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If The Euro Goes..what Happens To The Pound

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Thats cheered me up..

Never see them in the same forum though ........

boom tish :unsure:

Yes - they are also never seen together..:ph34r:

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If the euro goes, which it probably will, good cars become more expensive and good olive oil becomes less expensive.

from listening in on a conversation between a Greek and Italian friend good olive oil is already dirt cheap at source, it's more what the western European market will pay particularly if it has the right bottle and label, do you think the supermarkets and delicatessens sell it at "cost" :D

From what I hear in China you can get trainers for a fiver, that sell for over £100 in the UK

Edited by madpenguin

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. . . olive oil is already dirt cheap at source, it's more what the western European market will pay particularly if it has the right bottle and label, do you think the supermarkets and delicatessens sell it at "cost" :D

Well of course. Unlike money, it grows on trees.

But I'll admit, I'm a sucker for packaging and I love the ornate tins.

Back on topic for a sec (sorry) I really think a split from/with the Euro would be painless. As other posters reminded us, the old ERM was prolonged agony and the Euro has been a nightmare for the countries with currency pegs. It wouldn't make any more difference to us than leaving the ERM did.

The Euro was only ever going to work with harmonisation and now the bailouts and various austerity plans are only further exaggerating differences in (perceived) good and bad economies.

Someone posted a Brussells comment on another EU thread about 'the enormous political investment' that has been made in the Eurozone. That's really what's stopping people admitting a failed experiment.

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... That's really what's stopping people admitting a failed experiment.

Why do you think its a "failed experiment"? Capitalism is a failed experiment. Globalisation is a failed experiment. Mass home ownership is a failed experiment. The "free market" is a failed experiment. Except they are all still going and so is the Euro. All will still be going when I am long dead.

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Why do you think its a "failed experiment"? Capitalism is a failed experiment. Globalisation is a failed experiment. Mass home ownership is a failed experiment. The "free market" is a failed experiment. Except they are all still going and so is the Euro. All will still be going when I am long dead.

I agree with you, I only hear this sort of talk from the British, and American's, banking failures are at the heart of the crisis, and any excuse that diverts our attention from that is being used thus it's poor government and people taking on too much credit that's responsible for the crisis not weak financial regulation and banks greediness, honestly! :P

How often do people suggest the dollar should be replaced by state currency, what with states like California having trouble, the stock answer is that the US can print, well so can the ECB, they just aren't as keen on it as a cure all in the same way the UK/US are

Edited by madpenguin

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If I were living in mainland Europe, & I had substantial funds, I would be panicking right now. I'd want to get out of Euros. There are 6 realistic possibilities:

1. US Dollars - with massive QE, this may not be a good option

2. Swiss Francs - maybe

3. Sterling - maybe

4. Gold - maybe (lets not spark a gold debate here)

5. Property, not really, it's a falling asset class

6. Equities - probably not, going to be very volatile

To be honest, many will see Sterling as a good option. The result will be a strengthing pound, cheaper imports, lower inflation, interest rates held. More printing, not sure, because they can slowly introduce more honest inflation numbers to counteract the effect of cheaper imports. Another effect will be an influx of more EU workers attracted by earning those lovely strong pounds.

Of course, there are many unknowns, such as the chaos in the banking system that would occur & the impact on British banks.

My hunch is that overall, by 'luck' the British economy will look rather successful in comparison to our neighbours, Cameron will claim the credit, & Labour will have no chance of winning an election for a generation, & we'll all live the good life on the back of cheap imports

Lets see what you are saying-Sterling versus USD. Sterling wins ? Er No. Sterling will be picked off like a ripe cherry.

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In the unlikley event of the Euro going, the scale of the resulting financial chaos would be so great that there's no guessing what would happen to the pound. People in Britain often talk about the Euro as though it's some sort of optional add-on scheme like a Tesco loyalty card or something, when in fact it's the world's second biggest currency after the US dollar in terms of reserves and trading.

If the Euro falls apart it will be chaos and people will start to doubt the safety of all currencies, including the pound and even the dollar.

I still say that it is more likely that we will end up joining the Euro than that it will collapse, although neither look very likely in the near future.

Edited by blankster

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The reduction in the price of imported raw materials would surely offset this. Lower inflation would also help keep wages down.

When it comes to exports, the cost of imported materials is neutral (as you are exporting them again in the finished product). What changes is the cost of labour needed to produce relative to the currency of the buyers.

