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TeutonicKnight

Sterling Crisis This Year?

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So you didn't short at 1.70 but you shorted at the 2013 lows. Hmmm...

There is more chance of $ pulling back after such a big run than continuing. But it may continue.

Long term $ still in multi year bull.

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So you didn't short at 1.70 but you shorted at the 2013 lows. Hmmm...

There is more chance of $ pulling back after such a big run than continuing. But it may continue.

Long term $ still in multi year bull.

Yes, the mind of a short term spread bettor! :P (I'm only guessing that you have done it via that! Please enlighten me if you did it through a ETF)

Edited by renting til I die

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Always pay; for first or last, you must pay your entire debt. Persons and events

may stand for a time between you and justice, but it is only a postponement. You

must pay at last your own debt. If you are wise, you will dread a prosperity

which only loads you with more.

-RALPH WALDO EMERSON

If sterling does buckle, can hope it would force deep cuts in spending, major reforms, and allowing low-mid-high prime HPC, then volume fresh lending against £Trillions in real-estate equity to allow banks to book big profits and revenue for Gov.

They mind-think of the authorities at the moment though suggests the authorities would applaud lower sterling, to allow foreigners to hock off assets to in dollars/swiss francs, and that our exports would be more attractively priced... why not run it all the way down in that case. You can't take it past a level (either via devaluation or printing) which offers a fair balance else risk ruin and wider poverty. Markets always have their say in the end.

Military Power Required Sound Money

...As Dr Samuel Johnson wrote in 1749

Yet Reason frowns on War's unequal Game,

Where wasted Nations raise a single Name,

And morgag'd States their Grandsires Wreathes regret

From Ages to Age in everlasting Debt

Neither could governments afford wild inflation. If they attempted to wipe away their "everlasting debt" with the printing press, they would have lost further access to the credit markets, greatly diminishing their strategic positions. Paul Kennedy emphasized the importance of financial stability, "sound money, secure credit, and regular repayment of debt" in producing military success. In one case after another, the leading powers were powers because they were rich. "Success in war depended upon the length on of one's purse." First Spain, then the Netherlands, and later England came to dominate much of the world because of their financial capacity to wage war. Spain was bankrupted in 1596 when interest on the national debt took a large fraction of the national revenues, variously reported as from 40 percent to 66 percent. The result was that Spain was forced to withdraw from wars it could no longer afford. The bankruptcy of Spain produced a period of peace known as "The Breathing Spell." Dutch finance was the strongest in Europe even before the Dutch became military predominant. Dutch capital continued to play a major role in financing British wars. When Britain allowed its creditworthiness to decline during the time of the American Revolution, the Dutch withdrew their financial support, with unfavourable consequences from the British point of view.

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I think the main number of keep in mind is the deficit - ~7% GDP - for what seems likes years,well 8 (8 FFS!!!!).

The secondary thing is the level of debt to GDP - over 90%, heading fast towards 100%

UKGOV is spending ~ 45% GDP.

If they close the deficit by increasing taxes we'll have Scandinavian tax rates with Texas-like public services.

If the debt market stalls then there's a problem.

About half of government spend is pretty stubborn - pensions, social security.

Lets say the UK goes all Greek and has to swing to a primary surplus.

That means UKGOV will have to cut spending by 1/3.

If you are going to protect health + education - two areas where money is massively wasted - then the spending on the other dept will be more than halved - sack 50% or reduce wages by 50%

I look at Labour electioneering and its like listening to that pr1ck Brown in 2004ish - which, considering its Balls + Milliband it is.

Do they expect to win? If Labour go into government - majority or coalition - then it'll destroy the party.

They need to managing down expectations. All they are doing is coming up moronic response to other parties policies. Thats not opposition.

What do I think will happen?

1) Tax credits will go. That useless bellend IDS has royally messed up reform for 5 years. They need to remove the govrnemnt and get a contribution based insurance scheme in place. Get a work-fare scheme in place so there is no different to working on being on benefits.

2) Housing benefit will be reformed. Hopefully aligned to local wages//income.

3) Public sector pension reform. Contribution based. Retire at 70.

4) Army much reduced in numbers. Our army is useless. Its been useless since Suez. Why the Fck do we have our tank divs based in the UK, > 1000 miles from any battlefield???

What's certain is that Brown - and it was him solely - has totally fcked up the UK for the next 20 years.

I talk to the odd teacher + NHSworker. They talk about Brown as if he was some saviour. They just do not know or comprehend how he has royally shafted them.

