The markets tremble

How’s this for a frank assessment of the UK economy? “I would urge you to sell any sterling you might have. It’s finished. I hate to say it, but I would not put any money in the UK”. It’s by Jim Rogers, who co-founded the Quantum Fund with George Soros. The markets agree with him – the pound is, again, off between 2% and 3% against major currencies (for the latest, click here).

The market is beginning to get a handle on the sheer extent of the damage of Brown’s policies – and, crucially, his inept banking regulation. UK banks (in particular, RBS) lent aggressively to everyone from dodgy Russians to leveraged buy-outs. Given that bank debts amount to 350% of GDP, the potential for calamity is clear. The taxpayer is absorbing banking losses, on an apparently open-ended promise. As I blogged yesterday, the government may say its going to bail out the banks but who will bail out the government? There is no clear answer.