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bogbrush

Balance Of Trade

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Even with a trashed currency and low internal demand, we managed to run as a deficit in April of £3bn, including an excess of £4bn in services. That means a staggering £7bn deficit in April alone on goods.

http://www.statistics.gov.uk/cci/nugget.asp?ID=199

Dismal, dismal stuff, when we're running with a devalued currency. This, alongside the continued growth in the take of wealth by the government, is the fundamental that nails this country.

When is the penny going to drop that every aspect of our nation - the government, the country as a whole and individuals - survives by borrowing more to cover loss making positions, day after day, month after month?

And if anyone says it's balanced by capital flows, just don't; selling the place off bit by bit to pay debts really shouldn't be in the plan.

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Even with a trashed currency and low internal demand, we managed to run as a deficit in April of £3bn, including an excess of £4bn in services. That means a staggering £7bn deficit in April alone on goods.

http://www.statistics.gov.uk/cci/nugget.asp?ID=199

Dismal, dismal stuff, when we're running with a devalued currency. This, alongside the continued growth in the take of wealth by the government, is the fundamental that nails this country.

The pound is still overvalued; it must fall to reflect more accurately the purchasing power that we earn.

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The pound is still overvalued; it must fall to reflect more accurately the purchasing power that we earn.

One of the joys of being an offshore tax haven fruadster's paradise innovative financial center is that money flowing here from abroad to be laundered skimmed wisely invested pushes up the value of sterling artificially, making it so much harder for the rest of the economy.

Personally, I'm hoping for dollar parity, would be good for my job security..

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The pound is still overvalued; it must fall to reflect more accurately the purchasing power that we earn.

Is the only thing holding it the inevitability of much higher interest rates as the debt becomes unsellable? I can't see how else it can defy gravity.

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Is the only thing holding it the inevitability of much higher interest rates as the debt becomes unsellable? I can't see how else it can defy gravity.

I think it's one of the things that people need to realise about markets, they aren't actually good at providing 'efficiency' at all. Human beings ( and therefore the markets that represent their collective decisions ) are far too irrational for that ever to be the case. The information available to the individuals setting prices is far too fragmented, incomplete and often even distorted. The market often amounts to little more than a herding mechanism.

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I think it's one of the things that people need to realise about markets, they aren't actually good at providing 'efficiency' at all. Human beings ( and therefore the markets that represent their collective decisions ) are far too irrational for that ever to be the case. The information available to the individuals setting prices is far too fragmented, incomplete and often even distorted. The market often amounts to little more than a herding mechanism.

So what are you saying about sterling, apart from making a speech about markets?

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So what are you saying about sterling, apart from making a speech about markets?

I'd think that for you it should be obvious that the markets say it's worth a certain amount and they are therefore right. The market is always right afterall.

For me, I know the market isn't actually a 'perfect price discovery mechanism' and it's fairly obvious that sterling is overvalued, an easy position to hold if you accept the market as irrational in the same way that the participants are.

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Is the only thing holding it the inevitability of much higher interest rates as the debt becomes unsellable? I can't see how else it can defy gravity.

People doing chart-based analysis rather than looking at fundamentals? :huh:

effective%20exchange%20rate%20chart%20sterling%20BoE.jpg

...

In the 1992 crisis the currency crashed out of the ERM, and it took many years for sterling to regain it's former strength. Alas, much of this strength probably came from financial inflows which were quick to leave when the credit crisis struck. However, looking at the chart, one can quite reasonably make the case that from a purely competitive standpoint the pound has overshot on the downside and that at current levels it could be a good 'buy' for the long-term.

Edited by huw

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People doing chart-based analysis rather than looking at fundamentals? :huh:

Get enough people/organisations doing the charts and it can get all self-fullfilling, a herd mechanism if you will. There are a lot of chartists out there, even many of the software black boxes that actually do a lot of fx trade are programmed to predict using charts.

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you wahts funny, years ago first year in uni i asked a lecturer how a -ve balance of trade cound be sustainable for the uk. his reply was pretty much it doesnt matter. i hadnt worked out that the only country with a positive balance was china, germany maybe too?

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