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

Telegraph....a Must Read

Recommended Posts

Good article. I think the main point for us is this:

The danger comes if the "rope slips and burns" and, rather than depreciting gradually, the dollar tips into free fall. That would send US inflation soaring, while sparking a whole new wave of global panic. But dollar free fall is unlikely – not least because so many reserve-rich countries such as China and Japan would move to protect their dollar assets.

Last week, sterling also dropped to its weakest level in six months – hitting 92.14p against the euro and 62.71p to the dollar. Taking his cue from the US, Chancellor Alistair Darling said Britain has "no policy in place" to control the level of the pound.

America can pull off this trick because it is America – with a currency that's too big to fail. Just as Wall Street has the White House over a barrel, so the White House knows the rest of the world has too much to lose to allow the dollar to tank.

The same is not true of sterling. Given the UK's unmatched money printing and horrifying debt service costs, the currency markets are smelling blood – with many now arguing the pound should be "cut loose".

Once the devaluation process is truly started there is no way to know if it can be stopped easily as the process is self reinforcing.

And then the only way to stop it is ... to raise interest rates dramatically...

Share this post


Link to post
Share on other sites
The same is not true of sterling. Given the UK's unmatched money printing and horrifying debt service costs, the currency markets are smelling blood – with many now arguing the pound should be "cut loose".

What happens when sterling is cut loose? Is that a full-blown currency crisis? Does that inevitably lead to hyperinflation?

It seems King is playing a game of brinkmanship with the markets - who'll blink first? Surely the global economic consequences of sterling going under would be enormous. Would it trigger a global systemic default?

Share this post


Link to post
Share on other sites

If i where China & wished to "Explain" to America/Euro-land what "Might" happen i could think of no better example than the UK £

Mike

Share this post


Link to post
Share on other sites

China and Japan protecting their dollar assets? , its more like they are trying to spend their dollars (at least China) as quickly as possible , with various news items I saw in Beijing about China spending money in Iran to upgrade their oil refining capacity , buying more weapons resurfacing concrete roads to Tarmac roads etc.

Hell for the PRC's 60th anniversary they might as well have one helluva fireworks display.

Share this post


Link to post
Share on other sites

Cherry picking nonsense.

He's gone very hysterical of late.

Sterling was 1.36 earlier in the year. Nobody died. Jim Rogers told everyone to sell it and it promptly gained 25%.

Share this post


Link to post
Share on other sites
Sterling was 1.36 earlier in the year. Nobody died.

I don't think you can ignore the fact that things were rather unhealthy when that happened.

And who says sterling has to stop at that level when the central banker is turning into a manic devaluer. Sterling has to be the best game in town for currency speculators.

Share this post


Link to post
Share on other sites
Good article. I think the main point for us is this:

Once the devaluation process is truly started there is no way to know if it can be stopped easily as the process is self reinforcing.

And then the only way to stop it is ... to raise interest rates dramatically...

It appears that the idiots in charge are prepared to play chicken, luckily they are highly paid experts and know what they are doing.

We could be the next Iceland but if we go POP I think we'll set a huge chain reaction around the globe, if our banks go under because the govt is no longer viable things will get very interesting.

Edited by interestrateripoff

Share this post


Link to post
Share on other sites
Sterling was 1.36 earlier in the year. Nobody died. Jim Rogers told everyone to sell it and it promptly gained 25%.

That turnaround was just me. Transferred the last of my dollar earnings to sterling on March 9th :P

Share this post


Link to post
Share on other sites

So what do we transfer our £s too? as assets like houses and gold are just not my gig at the moment. diamonds? 2nd hand cars? a wife or two? :lol:

Share this post


Link to post
Share on other sites
I don't think you can ignore the fact that things were rather unhealthy when that happened.

And who says sterling has to stop at that level when the central banker is turning into a manic devaluer. Sterling has to be the best game in town for currency speculators.

True.

Share this post


Link to post
Share on other sites

I saw a lovely old oil painting in an antiques shop last week - £2,000. When I saw the price, I dismissed it out of hand. But it is lovely, and I've been thinking about it all weekend - and I can spare the cash at the moment. Would that be sensible?

Share this post


Link to post
Share on other sites
Cherry picking nonsense.

He's gone very hysterical of late.

Sterling was 1.36 earlier in the year. Nobody died. Jim Rogers told everyone to sell it and it promptly gained 25%.

but you are just comparing GBP to another turd that is sinking slightly less slowly (USD). It doesn't look quite as pretty if throw a few other currencies up against the GBP - AUD for one, which is now trading at $1.84 to the pound.

Share this post


Link to post
Share on other sites
So what do we transfer our £s too? as assets like houses and gold are just not my gig at the moment. diamonds? 2nd hand cars? a wife or two? :lol:

Get some quality guitars!

Share this post


Link to post
Share on other sites
I saw a lovely old oil painting in an antiques shop last week - £2,000. When I saw the price, I dismissed it out of hand. But it is lovely, and I've been thinking about it all weekend - and I can spare the cash at the moment. Would that be sensible?

I'll reply to that because I spend a lot of times looking at antiques but please take what I write with a pinch of salt: if you look at art as an investment, you have to ask first whether there will be a middle class in the future that will be able to buy antiques in that kind of price range (or its inflated/deflated equivalent in the future).

If not, then look more at things in the £1 million+ range, that will probably keep its value.

If you like it and it will give you pleasure every time you look at it, then it's something else.

Share this post


Link to post
Share on other sites
I saw a lovely old oil painting in an antiques shop last week - £2,000. When I saw the price, I dismissed it out of hand. But it is lovely, and I've been thinking about it all weekend - and I can spare the cash at the moment. Would that be sensible?

You need to check the health of the artist: young and healthy -- bad, already dead -- OK, old and about to die -- v. good indeed.

;)

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   288 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

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.