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LargelyIgnorant

Uk Plc On Sale

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We have the most open economy in the world, where foreign governments are free to buy former UK companies and our stock markets are now 50% foreign owned.

From this article on a US currency website:

The slope of the rally in the British pound has been nothing short of impressive. Over the past month, the currency has appreciated from 1.9650 to 2.0650 (1000 pips) against the US dollar with virtually no retracement. Many people have argued that rate hike expectations are behind the move, but if that was truly the case, then the less hawkish voting record from the most recent monetary policy meeting should have put a dent into the currency pair’s rally.

But instead of doing so, the GBP/USD pressed forward, hitting a new 26 year high on a near daily basis. The interest rate curve has been mostly unchanged since the beginning of the year. If anything, the front end of the curve has become flatter. Even though 6 percent is still baked into the markets, the “real” driver of the latest wave of pound strength is merger and acquisition flow. Flush with cash, foreign governments are on a buying spree and theUK has its doors wide open.

Some people may have forgotten that over the past few years, the UK has been one of the biggest beneficiaries of US protectionism. Remember the Dubai Ports Deal and the CNOOC’s bid for Unocol? Both were blocked by the US government. In an environment where the US economy is just struggling to stay afloat amidst the problems in the sub-prime sector, US protectionism has contributed to dollar’s demise against the British pound.

Qatar and China Both Investing Heavily into the UK

To the benefit of the British pound, Chinese and Middle Eastern investment funds have been snapping up companies left and right. Barclays PLC announced yesterday that the governments of China and Singapore have agreed to invest at least $3 billion and as much as $18.5 billion into one of the UK’s biggest banks. Last week, an investment fund controlled by the government of Qatar also made a $21.8 billion takeover of the British supermarket chain J Sainsbury PLC. Unlike the US, the UK has not stood in the way of any of these acquisitions. Earlier this year, a Dubai investment firm that is backed by the government also bought a major stake in HSBC holdings. With the reserves of China, Russia and other Middle Eastern countries continuing to grow, we do not expect this trend to end. Central banks are no longer just content with earning US treasury yields. They are hungry for high returns and are looking beyond fixed income assets.

Germany’s Protectionism Will Also Benefit the UK

Germany has also recently joined the US in trying to restrict foreign investment. Last week, Chancellor Angela Merkel warned that foreign government backed investment funds may use their financial stakes to pursue political goals and as a result, she said Germany will be looking into ways to protect her industry from foreign investors.

If the pound's strength is even partly attributable to our UK-on-sale policy, aren't we in deep trouble?

- A high pound increases imports, increasing the cash flows into the sovereign wealth funds now buying UK companies.

- The dividends from UK plc will now also go into the sovereign funds, swelling them further

- The sovereign funds will convert more of their useless* dollars (perhaps even euros) into pounds where they can be spent, driving the pound up further

* Dubai Ports, Unocal

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We have the most open economy in the world, where foreign governments are free to buy former UK companies and our stock markets are now 50% foreign owned.

From this article on a US currency website:

If the pound's strength is even partly attributable to our UK-on-sale policy, aren't we in deep trouble?

- A high pound increases imports, increasing the cash flows into the sovereign wealth funds now buying UK companies.

- The dividends from UK plc will now also go into the sovereign funds, swelling them further

- The sovereign funds will convert more of their useless* dollars (perhaps even euros) into pounds where they can be spent, driving the pound up further

* Dubai Ports, Unocal

Spot on post. Allowing / encouraging foreigners to buy up unlimited volumes of UK assets is a very short-termist policy. It means the currency appreciates in the short term as different sets of foreigners compete to buy pounds. The strong pound means that import inflation is very low. However, once the buying spree dies down, the foreign asset owners then try to repatriate the income from these assets, i.e. they all compete on the currency market to sell pounds. The pound then starts falling and not only are there are very few assets left to sell to prop it up, but also no foreigners want to buy them as they are falling in value. You are left with a hollowed out economy which has a very weak global purchasing power.

Take a look at the percentage of recent UK mortgages which are foreign backed, or the trend of foreign acquisitions of utilities, banks etc. or the amount of Sterling / UK bonds held by central banks, it is very scary indeed.

frug.

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We have the most open economy in the world, where foreign governments are free to buy former UK companies and our stock markets are now 50% foreign owned.

From this article on a US currency website:

If the pound's strength is even partly attributable to our UK-on-sale policy, aren't we in deep trouble?

- A high pound increases imports, increasing the cash flows into the sovereign wealth funds now buying UK companies.

