“What I’m confident about is that we will get through it,” said Alistair Darling yesterday about the current economic crisis. Well, of course, we’ll get through it. What I want to know is will we get through it with a currency?

It is a government’s duty to provide its people with opportunity. So we must thank Alistair Darling for giving us with his wise words on Saturday what has to be the easiest money-making opportunity of the year: to sell the pound as soon as the markets opened on Monday. Not since Northern Rock a year earlier has such an obvious trade presented itself.

I said in MoneyWeek’s New Year predictions for 2008 that I wouldn’t rule out a sterling crisis later in the year. That moment is looking more and more likely. If it is the government’s intention to devalue sterling as quickly as possible, it’s hard to see how they could improve on the job they’re doing.

Then again they may just be incompetent.

The story behind the pound’s devaluation

Let’s start with some charts of sterling. Two pictures that each tell a thousand ugly words. The pound against the euro:

And against the dollar:

The downturn accelerated in October-November 2007, shortly after Gordon Brown announced that he would not be holding a November election. The horrid realisation must have dawned on forex traders that we had three more years of the bloke and they began hitting the sell button. But it was an orderly decline. ‘He can’t last three years, surely?’ they thought.

Then as August began, the grim reality hit home that not only was he coming back from his holiday, but that he had no intention of resigning, despite dire Scottish election results. We had what is known as a mad rush for the exit, punctuated by a brief moment of respite as somebody won another gold medal, then downwards into the abyss.

Just as you thought you could take a breather last Saturday - perhaps watch a bit of footy or take a stroll by the river - Darling has his Road-To-Damascus-Meets-Trisha moment and onwards and downwards went the pound.

Anything that you, me or my Aunt Joan own which is denominated in sterling has lost 15% of its value in a year in currency alone.

Devaluing sterling effectively devalues the Government’s debt, so you might think for a second it’s deliberate. But you know deep down it isn’t. It’s that old Labour favourite: incompetence.

The Government can’t hope to save the housing market

Do they honestly think they can save the housing market? With this new £175k stamp duty threshold, I feel sorry for anyone who is struggling to sell a property currently valued at £250k. Before you can say party political broadcast, they’re going to be getting a whole load of offers at £175k, plus some cash for curtains and white goods.

Interest-free loans to help low earners to get on the housing ladder! If they’re low earners, why are you trying to get them into debt? That is highly irresponsible, is it not? How will they pay that debt back? They might go on to become high earners, yes, but then they might not - and with this lot in charge of the economy the latter is more likely – and what then? This is imprudent lending – the very cause of the problem.

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Source: How House Prices Could Fall by 75% from Here, in Gold Terms