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Pound Soars Inspite Of Ballooning Current Account Deficit

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Canada, Japan and the submerging markets have had the same experience because there's a vast excess of global liquiidty chasing too little yield. Exporters are getting crucified by asset/property speculators.

Ass, gas or grass. Nobody rides for free.

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What’s strange is that the rise in the pound has coincided with a surge in the current account deficit, now running at more than four per cent of GDP. You can explain away a deficit of, say, two per cent of GDP without too many worries, but one of this size is pushing it. By rights, a current account deficit should weaken a country’s currency, as covering it would require a huge amount of net inward investment (the balance of payments has to balance, so a current account deficit has to be offset by a capital account surplus). But the reverse seems to have happened: the bigger the deficit, the stronger the pound.

This is something that has long puzzled me. How can the pund be so strng when we have to buy virtually everything essential from abroad? Obviously there are capital flows into the country, but from where? China?

It seems to me that the US dollar and sterling are linked in a way - and I fear that if the dollar loses its reserve currency status and crashes (maybe because the Russians demand payment for gas in euros, or something like that) then sterling will crash along with it.

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Its Easter, its trips abroad time, its raise the holiday money rates.

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And an interesting tweet from Jim rickards on Max Keiser's site about the Russians being serious about pricing energy in roubles.

http://www.maxkeiser.com/2014/04/russia-serious-about-pricing-oil-in-roubles-russian-ambassador-to-rickards/

What are the implications for this? Surely the Rouble price will shadow the Rouble/Dollar exchange rate and the dollar price? Do Russia actually get paid in dollars for gas? (I guess the answer is yes)

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What are the implications for this? Surely the Rouble price will shadow the Rouble/Dollar exchange rate and the dollar price? Do Russia actually get paid in dollars for gas? (I guess the answer is yes)

They find an unshaven Putin down a hole?

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They find an unshaven Putin down a hole?

Shirtless, wrestling a bear?

Seriously though, I take your point about precedents, but they couldn't get away with it again. Surely not?!

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What are the implications for this? Surely the Rouble price will shadow the Rouble/Dollar exchange rate and the dollar price? Do Russia actually get paid in dollars for gas? (I guess the answer is yes)

Yes, since 1971 and the advent of the petrodollar, all such prices are paid in dollars. sadaam Tried settling accounts in euros and he got taken out.

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This is something that has long puzzled me. How can the pund be so strng when we have to buy virtually everything essential from abroad? Obviously there are capital flows into the country, but from where? China?

It seems to me that the US dollar and sterling are linked in a way - and I fear that if the dollar loses its reserve currency status and crashes (maybe because the Russians demand payment for gas in euros, or something like that) then sterling will crash along with it.

Royal Tour of Australia.

Prince George / Duchess kate only have to be seen wearing something from a UK retailer for 10 seconds and within 5 seconds the UK retailers online sales arm has sold out.

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This is something that has long puzzled me. How can the pund be so strng when we have to buy virtually everything essential from abroad? Obviously there are capital flows into the country, but from where? China?

It seems to me that the US dollar and sterling are linked in a way - and I fear that if the dollar loses its reserve currency status and crashes (maybe because the Russians demand payment for gas in euros, or something like that) then sterling will crash along with it.

It's a total mystery to me too. I am planning on moving my money away from the debtor nations and towards the creditor nations. It seems a sensible thing to do. But when sterling keeps going up my logic is turned on it's head.

I am starting to think my best strategy is to find the worst investment possible and invest in that. People that invested in Greek bonds have made 24%.

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Canada, Japan and the submerging markets have had the same experience because there's a vast excess of global liquiidty chasing too little yield. Exporters are getting crucified by asset/property speculators.

Ass, gas or grass. Nobody rides for free.

It's been like this for a couple of decades now. Too much capital relative to too little consumption. The excess of capital seeks a return where-ever it can find it, the foreigners buying London prime properties is a symptom of this. In an attempt to stimulate consumption QE and other central bank polcies are making it worse, but the problems predate these central bank interventions.

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This is something that has long puzzled me. How can the pund be so strng when we have to buy virtually everything essential from abroad? Obviously there are capital flows into the country, but from where? China?

it can be because it is speculated,just like tulips.

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It's a total mystery to me too. I am planning on moving my money away from the debtor nations and towards the creditor nations. It seems a sensible thing to do. But when sterling keeps going up my logic is turned on it's head.

I am starting to think my best strategy is to find the worst investment possible and invest in that. People that invested in Greek bonds have made 24%.

What most likely will happen based on historical precedent is the creditor nations currency will rise spectacularly followed by an almighty crash. The crash will impact all nations but the deficit nations will recover faster.

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What most likely will happen based on historical precedent is the creditor nations currency will rise spectacularly followed by an almighty crash. The crash will impact all nations but the deficit nations will recover faster.

I think you are right.

Money was supposed to aid barter ie I exchange my pig for your sheep and two chickens. I think we know the rest of the story

However China and Germany have been producing a lot and haven't been taking anything back in return. This really isn't a problem China and Germany aren't going to get paid.

The problem I see is what are we going to do without oil. If we have nothing to exchange for oil where does that leave us?

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I think you are right.

Money was supposed to aid barter ie I exchange my pig for your sheep and two chickens. I think we know the rest of the story

However China and Germany have been producing a lot and haven't been taking anything back in return. This really isn't a problem China and Germany aren't going to get paid.

The problem I see is what are we going to do without oil. If we have nothing to exchange for oil where does that leave us?

Oh we have enough to exchange for oil. Our current account deficit is only 4% or so of GDP. It'll hurt a bit in some ways to rebalance but in others it will bring blessed relief. Running a deficit means we import unemployment. Thus if our current account deficit goes to zero or is slightly positive then the employment rate will rise. Moreover this is likely to occur at the same time as we end immigration, as there's no way we will keep open borders if things go tits up. Countries play nicely when things are going ok, not when everything is falling apart. If that happens then inequality will fall and spending power will rise for the lower demographic groups, and fall higher up the food chain. The masses will benefit while the elites and the elites enablers lose out.

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So I think the logic goes like this.

If you were to compare two currencies one with an inflation rate of 0% and the other with an inflation rate of 20%. You would value the 0% currency high because it's keeping it's value. The currency with 20% inflation would trade at a discount. If then the inflation dropped back to 0% the currency would trade higher because it is no longer being devalued.

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I think you are right.

Money was supposed to aid barter ie I exchange my pig for your sheep and two chickens. I think we know the rest of the story

However China and Germany have been producing a lot and haven't been taking anything back in return. This really isn't a problem China and Germany aren't going to get paid.

The problem I see is what are we going to do without oil. If we have nothing to exchange for oil where does that leave us?

They arent? Where do you think the money comes from for the chinese to keep buying up the UK and US?

Chinese cashing their chips.

The germans maybe. Their EU sycophancy means a hell of a lot of their paper really is worthless, buying debt in southern europe, much of which has worse demographics than germany itself. Another great disaster created by the EU.

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They arent? Where do you think the money comes from for the chinese to keep buying up the UK and US?

Chinese cashing their chips.

The germans maybe. Their EU sycophancy means a hell of a lot of their paper really is worthless, buying debt in southern europe, much of which has worse demographics than germany itself. Another great disaster created by the EU.

Yes I think you are right about the Chinese cashing in their chips and buying London property. Maybe we should wait a bit longer and get more of their money before stinging them with LVT.

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