The Falling Pound Raises Fears of Nationalization

[Pale Blue Dot]

Source: New York Times

LONDON — An island nation that bulked up on debt and lived beyond its means. A plunging currency. And a financial system edging toward nationalization.

With the pound at a multidecade low and British banks requiring ever-larger injections of taxpayer cash, it is no wonder that observers have started to refer to London as “Reykjavik-on-Thames.”

While that judgment seems exaggerated, there are uncomfortable parallels between Iceland’s recent financial downfall and Britain’s trajectory. Equally important, news that widening bank losses in Britain have necessitated another round of government life support provides a stark example to the United States.

Washington’s attempts to stabilize financial institutions have failed so far, as well. And now the Obama administration, along with the rest of the world, could watch Britain to see what a bank nationalization might look like, and what it might suggest for American banks.

Ordinary Britons have a more basic worry. After relishing the boom that transformed the drab United Kingdom into Cool Britannia, they fear that the disheartening economic stagnation of the 1970s might return.

Read more: http://www.nytimes.com/2009/01/22/business/worldbusiness/22pound.html?_r=1&partner=rss&emc=rss

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If you think that the U.S. is immune to this, you're mistaken.

[DJ13]

1. The UK is our canary in the coal mine

They did everything in banking that we did on a grander scale (for the size of their population).

[notadmblnd]

2. looks like the bush and blair administration worked in tandem

to loot their countries and bleed their people dry.

[truthisfreedom]

3. Ack! The pound is out of control... good time to visit the UK. Exchange rate here:

From $1.96 to $1.36 in 120 days (4 months). Crushing.

[depakid]

4. It's a might cold and wet this time of year...

Interestingly enough- as Krugman notes, the pound's devaluation may be a "good" thing- at least in relative terms, compared with the problems in Ireland, Spain & Greece- which are tied up with the Euro.

[JCMach1]

9. Even lower by Spring and Summer... of course by then the bread lines could be a bitch

:sarcasm:

[DaLittle Kitty]

5. Watch U.S.Economy in Next Two Months! Bad News Here IS On Da Way Too!

Auto bailout runs out... Banks losing ground post bailout and Derivatives $58 Trillion Bucks start maturing... The Nightmare has only JUST BEGUN! :nuke:

[FarCenter]

6. Which UK bank will play the role that Creditanstalt played in 1931?

[JCMach1]

8. Barclays... their shoe hasn't really dropped yet...

[lonestarnot]

7. One world currency just around the corner.