- The dividends from UK plc will now also go into the sovereign funds, swelling them further

- The sovereign funds will convert more of their useless* dollars (perhaps even euros) into pounds where they can be spent, driving the pound up further

* Dubai Ports, Unocal

I don't happen to agree.

The value of the currency is not determined by the transactions, ie by the currencies use as a medium of exchange specifically. The value is determined by the relationship between its supply and the demand for it as a store of value - strictly, that amount that people choose to hold, what they choose NOT to spend - so quite the opposite of what you appear to assert.

If the pound exchange rate is going up, it is because there is more demand for it as a 'store of value', and this is quite independent of trade deficits or current account deficits. Those measures only give information about the behaviour and or disposition of the inhabitants of one group in relation to another.

- A high pound increases imports, increasing the cash flows into the sovereign wealth funds now buying UK companies.

No. A high pound means simply that there is more demand for hoarding sterling. It has nothing to do with imports or exports.

- The dividends from UK plc will now also go into the sovereign funds, swelling them further

The dividends will go to whomever is purchasing the assets of course.

- The sovereign funds will convert more of their useless* dollars (perhaps even euros) into pounds where they can be spent, driving the pound up further

As I explained, sterling is going up because there is a net increase in demand for it (to hold in cash) spending decreases it, so buying sterling to spend in the UK has no effect on the exchange rate in and of itself!

Edited by Far Out Bear

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The value of the currency is not determined by the transactions, ie by the currencies use as a medium of exchange specifically. The value is determined by the relationship between its supply and the demand for it as a store of value - strictly, that amount that people choose to hold, what they choose NOT to spend - so quite the opposite of what you appear to assert.

If the pound exchange rate is going up, it is because there is more demand for it as a 'store of value', and this is quite independent of trade deficits or current account deficits. Those measures only give information about the behaviour and or disposition of the inhabitants of one group in relation to another.

It was an article from a specialist currency site, I'm surprised they have it completely wrong. The point of sovereign wealth funds is to store value - the dollar is a bad store of value; part ownership of corporations are a good store of value - the UK is the only place that has no restrictions.

No. A high pound means simply that there is more demand for hoarding sterling. Your statement is true ONLY if there is a net OUTFLOW from the UK abroad. ie, foreigners are net increasing their sterling accounts, but the UK is net decreasing in order to purchase goods and services.

A higher pound means more imports. Our balance of payments suggests our economy is not in good shape. If 50% of UK companies are foreign owned, aren't 50% of the purchases by UK listed companies of foreign companies, actually foreign purchases of foreign companies? (if you see what I mean)

The dividends will go to whomever is purchasing the assets of course.

Indeed. 50% of UK dividends now go abroad.

As I explained, sterling is going up because there is a net increase in demand for it (to hold in cash) spending decreases it, so buying sterling to spend in the UK has no effect on the exchange rate in and of itself!

Bit lost here. If the Chinese government sells dollars and buys pounds in order to purchase UK companies, that has not effect on cable?

I'm worried that the UK has become dependent on banking; bankers profit from turnover/churn/fees - now credit is drying up, the bankers' profits will be dependent on selling the UK to anyone who has cash; the government is desperate to keep banking going and the bankers will tell them that the only was to do this is by avoiding protectionism.

The UK was a very wealthy country when we 'owned' India, the US, etc. Owning parts of the economy is how wealth is derived. All other countries are more protectionist than us - they can't all be wrong-headed?

Bloomberg Today: U.K. Companies Stay Open to Foreign State Takeovers

Chancellor of the Exchequer Alistair Darling will say that U.K. companies will receive no special protection against takeovers by foreign government-controlled investment funds, restating a commitment to free trade.

Darling will underline Britain's position at 1:30 p.m. in London in his first major speech since he succeeded Gordon Brown as finance minister three weeks ago. He will say the U.K. welcomes sovereign-wealth funds and call on other countries to resist protectionism.

``Free trade should be just that,'' Darling will say, according to remarks issued by his office in London.

Yes, free trade should be just that - but the proof that we are the mugs lies in the fact that we're letting ownership of our companies flow abroad, while every other country in the world is doing the opposite. What more evidence does the government need that opening up the UK does not result in a freer global market? No other country is reciprocating, despite years of the UK allowing our utilities, etc to go abroad.

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It was an article from a specialist currency site, I'm surprised they have it completely wrong. The point of sovereign wealth funds is to store value - the dollar is a bad store of value; part ownership of corporations are a good store of value - the UK is the only place that has no restrictions.

A higher pound means more imports. Our balance of payments suggests our economy is not in good shape. If 50% of UK companies are foreign owned, aren't 50% of the purchases by UK listed companies of foreign companies, actually foreign purchases of foreign companies? (if you see what I mean)

Indeed. 50% of UK dividends now go abroad.

