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Staying Ahead Is Easy

Mon, 18 Aug 2008 07:10:52 EST

Staying Ahead Is Easy - by Ian

You have taken the pole. You are the center of attention. Everyone is behind you. Not a moment to lose. Not a moment to turn heads, except those turning at you. The task ahead is keeping it up. The green light has gone. Your backs to the others. There is no quitting now. But you cannot help but smile. For life is a joy ride and it is all about staying ahead.

www.stayingaheadiseasy.com is a not so complicated website focusing on Formula 1 fever. It hosts slick videos on formula 1 and related stuff along with wallpapers, ringtones and above all a need for speed racing game, with prizes galore. This game needs to be tweaked a little to grab the returning visitor’s interest. The prizes include watches, caps, T shirts with the sponsor’s logo embedded.

BOVESPA - How to invest

Sat, 15 Mar 2008 04:54:19 EST

BOVESPA - How to invest - by Ian

How to Invest
International Investors (institutions and individuals) are allowed to hold any asset class available to domestic investors in Brazil.

According to the CMN (Brazilian Monetary Council) Resolution 2689, since international investors are not established or resident in the country, it is necessary to hire an institution to act as:

Legal Representative
Responsible to present all the registration information of the investor to the Brazilian Authorities. When the representative is an individual or a non-financial corporation, the investor must indicate a financial institution duly authorized by the Central Bank that will be jointly and severally responsible for the representative's obligation.

Fiscal Representative
Responsible for taxes and fiscal issues on behalf of the investor before the Brazilian Authorities.

Custodian
Responsible to hold updated reports and control all the assets of the international investor in segregated accounts, and provide this information anytime it is required, to the Authorities and to the investor.
The financial assets and securities traded as well as other forms of financial applications must be registered, held in custody or maintained in deposit accounts at an appropriated authorized institution authorized by the CVM or Central Bank.

International investments in equity instruments are tax exempt on capital gains and on CPMF. Investments from countries that do not tax income or where tax rates are lower than 20% are taxed as domestic investors. There is no minimum permanence period requirement for the investments in Brazil.

Step-by-Step
1 Choose a legal representative, a fiscal representative and a custodian. Actually, several financial institutions are authorized by the CVM and Central Bank to perform the custodian activities and can also act as investor's legal and fiscal representatives.

2 The Custodian will sign a contract with the Investor and will ask for detailed information attending the Brazilian legislation of “Know your Customer”.

3 Apply for the investors' operational code. The Custodian is also responsible for the application of the investor's Operational Code to the CVM. In 24 hours maximum, CVM will reply with the so-called CVM Code. Simultaneously CVM will request to the IRS (Brazilian Internal Revenue Services) an investor's CNPJ ( Legal Entity Federal Taxpayer Registry).

4 The funds brought into Brazil are subject to electronic registration at the Central Bank in declaratory form. The initial Electronic Declaratory Entry – RDE and subsequent updates are an obligatory requisite for movement across the foreign exchanges and must be obtained before such movements can take place. The representative is responsible for the registration of such operations.

5 Choose a BOVESPA's brokerage firm that will be your representative at BOVESPA and will execute your orders.

Source: Bovespa

Bring on the Public

Mon, 18 Feb 2008 14:00:08 EST

Bring on the Public - by Ian

The finance ministry’s discussion paper on raising the minimum public holding to be eligible for continuous listing from 10 per cent to 25 per cent is meeting stiff resistance from corporate India. Industry chambers are still noncommittal on their stance. But as the 28 February deadline for suggestions and comments nears, the trepidation over the proposals is giving sleepless nights to promoters who will be forced to offload chunks of their personal holdings.

The paper proposes a host of changes in the Securities Contracts Rules that haven’t gone down well with the promoters. For instance, it proposes that if the public holding goes below 25 per cent under any circumstances, “the promoters, management and the company may be jointly and severally liable to bring the public holding to 25 per cent within three months…, failing which appropriate enforcement action, including delisting, may be taken”. The paper also proposes defining the term ‘public holding’ and suggests excluding financial institutions, foreign institutional investors, employees, non-resident Indian/ overseas corporate bodies’ holdings and private corporate bodies from the definition. Essentially, this means that promoters holding 80-90 per cent of their stock will have to pare their share substantially.

