Britannia Radio

Interesting speculation from Conway, who is generally sound though 
perhaps usually more suited to accurate reportage than forecasting !

Soros is always around when things are sticky for Britain.  He makes 
money out of it!

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TELEGRAPH BLOGS    8.4.09
Gearing up for a V8 recovery?
Posted By: Edmund Conway  Economics Editor

In the good old days recessions were easily categorised into one of 
four capital letters, or so the economists tell us.

The optimists hope for a V-shaped recovery, with economic growth 
plunging deep into negative territory before bouncing healthily back, 
and then it's full steam ahead. There's the U-shaped recovery, which 
involves a more gradual decline in growth, followed by a gradual 
improvement in the following years. The realists usually anticipate a 
W-shape, where the economy appears to bounce back briefly, with this 
followed by a further slide into recession and misery before the true 
recovery eventually arrives. The real pessimists are more likely to 
predict an L-shaped recovery - although recovery is the wrong word, 
since as the shape of the letter implies this means that once the 
economy hits rock bottom it stagnates for many years before.

If you look at the forecasts from both the Bank of England and the 
Treasury they expect a V-shaped recovery; Lord of the Bears Nouriel 
Roubini reckons he's seen the future and it's L-shaped.

All of which brings us to George Soros and his appearance on TV this 
morning. The billionaire investor has dispensed with letters entirely 
and is predicting a recovery which instead looks rather like an 
"inverted square root sign" (so turn this à upside down). This is not 
dissimilar to what happened in the 1930s - a brief bump of recovery 
followed by another lurch downwards and then some years of not much 
at all. He has been predicting a slide of these proportions for some 
time, and I assume that he also has some sizeable trading positions 
that reflect this, which is worth bearing in mind.

But his point - that this downturn is looking just about as miserable 
as the 1930s - is an important one. For lest one forgets the very 
early 1930s were remarkable for including a series of bounces and 
moments of optimism that persuaded many that the recession would be 
over by Christmas. It didn't feel like the Great Depression until 
much later. On this point I would urge everyone to read Barry 
Eichengreen's latest essay which warns that this could actually end 
up being worse than the Great Depression.

One of the more hopeful points made by Eichengreen is that the 
authorities - monetary and fiscal - have thrown far more than their 
1930s counterparts at the problem: slashing interest rates and 
embarking on quantitative easing; cutting taxes and hiking spending. 
This might provide one with hope that policy could counterbalance the 
depression. Indeed, there are many in the corridors of power on both 
sides of the Atlantic who fear that so much stimulus has been pumped 
into the economy that before we know it we have a massive explosion 
of growth and inflation that would then take years to bring back 
under control.  [Readers will know that this is what I have been 
predicting for some weeks now. though not willing to put a date on 
this occurrence -cs]

This is what policymakers are privately calling a "V8 recovery" - in 
other words a supercharged V-shaped recovery (like a supercharged car 
engine). In some senses they would prefer this to an L-shaped slump, 
since as the experience of Japan has shown we have little experience 
of being to turn those around. But they are similarly aware that 
inflation, while no doubt familiar, is hardly an easy beast to tame. 
Certainly the UK and US have done about everything in their power to 
turn us in the V8 rather than inverted square root direction, and the 
devaluation in sterling since last year will certainly contribute. 
But no-one really knows what power these policies have in the face of 
such a significant debt-based slump. And as for Europe, where 
interest rates are still being kept higher than they ought to be, 
while some nations resist spending anything to bide them through the 
downturn, that square root symbol is looking all the more threatening.
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ECONOMIC  ÔShortsÕ   8.4.09

TELEGRAPH
=Tankers anchor off Devon waiting for oil prices to rise
Almost a dozen oil tankers carrying millions of litres of oil and gas 
have anchored off the British coast because the cargo's owners are 
waiting for prices to rise.  (Torbay ship suppliers are doing good 
trade!)
=[Richard Fletcher warns Darling NOT to repeat his ÔclangerÕ of last 
year when he caused the house market to stop dead ion its tracks as 
buyers waited for  the promised Stamp Duty cut.  He may be too late 
in his warning as the Treasury has ÔspunÕ the story of a coming £2000 
Ôscrap a bangerÕ  payment when buying a new car.  Result ?  Car sales 
hit a record low last month.  ]   (not on line)  [The Sun without its 
thinking cap on today urges the £2000 bounty! -cs]