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Trifecta.....................10/11/12

Austerity Debate is Major Threat to Pound - The Source - WSJ

In the U.S., signs of recovery have become a little more persistent and even political uncertainty associated with next month’s presidential election has started to fade. President Barack Obama is likely to be re-elected and a solution to the fiscal cliff that appears in January is likely to be found.
In the euro zone, the debt crisis is far from resolved but a new bond buying program by the European Central Bank and the successful launch of a new bailout fund from creditors have made investors a lot more confident about supporting the euro.
Back in the U.K., conditions are deteriorating once again with some analysts fearing that after a brief bounce in the third quarter the economy will then head back into recession for the third time.
This means not only that the government’s fiscal austerity is failing to work but that repeated easing of monetary policy by the Bank of England isn’t really helping either.
The International Monetary Fund helped to put the whole issue in the spotlight this week with its warning that the government needs to relax its austerity program given the deteriorating growth outlook.
This came just as the Chancellor George Osborne and Prime Minister David Cameron were pledging to stick to their fiscal guns at the Conservative Party’s annual conference.

For sterling investors this creates a serious dilemma.