All Eyes on Britian

Back in the office today. Been a crazy two days in the markets. I think everything going on right now in the U.S. is a sideshow. The story is in Europe and how things play out there. Nationalization, currency issues, sovereignty issues. These have world wide implications. Two articles in the UK Telegraph by Ambrose Evans-Prtichard tell the story. You need to know your writers. Pritchard is an alarmist. The problem is, I tend to think he is looking in the right places. This does not impact most securities and so usually can be ignored but it has profound systemic issues that impact all investments. Keep your eye on the English Pound. This first story, thanks goes to Ron.

http://www.telegraph.co.uk/finance/globalbusiness/4285331/Help-Ireland-or-it-will-exit-euro-economist-warns.html

"If Ireland continues hurtling down this road, which is close to default, the whole of Europe will be badly affected. The credibility of the euro will be badly affected. Then Spain might default, Italy and Greece," he said.

and

http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/2009/01/20/seriously_alarmed

The slide in sterling has turned "disorderly".

We can argue over whether or not the first phase of devaluation acted as a shock-absorber for a badly mismanaged economy, providing a cushion against debt deflation and the housing crash. But the latest dive has a very malign feel.

For the first time since this crisis began eighteen months ago, I am seriously worried that British government is losing control.

and

The danger is blindingly obvious. The $4.4 trillion of foreign liabilities accumulated by UK banks are twice the size of the British economy. UK foreign reserves are virtually nothing at $60.6bn.