Monday, Mar 17, 2008
Why??????????????
Bloomberg: Pound Falls Most in Six Years Against Euro, Reaches Record Low
Britain's currency also dropped versus the dollar and fell to a three-year low against the yen after the Fed cut the rate a quarter-percentage point to 3.25 percent in its first weekend emergency action since 1979
...........WHY???????????????????
Posted by bystander @ 09:08 AM (1056 views) Add Comment
17 Comments
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1. Beans On Toast said...
U.K is heading towards a deep depression - who in their right minds is going to want to hold GBP
2. alan said...
A Rabobank spokesman said "Guilty by association".
Euro was trading around 79p earlier. Now dropped to (just over) 78p.
3. Surfgatinho said...
Why? Well, either they've cottoned on to the true state of UK Plc, or they are expecting very rosy inflation figures this week and a cut in IRs next month
4. richc said...
Why??? Because the UK financial services-based economy is toast.
5. Wadisgod said...
Could this be that the UK will now be expected to slash interest rates like the US, while the mad men in charge of the ECB will fiddle while Rome burns!!!
6. japanese uncle said...
The world now sees the UK even more precarious than the US, justifiably because of the sheer intensity of the now collapsing housing/credit bubble. As I mentioned earlier, pound as the most 'geared' currency of all, will devalue further as global investors, not least Kimono carry traders are quickly withdrawing their money from all vehicles in the UK market, shares, bonds and the 'mighty Great British' properties including REIT, etc. This is simply inevitable as the whole nation has been used as a ginormous casino on a global scale for the past 10 years. After all voters of this nation are responsible for the mess , as they stopped thinking on their own, dancing on the skyrocketing nominal value of their houses which after all would not mean a thing to them, but for also skyrocketing council tax bill, and that if they are lucky (and prudent) enough not to have played fake Midas to 'release value' from your houses.
allowing Crash G & Silky Teflon to transform once a fine nation into a bunch of debt junkies
7. Matt_the_hat said...
The difference between UK and the USA is that people underperform in the US and their out of a job by the afternoon. A new guy comes in and spills the beans about how bad it is to clear the decks. In the UK nobody can be sacked so this sorry state goes on until somebody resigns, like thats going to happen with COE slaries as they are at the mo.
8. cornishman said...
JU "After all voters of this nation are responsible for the mess , as they stopped thinking "
people not thinking for themselves - that is the problem. But did they ever?
It would seem that most people want to be told what to think - witness the chancellor's speech last week.
9. Ted said...
Here you go:
1) A large amount of sterling mortgages were funded through a euro-pound carry trade. Banks were borrowing Euros and buying pounds with the euros to lend to consumers. As mortgage lending has dried up this component of demand for sterling on the FX markets has reduced. This carry trade was partly how the UK's trade deficit was funded. In other words the housing boom directly strengthened the pound.
2) Another reason is that the UK earned a net profit from overseas assets as historically Britain has been a large overseas investor (second only to the US in absolute terms over the last couple of decades - more than Japan, surprisingly). This is now no longer the case as many large British businesses are foreign owned and profits remitted abroad are now greater than those coming in to the economy.
3) Another huge component of demand for sterling in recent years was M&A activity. For example, Santander bought Abbey National for 10 billion quid. Santander effectively paid for this in Euros, but had to pay the shareholders of Abbey in pounds, so that deal amounted to a 10 billion pounds worth of demand for £s in Euros. Over the last few years (relating to point 2) many large British concerns have been bought by foreign businesses. This activity was greater than the reverse case of UK companies acquiring assets a broad, so demand for sterling was high on the FX markets as these deals went through. M&A activity has reduced massively since last summer, killing off this component of sterling demand.
So in summary, the reduction in the value of the pound is a consequence of the UKs large trade deficit being exposed now that some less visible components of the demand for sterling have weakened. According to an interview I read on FT.com (sorry can't find it now) with an FX trader, there is a significant chance that the pound will reach parity with the euro in the next two years!
10. harold said...
Brown is a NWO globalist - he wants the UK in the Euro; currency destruction is his aim, and then 'salvation' will be in Europe.
11. japanese uncle said...
Otherwise could he have become the PM first of all?
12. Mark said...
i guess a drop in interest rates will at least prevent a housing crash, and all the uk debt will be eroded over time....maybe a good time to buy property? its a buyers market based on sentiment and foreseable cheaper interest rates. looks good to me? any thoughts?
13. happyrenterz said...
Why? Debt, debt, debt.
NWO = the more debt you have the more sh*gged you are. Doesn't matter if you are an individual, company, bank or country.
14. Mark said...
happy renterz,
an individuals debt is not so bad ie mortgage, the interest payments will be cheaper over the next few years, interest rates will be down to about 4% and even lower if the situation progresses..
15. symo said...
Surely the world hasn't seen through the Blair/Brown Knowledge economy is greater than industry and manufacturing lies have they? Keep spinning Gordon, I'm sure that Tony is praying for you at Yale.
16. cornishman said...
remember Blairs farewell speech. His last words to the country were "Good luck".
17. dbnazz1 said...
Cornishman.........Couldn't agree more. the ability to think for one-self is something sadly in very very short supply. That is also part of the growing economic mess.