Wednesday, December 10, 2008
Oh Great!!!!
Pound sinks to record low as euro nears parity
"One London-based trader told Reuters this morning that some traders expected the euro to rise to 93p against the pound. “Technically, sterling is looking very heavy and the product of that is euro-sterling going higher,” the trader said. " When Sterling reaches parity with the euro does anyone think English companies will be able to match the pay of their European counterparts.......no, didn't think so.....deflation becomes hyperinflation very soon, cost of living goes through the roof, standard of living goes through the floor.
Posted by bystander @ 10:38 AM (2688 views)
13 thoughts on “Oh Great!!!!”
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Quad says:
Brown has destroyed this country
He has allowed a whole generation to run up massive personal debts.
Govornment has run up a huge debt, and continuing to do so.
he is now doing nothing to stop the pound devaluing.
I am so angry.
i may loose my job as a direct result of this devaluation, as an importer, we are suffering a lot.
stillthinking says:
If the UK population can’t service their debt, the reason why (unemployment, high taxation, interest rates..) is kind of irrelevant. What is more interesting are the consequences, and as has been pointed out many times before, this can only be either default through bank failure, or default through inflation, both of which destroy savers. Currently these two seem to be of fairly equal standing, except that the default would be a sovereign default similar to Argentina/Russia rather than confined to the banking sector.
The inflationary plans continue apace.
The reason why New Labour should be vilified, and the average UK voter is such a nutcase for thinking Brown’s handing of events has been “good”, is that they could have also attempted to let people successfully service the debt ! Wow ! What a crazy idea…. This would be accomplished by slashing taxes and public spending to less than 1997 levels, hence their culpability, they won’t do this because their power base is dependant on public spending,
So we are all going to hang in an attempt, which won’t work, to save New Labour.
rm96696 says:
In terms of any serious currency the fall in house prices is much greater than the figures you find in the housepricecrash table (30-40%).
japanese uncle says:
80-90% in London, 70-80% in Edinburgh, 60-70% elsewhere is a foregone HPC event. Be in no doubt.
51ck-6-51x says:
bystander:
Doesn’t a fall in Sterling imply selling in the Euro zone will yield more? That would give such companies more Sterling with which to pay their workers – the downside being that the workers will want more because their costs are effectively in Euros, since the UK is a net importer of the consumer basket from Europe. A company paying fixed costs not including labour in sterling will be making 34% more in Sterling at parity than now, whereas a worker buying a 100% Euro weighted basket would be paying only 15% more. Is my logic incorrect?
japanese uncle:
“In terms of any serious currency the fall in house prices is much greater than the figures you find in the housepricecrash table (30-40%).”
Isn’t this going to attract investors from countries with ‘serious’ currencies to our property market at some point?
matt_the_hat says:
Isn’t this going to attract investors from countries with ‘serious’ currencies to our property market at some point? – are people rushing to buy property in Iceland
last_days_of_disco says:
Once the security blanket to which we have been clinging so tenaciously is finally snatched away from us, we will wake up to realize that despite all that has happened and all our folly, we are still alive, except now we are no longer deceived. A very painful learning experience indeed.
51ck-6-51x says:
matt_the_hat:
I have no idea – I have not researched if property in Iceland is in demand by foreign investors; I don’t know what restrictions to foreign investment exist in that market; I don’t know what the laws regarding tenancy are like in Iceland; etc, etc… You may enlighten me if you wish.
crash bandicoot says:
We have been paying over the odds for things for years. Our cars were some of the most expensive in europe, our clothes have been overpriced, gap even refused to sell at the euro price on the label in the UK. And Apple even tried to make the UK itunes site more expensive than the rest of europe. Some of this overhead has gone into supporting overblown retail property prices. The rest has gone into supporting non-businesses and chancers. I don’t think that the pound = the euro will be that scary, if someone outside the UK relies on selling into the UK then they’ll have to price accordingly. It’s supply and demand again.
uncle tom says:
There is a ripple effect here, caused by the slightly different time lines of the downturn in the US, UK and eurozone.
First the dollar sank, then sterling joined it – the euro will be next.
In fact there is good reason to suspect that the euro will devalue dramatically, as that eventuality would appear to be in the best interests of France, and the Italians and Germans might not put up much of a fight.
The ECB might sense that its own survival depended on great largesse, funded by a vast issuance of central bank bonds. This would force eurozone interest rates and inflation toward painful heights, with widespread private debt defaults, especially in the ‘club med’ countries.
But eurozone exports – currently crippled by the euro’s relative value – would become competitive again.
However, the Germans have a deep seated hatred of inflation (which they might judge to be the better of the evils..) and the Italians might be propelled into sovereign debt default (which they might judge to be ultimately inevitable, and less humiliating if it can be blamed on someone else..)
Ultimately though, there are likely to be some serious rows within the eurozone, with national interests taking precedence over the common good. It follows that the currency’s survival is far from assured.
wealthyvagrant says:
From my understanding much of the UK’s foreign debt is payable in currencies other than £, so as the £ falls it becomes harder to pay back.
Crashwatcher says:
Quad – so what you’r saying is that what we needed over the last 7 years is a government that tightly regulated the bankers to make sure they were looking after peoples money properly and monitoring everybodys debt to make sure they weren’t personaly taking on excessive debt.
Perhaps what we need is the Conservative party who know how to run a Nanny state properly.
Buyinginafewyears says:
I overheard a colleague talking about the fall of the pound today, obviously concerned. He’s originally from Europe but now working in the UK. Putting myself in his shoes, i’d ultimately want to convert my wages back to euros so he’s effectively taken a pay cut in the order of 30% over the last few month. Not only that but 30% of what he saved in sterling has just gone up in smoke as well.
How long before highly skilled workers start quitting the UK?