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

Collapse In Pound Leads To Largest Goods Trade Deficit On Record?

Recommended Posts

Can't we find a way to export half a million pound shoebox flats from swinging London in kit form? The world will go mad for them.

A genuine London shoebox flat.

Share this post


Link to post
Share on other sites

A further fall trade deficit is to be expected because of the existence of contracts. Theoretically an improvement should take time to manifest as old contracts expire and new deals are made.

https://en.m.wikipedia.org/wiki/J_curve

This isn't just a short-term effect in the case of the UK - The data suggests it - sterling weakens and our current a/c deficit worsens over > 5 years following the depreciation

In a nutshell, the UK doesn't meet its Marshall-Lerner condition

The demand for UK imports is price inelastic in both the short and long-run because due to deindustrialisation we no longer produce substitutes for most of the manufactured goods that we have to import because we don't produce them in Britain anymore

Share this post


Link to post
Share on other sites

There may be a hedging component too, where people buy foreign goods and assets sooner than they might otherwise have done in case the pound drops further. This would show up as a temporary rise in the trade deficit.

Edited by ManVsRecession

Share this post


Link to post
Share on other sites

Oh dear, and there's a new iPhone out next month, init.

So what has it got that existing phones have not got.....and would anyone notice or anyone care......BTW I do not use a mobile phone and I know of many people just like me......no loss in quality of life, more of a gain......speaking to someone today, handed back all work phones and paraphernalia feels totally mobile phone liberated........anyway you get a feeling what the pound will do, rise and fall and money made on the movements....if the price is too much do not buy, if the value is there only purchase if there is a need.....things can wait, other opportunities show their face. ;)

Share this post


Link to post
Share on other sites

So what has it got that existing phones have not got.....and would anyone notice or anyone care......BTW I do not use a mobile phone and I know of many people just like me......no loss in quality of life, more of a gain......speaking to someone today, handed back all work phones and paraphernalia feels totally mobile phone liberated........anyway you get a feeling what the pound will do, rise and fall and money made on the movements....if the price is too much do not buy, if the value is there only purchase if there is a need.....things can wait, other opportunities show their face. ;)

I don't think many people buy iphones - they just get them for 'free' on their contract. The inability of people too see that they are actually paying for the new phone on their monthly bills is very telling IMO.

Anyway, the reason people get iphones is because society tells them they have to have one - the same as pretty much everything else.

Share this post


Link to post
Share on other sites

@arbitage

Not sure I follow.

Demand will fall for imported goods if the prices rise regardless whether we can manufacture same in uk or not? Easing deficit.

Share this post


Link to post
Share on other sites

@arbitage

Not sure I follow.

Demand will fall for imported goods if the prices rise regardless whether we can manufacture same in uk or not? Easing deficit.

Quantity demanded will fall but not necessarily total expenditure on imports.

Eg If quantity imported falls 8% but prices rise 10% we spend 1.2% more on imports (0.92 * 1.10 = 1.012)

Edited by LeeT

Share this post


Link to post
Share on other sites

I have my own business and i import 100% from China.I can tell you the £/$ is/will have a massive affect.Im only a one man band and i hedged my next 3 containers (10 months worth),and most of the large companies i know hedged for between 6 months and 14 months.

I hedged simply to make sure my costs would be in line with my competitors,or probably at my end none will of hedged,so better for a year.Iv also took some stock off the market and im waiting until my competitors run through current stock because the price of their next lot will shoot up.

The shippers have also been sorting out the overcapacity in the China/Europe lane and prices are starting to move higher slowly.(Buy the exchange traded fund SEA to ride that)

Inflation is pretty certain in goods,as margins are already very tight for the big retailers and they wont be able to swallow the increases.

In normal times id expect a lot to go under/out of business due to the noose tightening with the margin fall killing them due to debts,but with such low interest rates that might not happen.

For many goods you could probably manufacture cheaper in the UK now,but we dont have the factories left,or the set up for it.All capital goes into land/houses.

