Sunday, Jan 18, 2009
Gulp
Tititudorancea: Iceland Imposes Foreign Exchange Controls
Iceland has war time capital controls in place and the ECB no longer publishes the exchange rate. Which seems to have gone from 60 to 290 against the dollar. Obviously this exchange rate is meaningless with capital restrictions. However, if you assume (for no reason just made up) that the external exposure of the UK relative to the size of the domestic economy is comparable, then potentially our true rate of exchange against the dollar would be 1/6th of the £1:$2 peak i.e. worst case £1 : $0.33 . If we are stuffed in the same way as Iceland. But in that case why is Sterling holding up so well? People are defaulting right left and centre, the government is borrowing, there is talk of money printing, but still reasonably OK?!?
Posted by stillthinking @ 01:15 PM (673 views) Add Comment
6 Comments
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1. stillthinking said...
Regard this bit,
"and require domestic parties to submit all foreign currency they acquire, either from the sale of goods and services or in another manner, to a domestic financial institution."
In other words, the population's foreign currency is being confiscated in return for worthless kroners, very similar to the gold confiscation of the US, gold being a kind of foreign currency.
2. greytornado said...
Here we go again - just like the Harold Wilson Labour Government in the 1960's. You weren't allowed to own more than 4 gold coins and you couldn't take more than 50 quid out of the country.I remember it well, I had just started work. In actual fact, it kickstarted the whole foreign holiday scene for the general public, because ordinary workers hadn't realised that it was possible to have a foreign holiday on just £50, prior to Wilson. The whole Labour experiment, apart from a brief interlude with Edward Heath, (A pompous liar who took us into Europe on an outright lie), ended up with Callaghan going to the IMF to bail out the Country. That won't happen agaiin, because Gordon is running up debts that will well exceed the ability of the IMF to cover them. It seems to me as a casual observer, that Labour Governments always wreck the economy, despite their best intentions. This current lot have exceeded all previous attempts. As the song goes, 'Gordon is a moron'.
3. stillthinking said...
gt, there was also -another- -earlier- convertibility crisis under Labour in 1947 because Keynes, masterful economist that he was, fixed the post-war recovery exchange rate against the dollar of 4:1 , too too high leading to Labour getting dumped in 1951.
4. tyrellcorporation said...
C'mon brains on this site, where do you stick your money now? If Labour try this trick surely that's game over for anyone with savings as we'll be locked in to a crumbling currency.
5. mountain goat said...
The bailout of UK financial industry is just beginning. Watch out for tomorrows next installment: (Bloomberg) -- U.K. Prime Minister Gordon Brown said the government will announce a package of measures to encourage bank lending tomorrow. . The good news is that with GB trying to avoid UK financial meltdown and keeping our zombie banks afloat there wont be funds to bailout struggling homeowners. House prices will drop to levels even we can hardly imagine. There will be lots of hollow schemes to help homeowners but repos will increase relentlessly. When panic selling sets in the bubble will be followed by an equally huge trough of under-valued housing (prices below the long-term average of hp to incomes) . A one in 5 generation chance of bagging a bargain home. Just be patient and preserve what wealth you have. How to do this is the only thing worth worrying about, let the clowns have their party.
6. troy said...
we don't want banks lending, give ~~~us~~~ the money
what am I saying? it's our money anyway!