The head of Barclays Bank is predicting that we are perhaps only half-way through the process of house price decline, with values to fall by 30 per cent in all, according to John Varley. He also thinks that unemployment may rise to 7 or 7 and a half per cent by the end of 2009, with an additional 700,000 becoming unemployed. One hope that he is being realistic in his assessment, but my worry is that he is instead being somewhat optimistic.
As for Sterling, after a week of steep falls during which it reached an historic low against the Euro, in early hours of currency trading today the Pound has remained near it record lows against it, even if the USD is showing losses based on speculation that the US Federal Reserve may cut interest rates further, whereas there are suggestions from European Central Bank officials that the interest rate for the Euro may not drop too much further, which seems to be supporting that currency. On the other hand that 'not too much further' implies it will drop, not that it will not drop at all. In any case Yvette Cooper MP, Treasury Minister, speaking on The Andrew Marr Show yesterday stated that the main focus of the government is not to support the Pound, but to target inflation so I suspect we have not seen the floor on the value of the Pound against the Euro just yet.
Incidentally, I just posted an article in my Spanish blog today about moves by the Spanish government to support the economy there, which I'm afraid I ended on a rather apocalyptic note:
In summary, who can tell if the Spanish government's plans will prove genuinely helpful or simply prolong the agony. I'm afraid what is happening now makes me ponder again on what is said to be an ancient Chinese proverb (or curse): May you live in interesting times. It may well be that before the present economic downturn runs its course that the world will go through a period of considerable tubulence of which economic dislocation will be only a small component.
I'm tempted to end this with a trite 'Have a Nice Day', but that hardly seems appropriate.
- at the least, however, I can hope that you will Go in Peace.