Tuesday, Mar 02, 2010
Taking a dump on savers' heads after trashing their wealth
BusinessWeek: Bank of England Plans to Sell 3-Year Bonds in Dollars
I didn't think it was even accepted that this could be done. How can an issuing central bank of a currency abandon the currency due to lack of confidence? Isn't that a bit like Zimbabwe dropping the Zim Dollar? Shouldn't Mervyn King resign first or something?
Posted by paul @ 07:57 PM (3057 views) Add Comment
42 Comments
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1. icarus said...
Amount not specified, but a similar issue last year was for $2bn. Hardly Mugabe territory.
2. paul said...
Between now and then, the pound has dropped over 10% against the dollar. Well into Mugabe territory on a devaluation basis.
3. bluebeach said...
Bank of ingerland independence............ my ar$e.............. hang him high with that Tw@t Gordo
4. fallingbuzzard said...
Call me when the Debt Management Office is issuing dollar bonds.
5. Pickle said...
Well, If you are BOE and you have confidence in the pound, you think right now its undervalued. So borrow in dollars and pay the debt back in much cheaper dollars a few years from now.
I would say you have interpreted this completely the wrong way around. Not for the first time, I might add.
6. vacuouspolitician said...
Paul - did you remove your savings as you said you were going to do a few months ago? ...and where did you put them?
Not trying to be clever with you btw - just inquisitive.
7. Doormouse said...
Some were asking yesterday why Sterling had tanked. Wouldn't the treasury's dollar exposure on this debt issue need to be hedged which would put downward pressure on GBP. Imagine what will happen to GBP now this has actually been announced to the market.
8. mark wadsworth said...
Oo-er, this is not good. Of course £2 billion is small change, but this is the beginning of a slippery slope.
9. tyrellcorporation said...
Gulp! Ozzy Dollar 1.65 = £1. We're fast becoming a basket case!
10. mountain goat said...
This is good news surely? The markets fear BoE will monetise UK debt, so issue bonds in $. They are bonds, they need paying back when they mature. If the BoE plans to trash GBP by monetising our debts then paying these back will be very difficult. In fact as a saver I am more comfortable with them issuing bonds in $ than GBP. If all bonds are issued in GBP then the BoE is free to trash GBP because they only need to be paid back in GBP. So issuing bonds in $ forces fiscal responsibility on the UK.
11. paul said...
I did remove my savings, vp.
Trouble is I have nowhere to put them. Any suggestions for a good rate on a notice access savings account would be greatly appreciated.
12. waitingtobuy said...
Paul---have a look at Marks&spencers--they do 4% on a 3year fix,but you can take your dosh out at any time,and they will only charge a fixed rate for early withdrawal --£100--ok if you put in large amounts.
13. vacuouspolitician said...
Well done Paul. And its a brave thing to do. If more people did this it would make Penfold and his cronies think a little harder - at the moment they are just complacent because 'we' are all sitting around twiddling our thumbs while waiting for the pound to become completely worthless. The savers in this country need to take this direct action like you...
Have you got Vantage accounts? Not savings accounts - but they still pay 4% AER. Still 5hit but better than some accounts paying 0.1%
14. mr g said...
VP @11 "If more people did this it would make Penfold and his cronies think a little harder - at the moment they are just complacent because 'we' are all sitting around twiddling our thumbs while waiting for the pound to become completely worthless. The savers in this country need to take this direct action like you..."
OK guys, we've been here before with this argument, when are we going to actually take action instead of just talking?
15. vacuouspolitician said...
mr g - lol Yes this site is a great talking shop ...but that appears to be it. I have decided to remove all my savings if there is a large movement of people who are prepared to do the same thing. I have also removed any savings that do not keep pace with inflation. It's small beer but it's my two fingers to some of these institutions. However (like everyone) individually we are insignificant - we will just not hurt these banks. The Saveoursavers site is a good idea and hopefully it might just galvanise a few thousand people - I would hope it continues to grow and perhaps have a few hundred thousand people ...but I suspect that the apathy in this country is deep-rooted. Other than that I really don't know what else there is to do...apart from keep smiling and look forward to the spring/summer.
16. markj69 str05 said...
@Paul... Have you thought about premium bond? I know someone who says he gets a good return (Although I can not quantify 'good').
Thinking about switching some of our savings for a while, just to see. Obviously no guaranteed return, but there's always the chance of a higher return, and not loss of investment (Other than £ depreciation).
Mr g, what id everyone switch savings into Premium bonds - Does that class as action, in your eyes?
17. estrader said...
@12 "OK guys, we've been here before with this argument, when are we going to actually take action instead of just talking?"
Mr g - I moved 50K from the proceeds of the sale of my property out of the £Pound and into another currency. Not only am I earning over 6% on a fixed term of less than 12 months, the pound has dropped over 5% since I did it. It may rebound but I have lost faith in this government, the country and its future. I don't know if I will stay here much longer so the currency move wasn't just speculation.
18. markj69 str05 said...
@13 vc... There are many people who do not know what their investment options are (Myself included). And I suspect that after the recent c0ck-up in the financial sector, not many people would trust spo called 'independent advisors'. So what are our options. I'm not going to sleep with £'s under my bed (I have a delicate back). So please enlighten us of this save haven, where bankers do not profit, and the switch is easy, risk free, and has a return! - Premium bond, poss'?
19. markj69 str05 said...
@ 15 estrader... How do you go about moving funds into another currency?
20. estrader said...
