Tuesday, October 13, 2009

British Pound Getting Pounded

Just a few quick remarks about the pound. We'll follow this up with another detailed post by the end of the year as we said we would a few weeks ago.

A few weeks ago we again remarked about our concern about the pound. In the last two days the pound has been pounded. Pun intended. Two days does not a trend make but these are outsized moves which are likely giving us hints of the future.

It's funny how just weeks ago HSBC talking heads were jabbering about the dollar's demise when they should have been worried about their own currency. HSBC and other British financial firms are in an enormous bubble. And one thing we know about the human psyche is people in a bubble generally have no idea one actually exists. Or more generally put, HSBC is more than likely clueless as to the difficulty in their future.

Let's see. I wonder how the City of London would be impacted with a substantially weaker pound? Especially when Britain's number one export is the pound. Remember, London is a big driver of commodities and American stock market action amongst other financial games. Britain's only substantial export is pushing around paper or Frankenstein finance. There's an excellent analogy here. That is, Britain is the "me too" of global finance. Of course, we have uniquely remarked time and again for over a year that global finance is dead. We'll play more games as the status quo tries as they may to save the system. But ultimately they will fail.

The financial idiots in London still have dreams of reclaiming their eminence as the world's financial capital from Wall Street. In fact, many thought they had successfully done so over this past cycle. We often heard cries from Wall Street and CNBC that the City of London was becoming the financial capital of the world. That included capturing much of the emerging markets business. In the United States, we were told that was because it was too difficult to do business here. More deregulation of Wall Street was needed. Ha ha ha. Dreams die hard.
posted by TimingLogic at 9:20 AM