When they submit their suggestions to the paper by 28 February, corporates are likely to target these specific clauses to be watered down rather than oppose the move directly. Such opposition, however, should not deter the government from the noble move. Over the years, regulations have selectively marginalised the retail investor, apparently, to protect the gullible from the vagaries of the market. Most of these changes happened after the meltdown of 1999-2000, when retail investors scorched their fingers and began to shy away from the market. As of 30 June 2007, the average retail holding in NSE companies is just 13 per cent. Institutional investors convinced the regulators that retail investors are better off in mutual funds. Gradually, retail quota in an IPO has gone down to as low as 25 per cent today while qualified institutional buyers (QIBs) have a quota of 60 per cent. Pre-1993, a public issue had to be a minimum of 60 per cent of a company’s issued capital.

Though vested interests would point towards the carnage in the stockmarkets to keep retail holdings minimal, widespread holding is essential for stability in the marketplace. A higher float reduces chances of manipulation given that promoters with low public float manipulate share prices through myriad investment companies. IPOs in recent times in China and India have proved that retail investors have an appetite for new stocks. Restricting their participation is against the principles of a free market. In November 2007, PetroChina sold 4 billion shares, or 2 per cent of its stocks, in an IPO to raise $8.9 billion, giving it a valuation of $1 trillion, twice that of the world’s largest oil and gas company Exxon-Mobil. And last month, Reliance Power received 5 million applications for its $2.5-billion IPO, including bids worth $190 billion—both world records. Clearly, retail investors haven’t asked for mother-hens to protect them in the stockmarkets. They are aware of the risks. Even though the Reliance Power stock listed disastrously below the issue price and Anil now has the distinction of being the first Ambani ever to cause losses to shareholders, but most certainly the junior Ambani will have to face the same investors yet again in the upcoming Reliance Infratel issue.

That mutual funds is the only way for retail investors to participate in the stockmarkets is an argument that’s been turned on its head by such public response. Western markets have turned to mutual funds as much because of lack of public interest as it is to protect small investors. But reducing the role of the retail investor here has been equivalent to treating the symptom, rather than the disease. Remember, retail investors clam up either in a meltdown, or, when volatility is unbearable. But, isn’t that true for all investors and investments in such situations? So, why single out retail investors? It’s better to invest money in educating investors about the mercurial nature of equity investing than bottleneck their participation.

The discussion paper has come at just the right time when the markets are swinging uncontrollably. And wider holdings promise to bring sanity. With such retail interest, why must the domestic stockmarkets follow the mutual fund model? If countries such as India and China have such unique retail markets, let them be so.

Forex - Caveat Emptor?

Mon, 18 Feb 2008 13:48:20 EST

Forex - Caveat Emptor? - by Ian

It appears banks being sued by irate clients who bought derivatives contracts and lost money on them is not limited to this country. Divania, Italy’s tenth largest exporter, is suing Unicredit, Europe’s second largest bank, for fraud and usury, for having been sold derivatives contracts that lost money, forcing the $100-million company to shut down.

A similar scene is playing itself out here; several Indian companies are taking matters to the courts — Sundaram Multipaper is suing ICICI Bank, for one — about being similarly fooled; ICICI Bank says that the company knew what it was getting into.

Media reports have named Yes Bank and Kotak Mahindra Bank as other banks that ‘mis-sold’ such derivatives contracts to unsuspecting companies. The Reserve Bank of India (RBI) has received complaints from other companies too that say were misled by the banks. While some have alleged misrepresentation, others say that these deals were not approved by the appropriate authority, often the board of directors. “Most companies require board approval for getting a loan,” says a former financial controller at one of the companies. “Given that, taking on such exposures would require similar approvals.” None of the companies and their officials wanted to be named since matters were either sub-judice or in negotiation.

Yet others allege fraud by their own employees, or officials going beyond their remit, who used the hedges as a way of speculating on currency movements. This much seems clear: most of the companies caught in this situation are the small and medium-sized export houses who were struggling with an appreciating rupee and tighter profit margins. “Many of these companies may have immature corporate governance structures,” says Mohandas Pai, former CFO at Infosys Technologies. “They may not have risk management capabilities at the board level that could review these transactions or be advised of the downside risks.”

Many of the companies affected are based in the south, where financial conservatism rather than aggressive behaviour is the norm. “So when approached by the big Mumbai banks, they may have succumbed,” says a former CFO of a Bangalore-based export firm. “Besides many of these companies need the banking relationships that large banks can provide, and that may have been another reason for being intimidated into undertaking these deals.”

