November 17, 2008 (LPAC)--With the Pound Sterling plunging through the floor and what remains of its economy collapsing, Britain is in serious trouble, a trouble caused by its own rapacious, imperial financial policies. The British Empire, as Lyndon LaRouche warned, is committing suicide in its efforts to eliminate the nation-state system as a rival for political power.
The British press would never say that directly, so instead we are treated to a watered-down version, claiming that the horrible odor permeating the British Isles is but a whiff of Iceland. The same Iceland, incidentally, which was looted into the ground by British hedge funds and other speculators, then declared a terrorist state by Britain when it could not meet its obligations, and now driven into the waiting, deadly arms of the IMF.
Among today's diluted news reports:
* The Confederation of British Industry today predicted that Britain's "recession" will deepen, with unemployment reaching 2.86 million in two years, in the worse recession in 20 years. The CBI also predicts a shrinkage of the economy by 0.3 percent this year, with unemployment increasing from the 1.82 million to 2 million by Christmas.
* Today's Daily Telegraph, commenting on a possible run on the pound sterling writes: "Put simply, the UK has an air of Iceland about it." While Iceland's private banks collapsed with its foreign liabilities being 7 times the GDP, British banks foreign liabilities are three times the UK's GDP. In fact, their liabilities are 381 billion dollars more then their assets. On top of this they have large sterling assets which are depreciating along with the currency, which has collapsed 25 percent, going from a high of $2.07 to the current $1.48. As for British Prime Minister Gordon Brown's 250 billion pound bank guarantee scheme, this is also extended to foreign currency liabilities as well. Meanwhile the government's own foreign currency reserves are "pathetically small" (25 billion pounds).
* On top of this, Britain has a big trade deficit which is 3 percent of GDP, which requires it to borrow 40 billion pounds to plug the deficit and could reach 5 percent of GDP by next year. Not only will foreigners become more reluctant to fund the deficit, but British investors will too because they will be looking to harder currencies.
* The Independent has a similar article entitled, "Another British currency crisis; it's enough to make you feel nostalgic," a reference to previous sterling crises in 1956 and 1970s. The article makes the obvious point that the hot money that was entering the UK to finance their own housing bubble is now leaving and is unlikely to come back, not only because of the collapse of that bubble but also because of the cut in British interest rates, which are now among the lowest in the world. The collapse of the pound will not help exporters for the simple reason that the exporting sector collapsed so much during the bubble years, that now there is no bases for an export boom.
