Jump to content
House Price Crash Forum
Sign in to follow this  
gruffydd

Sterling On Verge Of Full-blown Crisis - Guardian

Recommended Posts

http://www.guardian.co.uk/business/feedarticle/8291328

"There's a real danger of the decline in sterling becoming a full-blown crisis. The government and the Bank of England have to change their tune on the pound pretty quickly," said Neil MacKinnon, director and chief economist at ECU Group, a hedge fund based in London.

"I would say we're close to a sterling crisis," said an analyst at one UK bank who asked not to be named.

He noted that the markets are making their view on the BoE's FX policy stance crystal clear: it has to change. "The market is doing it for him (King). Clearly, what's happened today has nothing to do with UK rate expectations."

"Investors are stumping up increasing amounts on the credit default swap market to insure against the risk of UK default. The premium on five-year UK sovereign CDS this week reached 135 basis points, according to CMA Datavision, meaning investors are paying 135,000 to insure against default on 10 million pounds of government bonds.

Equivalent CDS on Spanish debt, which was this week downgraded by S&P to a notch below UK government debt, is not much higher, at 153 basis points."

Edited by gruffydd

Share this post


Link to post
Share on other sites

'The British economy is in deep trouble and investors are in no mood to hang around and wait for a pick-up,' said IdeaGlobal's foreign exchange head Maurice Pomery.

All eyes are now on Mervyn King, the Governor of the Bank of England, who is due to make his first major speech tonight since being told by the Treasury that he can now increase the money supply.

Share this post


Link to post
Share on other sites
http://www.guardian.co.uk/business/feedarticle/8291328

"There's a real danger of the decline in sterling becoming a full-blown crisis. The government and the Bank of England have to change their tune on the pound pretty quickly," said Neil MacKinnon, director and chief economist at ECU Group, a hedge fund based in London.

"I would say we're close to a sterling crisis," said an analyst at one UK bank who asked not to be named.

He noted that the markets are making their view on the BoE's FX policy stance crystal clear: it has to change. "The market is doing it for him (King). Clearly, what's happened today has nothing to do with UK rate expectations."

"Investors are stumping up increasing amounts on the credit default swap market to insure against the risk of UK default. The premium on five-year UK sovereign CDS this week reached 135 basis points, according to CMA Datavision, meaning investors are paying 135,000 to insure against default on 10 million pounds of government bonds.

Equivalent CDS on Spanish debt, which was this week downgraded by S&P to a notch below UK government debt, is not much higher, at 153 basis points."

What would happen in the event of a UK default?

Daft question I guess to those who know.

Share this post


Link to post
Share on other sites
What would happen in the event of a UK default?

Daft question I guess to those who know.

Not a daft question at all..........

The Arabs would send the bailiffs round.......... Oh and no one would export to us. Provided we are self sufficient in food stuffs we could get through it.

Knock on effect...war and stone age come to mind...........

Share this post


Link to post
Share on other sites
What would happen in the event of a UK default?

Daft question I guess to those who know.

Look at countries that have defaulted recently e.g. Argentina, Russia. It's unpleasant for the middle classes for a while.

Share this post


Link to post
Share on other sites
'The British economy is in deep trouble and investors are in no mood to hang around and wait for a pick-up,' said IdeaGlobal's foreign exchange head Maurice Pomery.

All eyes are now on Mervyn King, the Governor of the Bank of England, who is due to make his first major speech tonight since being told by the Treasury that he can now increase the money supply.

surely this is the opposite of what investors are looking for.

we need some stability and a higher interest rate. NOW.

Share this post


Link to post
Share on other sites
surely this is the opposite of what investors are looking for.

we need some stability and a higher interest rate. NOW.

Yes, what impact will the increasing of money supply have on sterling???????? I couldn't quite believe what I was reading - that's why I highlighted it.

Edited by gruffydd

Share this post


Link to post
Share on other sites

Just saw this little pearl of wisdom on Injin's signature:

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."–Ludwig von Mises

Share this post


Link to post
Share on other sites

The UK won't default on its debt - it can print more sterling any time it wants. :rolleyes:

The value of that sterling is another matter; a collapse gets ever nearer...

The path ahead seems to be: govt tries to sell gilts; can't, so prints money; holders of sterling flee in horror; value of sterling drops like a stone and foreign vultures use their stronger currencies to pick over the UK's dying corpse; buying bargains we can't afford. :(

Share this post


Link to post
Share on other sites
Yes, what impact will the increasing of money supply have on sterling???????? I couldn't quite believe what I was reading - that's why I highlighted it.

well. i got a currency bonus and a gold bonus today.

every little helps...get that credit card out gruffydd...

Share this post


Link to post
Share on other sites
Not a daft question at all..........

The Arabs would send the bailiffs round.......... Oh and no one would export to us. Provided we are self sufficient in food stuffs we could get through it.Knock on effect...war and stone age come to mind...........

The Russians and Argentinians are broadly self sufficient. We on the other hand import 40% of what we eat.

But we won't default - the Yanks will bail us out. At a very high price.

Share this post


Link to post
Share on other sites

Might just do that. This is really getting hellish. Got to move my assets to safety. Will probably be up all night AGAIN. Seeing that so much appears to be hinging on Mervyn King's statement this evening, the clock is ticking...

Edited by gruffydd

Share this post


Link to post
Share on other sites
He's understating the national debt; it's way more than £400bn. It was past £400bn before the credit crunch started! AD is borrowing £118 in 2009 alone (from the pre-budget report.)

i think its currently 1000 billion.

Share this post


Link to post
Share on other sites
Not a daft question at all..........

The Arabs would send the bailiffs round.......... Oh and no one would export to us. Provided we are self sufficient in food stuffs we could get through it.

Knock on effect...war and stone age come to mind...........

the Arabs are stupid they can never get their money back we put their kings & leaders in power so they will keep lending us money till the oil runs out !! ;)

the only problem now is we need more then they have to lend to us we need to find new mugs like china & india to lend us all their money, then all our problems will be gone untill they run out of money !!

Share this post


Link to post
Share on other sites
Just saw this little pearl of wisdom on Injin's signature:

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."–Ludwig von Mises

A lot of that Austrian stuff has started to look very attractive over the past half-year or so... you can't help feeling like it's 1978 again

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.