According to RBI guidelines, companies can hedge using derivative contracts in line with the value of the underlying trade transaction or export. But it seems that in many cases, the positions implied by the derivatives contracts were several times the value of the underlying export, making it a speculative bet on currencies, and a large one at that. “There have been instances when a bank has sold a company a derivatives position, and gone ahead and taken the exact opposite position on its own account,” says the CFO of another Chennai-based export house.

Doth the victim protest too much? Some companies have gone ahead and bitten the bullet, but for the others, there are three defences: the deals were entered into by people not authorised to enter into them, full disclosure about the downside risks was not forthcoming, and even the banks had to know that the positions being taken were in violation of RBI prudential norms by being several times the underlying export transaction. That’s for the courts to decide, however, or for the banks and companies to negotiate a settlement.

Divania’s owner Francesco Saverio Parisi had another weapon: secret videos of Unicredit officials softening him up for the kill. Some videotapes of the meetings with the bank advisors showed how the bank manipulated documentation; one tape even had a Unicredit advisor admitting that he knew little if anything about the nature of the contracts he was asking Parisi to sign. Parisi is suing for almost $450 million. Banks may discover a new twist to the meaning of the word ‘payback’.

Source: http://www.businessworld.in/content/view/3680/3779

World Economies hang by an Internet thread

Fri, 08 Feb 2008 10:53:59 EST

World Economies hang by an Internet thread - by Ian

The 10 minute energy solution

Tue, 22 Jan 2008 04:08:22 EST

The 10 minute energy solution - by Ian

Dear Fingad Users:

There's a fast-growing high-tech company in California that just unlocked one of the largest sources of energy anywhere on earth

Officially discovered by NASA in 1978, the energy source is known as the Earth's Energy Budget. And right now it stands at 174 Petawatts every single day.

How much energy is in 174 Petawatts?

Let me put it this way - just one Petawatt - or 10-minutes worth - is enough to keep the electricity going in London for 3,846 days straight! Or over 10 years.

And the company in California that I'm going to tell you about has created a way to capture those Petawatts and convert them into useable energy for homes and buildings.

Of course I'm talking about solar energy. The solar market is heating up. And for good reason.

With oil prices above $90 a barrel, consumers are looking for cheaper, cleaner and abundant alternatives. And solar is one of the most promising alternatives available today.

In fact, the Wall Street Journal reports that "If it can maintain the same growth rate is has for the past decade, it can supply all of mankind's projected electricity demands 26 years from now."

If you don't have any investment exposure to the solar market, you're missing out on one of the most important trends of the 21st Century.

And it makes some investors very rich.

Today, the solar market is worth $16 billion.

But it's growing about 30-35% annually ... and by 2016, the solar market hits $70 billion.

Now, the tiny $50-million company I'm highlighting in this report isn't a typical solar panel company. In other words, they don't install those unsightly panels on your roof.

What they manufacture and install are the "next generation" solar panel... a solar panel that also doubles as your roof.

Dozens of buildings have already installed the company's energy converting systems, including the world famous Savoy Hotel in San Francisco and the University of Toronto.

But that's just the tip of the iceberg. In the coming years, it's estimated that nearly every new home built in America will have these systems.

And once installed on a mass scale, these things could eventually capture more energy in a single month than Saudi Arabia will produce in the next 50 years!

This breakthrough is the next generation of building-integrated photovoltaics (BIPV), or solar panels built right into buildings' external structures.

You see, traditional solar panels are large, unsightly and expensive. But with solar shingles and glass, the architectural design appears unchanged. Take a look at this house, which has installed the company's solar roof shingles:

These little solar roof tiles can actually generate enough electricity for your entire house.

I'm telling you, this development is a blockbuster, and could literally change the way we use energy forever.

The Birth of a New Industry: Endless Energy

Many think this solar company will single-handedly transform the energy market, making electric utility companies nearly obsolete, similar to what PC and Windows did to typewriter companies like Brother and Smith Corona.

I don't know if that'll happen or not. But I do know this.

The company is getting some major media attention, recently being featured on NBC's Today Show.

I'm predicting that it'll increase in value by 763% over the next three years, like MEMC Electronic Materials (WFR-NYSE) did.

MEMC manufactures silicon wafer technology for the solar industry. With the solar boom, MEMC's stock has gone ballistic - from $4 in 2002 to over $70 today.

I'll talk more about the parallels with MEMC in a minute, but first let me tell you why this emerging California solar company is following in the same footsteps.

