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U B S Issue Sterling Warning --Sell Pounds Now

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http://www.bloomberg.com/news/2010-09-01/ubs-says-pound-will-weaken-to-record-low-against-swiss-franc-on-austerity.html

UBS Says Pound Will Weaken to Record Low Against Swiss Franc on Austerity
By Ron "Ronald" Harui - Sep 1, 2010 4:01 AM GMT+0100
Investors should sell the pound
against Switzerland’s currency in a bet that sterling will weaken to 1.5000 francs, UBS AG said, the lowest level on record.
The U.K. will announce an austerity program on Oct. 20 that will slash most departments’ budgets by a quarter to cut a deficit that hit a postwar high of 11 percent of the economy in the year through March. The Treasury’s fiscal monitor has predicted 490,000 public-sector jobs will be lost by April 2015.
“Sterling is likely to weaken further once the U.K. government’s fiscal austerity program starts,” wrote Mansoor Mohi-uddin, chief currency strategist in Singapore at UBS, the world’s second-largest foreign-exchange trader, in an e-mail.

NO sign of austerity yet apart from falling house prices. Should get interesting after October.

Pound down a little vs. the Euro and $ but nothing dramatic.....yet.

1 GBP =

$ 1.53880

Euro: 1.21054

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So we move to cut the deficit and the markets don't like it, keep spending the money we don't have and the markets don't like it.

Perfect.

Ask the Irish about how austerity measures please the markets and keep your credit rating..

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But when the libcons won the election and the austerity measures to cut the deficit became clear the pound rallied. Why would clear cut austerity measures damage the pound?

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But when the libcons won the election and the austerity measures to cut the deficit became clear the pound rallied. Why would clear cut austerity measures damage the pound?

I wish I knew. I'm just glad I went 50/50 EUR/GBP in early 2007.

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I personally think this is one of the central problems of the current system, there is just far far too much money floating around in circular investing activities such as currency speculation.

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But when the libcons won the election and the austerity measures to cut the deficit became clear the pound rallied. Why would clear cut austerity measures damage the pound?

because it puts the credit rating in just as much jeopardy as continuing spending. When austerity kicks in it is pretty inevitable tax receipts will adjust accordingly downwards as it will just be removing money (all be it deficit spending) from the economy, which equally finds its way through to private consumption. Last time the UK had a sniff of deflation sterling fell through the floor in 2008, it didnt rally again until they started QEing.

In summary cut the deficit or dont, it doesnt matter which way you go the UK is fcked because the consumer is debted up to the eyeballs and cant keep the economy functioning at its current size and tax receipts cant keep the govt functioning at its current size, its perfectly circular

Edited by Tamara De Lempicka

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I personally think this is one of the central problems of the current system, there is just far far too much money floating around in circular investing activities such as currency speculation.

Yeh, they could put it into housing.

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But when the libcons won the election and the austerity measures to cut the deficit became clear the pound rallied. Why would clear cut austerity measures damage the pound?

Quite, can't see it myself.

Surely currency traders aren't that stupid anyway. They know more or less what the government's got up its sleeves so these things will already have been factored into the pound's value.

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In 2007 you got around 2.4 swiss francs for a £; you get 1.56 today and it's expected to go lower!

At least the bankers will get a crap deal when they flee to Geneva after the revolution...

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In 2007 you got around 2.4 swiss francs for a £; you get 1.56 today and it's expected to go lower!

At least the bankers will get a crap deal when they flee to Geneva after the revolution...

whilst i think moving into CHF for the next couple of years is not advisable, in fact id personally suggest moving out of it but you are correct when we moved here it was that conversion rate (30 years ago it was 6:1, theres your inflation theft), house price crash, not arf, anyone active outside of GBP (if they are lucky and get it right) is probably gonna be looking at a 80%+ HPC before this is over.

Edited by Tamara De Lempicka

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Exactly. Totally.

Too much money. Yields tending to zero. Assets like property and pensions too expensive.

Inflation a little too high for comfort.

More and more money put towards speculative activities.

That is all I do now. Everything is totally liquid. I don't seek a yield - I feel forced to merely speculate on changes in capital values. It's not good.

Correct, its bloody disasterous, all the signs are there where its heading and they keep making it ultimately more disasterous by as you say forcing speculation/malinvestment, ultimately fcking up the prudent (who would have been required at the point of recovery) as well as the impurudent when it all goes down

Edited by Tamara De Lempicka

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Exactly. Totally.

Too much money. Yields tending to zero. Assets like property and pensions too expensive.

Inflation a little too high for comfort.

More and more money put towards speculative activities.

That is all I do now. Everything is totally liquid. I don't seek a yield - I feel forced to merely speculate on changes in capital values. It's not good.

Well put, and I know the feeling! :lol:

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Exactly. Totally.

Too much money. Yields tending to zero. Assets like property and pensions too expensive.

Inflation a little too high for comfort.

More and more money put towards speculative activities.

That is all I do now. Everything is totally liquid. I don't seek a yield - I feel forced to merely speculate on changes in capital values. It's not good.

You have summed it up perfectly how i feel over the past couple of years , chasing yield. I am now 100% cash and thats how it is staying. I'll stick the money away for 5 years leaving enough behind to pay the CGT and forget about Bloomberg , FT and the WSJ and leave the drama alone for a few years.

