http://news.bbc.co.uk/2/hi/business/7203966.stm

How dumb is the European Central Bank and the Bank of England?

This dumb:

On Tuesday, the US Federal Reserve made its biggest rate cut for 25 years in an effort to avert a full-blown recession.

However, the European Central Bank hinted it would not follow suit, and the Bank of England was unlikely to accelerate rate cuts, analysts said.

So our HUGE rate cut won't help them.

I admit to not know much about how the Bank of England makes it's decisions, but I was in the UK when the pound really started getting its feet under it. You know what the effect on Joe English was? He felt like England was a world power again. He felt a little bit of the "old days" when Sterling was the currency in which the world's financial transactions were conducted. He was remembered when the pound could buy the world!

That's nice. But if you don't have the economy to support that strength, you're just hurting yourself in the end.

Case in point: the town of Brixham in Devonshire. This lovely seaside town revolves around the tourist trade. Once the place where William III of Orange landed with his Dutch army, on 5th November, 1688, during the Glorious Revolution, Brixham is rife with history (most of it maritime). It's where the replica of Sir Francis Drake's bark, The Golden Hind, (upon which he was knighted by Elizabeth I) is moored. It's on Torbay, the home of Agatha Christie and fans of the fiction writer can see many of the places in her books by strolling around the area.

Yeah, there's a fishing industry in Brixham, but most of its residents make their money from tourism. Most of the houses with ocean views are owned or rented by seasonal residents.

Do you know what the high pound did to Brixham? No one went there last summer. The European and American visitors were strangely missing. And because the pound can buy so much more in the US and Europe right now than it can in England, the seasonal residents of Brixham took their holidays in Spain or the Caribbean last year.

Many small businesses along the high street had their worst summers ever. And a bad summer in a seaside town mean a bad year. Too many of those, and they will close. Friends of mine over there wonder if they'll be able to stay open this summer.

A strong pound is NOT good for England. Yeah, it makes the English consumer feel very powerful overseas, but it hurts the English economy. On the big scale, no one is buying English-made products. The price is too high. All the spending power is flowing out of England and into other countries. Small companies will fail and close. Large companies will cut staff. People will lose their jobs. And then what will you have? Inflation paired with unemployment. Loverly...

Bank of England: discard your union-flag-flying nostalgia about the Empire and CUT THE RATE!!!

The same thing applies to the EU but to a smaller extent -- the Euro has never been strong and so many people said it would never be more than a joke currency. But it's strength is proving that wrong now. But this is NOT real. This is inflated. This is hurtful to everyone.

So you know my position, I LOVE a strong Pound and Euro. I did 25% of my wholesale business in Europe last year and almost 20% in the UK. A strong Pound and Euro means they will buy more from me than ever. But it's not good for the world economy, even if I'm living high right now because of it. It will not last. The support for a strong Pound and Euro are not there. Only inflation and unemployment can come from this.

This reminds me too much of the late 80s when the Yen was so high and the Japanese Central Bank wouldn't cut the rate. Our government tried to cajol and even strong-arm them to cut their rates, but they wouldn't.

Do you know what happened to the Japanese economy in the 1990s? See?