Right now, we're told the debased pound makes exports more competitive (despite the increased cost of raw materials) so it follows that a stronger pound - for whatever reason - will make them less competitive.

Given that the Eurozone countries represent a huge export market for the UK that would be decimated with the collapse of the Euro, I think it unlikely that a collapse there would have any real long benefit except maybe in the very short term.

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I agree with you, I only hear this sort of talk from the British, and American's, banking failures are at the heart of the crisis, and any excuse that diverts our attention from that is being used thus it's poor government and people taking on too much credit that's responsible for the crisis not weak financial regulation and banks greediness, honestly! :P

How often do people suggest the dollar should be replaced by state currency, what with states like California having trouble, the stock answer is that the US can print, well so can the ECB, they just aren't as keen on it as a cure all in the same way the UK/US are

They can and they will print. The difference with the ECB is that it isn't allied directly to one country, it has to deal with a bunch of differing economies and pretend to be acting in the interests of all of them. It's pretty obvious that the Germans have the whip hand though, so when they finally succumb to the need/temptation to print that's when it'll happen.

However, the Germans know from history what the consequences will be so they are reluctant - hence the ECB 'falling behind' in the race to the bottom. That really screws over smaller Eurozone countries like Ireland who get the worst of both worlds as it would have benefitted them to have the printing happen now and used to relieve the bankers debt.

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When it comes to exports, the cost of imported materials is neutral (as you are exporting them again in the finished product). What changes is the cost of labour needed to produce relative to the currency of the buyers.

The more the raw materials cost for a given amount of investment capital the less you can afford, which leads to smaller manufacturing runs, higher cost of production and a more likely risk that you have stock failure so that you cannot supply or on the other side a higgher scrappage / carrying costs for work in progress. Neutral it is not.

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The more the raw materials cost for a given amount of investment capital the less you can afford, which leads to smaller manufacturing runs, higher cost of production and a more likely risk that you have stock failure so that you cannot supply or on the other side a higgher scrappage / carrying costs for work in progress. Neutral it is not.

Right, so our export prospects have been hurt by the debasement of the pound then?

Thought not.

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Why do you think its a "failed experiment"? Capitalism is a failed experiment. Globalisation is a failed experiment. Mass home ownership is a failed experiment. The "free market" is a failed experiment. Except they are all still going and so is the Euro. All will still be going when I am long dead.

Yes you could argue that the euro "failed" after only a couple of years when Germany let her budget deficit exceed the 3% limit. It just mutated into something else. The next version of the euro failed because there was no central reserve to provide liquidity in an crisis. The problem seems to be that with each mutation of the euro the next problem seems to be bigger than the last one. Even so, unless countries start dropping out of the euro it won't be perceived as a failure.

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I think that the Pound will initially be the Europes safe haven currency. Given Germany's relative stronger growth- I believe that it will become the safe have currency, especially without the pressure of having to bail out the PIIGS

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I think that the Pound will initially be the Europes safe haven currency. Given Germany's relative stronger growth- I believe that it will become the safe have currency, especially without the pressure of having to bail out the PIIGS

It would be nice.. but I think in reality the dollar is still the safe haven currency.

When there are either euro or dollar troubles the pound seems to bob up and down in between. If the euro is disbanded (which still seems very unlikely to me), I would expect the dollar to strengthen a lot and the pound to strengthen a bit.

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A consistent pattern in the relative performance of major currencies over the last few weeks has been that the pound is to the others as the euro is to the pound. We've just been a slightly less bad version of the euro. Seems to me if the euro 'goes', we're next.

http://www.bbc.co.uk/news/business/market_data/currency/13/11/intraday.stm

http://www.bbc.co.uk/news/business/market_data/currency/11/12/intraday.stm

http://www.bbc.co.uk/news/business/market_data/currency/13/12/intraday.stm

http://www.bbc.co.uk/news/business/market_data/currency/11/14/intraday.stm

http://www.bbc.co.uk/news/business/market_data/currency/13/14/intraday.stm

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$ = Euro 1.29921 £1.55020

Sterling was 1.583 a few minutes ago so its starting to refelct some realities about our economy and dependence on the EZ for more than half our trade.

IMO £ wil fare better than the Euro in a total meltdown. The Euro may go this side of Crimbo:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8170267/Euro-slide-gathers-pace-on-debt-crisis-fears.html

"The spreads between 10-year Spanish and Italian bond yields over the German benchmarks, which have a solid status, have now reached their highest levels since the euro was launched in 1999."

Edited by Realistbear

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  • 224 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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