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I think the main number of keep in mind is the deficit - ~7% GDP - for what seems likes years,well 8 (8 FFS!!!!).

The secondary thing is the level of debt to GDP - over 90%, heading fast towards 100%

UKGOV is spending ~ 45% GDP.

If they close the deficit by increasing taxes we'll have Scandinavian tax rates with Texas-like public services.

...What's certain is that Brown - and it was him solely - has totally fcked up the UK for the next 20 years.

I talk to the odd teacher + NHSworker. They talk about Brown as if he was some saviour. They just do not know or comprehend how he has royally shafted them.

When we used to have real recessions, like during last 700 years, to rebalance positions and liquidation malinvestment and hangovers of excessive debt (not carry on the party policies), they made moves on both side of the equation. Gov spending cut, and taxes raised. If it comes that that Texas-like public services, best to have some savings to treat yourself to private (possibly lot cheaper than today's rates) services like medical and dentistry, eh.

How old are they? Older people from all walks of life have a lot to be happy about, voting in the free spenders with the HPI party (1997), and HPI continuation (Jubilee 2012)... how many now getting into BTL, with zero scars from financial 'crisis'.. their homes all paid off... pensions.. Timak's parents in law with house, and hundreds of thousands of pounds in the bank, complaining about low yield that was depriving them of income, so 'sensibly gone into BTL'. It's a paradise of wealth and asset values that isn't appreciated at all, by many people; never enough for them.

blair-006.jpg

article_update_ef42c3b2af70d3d2_13389070

...market participants can dump gilts, especially if the UK Government takes an approach that is harmful to their investment in sterling - driving up interest rates.

Although I've lost track on Gilts. Gov could buy up even more, carrying on the party, and VI could withstand falls on their holding if it's offset some other way.

http://www.economicshelp.org/blog/1407/economics/who-owns-government-debt/

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Just wondering whether it is possible to open a Euro account in a German bank and whether you might end up with Deutschmarks before the end of the year.

The only German bank offering accounts to nonresidents is DKB. You can apply online - the whole process is in German but there's at least one website that takes you through the process step by step with translations. There's also an ID verification process that involves sending a document by post.

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The only German bank offering accounts to nonresidents is DKB. You can apply online - the whole process is in German but there's at least one website that takes you through the process step by step with translations. There's also an ID verification process that involves sending a document by post.

Thanks. Very useful.

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They need to crash the debt market with out killing the real economy.

The only way to do that is to ensure businesses aren't leveraged up to the hilt.

Perhaps they need to provide finance directly

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Just wondering whether it is possible to open a Euro account in a German bank and whether you might end up with Deutschmarks before the end of the year.

What interest rates do the German banks pay savers?

Article a few years ago, suggested Germans were stockpiling Euro notes with the X code, for Germany; with some panicky fear that in Euro-currency collapse, those notes would be more likely to be exchanged for new Deutschmarks.

It's pretty impossible for me to hold a chunk of my savings in cash/ foreign currency.. too risky... (just enough to maybe bribe our way out with airfares in a massive crisis.. but nothing left over when we got to whatever destination)... and irritates me... all those years of working, savings, towards building a deposit towards a house, vs runaway HPI and others celebrating it. Below might have some answers for you, on your German Euros savings bank proposition, but it was authored when Govs allowed recessions and rebalancing. Not chasing forever HPI, QE £$Trillions kiss-it-betters, ever more landlords...

When deflation lowers interest rates, the loss of real income by holding cash may not be significant compared to the risk of losing your capital due to default of banks or other institutions. The average yield on three-month Treasury securities in 1933 was an almost invisible 0.515 percent. For a brief time it was even negative. So those who chose to hold cash were not throwing away high-interest income. Watch the growth of currency as a crucial sign that the economy is headed for a deflationary contraction.

A common feature of economic slumps is credit revulsion. Even good borrowers find their welcome mat withdrawn. When the music stops, the attitude of lenders hardens. Banks will slash credit and call loans even to good customers. They will be driven to do this in part, because of growing demands to hold cash. When the public raises its demands for currency, the banks have no choice but to shrink. Each time commercial bank obtain refills for their customers, they must reduce their reserve accounts with the central bank. If the customers suddenly prefer low-leverage money - cash - the banks are obliged by the logic of leverage to reduce their lending. $1,000 in the banking system can be leveraged at 10:1 or more. $1,000 in a mattress is not leveraged at all.

