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Pluto

Up, Up, And Away, In My Beautiful Balloon

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I'm so glad inflation is only running at 2.4%.

Sterling is holding up in light of rampant inflation. Amazing...

http://today.reuters.co.uk/news/articleinv...-NATIONWIDE.xml

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Sterling's performance is truely impressive of late, especially when you consider that it seems to be flying in the face of all rational economic indicators.

My own personal theory goes like this:

There is currently a huge amount of excess money floating about in the world at the moment with a lot of it coming from the US. This money has to go somewhere. Banks are keen to lend this money to people rather than invest it in the traditional sense because they can make more money that way and keep this inflationary bubble going for a bit longer. Some countries (NZ being a prime example) are keen to prevent excess debt and inflationary asset bubbles forming and so put up interest rates and/or maintain relatively restrictive lending laws. Other countries (the UK, Ireland) are happy to suck down as much debt as the global market can supply. Really stupid countries (like the UK) are also trying to sell of national assets to the highest bidder as fast as they can. This results in more foreign money flowing into the country pushing up the value of the currency. Thus NZ can put up its interest rates and see the value of its currency fall (there are nearly 3 NZ$ to the pound compared with 2.5 NZ$ a couple of years ago) whilst a country with much lower interest rates but lax lending laws can see the value of its currency increase.

Of course as soon as people stop borrowing, the value of the currency plummets and all the foreign debt becomes even less affordable.

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Sterling's performance is truely impressive of late, especially when you consider that it seems to be flying in the face of all rational economic indicators.

My own personal theory goes like this:

There is currently a huge amount of excess money floating about in the world at the moment with a lot of it coming from the US. This money has to go somewhere. Banks are keen to lend this money to people rather than invest it in the traditional sense because they can make more money that way and keep this inflationary bubble going for a bit longer. Some countries (NZ being a prime example) are keen to prevent excess debt and inflationary asset bubbles forming and so put up interest rates and/or maintain relatively restrictive lending laws. Other countries (the UK, Ireland) are happy to suck down as much debt as the global market can supply. Really stupid countries (like the UK) are also trying to sell of national assets to the highest bidder as fast as they can. This results in more foreign money flowing into the country pushing up the value of the currency. Thus NZ can put up its interest rates and see the value of its currency fall (there are nearly 3 NZ$ to the pound compared with 2.5 NZ$ a couple of years ago) whilst a country with much lower interest rates but lax lending laws can see the value of its currency increase.

Of course as soon as people stop borrowing, the value of the currency plummets and all the foreign debt becomes even less affordable.

I personally think there has been a flight from dollars to UK pounds over the last few years. Most low profile, but some higher, like Randy Lerner's bid for Aston Villa currently. Randy Lerner is the son of fomer MNBA's Al Lerner. Al bought the Clevleland Brown's and the time Randy was never interested in any sporting venture. Out of the blue Randy is now a "football" fan in the UK. This is just another case of dollars leaving the US and finding a home in the UK.

The rise in Sterling has more to do with the collapse of the dollar than the strength in the UK economy, if that makes any sense.

Edited by Pluto

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I remain a long term $ bull in relation to sterling. IMO, the miracle economyh is perceived as truly miraculous without the risk of a downturn despite the data suggesting othertwise:

1. Twin deficits expanding.

2. M4 up 13% and CPI data appearing to be incongrous.

3. Unemployment up.

4. Constant erosion of UK manufacturing base.

5. Personal debt highest in the world per capita

6. Rising insolvency rates

7. Excessive reliance on housing in GDP

8. Sterling's value is based on other country's weaknesses rather than inherent UK strength--in other words sentiment driven.

And its not just against the $ that the pound is becoming dangerously over valued:

http://www.tradingmarkets.com/.site/news/F...%20NEWS/355291/

FOREX NEWS
Sterling Rallied Against Other Majors Wednesday In New York
Wednesday, August 30, 2006; Posted: 02:33 PM
(RTTNews) - The British pound advanced against other major currencies Wednesday in New York trading. This came as UK consumer credit growth continued to fall in July.
:blink:
The British currency extended its gains against the greenback
. The pound advanced against the buck Tuesday as the FOMC minutes firmed expectations that the Fed will continue to hold rates in September...../
Meanwhile, the British pound
strengthened against the Euro
....../
In the meantime, the pound
rallied against its Japanese counterpart
...../

So, not only do we have the most expensive houses in the world (LOndon at least) we now have the most expensive currency. Little wonder our exports are getting hit.

