usually the mainstay of the industry – has almost entirely dried up and the price is now being driven by investors. They range from the billionaires stashing boxes of krugerrands under the floors of their Swiss chalets (as an emergency fund for total disorder) to the small savers buying the exchange traded funds (ETFs). SPDR Gold Trust has added 200 metric tonnes in the last six weeks. ETF Securities added 62,000 ounces last week alone.

In dollar terms, gold is at a seven-month high of $964. This is below last spring's peak of $1,030 but the circumstances today are radically different. The dollar itself has become a safe haven as the crisis goes from bad to worse – if only because it is the currency of a unified and powerful nation with institutions that have been tested over time. It is not yet clear how well the eurozone's 16-strong bloc of disparate states will respond to extreme stress. The euro dived two cents to $1.26 against the dollar, threatening to break below a 24-year upward trend line.

Crucially, gold has decoupled from oil and base metals, finding once again its ancient role as a store of wealth in dangerous times. >>> By Ambrose Evans-Pritchard | Wednesday, February 18, 2009

SKY NEWS: Bank To 'Print Money' To Tackle Recession

The Bank of England could begin 'printing money' next month in a bid to tackle the recession.

Minutes of the Bank's Monetary Policy Committee (MPC) showed members were in agreement that more radical measures were needed to ward off deflation.

The committee voted 8-1 in favour of the half point rate reduction of the interest rate to an historic low of 1%.

The Bank of England does not actually print money when it moves to increase the amount of cash in the economy.

Instead it engages in a process known as quantitative easing, whereby it creates money to buy up Government securities - gilts - and private sector assets. >>> | Wednesday, February 18, 2009

THE NEW YORK TIMES: Fed Offers Bleak Economic Outlook

The Federal Reserve cut its economic outlook for 2009 on Wednesday and warned that the United States economy would face an “unusually gradual and prolonged” period of recovery as the country struggles to climb out of a deep global downturn.

In gloomy economic projections released by the central bank, the Fed’s Open Market Committee said it expected that the economy would contract by 0.5 percent to 1.3 percent this year, that unemployment would rise to 8.5 to 8.8 percent and that inflation would remain under greater pressure.

Bleak economic data reflecting a sharpening slide in housing, trade, industrial production, spending and employment rates “more than offset” any potential impact from an economic stimulus plan, the Fed said, forcing it to cut its economic outlook. >>> By Jack Healy | Wednesday, February 18, 2009

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Sterling Slide Is Worst Since 1931
THE TELEGRAPH: The pound is suffering its worst slide since Britain was forced off the gold standard in 1931.

Sterling dipped closer to parity against the euro, with the single currency now worth more than 95p for the first time ever. The pound's fall came amid fast-growing disquiet about the fate of the UK economy and consumer sentiment next year.

The pound has now fallen by 23pc against a basket of other currencies, according to figures from the Bank of England. The fall is sharper than the devaluations in 1992, after leaving the Exchange Rate Mechanism, 1976, when the International Monetary Fund was forced to intervene, and 1949, when a host of countries slumped against the dollar.

The devaluation is only matched by the moment in 1931 when, under Ramsay MacDonald, the UK was forced to abandon the gold standard, plunging by more than 24pc against the dollar. The parallel is significant, since many economists have attributed the gold standard exit as one of the main reasons the UK enjoyed a relatively mild depression in the 1930s, while the US suffered mass unemployment and saw its economy shrink by a third.

The pound had fallen more than 1½ pence against the euro yesterday and was trading at 94.15 early on Friday. Late last night it fell as low as 95p, with the pound buying €1.047.

Traders are increasingly convinced that the Bank of England will follow in the Federal Reserve's footsteps and cut interest rates all the way to zero by early next year. >>> By Edmund Conway and Angela Monaghan | December 19, 2008

TELEGRAPH BLOGS:
Germany Is Already Collapsing >>> By Ambrose Evans-Pritchard

TIMESONLINE:
Japan Cuts Rate to Just Above Zero >>> Rosie Lavan | December 19, 2008

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The Incompenet Twerps to Let the the Pound Fall through the Floor...
THE INDEPENDENT: Treasury says protecting the currency is 'not a first-order issue' as Euro readies to overtake sterling in markets for the first time.

The plummeting pound will not be propped up by government intervention, ministers declared yesterday, as it emerged that they will simply hope Britain's beleaguered currency stabilises as broader measures to stimulate the economy begin to take effect.

Sterling has fallen to a series of record lows against the euro in recent days, and looks set to reach parity with the single European currency for the first time. Its fall has hit holidaymakers as well as the thousands of Britons living on the Continent, who have seen the value of pensions and savings plummet.

But ministers have made it clear no help will be forthcoming to stabilise sterling. The Europe minister, Caroline Flint, confirmed the value of the pound was not a "first-order issue" and Yvette Cooper, Chief Secretary to the Treasury, said bolstering the currency had never been the Government's aim. Pound to Be Left to Its Fate >>> By Michael Savage, Political Correspondent| December 15, 2008

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Bushonomics!
Image courtesy of the Frankfurter Allgemeine Zeitung
BBC: The euro has hit a fresh high against the dollar, as negative views of the US economic outlook continue to take their toll on the US currency.

A steady sell-off of the dollar meant that one euro was worth $1.4571 at one point, while the pound hit $2.09 for the first time since the 1980s.

A steady stream of bad news coming from the US mortgage sector has sparked fears for the health of the economy.

These fears have prompted investors to sell dollars and buy euros or pounds. Euro climbs to fresh dollar peak (more)

Mark Alexander

Bernanke Says US Economy to Slow Down
Photo of Ben Bernanke, the Federal Reserve chief, courtesy of the BBC
BBC: Federal Reserve chief Ben Bernanke has warned that the US economy will slow noticeably before the end of the year.

He blamed the slowdown on the credit crisis, which has made it harder for banks and individuals to borrow money.

He said that there was likely to be more "financial restraint on economic growth as credit becomes more expensive and difficult to obtain".

In the longer term, he said that the greater premium attached to risk may lead to a healthier financial system. Bernanke says US economy to slow (more)

BBC:
Global credit crunch

FINANCIAL TIMES:
Bank of England holds rates at 5.75% By Chris Giles

FINANCIAL TIMES:
Pound hits fresh high after rate decision By Peter Garnham

NEUE ZÜRCHER ZEITUNG:
US-Banken schockieren mit neuen Milliardenbelastungen: Neue Belastungen in Millardenhöhe angekündigt

LE FIGARO:
Wall Street fébrile De Perrine Créquy

Mark Alexander

Bush’s Abject Failure: The Economy – US Debt Woes Pull US Dollar Further Down into the Doldrums
TIMESONLINE: Sterling soared today to levels not seen since 1981 as 'risk aversion' to the dollar grew amid US housing market fears

Renewed worries about the crisis descending on the American sub-prime housing market sent the dollar tumbling to 12-year lows on the currency markets and pushed the British pound to its highest level since 1981.

Sterling leaped to $2.05, a 26-year peak, fuelled by renewed expectations of higher UK interest rates after stronger than expected inflation data emerged yesterday.

Set alongside fresh price highs charged by Britain's retailers, it reinforced predictions the Bank of England would increase interest rates to 6 per cent as early as next month. Pound hits $2.05 as dollar struck by US debt woes (more)

Mark Alexander