There are many ways. You can now buy foreign currency ETF's, take a look at etfsecurities.com
also take a look at Natwest Stockbrokers (or any stockbroker) who gives you International share trading ability and Forex. I am fortunate in that I am a citizen of another country and therefore still have active bank accounts there. That said, I have opened up a Bank account in the USA though it can't be done online. I opened it when I visited the USA. There are probably other ways as well (to own physical foreign currency)
21. vacuouspolitician said...
mark - there is simply no quick fix or easy answers. Sorry. But it does comes down to what you believe in and more importantly what your future plans are. My personal view is I will not allow my savings to languish in accounts that pay interest below inflation - it's just the principal. You'll just have to be pro-active and on the ball - move it when you think the institution is taking the pi55. I really wouldn't bother with Premium bonds - the returns are quite poor.
Sounds like estrader is on the ball.
22. markj69 str05 said...
Thanks. Been trying to make the most with easy access 'best deals', switching when necessary. But I still feel my £sterling is depeciating more than I would like.
So sorry, mr g. No stand tonight or forseeable future. Unless you have any alternatives?
23. European Bear said...
If you are looking to get money into a foreign currency, check out HSBC. If you combine your savings and mortgage etc with them you may be eligilbe to open an account in a foreign currency.
24. European Bear said...
Aside from switching to a foreign currency I guess the other alternative is gold, but it is really expensive now...UK is in a real mess. It's a tough situation if you want or have to live there and it will only get worse in the short to medium term.
25. Troublehoff said...
Err yep, to fund foreign exchange reserves.
Not then because selling short term bonds in Sterling would demonstrate to the world that buyers are expecting super-high inflation over the short term.
And here was me thinking that the UK could not technically default.
26. smugdog said...
I didn't realise how stupid and stubborn some of the net curtain twitches are on this channel.
Priceless!
Why not just burn your notes in a mass protest. That’ll teach em!
27. Gordiji said...
Nationwide international is the independent offshore arm of nationwide B.S located in isle of man. You can have € $ £ and Yen accounts with them and easily switch between them. Conversion rates are good and if you can see a big move coming like the one recently, it's easy to avoid a loss. Done through telebanking, no brokers, fees, just a little less than spot prices. Google 'Natiowide International'
28. hpwatcher said...
I didn't realise how stupid and stubborn some of the net curtain twitches are on this channel.
Priceless!
Why not just burn your notes in a mass protest. That’ll teach em!
I made a big bonfire in the garden this morning! Now I don't have anything to worry about, and am going down the Job centre this morning to claim benefits.
29. flashman said...
There is nothing unusual or alarming in this Dollar dominated issuance. It is done to adjust foreign currency reserves. The French did it recently as well. There is no reason why most of you should know about bond issues etc but a quick Google search before commenting might help. (icarus and mountain goat excepted)
The same goes for interest rate discussions. Why can't you just Google a few 'best buy tables’?
Perhaps its worth considering that the FTSE has gone up from about 3500 to 5500 in the last 12 months and land has gone up about 20% in the same period. It sure beats making £3.50 in a savings account.
30. smugdog said...
Be careful burning rubbish HPW, you'll have the Environmental Inspectors snooping around,
and with no notes left to pay the hefty fine.
31. estrader said...
Seeing this is a property site I am glad to say that my stupidity and stubbornness has so far outperformed the property market by a wide margin. But then again, I do my own figuring and my own grafting in an effort to understand what is what and what is not.
32. tom101 said...
Stop a few country folk killing some foxes brings 250,000 demonstrators to London.
Rob a generation of their savings.....not a dickie bird happens......
I really don't understand.
33. bellwether said...
Tyrell, Paul, Bluebeach I dont know what you get put of reciting the same thoughtless cliches and tiresome puns day after day but compared to Smugdog's attention seeking, I'll get all the boys to hate me while dancing in my mini agitpost skirt, you're adding to the site. Smugdog put your f@nny away.
34. smugdog said...
@ Bellwether...... I am Bluebeach.....and a few others... go figure.... you sad souls........over and out.........
35. alan_540 said...
Smuggy (et al) - don't go just yet, you liven the place up a bit!
36. icarus said...
Welcome back Flashy. Been away on one of your adventures? Who'd you meet - the Tsar? Hiow did you get on with the Tsarina?
37. vacuouspolitician said...
"I didn't realise how stupid and stubborn some of the net curtain twitches are on this channel.
Why not just burn your notes in a mass protest. That’ll teach em!"
lol. Nice one.
...or why not light your cigars with them while topping up your tan listening to the birds singing. Spring and summer is on its way.
Enjoy your life now and don't put it on hold.
There are loads of things to buy at reasonable prices...including businesses that give nice returns. Be your own boss. Get out of the rat race...
38. 51ck-6-51x said...
Hi hi Smugdog & welcome back
- I agree with you on this one.
Instigating a bank run will not help savers one iota.
(N.B. I do not agree with your tone though, better to give the reason than to taunt IMO)
39. estrader said...
@38 - You aren't suggesting that the savers here should be more altruistic are you?...That idea simply warms the cockles of my heart...I feel guilty now for doing what I think is best for the little wealth I have earned.
40. mr g said...
Tom101@32 "Stop a few country folk killing some foxes brings 250,000 demonstrators to London.
Rob a generation of their savings.....not a dickie bird happens......"
In my book that's got to be one of the most telling statements ever posted on HPC.
41. tenyearstogetmymoneyback said...
As Vacuouspolitician said you just have to be proactive.
Recently switched my A&L 6% bank account (which had timed out) to an Abbey 6% one (lol as they are both owned by Santander.
While opening the account discussed the Halifax £5 a month account with the clerk there. It turned out he was already doing this,
(pay in £1000, withdraw £1000 and get a fiver each month). His comment was that as HBOS had had so much tax payers money
it was only fair to try an get some of it back.
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