Edited by durhamborn

Share this post


Link to post
Share on other sites

Quantity demanded will fall but not necessarily total expenditure on imports.

Eg If quantity imported falls 8% but prices rise 10% we spend 1.2% more on imports (0.92 * 1.10 = 1.012)

This is exactly what will happen,my prices will go up,but sales will slow.Il make less money/profit yet spend the same/more on the goods.It puts a big strain on working capital/cash flow/return on equity for most companies.

Share this post


Link to post
Share on other sites

I have my own business and i import 100% from China.I can tell you the £/$ is/will have a massive affect.Im only a one man band and i hedged my next 3 containers (10 months worth),and most of the large companies i know hedged for between 6 months and 14 months.

I hedged simply to make sure my costs would be in line with my competitors,or probably at my end none will of hedged,so better for a year.Iv also took some stock off the market and im waiting until my competitors run through current stock because the price of their next lot will shoot up.

The shippers have also been sorting out the overcapacity in the China/Europe lane and prices are starting to move higher slowly.(Buy the exchange traded fund SEA to ride that)

Inflation is pretty certain in goods,as margins are already very tight for the big retailers and they wont be able to swallow the increases.

In normal times id expect a lot to go under/out of business due to the noose tightening with the margin fall killing them due to debts,but with such low interest rates that might not happen.

For many goods you could probably manufacture cheaper in the UK now,but we dont have the factories left,or the set up for it.All capital goes into land/houses.

When the China thing first kicked off, I saw some quotes for some widgets.

I could not believe the labour cos - pennies.

20 years down the line, Ive seen some more costings. When you chuck in shipping and Chinese Labour its really not cheap, by a long shot. Sort of put this in a factory or get some plant to make it.

Thing is, China has not really moved up the quality/price ladder.

The Sino mercantilist policy was purely about getting people into work, rather than moving up the value chain, which would involve the Communist party having to relinquish control.

I still thin kthat China faces a mini revolution/turmoil some time shorty. There's no other way to resolve the many conflicts.

Share this post


Link to post
Share on other sites

When the China thing first kicked off, I saw some quotes for some widgets.

I could not believe the labour cos - pennies.

20 years down the line, Ive seen some more costings. When you chuck in shipping and Chinese Labour its really not cheap, by a long shot. Sort of put this in a factory or get some plant to make it.

Thing is, China has not really moved up the quality/price ladder.

The Sino mercantilist policy was purely about getting people into work, rather than moving up the value chain, which would involve the Communist party having to relinquish control.

I still thin kthat China faces a mini revolution/turmoil some time shorty. There's no other way to resolve the many conflicts.

Yes thats right.Its not very cheap now and like you say add on shipping and its even worse.The main reason they did well was the government.Lets say a dog cage i used to sell.The factory ran at 10% capacity when i first went with them.The government covered the cost.Slowly they sucked in all the demand around the world for those sort of dog cages.Took around 7 years.Now nobody else has a factory making them.Only China.Expand that right across products.Thats what they did.

I do think this will slowly turn now.Already freezer production etc is returning to the UK.It will start with the bigger goods (costs more to ship) and work down.The small stuff will always come from China ,30,000 on a container has tiny unit costs.120 freezers though is a different story (£20 a unit shipping at the present time including import duty and a 4 month lead time order to delivery).

Share this post


Link to post
Share on other sites

I know that the new handheld ZX Spectrum that got kickstarted about 6-8 months ago is made in the UK.

So is raspberry Pi?

I guess a plus is that factories don't need to be as big as they used to be, the amount of rates that need paying on premises has to come into the equation for these companies.

Share this post


Link to post
Share on other sites

I don't think many people buy iphones - they just get them for 'free' on their contract. The inability of people too see that they are actually paying for the new phone on their monthly bills is very telling IMO.

Anyway, the reason people get iphones is because society tells them they have to have one - the same as pretty much everything else.

You'll be surprised. I lived out in Singapore for 10 years, and an awful lot of people buy them with cash out there.

