One month after the Fed admitted that growth was going to be slow in the US, Bank of England Governor Mervyn King announced a cut in their growth forecasts, but the the negative impact was immediate. His language was extremely negative, "It may still be summer but there is a chill in the economic air". "The economy faces a difficult and and painful adjustment that cannot be avoided."
England is facing a worse combination of slower growth and higher inflation than the US and certainly is doing worse than the Eurozone. The stagflation scenario is real in England. The recent decline in commodities may slow the inflation side of the problem but the housing market may be in worse shape. Great Britain has not been as pro-active in trying to provide a housing solution and the Bank of England has not been as aggressive as the Fed with providing funds for banks even though M4 money supply is growing at double digits. Retail sales have turned negative in the last month and industrial production is negative yoy.
No wonder the pound is at 22 month lows. It is not that the US is looking so good but rather that places like Great Britain are turning into major economic problems.
England is facing a worse combination of slower growth and higher inflation than the US and certainly is doing worse than the Eurozone. The stagflation scenario is real in England. The recent decline in commodities may slow the inflation side of the problem but the housing market may be in worse shape. Great Britain has not been as pro-active in trying to provide a housing solution and the Bank of England has not been as aggressive as the Fed with providing funds for banks even though M4 money supply is growing at double digits. Retail sales have turned negative in the last month and industrial production is negative yoy.
No wonder the pound is at 22 month lows. It is not that the US is looking so good but rather that places like Great Britain are turning into major economic problems.
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