Mervyn’s power

Sometimes I don’t understand financial markets at all.

For weeks now, everyone has been talking of Britain (and indeed much of the developed world) sliding into a recession – and for any switched-on commentator such a slide has been inevitable for some time. (A recession, of course, being defined as two consecative quarters of negative growth; last quarter was well into the negative and there’s nothing that we can do this quarter to turn that around).

Then, Mervyn King, the governor of the Bank of England, comes out and says it and the pound takes a hammering. He was just stating the blindingly obvious, and had probably been muttering about this privately for weeks. Now, if you will forgive a bold statement, these financial investment guys are intelligent chaps. They make a lot of money (and sometimes lose a lot) – they must be brainy. So why suddenly dump pounds the moment King goes public with his thoughts? Surely it would have made much more sense to do this a long time ago.

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