Sunday, May 10th, 2009...3:29 am

The Great British Haircut

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31_52_11-the-city-of-london-the-square-mile_web1Sadly I’m not talking about the kind of haircut you get down the barbers, and in fact, “haircut” is probably putting it lightly, it’s more of a full-on head shave.

The budget Darling came out with very effectively manages to achieve fuck all, the amusing 50% tax rate for earners over £150,000 will be particularly effective… in encouraging as much tax avoidance and evasion as possible, meanwhile the “cash for scrap” scheme will provide a minor and mainly pointless stimulus to the car industry – most of which is dominated by foreign manufacturers anyway, not that I’m protectionist, but nonetheless, it’s a good way to dissuade any trade for the time being as expectations will now align themselves towards waiting for the scrap money.

It could well be possible that they’re lubing us up for an IMF package, but I don’t think we’ll qualify for it being as we have an unstable financial sector and no real regulation, which are two things the IMF are of course insistent on.

Further to that of course, the greatest fear is of a run on sterling… one might say we were overvalued at $2 to £1 but in any case, the massive fall against the Euro and the Dollar both don’t bode well and a questioning of the creditworthiness of the sovereign… something which I have already said is very likely to occur… but not to the point of questioning it enough to start refusing to finance the sovereign.

Nonetheless, the costs of financing will inevitably rise as a result and create a feedback effect which will again shit on the value of sterling, and in hindsight, the insolvent banks should simply have been allowed to collapse in an orderly manner – namely to seal all the depositors and users of retail services in a vault (i.e. a brand new bank company) – prospects for sterling are dubious at best – primarily because the Sovereign is completely and utterly failing to instill any confidence whatsoever.

Hopes? The only possibly hope that’ll save us is the replacement of the government by a new party, beyond that… don’t hold your breath and meanwhile, keep a close eye on the Quantitative Easing programme which they’ve already announced they’ll be expanding; sorry lads, trickle down ec0nomics doesn’t work all that well.

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