You see, this stock is small, trading at a market cap of just $68 million. And it's completely under Wall Street's radar.

But that's changing. And changing fast.

Wall Street is tripping over itself trying to find new and promising solar stocks to invest in.

And the reason is simple: Major profits!

Not only are alternative energy stocks red-hot right now, posting an average annual gain of more than 40% since 2003, but these companies represent the next generation of energy.

Take a look at the New Alternatives ETF, a fund that tracks solar, geothermal, wind and ethanol stocks:

It's the future. Plain and simple.

To give you an example, when First Solar went public in November '06 the buying frenzy shocked many traders unfamiliar with the progression of alternative energy markets . . . but not me.

You see, this company was bringing updated technology to the table. Technology that was disruptive to your run-of-the-mill solar energy company.

Much like our young BIPV stock right now.

Analysts originally predicted that First Solar's stock would open somewhere between $16 and $18 a share. But on the morning of November 17, shares of First Solar opened at $25 a share, and never looked back.

Today it trades for $185 a share!

And it commands a market cap of $13.5 BILLION! And that's on sales of $54 million.
Share the Wealth

With the solar energy industry booming, there's been a trickle-down effect, too. Any company directly or indirectly connected with solar is benefiting.

Again take a look at MEMC Electronic Materials, for example. It's a global supplier of silicon wafer technology to the solar industry.

Its stock has soared in value, going from $1.05 in 2001 to a high today of over $70. That's a gain of over 6,566%. Check it out:

With gains like that, investors are making a fortune investing in alternative energy stocks.

That's why I'm so bullish on my tiny solar roof stock. It's next in line for blockbuster gains.

I'm predicting that every $10,000 invested will turn into $76,300 within three years.

Double up and you're looking at $152,600.

Sounds too good to be true, but one of my favorite solar recommendations, World Water & Power (WWAT.OB) has gone from $0.14 in 2006 to over $2.50 this year.

Take a look:

Likewise, I think this new solar roof stock will easily hit $2.00 by this time next year . . . and $4.19 within three years.

You can still pick up shares of this solar roof stock for less than $0.65! let me tell you why . .

You Must Erase "Alternative" from Alternative Energy

Let me dispel a myth. "Alternative" - as in alternative energy - isn't "alternative" anymore. It's mainstream.

Over the past several years, FedEx, Staples, the Timberland Co., and corporate behemoth Wal-Mart have begun installing solar panels at their stores and facilities.

Now listen, I don't want you to be disillusioned. These companies aren't installing solar panels because they've suddenly become concerned about global warming.

No, they've installed solar panels because it'll reduce their electric bills by as much as 60% each month.

That's what's driving the boom in solar energy.

But it's a boom that still hasn't caught on with John Q. Investor.

In fact, the ordinary investor doesn't have a clue about the potential in these stocks. Let me explain . . .

It wasn't that long ago that I attended the Solar Power Conference and Expo in Washington, D.C.

It's one of the largest, most influential future and clean energy conferences in America, where policymakers and leaders in the energy industries learn about the latest in solar technologies.

It was there that I had an epiphany.

You see, while attending a press conference with Senator Lamar Alexander (chairman of the subcommittee on energy) and three of the most powerful CEOs in the solar industry, I made an important and profitable discovery - one that has already made some investors a lot of money!

On that Friday afternoon, in a makeshift pressroom in the basement of the Hyatt Regency hotel, only eight journalists were meticulously taking notes.

Eight journalists! That's it!

That's when I realized the average investor is still clueless as to just how lucrative this market is.

But that's OK. Because while these guys sleep on what is already shaping up to be one of the most profitable markets of the 21st century, a group of wise investors are making a fortune in solar.

In fact, the last solar manufacturer I recommended has already delivered gains of more than 245% in the past six months.

But I'm expecting even more from this next one.

Let me show you why, of all the publicly-traded solar companies, this is the one that will soon dominate the BIPV segment of the solar energy market.

$40 to 50 billion in revenue by 2010

When most people think about solar, they envision photovoltaic devices (PV). This is what a typical photovoltaic installation looks like:

Now during the energy crisis of the 1970s, serious interest in solar technology took hold in the U.S. But due to prohibitive prices, large-scale applications were nearly impossible.

However, in 2007, with oil trading at $90 a barrel, interest in solar has returned. Only this time, PV is cost-effective.

