I notice that, as Sterling hits a new low against the Euro, that Ambrose Evans Pritchard is now predicting 1929 is the benchmark to measure the likely fallout of the credit crunch.
Now, I am starting to think that Ambrose is beginning to sound like the boy who cried wolf a bit. I do not underestimate the scale of the emerging problems- as I have said before, the scale is truly enormous. However Evans Pritchard continues to add in his view that the Euro will collapse and much of the European Union with it. In fact, I think that the fall of the British Pound is a good thing- it helps make British products more competitive in selling into the European market. As for the US- the fall in the Dollar is already helping to correct the dramatic financial imbalances that have emerged over the past decade. This does not mean that either the US or the UK will escape recession, but neither does it mean that the problems are of the same order of the Japanese deflation of the past decade and a half (and even if they did, the Japanese are not exactly starving on the streets).
Yet again it is the mono-mania of the anti-Europeans that is removing all sense of perspective. There are problems, but these are not black and white issues- and the shades of grey can still leave plenty of room for very positive outcomes too.
Many will greet 2008 with pessimism, I do not- I am realistic about the positives and the negatives. I am not blind to the faults of the Eurozone, but neither do I ignore the advantages. As the Euro continues to climb against Sterling, we are hearing precisely the same predictions of doom as we heard when it was falling- and the ups and downs of currency markets are very poor indicators of fundamental prosperity.