Never mind that he contradicted the PM or that he said a rude word. That pales into insignificance.

What shocks me about Alistair Darling’s rant to the Guardian on Saturday — where he said the UK economy is in its worst state for 60 years — is that this man does not grasp how the economy works.

He doesn’t get it. It’s about confidence.

What Darling has done is confirm fears. Consumers, investors and businesses that were not previously worried, now are. They have been told from the highest office in the land that it’s time to cut back.

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That goes beyond breaking ranks from the Party and could do material damage to the economy.

We expected this. We have prepared for the downturn and this outburst makes our hedge more important now than ever before.

Our latest recommendation is a pragmatic response to a desperate situation.

The Age of Turbulence

On a recent trip to Singapore I took with me Alan Greenspan’s book. ‘The Age of Turbulence’ is Greenspan’s account of his tenure as Chairman of the US Federal Reserve.

In its 531 pages, Mr Greenspan frequently notes the importance of confidence. Confidence, even weak confidence, keeps the wheels of the economy turning.

Speaking on 9/11:

"What worried me was the fear such an attack would create.

"If people withdraw from everyday economic life — if investors dump their stocks, or businesspeople back away from trades, or citizens stay home — there’s a snowball effect. It’s the psychology that leads to panic and recessions."

Read and re-read, Mr Darling.

Despite the backtracking, his rant was not about being frank with the people. It was about him wiping his hands of a tough situation. It was self-indulgent and reckless.

There has never been a more important time to hedge and the Fleet Street Letter has prepared accordingly...

The solution

As well as making people more nervous about the economy, Darling’s outburst will further undermine confidence in sterling too. So we recommend investing in asset classes that gain when sterling falls.

The foreign exchange markets are volatile — and too leveraged for the long-term investors — but there is an alternative.

The Fleet Street Letter is about to publish a report that tells investors exactly how to prepare. Subscribe today and you will be one of the first to read it.

Not only that, you’ll receive our investment advice for a whole three months trial subscription without committing to pay a penny (and even if you cancel, you’ll still get to keep the report we’ll send you).

Plus, accept this offer now and you’ll also qualify for a 50% discount for the first year.

Find out more here.

Best wishes,

Theo Casey
Investment Director
The Fleet Street Letter

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P.S. If you enjoyed this article then we encourage you to sign up for The Fleet Street Letter. Get contrarian, cutting-edge analysis for sensible, long-term investments that secure you high growth and healthy dividends.

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