links for 2010-10-25

History suggests sterling’s losses will be sustained while Osborne implements cuts that are bigger than those announced by Geoffrey Howe when he was Margaret Thatcher’s chancellor in 1981, according to UBS. The pound lost 20 percent against the dollar that year and weakened the following three years.

“The main parallels between now and the early 1980s are that fiscal policy is clearly being tightened, the economy is weak, so the Bank of England may have to respond,” said Mansoor Mohi-uddin, global head of currency strategy at UBS in Singapore. “The currency market is beginning to focus on the downsides of fiscal tightening.”

44 per cent of Japanese said deflation was “favourable”, while a further 35 per cent felt neutral about the phenomenon – and just 20.7 per cent described it as “unfavourable”. Since then, the negative reaction has risen slightly. Nevertheless, that proportion remains low. Or as Kathy Matsui, an economist of Goldman Sachs, told a meeting at the International Monetary Fund in Washington last week: “More Japanese actually feel deflation is positive rather than a negative.”

“Africa looks remarkably similar to what India was 15 years ago,” said Firdhose Coovadia, director of Essar’s African operations. “We can’t lose this opportunity to replicate the low-cost, high-volume model we’ve perfected in India.”