Note that the money supply is much more than merely cash in people's pockets. M-3, the broad measure of money, currently includes in addition to currency: traveler's checks, checking accounts, and other "checkable" deposits like NOWs and Super NOWs, saving deposits, small time deposits, overnight repurchase agreements, and term Eurodollars. Of all the components of the money supply, currency involves the least risk of all.

With the value of real estate collateral falling, the true market value of construction and other real estate loans will fall. Bankers like other lenders, like their predecessors after 1929, will not wish to magically turn on dollar of cash into a loan worth just eighty cents, much less sixty cents. When the value of collateral falls, and the public's demand to hold cash rises, even easy money at the Fed may not stop deflation. Cash could be hard to come by, and idle credit lines may be withdrawn. If your business has seasonal needs, anticipatory borrowing may make sense. If you cannot secure irrevocable letters of credit, you may wish to borrow now. You can place the cash your realize from anticipatory borrowing in interest-bearing accounts, and absorb the loss as a price of doing business. It could be cheaper than dealing with a loan shark, as many small businesses were forced to do in the last depression.

Edited by Venger

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Well with the catastrophic fall in Sterling when rates were crashed to 0.5% and the biggest QE in the world announced, it had the unfortunate side effect of rescuing London (and thereby national) property prices as it encouraged 'investors'.

Yes; that's their mind-think. It's no way to run an economy, and it might catch up with them next time. A postponement.

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The Swiss Franc fiasco last week has already wiped out a chunk of the retail Forex market including myself (partially) and I wasn't even trading at the time!

Its a largely unregulated casino and I think there will be repercussions from that alone that make retail trading trickier and expensive for smaller punters. The leverage in some cases, crazy. Though IG etc are formidable business, and will probably lobby for their survival.

Edited by aSecureTenant

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You can see the deep lasting change on mindset about money from how it affected one of Buffett's ancestors.

Went all to cash... (might make sense now into other currencies for those who believe sterling is at risk)... although he chose the worst time to stick with his plan... after the crisis had passed, and before investment growth. Brilliant time to have been in cash though, in that crisis. Although the future all looks secure, via debt and QE, and super low base rates yes.

Dear Fred & Catherine,

Over a period of a good many years I have known a great many people who at some time or another have suffered in various ways simply because they did not have ready cash. I have known people who have had to sacrifice some of their holdings in order to have money that was necessary to have at that time.

For a good many years your grandfather kept a certain amount of money where he could put his hands on it in very short notice.

continues http://monevator.com/buffett-family/

Message I once received from one of the smartest HPCers on forum, imo.

People use their 'wealth' to buy assets but these assets no longer give decent yields. One day it'll all grind to a halt because a few people are rich on paper but no one has any money. I'd just prefer it to take months not decades.

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Deutsche Bank also allows current accounts for UK citizens .

I have done some research. Under a return to the DM, German residents can change their money from Euros. In order not to over-burden Germany, other residents of EZ countries cannot do this and will get Euros or their currencies back (otherwise everybody would change all Euros to DM and German taxpayer still eternally burdened.

It is not clear what will happen to non German residents who are also not resident in Eurozone countries. If they say no - you are forced to change to the Sterling rate just before transition it may be a pain. But then I have a mortgage in Germany so if they apply the same principle - then happy days!

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The only German bank offering accounts to nonresidents is DKB. You can apply online - the whole process is in German but there's at least one website that takes you through the process step by step with translations. There's also an ID verification process that involves sending a document by post.

Not sure if that is the case now! But I will look into it more...

https://www.deutscheskonto.org/en/dkb-foreigners/

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4) Army much reduced in numbers. Our army is useless. Its been useless since Suez. Why the Fck do we have our tank divs based in the UK, > 1000 miles from any battlefield???

Err ... Is it not 'defence' spending ? Would you not keep them in the country for like "DEFENCE" ? with all the rest of the military instead of galavanting round the globe kissing the U.S.A's backside, fighting illegal wars to feed their greed and prop up their over inflated ego ? ..........#justsaying

Edited by headmelter

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Err ... Is it not 'defence' spending ? Would you not keep them in the country for like "DEFENCE" ? with all the rest of the military instead of galavanting round the globe kissing the U.S.A's backside, fighting illegal wars to feed their greed and prop up their over inflated ego ? ..........#justsaying

No its not. We have America to the West, Norway to the North, France to the South, Netherlands to the East.

We do not need a large standing army to defend us.

Rather than making the UK more secure, an expensive standing army prevents money being spent of stuff we do need - rapid reaction forces, comms etc etc.

Bit like the Navy trying to justify itself by doing drug patrols in the Caribean. FFS why not say they provide an environment for barnacles.

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