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Foreign Exchange

Stating the obvious

Is clear that here in the UK the media is really struggling to understand what is going on.

I received a newsletter from Fidelity Investments this week that made a telling point. Many of the companies and institutions in trouble have been basket cases for years, so their demise should come as no surprise. It cited the examples of Woolworths in the UK and the car industry in the US; it highlighted the fact that many of us chose to live in a state of suspended reality for years.

I haven’t read too much foreign press, but it is clear that here in the UK the media is really struggling to understand what is going on. There is no shame in that – after all, few of the experts who send me research would seem to have a clue either. As I’ve mentioned before, we are in the era of relative devalue trading, where the skill required is to recognise which heap of crap stinks the least.

Before the Bank of England cut its bank rate by a further 50 basis points this week, there were numerous suggestions that such an act would send sterling into freefall. This has not yet happened, which perhaps shows that the principle of following reverse barometers – principally the national newspapers – still holds true.

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