Monday, December 29, 2008

Sterling Schmerling

You could say the markets are adjusting to the certainty of another drop in UK interest rates - but I wouldn't. The smart money can see how completely this government has destroyed our economy.
Many years ago I read an excellent book that made the case for making things - its the only real way to add value. Selling hairdressing, financial services etc etc is all very well, but it won't pay the bills in this environment.
I had lunch today with a well respected financial figure in Scotland who told me of visiting NOMADS in London recently. The four most senior people in the firm met him to do a £2million transaction. Why? Because they had nothing else to do.The last deal they worked on was in June.
Until the feel good ( or at least the feel better) factor comes back you can forget pay increases, or even being sure of your job. Another 600,000 out of a job? That's about half what it will be when the high street really crumbles in the next month or two.
And that's why Sterling is tanking.
And why credit default swaps on it are triple those on Germany and double those of France.
The news about USC, Tom Hunter's retail business, being in and out of administration, only serves to reinforce the point.
"Scotland's richest man" was forced to sell his stake in Dobbies at a loss when his bankers ( HBOS by the way) said they wanted the cash back. My guess is that anything he owns is currently on the block, and I wouldn't be at all surprised if he ends up ( along with many other HBOS customers) NOT owning very much.

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