We have nothing to fear but bears themselves, especially the English ones

Just the other day, Guambat rendered the off-handed offense to his many English friends (and their allies, the Scots, Welsh, Northern Irish and anyone else who was at one time or other considered "British"), that he "can't begin to touch the cynicism of the British".

And that was before he followed up on a reference emailed to him from a close Australian friend of English persuasion, who pointed him to the following doomsday article (and Guambat points out it was the English Conguerer, William, who invented the "Domesday" Book, and the English at large who thereafter gave it the "Doomsday" spelling).

> Markets poised for severe fall, says King By Edmund Conway, Economics Editor, Telegraph (UK) Nov 11, 2007.

The Bank of England Governor has issued an extremely unusual warning on world stock markets, indicating that shares may be heading for a major fall.

Mervyn King said the full impact of the credit crunch had not yet been felt on equity markets in the West and in developing countries, saying that the possibility of share price falls were one of the biggest risks facing the world economy.

The BOE Governor seemed as perplexed as Guambat has been over the perceived disconnect between the direction of the stock markets and the implications of the credit/dollar crunch. (See, You can't get there from here and The market is climbing a wall of money and Hello dollar!)

He said,

"It is very striking that despite the developments we've seen in the last three months , despite the stresses and strains in the banking sector , equity prices are higher now than they were in August," he said, unveiling the Bank's Inflation Report, which said the strength of share prices had been "surprising".

He added: "This is true around the world, and in emerging markets they're 20pc higher. There must be some downside risks there.

"That's factored into our projections. That's the bigger risk to the global economy than the narrower one focused on the banking sector."

It is highly unusual for a central banker to comment directly on share prices. One of the most renowned examples was former Federal Reserve chairman Alan Greenspan's comment about "irrational exuberance" in the US stock market in the 1990s. [See, The legacy of Greenspan's Put.]

In following links from that article, Guambat noticed these other Chicken Little droppings from the British Press that all make for a depressing start to a Thanksgiving Week:

> Nowhere left to hide for private equity By Andrew Murray-Watson

Secretive private equity groups are to be forced into the public eye following the publication this week of a report into the industry by Sir David Walker, the former chairman of Morgan Stanley.

The Walker report, commissioned after a barrage of criticism aimed at private equity companies, will recommend that an independent body is set up to hold buyout groups to account if they do not publish a raft of financial obligations and consult with stakeholders such as employees and unions.

Sir David was asked to lead a working group to come up with a voluntary "comply or explain" code of conduct for private equity companies, partly to head off potentially more onerous regulation from government.

On Tuesday, Sir David is expected to announce that the British Venture Capital Association, the trade body for the private equity industry, will be tasked with setting up a panel to enforce the new code. All of the BVCA's members, which account for more than 95 per cent of private equity companies operating in the UK, will have to sign up to the code if they wish to retain their membership.

(Actually, Guambat is quite certain that the membership of the committee will be wearing cover-alls to make sure they do not spill any whitewash on themselves, and there will, actually, be very many places for Private Equity to hide in their little chicken coop.)

> An economy on the brink of snapping

Talk of 'soft landings' or a 'happy handover' of growth from America typifies end-of-bull-market wishful thinking, says Tom Stevenson

This year's wishful thinking is dressed up as Goldman Sachs's "happy handover" or the ubiquitous "decoupling".

(Guambat reckons Tom Stevenson ought to talk to Sam Jones, who already has pointed out "No doubt Goldman will already be making money from it".)

> We face a crude awakening over oil prices By Liam Halligan, Economics Editor

Optimists say the world economy is now immune to high oil prices. After all, since 1999, global commerce has boomed despite the ever-growing cost of crude. The Western world is less energy-intensive, they say, given our increasing reliance on service industries.

I'm not so sure.

But we are now approaching a crunch point for the global economy - with crude costs about to become a very major problem. Until quite recently, the world has managed to keep on growing despite expensive oil. The advent of cheap Chinese goods helped keep inflation at bay.

But the inflationary impact of China's thirst for energy is now easily outstripping the "deflation" it exports via low-price goods. And, around the world now, as oil prices rise, inflationary dangers loom.

Because US petrol is lightly taxed, crude costs feed directly into prices on the forecourt. Tens of millions of American homes are heated by oil. And the US is, of course, a huge country - so haulage costs are a large proportion of the price of goods in the shops.

For all these reasons, America is uniquely vulnerable to high oil prices. Last week, we learnt that US inflation hit 3.5 per cent in October - a 14-month high.

There's much worse to come.