Bit lost here. If the Chinese government sells dollars and buys pounds in order to purchase UK companies, that has not effect on cable?

I'm worried that the UK has become dependent on banking; bankers profit from turnover/churn/fees - now credit is drying up, the bankers' profits will be dependent on selling the UK to anyone who has cash; the government is desperate to keep banking going and the bankers will tell them that the only was to do this is by avoiding protectionism.

The UK was a very wealthy country when we 'owned' India, the US, etc. Owning parts of the economy is how wealth is derived. All other countries are more protectionist than us - they can't all be wrong-headed?

Bloomberg Today: U.K. Companies Stay Open to Foreign State Takeovers

Yes, free trade should be just that - but the proof that we are the mugs lies in the fact that we're letting ownership of our companies flow abroad, while every other country in the world is doing the opposite. What more evidence does the government need that opening up the UK does not result in a freer global market? No other country is reciprocating, despite years of the UK allowing our utilities, etc to go abroad.

It was an article from a specialist currency site, I'm surprised they have it completely wrong.

I have little respect for 'specialists' in economics, it is a science that is still in its infancy and is therefore full of QUACKS. These hedge fund dudes are supposed to be the best brains in the world - and look at the ****** up they made.

Furthermore, you have shown that you posted an article that you do not understand the contents (ie, that you are incapable of even a first defence, and instantly defer to a supposed authority)?

I was not really arguing about whether you think the economy is in good or bad shape. What I was concerned about is your flawed logic. Remember, there is a difference between a logical conclusion and someones educated opinion (may be this is the case for this article you mention)

Let me say again, a higher pound does not mean more imports! It only means that there is more global demand for the currency for holding (not spending) If you believe this to be the case, you must prove it. It may be that lower domestic prices might change peoples habits towards more consumption and less cash savings - but that is by no means a matter of fact (see the Japanese decade recession, the lower prices did not encourage them to spend more)

Bit lost here. If the Chinese government sells dollars and buys pounds in order to purchase UK companies, that has not effect on cable?

How can it? The net effect is zero in terms of the number of pounds sterling accumulated (there may be a little blip on the very day they bought the pounds, but the recipient then decides whether to spend or save). The only way the exchange will increase is if China bought MORE pounds than they spent, ie, increased their holding. The Chinese have been accumulating cash also, because otherwise the exchange rate would've tanked long ago!

The reason our companies are going abroad is this. There is a net disposition in the UK to purchase foreign consumer goods, because they are cheaper than the domestic equivalent (I blame government intervention on all sides for this process - called mercantilism). The foreigners then have the money to spend on assets. It is not a currency issue as such, but a net exchange of capital goods for consumer goods (sometimes known as 'selling the cows to buy milk') AND I AGREE, THIS IS A VERY DANGEROUS TREND FOR THE UK as a collective. But the transfer is a symptom of government intervention the market place (through currency and interest rate manipulation) and not the unhampered free market itself which is what you're trying to blame for the mess.

Edited by Far Out Bear

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The UK is trading from an insolvent position [aka Bankruptcy]. Our imports/exports are imbalanced and we collectively own nothing but owe a lot. We cannot trade our way out. Our economy is completely f*****, we just don't know it because we are living "high off the hog" on borrowed money. Golden Gordon is busy putting the final nails in our coffin, anyone for PFI.

On the plus side, war is always a good way to improve the economy, who shall we invade next?

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I have little respect for 'specialists' in economics, it is a science that is still in its infancy and is therefore full of QUACKS. These hedge fund dudes are supposed to be the best brains in the world - and look at the ****** up they made.

Furthermore, you have shown that you posted an article that you do not understand the contents (ie, that you are incapable of even a first defence, and instantly defer to a supposed authority)?

The article is easy to understand. I think there is a certain logic to it. Merely that you do not agree with it does not mean that I should defer to your apparent authority.

Let me say again, a higher pound does not mean more imports! If you believe this to be the case, you must prove it. It may be that lower domestic prices might change peoples habits towards more consumption and less cash savings - but that is by no means a matter of fact (see the Japanese decade recession, the lower prices did not encourage them to spend more)

We're not yet in recession - so are in a different situation. The competitive currency devaluation that most countries are following certainly appears designed to protect their export economies. Japan's devaluation has resulted in their huge balance of payments and accumulation of foreign reserves - it seems logical that a high pound does the inverse to our imports. An example of a higher pound resulting in more imports is people on HPC talking a lot recently about buying stuff from the US. It is possible that it may not mean a greater total value of imports, but that would be surprising.

