We last linked to Ambrose Evans-Pritchard in "Metal prices fall further than during Great Depression" with the comment:
A visit from our terminally depressed pal*, Ambrose Evans-Pritchard.naked capitalism tips us to today's story by saying:Ambrose Evans-Pritchard, Telegraph. For him, this is almost cheerful. But his optimism for the US rests in part on his conviction that the euro "will die a slow death."
Clicking that "Ambrose" link will get you to some astounding econ. and market calls.
From FT Alphaville:
In case you haven’t heard enough depressing news about sterling and feel like a supplementary dose of depression central, you simply must check out the latest blog post from Telegraph business editor Ambrose Evans-Pritchard.
Clearly if there’s ever a time to break into an upper casing blog-title panic, it’s a five cent drop to $1.39 in cable; for Evans-Pritchard is SERIOUSLY ALARMED about sterling. As he explains (our emphasis):
The slide in sterling has turned “disorderly”. We can argue over whether or not the first phase of devaluation acted as a shock-absorber for a badly mismanaged economy, providing a cushion against debt deflation and the housing crash. But the latest dive has a very malign feel. For the first time since this crisis began eighteen months ago, I am seriously worried that British government is losing control.So there you have it, a problem that is potentially bigger than the UK government.What does that entail? A sequence of events which may, according to Evans-Pritchard, conclude in something far worse than what happened to Iceland (our emphasis):
Of course, need we remind readers, Ambrose Evans-Pritchard has never much liked the euro, the euro zone, Trichet or the ECB....MORE
If the Government is forced to nationalise RBS and perhaps Barclays with their vast exposure in dollars, euros, and yen, it risks being submerged. It is one thing for a sovereign state to let its national debt jump in a crisis — or a war — perhaps even to 100pc of GDP. It is another to take on foreign debts on such a scale with no reserves. Yes, the banks have foreign assets as well to match the debts. But how much are these assets really worth?
This is the moment when the “rubber hits the road” — to borrow from American argot — the moment when the reckless debt experiment of our economic and political leaders comes back to haunt.
We cannot even do what Iceland did to save its skin. Reykjavik refused to honour the foreign debts of its buccaneering banks. It let them default, parking the losses in Resolution Committees. Small islands can do that. Iceland has fish instead, and lots of metals. Britain cannot follow suit. The debts are too big. If London takes such disastrous action it will set off global panic and lead to an asset death spiral, drawing the entire world into deep depression.
What have our leaders wrought? The reckless conduct of City, the fiscal incontinence of Gordon Brown (3pc deficit at the top of the cycle), and the pitiful regulation of the UK housing boom have all combined to bring the country to the brink of disaster. England has not defaulted since the Middle Ages. There is a real risk it may do so now.