In 1976, the average selling price per watt was about $100. Today it's significantly less. Take a look:

With such a drastic reduction in price, coupled with the ever-increasing price of oil, it's no wonder that both residential and industrial consumers are starting to flock towards solar alternatives.

In fact, since 2001, the global photovoltaic market has averaged about 40% annual growth. And this year alone, PV production is expected to reach 1.5 gigawatts, representing approximately $11 billion in revenue. That's double its level in 2003.

By 2010, analysts estimate global PV manufacturing will be sufficient to meet one third of new U.S. electric demand annually - representing $40 to 50 billion in revenue!

There's no doubt the PV business is booming.

Mother Nature is bullish on solar!

Something very important is going to happen this winter that's going to push the renewable energy market to new heights - especially solar!

This winter, Americans will pay nearly twice as much as they paid last year in heating bills.

And mark my words, when the first really nasty cold snap forces consumers (especially business owners) to jack their thermostats past 70, the market is going to warm up to solar, fast!

Here's why . . .

Over the past two years, the solar industry has hit new highs every time Mother Nature reminded us who's boss.

Last summer for example, Arizona had record peak usage and almost maxed out capacity when the state endured record-breaking temperatures of as much as 108 degrees Fahrenheit.

And only a few days after hurricane Katrina ripped New Orleans to shreds (and devoured its electrical grid), solar stocks soared.

Of course, these are two examples where Mother Nature's effect on energy supplies was relatively short-lived.

But a little later this year will be the beginning of at least three to four months of blistering cold weather - and overwhelming heating bills.

It will be a cold and hard wake-up call for most of the country when we finally realize that natural gas and fossil fuels are no longer cheap and abundant. And the reality of renewable energy is going to take hold more strongly like you've never seen before.

And one company that's going to exploit this for everything its worth is featured in my special report, Endless Energy.

In this report I outline why this solar company - with a market cap of just $68 million - stands to profit more than almost any other solar manufacturer on the planet.

Even when matched against industry giants like Sharp, Kyocera and BP Solar!

But you have to act fast.

Energy legislation is scorching hot on the Hill right now.

And the extension of the solar tax credit is right around the corner.

The last solar tax credit extension for just one year pushed solar through the roof.

Just imagine what this next eight-year extension's going to do!

Rest assured, this thing's going to get passed. And really, for no other reason than that every politician in Washington knows this one's a big-time vote-getter.

And that's why I want you to buy this solar energy stock right now, before it goes up any further.

A Solar Roof and Window on Every Home and Business

The fact is, solar roof tiles applied to new buildings provide the opportunity for substantial benefits as a competitive alternative to non-energy producing roof tiles.

Builders and manufacturers of building products already use roofing tiles. So they're especially attracted to the economic benefits of using similar materials that produce energy while continuing to function as an actual roof.

And with the increasing love affair solar is having with new, cost-efficient PV technologies, coupled with the outlook for green building growth, this stock is in a perfect position to take the lead in low-cost BIPV.

Solar Fact #1

The sun produces an estimated 4 trillion watts of electricity every single hour . . . enough power to meet our current energy needs for the next 500,000 years.

Solar Fact #2

"As prices for coal, natural gas and oil have soared, solar power has been getting perhaps its most serious look from investors since President Jimmy Carter pulled on a cardigan and asked Americans to damp their furnaces. The new interest means that the handful of domestic solar stocks has been surging, too."

- The New York Times, September 11th, 2005

Solar Fact #3

"Few power-generation technologies have as little impact on the environment as photovoltaics. As it quietly generates electricity from light, PV produces no air pollution or hazardous waste. It doesn't require liquid or gaseous fuels to be transported or combusted. And because its energy source - sunlight - is free and abundant, PV systems can guarantee access to electric power."

- U.S. Department of Energy

THE COLLAPSE OF THE BRITISH POUND

Wed, 16 Jan 2008 02:53:29 EST

THE COLLAPSE OF THE BRITISH POUND - by Ian

THE COLLAPSE OF THE BRITISH POUND

Two months ago, headlines around the world were trumpeting the "The Death of the Dollar." Since then, the Greenback has stabilized and it's the seemingly invincible British currency, the Pound Sterling that has undergone a remarkable collapse. With global equity markets offering scarce opportunities in the face of continuing declines, shorting the British currency has become one of 2008's favorite trades virtually overnight. Goldman Sachs highlighted betting against the Pound Sterling as one of its top 10 trades for 2008. A Lehman Brothers report gave no fewer than seven reasons to sell Sterling during the next six months. And Citigroup's foreign-exchange team fell into Reverend Jesse Jackson-style sloganeering, calling the Pound Sterling the currency "everyone loves to hate for 2008."

