BREXIT - THE GOOD NEWS

The Financial Times Stock Exchange 100 Index

Since the vote for Brexit, the UK stock market has performed well.

The UK's manufacturing sector had a good September.

Merryn Somerset Webb

Merryn Somerset Webb in the Financial Times‎ tells us that the Cloud over the pound has a silver lining.

According to Merryn Somerset Webb, the devaluation of the pound in 1949 (from $4.03 to $2.80) led to a rise in the stock market.

In 1967 sterling was devalued again (from $2.80 to $2.40).

The stock market then rose 30% in 1968.

Most big UK companies are currently benefiting from the fall in the pound.

Switzerland is not in the EU, and is 'very rich'.

Before Brexit, the UK's huge current account deficit (difference between exports and imports)  was about 6 per cent of GDP - near a peacetime record.

The UK needs its economy to rebalance.

The pound was over-valued - because of the constant flow of speculative capital into London.

The UK is now, to some extent, rebalancing its economy.

Greece has not been so lucky. 

It is stuck with the Euro.

Greece, Italy and Portugal all need to re-balance, but it is not easy when they are stuck with the Euro and the EU.

MORE HERE:  Cloud over the pound has a silver lining.

CHINA - DEVALUATION

Many Chinese cannot afford to buy anything other than the basics.

Reportedly, in China: house prices have stalled, some construction projects have been suspended, some building sites are deserted and some factories have fallen silent.

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To help its economy revive, China has devalued its currency.

Chinese exports to the USA and Europe will be even cheaper

This will hurt US and European manufacturers whose exports to China will now be more expensive.

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Donald trump says: "China has rebuilt itself with the money it has sucked out of the United States and the jobs that it has sucked out of the United States...

"They are doing a big cut in the yuan and that is going to be devastating for us... they are just destroying us."

There is a fear that stock markets will slide and the world economy will tip back towards recession.

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Chained like a dog.

The World's economic problems can only be solved by reversing the process whereby wealth is increasingly concentrated in the pockets of the elite.

The rich elite cannot buy great quantities of such things as cars and clothes.

"A little more redistribution now might improve the quality and quantity of economic growth."

The Economist explains: How inequality hurts growth