A wise government would have regulated finance in the rest of the UK, whilst treating the City as a ’special economic zone’ where light regulation applied.

Instead, the government has applied the same, light regulatory approach to everything: from the eurobond market to the consumer mortgages market.

When investors put money in sterling assets, they are not relying upon the City’s status as the largest financial market in the world or its financial genius. The backing for sterling assets (be in equities, corporate bonds or government stock) does not arise from the City only, but from the entire UK economy, Flushing and Loo included.

Investors must surely see the UK’s housing bubble, which is worse than America’s, its excessive leverage and its stretched-out consumers. They know that there has to be an adjustment in consumption, an increase in saving and a develeraging to sustainable levels. That is why there is investor flight from sterling assets.

Much as I dislike Mr Brown and his crew, I dislike Mr Griffin and his associates very much more, (as I am sure you do). And it’s not like such a scenario, albeit unlikely, is without historical precedent.

Note: SF does not give legal advice, make your own mind up etc.

The question of food security is one that senior Politicians like John Redwood must address, our agricultural sector must be encouraged to grow and supply our domestic market. Cutting rates is certainly going to make most imports cost more and the danger is that because our economy is now 76% service based we are not now producing the wares needed to offer consumers an alternative. David Cameron has talked about the need to re-balance the economy and he raises a very important point, one that is often overlooked. There can be no consumer choice without import substitues.

Manufactured goods might rise somewhat but pricing in Britain has been outrageous for a decade. Hopefully now imported goods will find they have to be sold at lower margin to compete with local and keep people buying. Price rises will be muted to say the least.

Thank God we are not in the Euro which is stuck at too high a rate. Sterling is doing exactly what it’s meant to do at times of economic crisis – bomb and get us back into business.

This is the correction of the overvalued economy Britain has been suffering from for a decade with excess borrowing holding it up. Thank God it’s now over.

Money is the means of exchange and the means of financial calculation in a free market. It is time governments stopped interfering with and corrupting it. Inflation introduces uncertainty, miscalculation, dishonesty, and a lack of integrity.

So abandon the 2% inflation target (which is anyway a joke).

Come on – 0% inflation: it is not rocket science.

Reply: I assume they are not trying to – I guess they do not understand the consequences of their actions on banking capital and interets rates. They are about to find out.

Most intelligent criticism of Euro membership has always stressed that the pros and cons of the Euro do not rest on the transient strength of the pound at any particular time. Unfortunately such a distinction will be spinned away by Euro-Fanatics as they re-launch their assualt on the pound.

Erm, Tony, we’re cutting rates in isolation because we want the pound to fall against other currencies. This will make exports more attractive to foreigners (and of course imports to us more expensive and less attractive), thus increasing the demand for goods and labour in the UK. This will make the recession shorter/less bad.

So it is not only a case of the sterling against the dollar, but the dollar against everything else.

Funnily enough, as I have agreed with you all the time, relation between interest rates and currency valuation is not all that is cracked up to be, and never has been. The markets are a step ahead, and they see that the US is doing what it needs to get out of their recession whilst the UK and ECB are just sitting on their hands.

For a moment Stuart, I thought you were talking about Gordon Browns cabinet.

Stuart Fairney: “I am very, very sick of being forced to pay for this circus.”

So am I! If the Tories are to have a reasonable crack of the whip in what are going to be increasingly difficult circumstances, the BBC must be cut down to size and privitized and it must be done with in a very short timeframe of winning the next election. Should the Tories manage that feat.

Digital TV & the cut over to Terrestrial TV tarting now, will permit the BBC to go to a subscription only basis. Those that want it can pay, just like SKY. For the rest of us, we can buy or hire our DVD’s ‘dirt cheap’ these days, or [GASP] there is always ITV.

The fact is, for the last 25 years the BBC has been a schill for the Labour party. In the interests of Democracy, its got to be reformed.

Not all! Some of us had the good sense to move out of overpriced UK property and overvalued GBP into foreign currencies, just about anything would be showing a handsome profit over the last year (except AUD).

I’ve also done some workings on putting that £37 billion that the banks are being given into perspective (Click link above), to sum up:

£40 billion is barely 1% of total bank sterling assets
£40 billion is a 3.3% write-down on mortgage advances
£40 billion is three-and-a-half months’ worth of gross cash receipts from existing mortgage borrowers.
£40 billion is seven-and-a-quarter months’ worth of pre-tax, pre-bonus profits.
£40 billion is 1.7% of total bank bonds, mortgage backed securities (should you agree with me that the best way to solve the ‘banking crisis’ is debt-for-equity-swaps).

Crisis? What crisis?

My spending has gone up as i am worried about inflation and falling sterling. Real inflation that is not temporary oil driven inflation.