During the last six weeks, the Pound Sterling has taken over the dollar's role as the whipping boy of the currency markets. Since touching an eye-watering $2.11 in November, the British Pound Sterling has dropped more than 7% to fall through the $1.96 level this past week. The Pound's sharp drop is rekindling memories of September 17, 1992, when George Soros "broke the Bank of England" by betting that the United Kingdom would devalue the Pound. He made $1 billion in the process. But in what must be the most shameful assault on British pride, thanks to sterling's more than 10% fall against the euro in the past six months, the United Kingdom's economy in 2008 now is 4% smaller than that of France. Sterling's rapid fall to 11-year lows against European currencies, combined with China's rise, also has pushed Britain down to #6 in the ranking of the largest economy in the world -- falling from #4 only two years ago.

The negative news coming from the United Kingdom during the past few weeks has been relentless. The woes of the British economy suddenly look similar to those facing the United States: a deflating housing market, a soaring current account deficit and weakening consumer spending. As capital markets suffer the credit-crunch blues, consensus is that economic growth is likely to slow sharply and that short-term interest rates are set to fall. In fact, the United Kingdom's position is by almost all measures worse than that of the United States. The run-up in U.K. house prices was much bigger and both valuations and household indebtedness are still more extreme. At the end of 2006, household mortgage debt was 126% of GDP, against a mere 104% in the United States. Flush with free money, Britons have helped the U.K. economy outperform its European peers during the past 10 years, thanks to a cocktail of easy credit and soaring house prices. That has changed overnight. U.K. retailers have reported their worst Christmas season in three years, and housing prices have fallen 0.8% on average. And with at least 1.4 million low-rate mortgages to be reset higher this year, Britain's housing troubles are likely to worsen.

The United Kingdom's current account deficit, at 5.7% of GDP in the third quarter of 2007, also was bigger than that of the United States. Indeed, thanks to a statistical quirk, some experts estimate that the United Kingdom's true current account deficit actually is closer to 7% of GDP. Economic growth is likely to decelerate from an annual rate of more than 3% in the third quarter of 2007 to a rate somewhat below 2% by the end of 2008. And even this optimistic scenario assumes that the Bank of England lowers its key rate by a full percentage point during the course of 2008.

With the benefit of 20/20 hindsight, the British Pound Sterling's drop was inevitable. It was (and probably still is) the most overvalued currency in the world. As any of you who have traveled to London in the past few years can confirm, $1.96 buys far more in the United States than £1 does in the United Kingdom. Morgan Stanley estimates that in purchasing parity terms, the British Pound Sterling should trade at around $1.64 to the dollar -- just about the average dollar exchange rate since 1985. Bank of New York Mellon notes that Sterling is still almost 18% above long-term averages compared with the dollar. French investment bank BNP Paribas points out that British Pound Sterling today still is more overvalued than it was on that fateful day in September 1992 when George Soros made his $1 billion bet.

Currency traders have a Rule of Thumb: Once the bottom drops out of a currency, it tends to overshoot, both on the upside and the downside. During the last few weeks, the British Pound Sterling has fallen like a warm knife through butter. Not even the Bank of England's decision to keep U.K. interest rates on hold at 5.5% last week did much to steady its free fall. It's taken as gospel that Britain's central bank will be forced to lower its key interest rate to spur growth as soon as next month.

Sterling's fall will complicate the life of the Bank of England's monetary policy committee. The 4.5% rise in the euro on a trade-weighted basis since last June is expected to knock about 0.4 or 0.5 percentage points off the United Kingdom's growth rate. At the same time, inflation will soar to more than 2.7% by the autumn, according to Goldman Sachs. That all adds up to a mild case of stagflation, which will force the central bank to be more cautious about cutting interest rates.

But a falling currency is not all bad news. Imported goods will become more expensive, yes. But a weaker pound could be a boom for British exporters, providing much needed stimulus to the U.K. economy. But here's what is most worrisome: Investment banks and economists are worse than flipping a coin in forecasting exchange-rate movements. With so many experts now suddenly saying the same thing, it's precisely the level of consensus surrounding the "short Sterling" trade that makes it suspect. But the Pound Sterling's sharp decline does prove an iron rule of economics that usually only makes it into physics textbooks: "What goes up, must come down."