The MAIN driver for sterling is house prices:

http://today.reuters.co.uk/news/articleinv...ERLING-OPEN.XML

Sterling hits two-year high after Nationwide data
Thu Aug 31, 2006 8:59 AM BST165
LONDON, Aug 31 (Reuters) - Sterling was at two-year highs on a trade-weighted index for a second day on Thursday, buoyed by a survey showing house prices jumped sharply in August, which raised expectations for an interest rate hike this year.

Ironically, with an IR hike the driver collapses? :blink:

Edited by Realistbear

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I remain a long term $ bull in relation to sterling. IMO, the miracle economyh is perceived as truly miraculous without the risk of a downturn despite the data suggesting othertwise:

1. Twin deficits expanding.

2. M4 up 13% and CPI data appearing to be incongrous.

3. Unemployment up.

4. Constant erosion of UK manufacturing base.

5. Personal debt highest in the world per capita

6. Rising insolvency rates

7. Excessive reliance on housing in GDP

8. Sterling's value is based on other country's weaknesses rather than inherent UK strength--in other words sentiment driven.

And its not just against the $ that the pound is becoming dangerously over valued:

http://www.tradingmarkets.com/.site/news/F...%20NEWS/355291/

FOREX NEWS
Sterling Rallied Against Other Majors Wednesday In New York
Wednesday, August 30, 2006; Posted: 02:33 PM
(RTTNews) - The British pound advanced against other major currencies Wednesday in New York trading. This came as UK consumer credit growth continued to fall in July.
:blink:
The British currency extended its gains against the greenback
. The pound advanced against the buck Tuesday as the FOMC minutes firmed expectations that the Fed will continue to hold rates in September...../
Meanwhile, the British pound
strengthened against the Euro
....../
In the meantime, the pound
rallied against its Japanese counterpart
...../

So, not only do we have the most expensive houses in the world (LOndon at least) we now have the most expensive currency. Little wonder our exports are getting hit.

The MAIN driver for sterling is house prices:

http://today.reuters.co.uk/news/articleinv...ERLING-OPEN.XML

Sterling hits two-year high after Nationwide data
Thu Aug 31, 2006 8:59 AM BST165
LONDON, Aug 31 (Reuters) - Sterling was at two-year highs on a trade-weighted index for a second day on Thursday, buoyed by a survey showing house prices jumped sharply in August, which raised expectations for an interest rate hike this year.

Ironically, with an IR hike the driver collapses? :blink:

I'd be very careful with your $ investments RB. The whole US economy and dollar revolves around cheap oil. If oil stays above $60 for much longer the US is going into a recession, and the dollar this time will be toast. It was almost toast in the 70's; oil was the culprit then also.

Volcker saved the day then, but his policies are not possible today with debt the way it is.

Fiat currencies are all scary right now.

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I'd be very careful with your $ investments RB. The whole US economy and dollar revolves around cheap oil. If oil stays above $60 for much longer the US is going into a recession, and the dollar this time will be toast. It was almost toast in the 70's; oil was the culprit then also.

Volcker saved the day then, but his policies are not possible today with debt the way it is.

Fiat currencies are all scary right now.

I don’t see it this way at all but quite the opposite.

G.W Bush and the thugs in the USA have made a grab to control the worlds oil supplies and are forcing the price up at every opportunity so more $USD are needed to buy the same amount of oil and this is supporting the currency.

If oil prices fall then Bush and his friends who are Texas oil billionaires see the value of their holdings plummet down and when they cash the chips in, the profit is valued in a depreciating currency so they switch out of the $$$$$ and this makes it crash even faster.

Apparently we are told that consumption of fuel in the USA is rising and holding it’s own in the UK. This is not something I believe as I myself and others have cut back on the amount we use and you can see petrol stations all over the place that are closed.

The surge in oil prices is offset by India and China booming and buying commodities from the west so this helps to some degree to guard against a depression.

We both know the USA is holding on by the skin of it’s teeth with $118,000 worth of debt for every man woman and child in the country but disagree on what will be a catalyst for the fall of the country.

America was in trouble pre 9/11 with Enron and all that but then we had a false flag attack and this allowed them to continue on a bit longer but now the cracks are showing and if these allegations about 9/11 become proven in court then I think you will see America fall to it’s knees in a single night but on the brighter side the sooner the American people take the medicine the better it will be in the long term.

you may like to read this about the Iranian Oil Bourse and then connect the dots to see why Bush wants to attack Iran or you may like to learn why China will back Iran or even read that the National Institute of Standards and Technology (NIST) does not go for the pancake theory on 9/11.

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  • 302 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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