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Cynicus

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About Cynicus

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  1. The Kroner looks like one of the safer options to go for. They have political stability, mountains of oil wealth, and therefore look a good bet. However, I say this without having tracked the currency performance. You may want to check an FX chart for history over the last 2-5 years before diving in. If too many others have already had the same thought.....
  2. In this respect, I can only agree with you!
  3. Not stupid at all. Possibly many who think they know what it is, probably do not. It is the International Monetary Fund. Their description of themselves is as follows: Not very helpful really. More of a mission statement than what they do.... As such, good old Wikipedia describes it here. The real question is whether the IMF is a tool of the devil, or a jolly useful institution. For the answer to that question, you will need to form your own views....
  4. I can not sypathise with the first post in this thread enough. The poster is quite right to be angry. He does not need a bailout, is in manufacturing, and actually does something that is creating wealth within the UK economy. When these bailouts are undertaken, one way or another, he will be paying for them. It does not matter whether it is Jaguar or RBS, the money that will pay for these bailouts will eventually be paid in taxation. In practical terms this means that corporation tax might rise, or it may be income tax, in which case he will have to pay more to his workers to give a living w
  5. You are assuming deflation is due to the collapse of confidence, rather than a supply side problem. This is what everybody is not considering. It is all a question of over supply. Sorry for a brief reply, but it is very late where I am, but a fuller answer is here.
  6. The first point is that printing money is an indirect method of default. When a government prints money, they are transferring some of the value of the existing money supply to the newly printed money. The overall value of the money has not altered, it is just distributed over a greater number of units. As such, if you then repay debt with the money at the new value, you are paying less than you would otherwise pay. If you owe £1, yesterday the person you owed the money to could have used that money to buy a loaf of bread. Today they can only use it to buy three quarters of a loaf of bread. In
  7. I am not sure if this is common knowledge as yet, but the Telegraph has recently published an article as follows: Even more worrying is that in the new banking bill, the necessity for the BoE to publish how much money it prints has been abolished. I found out about this on at Guido Fawkes here. To say the least, this is very disturbing. It appears that the government will try to print its way out of the crisis. I believe that this is because the UK is about to default on debt, and have been looking at this subject for some time. It seems that there are troubles selling government guilts/b
  8. Interest rates are set as a target to govern the money supply in the economy by central banks (through open market operations in the UK primarily through the London Interbank Offered Rate). The control of the money supply is managed by either buying or selling securities such as second hand government debt (e.g. bonds), or by lending to or borrowing money from banks. The important word here is target. At its most basic, the more money sloshing around the economy, the more supply in other words, means that there is less scarcity of money. This allows (in principle) banks to lower interest rates
  9. I'll republish a link from an earlier post. This from the Spectator: http://www.spectator.co.uk/the-magazine/fe...ons-books.thtml Gives a good summary. Some argue that the UK net debt position is not too bad. There is an answer to this which suggests that we should be worried here. Who is lending to the government can be found here: http://www.bankofengland.co.uk/publication...in/qb040406.pdf I hope this all helps with the answers.
  10. Money is any unit of exchange, at its most basic. In the case of modern 'money', it is the confidence that an intangible abstraction will hold a value in exchange. Scary, huh? I have written something on this that can be found here, or the easier option is the Wikipedia definition here. For your question about the production of gold coins. This is not increasing the money supply in the sense that you mean. There is no difference between producing more gold coins and producing any other good, or even growing more wheat. In this case a service is being added to a commodity, as the making of
  11. The arguments about the cost of new oil does not alter the reality that most oil is still very easy and cheap to extract. That is why it was so cheap, right up to the point where demand exceeded supply. With demand falling, oil could in principle return to the prices of a couple of years ago. However, I am sticking with my guesstimate of $60 per barrel, though I suggested orignially that this would take two years. I now think that this will be the price in about 12 months. Why not fall lower than $60? I think that demand from emerging economies will start to rebalance drop in demand from the O
  12. More probable is devaluation leading to inflation of imported goods and commodities, with falling incomes (in particular if you take unemployment into account as a displacement of wage level falls), and falling house prices. Perhaps economics needs a new term for this, which I would suggest as the economic phenomenon of 'toxic mess'
  13. The answers are all in this article from the Spectator: http://www.spectator.co.uk/the-magazine/fe...ons-books.thtml Hope it helps
  14. bombardier: Not quite an answer to your question, but you may find this informative in general. http://en.wikipedia.org/wiki/List_of_count...y_external_debt I know it is Wikipedia, but it references the CIA factbook. Just a big picture look at debt. This may also answer many of your questions: http://www.bankofengland.co.uk/publication...in/qb040406.pdf I have not had time to check it is the right report (it is taking ages to download) but I believe it includes aon the UK assets and liabilities (including whom we owe what to), and may make interesting reading for you. However, it is no
  15. You may want to take a look at the Telegraph article here - unless OPEC restrict supply, then there is a real possibility of a drop to $60. However, the article does not suggest that. I am just reasserting my original prediction....though I have been wrong about the speed of the decline in price. Having said that, I think the decline in price from here on will be less dramatic, more bumpy,and that the price fall will be tempered when the $US goes back into decline. The interesting thing is that so many people kept on insisting that the price would remain so high. I have yet to see an explana
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