London, England

The flight from Vienna to London Heathrow was barely half full. And the usual hustle and bustle so typical of Heathrow was mysteriously absent yesterday afternoon when I arrived.

Indeed, London is not beating to the same rhythm it was just three years ago.

For all intents and purposes, the United Kingdom is basically bust. Its banking system is desperate for capital and has been heavily reliant on The Bank of England for support. This applies mainly to RBS and Lloyd's – both insolvent. The credit crisis almost destroyed the country's financial system by early October 2008; almost 13 months later, this country is printing gobs of money and remains the single biggest purchaser of gilts or British government bonds.

In 2008, the United Kingdom spent more than its entire gross domestic product or more than $400 billion dollars recapitalizing the financial sector.

Britain is in the midst of its most severe economic recession since the early 1970s. Some would argue the worst contraction since WW II.

By the early 1970s, things were so bad in England that the country imposed foreign exchange controls; individuals could not take more than £25 pounds out of the country. Colin Bowen, managing director of the Isle of Man Assurance, reminds investors in his presentations at The Sovereign Society of this incredible statistic; it's also a warning to other nations that exchange controls can and will happen elsewhere as a result of challenging economic conditions. I think several industrialized countries are headed down this path now, including the United States, Greece, Italy, Ireland and possibly others in Central Europe.

By 1977, the International Monetary Fund (IMF) was summoned by the United Kingdom and Italy. Both countries were suffering heavily largely because of the "oil shock" that decade and had terribly mismanaged their economies. They weren't alone. Many other economies were in shambles.

Compared to 35 years ago, the world is a different place. The mature economies, viewed as safe-havens just 11 years ago amid the Asian financial crisis are now on life-support courtesy of government bailouts while Asia, namely China, is the envy of the world with its massive surpluses. Western nations are now debtor countries and, increasingly, Asian countries are becoming creditor nations. And the IMF is busier than ever lending hundreds of billions of dollars to feeble economies.

The United Kingdom will recover. Britain is still home to the second-largest financial center in the world and though it will lose that status to Beijing over the next decade and beyond, so will New York. American financial power since 2008 isn't even based in New York or what's left of Wall Street; it resides in Washington.

We are at the "beginning of the end" after 300 years of Anglo-Saxon financial domination and nowhere is this reality more apparent than in London in late 2009. The city's big buzz has been cooled by the financial crisis. You feel a chill.

Finally, as an investor, there's absolutely nothing I'd buy in the United Kingdom after a huge rally for sterling. Not real estate, not stocks and certainly not gilts. I would, however, short the pound.

Genesis, the rock group, couldn't have said it better when they released their    1973 seminal album – Selling England by the Pound. Perhaps today it would be more appropriately entitled "Selling England Short by the Pound."