How others see us...

In today's New York Times, an article by Julia Werdigier and Nelson Schwartz begins with a somber summary of the UK.

"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 multi-decade 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".

They quote Will Hutton, very much Nulabour, "I fully back what the government is doing, but there is a risk of being Iceland on the Thames... And the more sterling falls, the greater our liabilities in terms of what we owe."

The pound trading against the dollar at $1.3618 is at its lowest since September 1985, but it was over two dollars to the pound not many months ago.

The two Americans and Will Hutton are all correct, though with the US already having pledged billions of dollars and Barack Obama promising to splurge much more, and having had bank failure on several occasions recently in the US, perhaps the two major differences between the two countries are the indebtedness and the strength of the currency.

There is almost certainly a very direct relationship between the indebtedness and the currency, and this is the main concern of the Americans and Hutton. G.Brown borrowed heavily and allowed too many citizens to go into massive debt, on house purchase and credit card, etc. If we are in a weaker position, then it is our indebtedness which is the cause.