In a nutshell:

Android is cheaper, more customisable and you can choose from many different hardware manufacturers. It also has the benefit of not having to go through iTunes to move stuff to and from your phone. Due to it's open nature, it's generally ahead of apple in terms of innovation, but the negative of this is that it tends to be more flaky and less refined.

Apple generally appeals to people who want quality, sleek design and ease of use. You can't customise iphones as much as android, but plenty of people don't care - they just want a phone that does the things it needs to in a simple and easy to use way.

Of course, the above is my opinion only :)

Share this post


Link to post
Share on other sites

I know that the new handheld ZX Spectrum that got kickstarted about 6-8 months ago is made in the UK.

So is raspberry Pi?

I guess a plus is that factories don't need to be as big as they used to be, the amount of rates that need paying on premises has to come into the equation for these companies.

Tech is about supply chains.

For various reasons, the supply chains have concentrated in Asia - lots of nimble. cheap fingers.

However, with electronics becoming more + more integrated and people getting better at design for cost + production, most of the stuff will be robots and pick + place machines.

Going back to my post about the increase in Chinese labour costs.

I cannot remember the exact pricing but is was something like 20p for a quite complex widget.

Then, that was a fraction (literally) of the Western cost.

Now Im looking at some Chinese factory labour costs and thinking - cheaper in the Midlands/Stoke, a lot closer and if the sh1t hits the fan I can train it there and back in a day to knock heads/trouble shoot. All in the same (sort of, Brummies I dont understand) language.

There's still compnaies trying to chase cheap Labour. Uk -> Turkey -> China -> Vietnam -> fckknowwhereistan.

Its insane. The risk and effort in moving production sites is insane. Its only something you'd want to do every 20-30 years, providing theres been some large shift in cost base/demand. To do it every 7 years is a path to bankruptcy.

Stop moving jobs. Think where the costs are. Work on your production processes and capital plant. FFS - leanr from the Germans and Swiss. Stop being a cheap, brainless penny pincher.

Again. I fail to see how China is not going to cause trouble or expense for the companies operating there. Is its them (Commies) or you then its You.

Share this post


Link to post
Share on other sites

You'll be surprised. I lived out in Singapore for 10 years, and an awful lot of people buy them with cash out there.

In a nutshell:

Android is cheaper, more customisable and you can choose from many different hardware manufacturers. It also has the benefit of not having to go through iTunes to move stuff to and from your phone. Due to it's open nature, it's generally ahead of apple in terms of innovation, but the negative of this is that it tends to be more flaky and less refined.

Apple generally appeals to people who want quality, sleek design and ease of use. You can't customise iphones as much as android, but plenty of people don't care - they just want a phone that does the things it needs to in a simple and easy to use way.

Of course, the above is my opinion only :)

Android is basically free.

You pay for accessing Google play and billing.

Developing a good experience on a phone is not free.

You either just make hardware and contract the software out, or you build a team and try and compete with Google.

Good luck on either.

My take is that Android is holed due to its use of Java (Jarvik). Terrible choice done for the right reasons at the time but the run-time is a huge memory + performance hog. There are better langues/frameworks for phones.

Share this post


Link to post
Share on other sites

Yes thats right.Its not very cheap now and like you say add on shipping and its even worse.The main reason they did well was the government.Lets say a dog cage i used to sell.The factory ran at 10% capacity when i first went with them.The government covered the cost.Slowly they sucked in all the demand around the world for those sort of dog cages.Took around 7 years.Now nobody else has a factory making them.Only China.Expand that right across products.Thats what they did.

I do think this will slowly turn now.Already freezer production etc is returning to the UK.It will start with the bigger goods (costs more to ship) and work down.The small stuff will always come from China ,30,000 on a container has tiny unit costs.120 freezers though is a different story (£20 a unit shipping at the present time including import duty and a 4 month lead time order to delivery).

Maybe we need to invent a word for this - monopoly?

I wonder itll pan out for companies/consumers?

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.

  • Next General Election   90 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    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.