Tuesday, Jan 20, 2009
Inflation shouldn't be a problem; should it?
Telegraph: Sterling slumps to eight-year low after second bank bail-out
The pound, which was trading above the $2 mark less than 12 months ago, slumped to below the $1.40 mark for the first time since June 2001 in morning trading in London after registering a fall of more than three cents yesterday.
Currency traders have been aggressively selling the pound as the depth of the recession facing the UK becomes clearer. Interest rates are now at 2pc and most analysts expect the Bank of England to continue cutting close to zero in an effort to get money moving around the economy again.
Posted by flintster1994 @ 10:09 AM (1543 views) Add Comment
20 Comments
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1. paul said...
Interest rates are now at 2pc
Err, interest rates are 1.5%.
2. icarus said...
London helps Wall Street to financialise the world economy (massive funds sucked into speculative trades) and when the whole thing explodes the dollar is protected by its reserve currency status and the £ is on its own.
3. icarus said...
....and Blair is with JP Morgan.
4. str 2007 said...
Maybe we should join the dollar instead of the Euro then !
5. seanb303 said...
str
maybe we should sell northsea oil in stirling instead of dollars
6. techieman said...
str 2007 - off topic - re your remark this am to mine. "Do you just save them in a HPC folder in Favorites with a brief description of the conversation or have you devised a better method for recalling interesting links and getting back to ones you posted on earlier without forgetting where you put the posts (on a busy blogging day) ?" I just remember the gist of most of the conversations and then do a search using the new search above next to housepricecrash.co.uk. I always thought that this site should allow you to look at all posts by a specific member by date etc. Re the "recovery" so far - i thought about buying some RBS @ 11p yesterday (seemed to me like there would be some speculation that they wouldnt be fully nationalised at some stage) but then i had second thoughts! Actually punted a small value call this am before the open just before i typed that stuff - to keep interested.
Re this $ move, looks to me like capitulation in a 5th wave down. Am more interested in £/Euro, looks like the retracement into the new year was to shake out the parity boyz at that time. Am very interested to see what happens if/when we get near there. Am expecting double top or a bit higher (parity) and then a big move for the pound v the Euro.
7. techieman said...
seanb303 - if the pound is worth less we get more pounds if we sell in $. Am i missing your point?
8. stillthinking said...
I am not a socialist by nature, but has it occurred to anybody that we are moving to a situation where the "wealthy", are sitting on vast profits from a system which is actually bankrupt.... and the only reason they will continue to be wealthy in the future is that taxpayer money, absolutely nothing to do with them, will be diverted to their spending accounts.
So in the future some people will be "taxpayer wealthy" and some people will be "taxpayer poor", just like the distinction between public/private pensions. Absolutely none of which will have any connection to hard graft. Or to put it another way, in the future tax revenue will be redirected to the rich.
9. Crunchy said...
8. stillthinking said
Or to put it another way, in the future tax revenue will be redirected to the rich.
crunchy- Or to put it another way, tax revenue may always be redirected to the rich.
This could be the start of a long term trend.
10. inbreda said...
and they don't pay tax because it's all been offshored to dodgey tax havens.
11. seanb303 said...
techi
i don't mean sell at one to one, i mean taking into account exange rates
i would stop any futher sterling falls and bring stability
despite rate cuts
12. techieman said...
Sean - i dont want to labour this but if you have £1 = $2 then $1 = £.5 so if you get $50 per barrel you get £25. If your £ is only worth $1 then you get £50. So... nope you have lost me unless i am being dim!
13. mrmickey said...
It does appear that the banking system has acted as a funnel to channel wealth from the many to the few and the government is desperately trying to keep this system going. This process appears to have been accelerating over the last 25 years and is now almost complete game over, we in the UK appear the first to taste the brave new world.
14. seanb303 said...
techi
what i mean if we start selling 2million barrels a day in pounds instead of dollars the value of sterling increases
the value of the dollar against stirling decreases, look at what happened when iran switched from dollars to euros
15. 51ck-6-51x said...
The current fall in Sterling is worse than the ERM one in 92:
16. Bennej said...
Stillthinking. This very issue has started to occur to me, why should I pay my taxes to prop up wealthy land owners and people with very profitable buy to let businesses? It is just not fair.
17. Mr Cobblepot said...
Last week when the pound was at around $1.49, I was watching Bloomberg TV covering an interview with the CEO of Ben Sherman. He stated that because of sterlings decline his company would see an increase in material/production costs of around 20% in the middle of the year, and that he doubted the company could absorb any more of the increased costs. So if thats how its going to be for the vast majority of manufacturers then inflation will take off at a massively accelerated rate.
18. fjcruiser said...
Well when Vince Cable actually said loudly on the news yesterday that RBS balance sheet was bigger than the UK economy, no one batted an eyelid. Remember the Icelandic banks ?Only a matter of time before the IMF will be called to the rescue. Thanks GB.
19. str 2007 said...
techieman
''Re this $ move, looks to me like capitulation in a 5th wave down. Am more interested in £/Euro, looks like the retracement into the new year was to shake out the parity boyz at that time. Am very interested to see what happens if/when we get near there. Am expecting double top or a bit higher (parity) and then a big move for the pound v the Euro.''
Do you mean the Euro weakening against the pound or the pound getting alot weaker still?
20. techieman said...
str2007 - i said at the end of last year not to expect parity, that i was nervous and sold some more Euros (to hedge against a cash Euro position i have). I am now 60% hedged. I said that i would need to see more before hedging the other 40% or going all out short.
So now we have shaken out those boys - see http://www.actionforex.com/technical-analysis/daily-forex-technicals/chart-of-the-day:-eur%10gbp-2009011374897/. I do the Eur v GBP not the other way. Now when we hit the trendline shown in the chart the Eur has subsequently increased. What i am saying is that i think there is one more up move (we are having it now) so for now the £ gets weaker but either at, near or above the top (parity) we will have a (major) reversal. Now as ive said i may have to have a coup[le of bites at that cherry.