Sunday, Jan 20, 2008
The currency theme will dominate UK economic trends in 2008
davidsmith: Don’t bank on euro as the pound slides
Sure enough the Pound bubble will be a major driver in influencing political and monetary decision in 2008. Of course davidsmith got it totally wrong, but -as usual - reading this clown helps understand what will NOT happen. However, in a rare moment of lucidity he said something remotely sensible: "A change in interest-rate expectations and tough talk from the ECB does not add up to a 14% fall for sterling against the euro over the past year, equivalent to Harold Wilson’s “pound in your pocket” devaluation of 1967. So something else has been happening, and appears to be directly linked to the credit crisis" My, my, look at the brain on davidsmith!
Posted by confused76 @ 11:15 AM (976 views) Add Comment
8 Comments
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1. Icarus said...
"private-sector housing is worth £4 trillion, 3.4 times mortgage debt". But the £4 tr'n is on paper only (he writes that owner-occupiers gain, but this sum cannot possibly be realised), while the mortgage debt is real and is a real problem.
2. paul said...
"There is a risk that sterling weakness, if maintained, might stand in the way of the rate cuts that the economy needs."
Oh dear. Very very basic economics textbook stuff. I stopped reading here, because simply taking it as given that cheap credit is what the economy needs and what will get us out of this mess is nonsense.
As per usual for the twit.
3. handle_it said...
He gets paid to write this stuff ? ;0)
4. bystander said...
So after reading Mr Smiths inscisive piece - where does that leave the pound? I think anyone with any brain has begun to wonder exactly why the pound has dropped 14%, with only one rate cut, so is this political machinations or overly negative FX traders making the most of anti-pound feelings to charge their bonus accounts. The pound was deliberately devalued by Wilson, but considering the fact that back then we had a manufacturing core and now the only thing we manufacture, as has been stated before on this site is - bands, celebrity and debt - we will end up creating run away inflation. Interest rates cannot go down to help the debt ridden populace as that will cause inflation and even more debt, just to get by, and they cannot go up as this will cause a multitude of bankruptcies and home defaults. Rates go down no-one will want to save in the UK as savings rates will instantly drop, although mortgage rates will not, unless on a tracker. Rock and Hard place. I do not see Euro-zone is that much better, with inflation and slowing economies throughout the zone. The ECB is also in a difficult place, but Trichet is more vocal and sensible with his rhetoric than Mervyn Smith. ~Mervyn Smith and Ben Bernancke have played the we will drop rates if seen necessary, while Trichet has said they will raise rates if necessary. Words create speculation, speculation has driven the dollar and pound down and the euro up. I have no answers, but maybe someone out there has got a better idea of what will happen, long term, than Mr David Smith.
5. japanese uncle said...
Merd'ing King and Ben (which sounds like 便 meaning sh-t in Japanese) Barnanke, both gentlemen smell very badly.
Someone behind them may want to see the flow of money from USD/GBP to EUR, as he has just completed shorting the currencies in the market.
hence 'lip service' for IR cutting which might not be realized.
6. tick tock said...
the £ rise against the $ has boosted US proffits on stirling priced equity investments by a huge amount over the last few years.
Which economy the 'locusts' choose to decend upon next is a matter of opinion only for non participants, but I seem to remember comments from German politicians a while back regarding the Anglo- Saxon Hedge funds arrival there.
7. paul said...
I'm astonished that Mervyn is not paying a little more attention to the mistakes they're making in the US of solving the end of cheap money with ... more cheap money.
便場ベン。 へへ
8. su said...
bàillibh?