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You have summed it up perfectly how i feel over the past couple of years , chasing yield. I am now 100% cash and thats how it is staying. I'll stick the money away for 5 years leaving enough behind to pay the CGT and forget about Bloomberg , FT and the WSJ and leave the drama alone for a few years.

Me too (except for a toy or two) but I'm not locking it away, 100% cash 100% liquidity.

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because it puts the credit rating in just as much jeopardy as continuing spending. When austerity kicks in it is pretty inevitable tax receipts will adjust accordingly downwards as it will just be removing money (all be it deficit spending) from the economy, which equally finds its way through to private consumption. Last time the UK had a sniff of deflation sterling fell through the floor in 2008, it didnt rally again until they started QEing.

Glad some people get it.

Indeed, this is exactly what a depressionary, deflationary spiral looks like which is why slashing spending in a recession is a high risk strategy. You may end up with less debt but if your economy and tax take shrinks you can find the smaller deficit just as hard to fund. In fact slashing peoples income can hit the government tax take harder than the actual wage earners themselves since the lost earnings comes entirely out of taxed income (ie that portion of income above the individuals tax free threshold). If you slash everyones wages by 50% then the tax yield from income tax will drop by much more than 50%. This is before taking into account the reduced take from things such as VAT due to lower turnover in the economy or less Corporation Tax due to lower profits.

Of course, the UK government is hoping everyone else is in the world is going to go on a mad spending binge which will provide the external demand led growth to compensate for austerity at home. One suspects that they are going to be disappointed.

Edited by realcrookswearsuits

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I remember when CHF/£ was 10/1.

I used to live in Switzerland as a child, 30+ years ago, and whenever I go back I see that everything is exactly the same price as it was in the 1970s! Now that's what I call a currency! (I'm not saying it's a cheap place to live, no Siree! But they don't have inflation.)

The Swiss government is actively trying to hold the CHF down. But they are failing. The Franc will rise. (I remember when it was the SFr)

Obviously my cash has been in CHF for a couple of years now. Bring on the hyperinflation - I'm ready and waiting. :P

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I remember when CHF/£ was 10/1.

I used to live in Switzerland as a child, 30+ years ago, and whenever I go back I see that everything is exactly the same price as it was in the 1970s! Now that's what I call a currency! (I'm not saying it's a cheap place to live, no Siree! But they don't have inflation.)

The Swiss government is actively trying to hold the CHF down. But they are failing. The Franc will rise. (I remember when it was the SFr)

Obviously my cash has been in CHF for a couple of years now. Bring on the hyperinflation - I'm ready and waiting. :P

Yes

People say Switzerland has famously been in deflation for 30 years, which is why the wealthy have historically set up base here, but i wouldnt be so sure of its safety going forward, at least for a couple of years (in fact my analysis suggests theres a good chance of it losing up to 50% in value against the dollar over the next 2-3 years before the dollar starts tanking). Also for me C Suisse and UBS are both still fcked when the SHTF again.

Another advantage ive highlighted before though is a number of privatebanks here work on very highdeposit ratios 80%+

There are few better countries in Europe to try to retain wealth over the coming years but its far from a perfect situation

Edited by Tamara De Lempicka

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When austerity kicks in it is pretty inevitable tax receipts will adjust accordingly downwards as it will just be removing money (all be it deficit spending) from the economy,

Can we dispense with all the "taking money out of the economy" b*ll*cks please. All public spending is from tax receipts (current or future) so you cannot "remove money" by reducing it.

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Yes

People say Switzerland has famously been in deflation for 30 years, which is why the wealthy have historically set up base here, but i wouldnt be so sure of its safety going forward, at least for a couple of years (in fact my analysis suggests theres a good chance of it losing up to 50% in value against the dollar over the next 2-3 years before the dollar starts tanking). Also for me C Suisse and UBS are both still fcked when the SHTF again.

Another advantage ive highlighted before though is a number of privatebanks here work on very highdeposit ratios 80%+

There are few better countries in Europe to try to retain wealth over the coming years but its far from a perfect situation

You have identified the one fly in the Swiss ointment. If UBS or CS went belly up the Swiss government would struggle to rescue them and the impact on CHF could be dramatic. However, barring such an eventuality, I think CHF is a good shelter from UK inflation. NOK would be my second choice; they've still got more oil than the rest of Europe and the UK combined.

(Edited to add: Actually if I were designing my strategy from scratch today I think NOK might be my first choice! However I have strong connections with CH, relatives who live there etc, so I'm going with the familiar.)

Edited by Nationalist

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Can we dispense with all the "taking money out of the economy" b*ll*cks please. All public spending is from tax receipts (current or future) so you cannot "remove money" by reducing it.

No, but the velocity of circulation is reduced if people sit on their cash. That drags GDP down.

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Ask the Irish about how austerity measures please the markets and keep your credit rating..

I think people are missing the point - if you are shafted then you are shafted. There's no magic bullet.

Longer term, doing the right thing can help you get out of the mess sooner but in the meantime you are going to suffer the consequences of your mistakes in some form, no matter what you do.

In fact, doing the wrong thing from a longer term perspective quite often makes things easier in the short term. There's a reason why 'short term solution' is such a derisory term .....

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  • 246 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%



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