How can it? The net effect is zero in terms of the number of pounds sterling accumulated. The only way the exchange will increase is if China bought MORE pounds than they spent, ie, increased their holding. The Chinese have been accumulating cash also, because otherwise the exchange rate would've tanked long ago!

Apologies for being slow - I really don't get how exchanging dollars for pounds does not affect the exchange rate - don't they take pounds out of the global supply from e.g. central banks and hand it to UK shareholders, where much of it will be spent internally?

But the transfer is a symptom of government intervention the market place (through currency and interest rate manipulation) and not the unhampered free market itself which is what you're trying to blame for the mess.

Straw man argument. I am saying that no other country is engaging in a free global market, nor will they do so. If it was an unhampered free market, there wouldn't be such a problem.

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I see Pat the Prat has surfaced from his Nu Labour bunker.

Don't feed the Troll.

From Wikipedia

"In Internet terminology, a troll is someone who intentionally posts derogatory or otherwise inflammatory messages about sensitive topics in an established online community such as an online discussion forum to bait users into responding."

"in Scandinavian folklore and children's tales; they are often ugly, obnoxious creatures bent on mischief and wickedness."

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I see Pat the Prat has surfaced from his Nu Labour bunker.

I forgot! Thunderbox, Farticus and Largely Ignorant are the same person! Now it's come back to me! :lol:

(At least, they're using the same address.)

p

Edited by patprimer74

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I'll try and cut down to the specifics. We'll worry about the other stuff later.

Where I disagree is here:

1) Higher Pounds = More imports.

2) Foreign purchases of assets = higher pound.

Those two are not logical, they are false in the general I don't care what s*****y bugger says otherwise. There may be empirical evidence to show that they appear to hold some water at certain times, and none at other times - it is different in each situation and the market economy is complex in the extreme.

You appear to think that currency flow back into the UK from a foreigner will raise the exchange rate of the pound. Why? What difference does it make to the currency who is holding it? It is net demand for it that describes its value. When sterling is bought and then sold (to pay for an asset) the currency passes on to the recipient and remains in circulation. It is the HOLDING of currency for its own sake (demand) that determines its exchange value (for instance, if no one wants to own any of it, it goes to zero - hyperinflation)

A current account deficit simply means that there is net dishoarding domestically, and a net hoarding internationally. If the net dishoarding exceeds net hoarding then the exchange rate will fall, and vice versa. It is utterly independent of who and where.

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You appear to think that currency flow back into the UK from a foreigner will raise the exchange rate of the pound. Why? What difference does it make to the currency who is holding it? It is net demand for it that describes its value. When sterling is bought and then sold (to pay for an asset) the currency passes on to the recipient and remains in circulation. It is the HOLDING of currency for its own sake (demand) that determines its exchange value (for instance, if no one wants to own any of it, it goes to zero - hyperinflation)

I think that the net demand for £ is increased because $ are impossible to spend on real assets, hence $ holders are exchanging their $ for £. The £ are not spent immediately & entirely, thus £ holdings increase and the £ appreciates. Couldn't the lapse between the £ accumulation and spending account for the current rise? If it does, when the £ are spent on UK assets, does it then follow the £ will fall as it is dishoarded?

I'm beginning to have a glimmer of understanding what you mean - thanks for taking the time to explain.

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I think that the net demand for £ is increased because $ are impossible to spend on real assets, hence $ holders are exchanging their $ for £. The £ are not spent immediately & entirely, thus £ holdings increase and the £ appreciates. Couldn't the lapse between the £ accumulation and spending account for the current rise? If it does, when the £ are spent on UK assets, does it then follow the £ will fall as it is dishoarded?

I'm beginning to have a glimmer of understanding what you mean - thanks for taking the time to explain.

I agree entirely with this post, and yes, if this current sterling accumulation is to be spent on assets some time down the road, then at least that aspect of sterling demand will be reversed and the pound will go back down (all other things being equal). This will make imports more expensive (all other things being equal) and MAY lead to less consumption (but not necessarily a reverse in the trade deficit, because we may still spend the same amount of pounds but those pounds are now buying less)

Sorry to have bit your head off a little but I was a bit red ragged because it looked as if you were refuting my post with no effort and a reference to the author, rather than to explicit content that would show my error. Perhaps you didn't intend it as a snub, and I over reacted.

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I agree entirely with this post, and yes, if this current sterling accumulation is to be spent on assets some time down the road, then at least that aspect of sterling demand will be reversed and the pound will go back down (all other things being equal). This will make imports more expensive (all other things being equal) and MAY lead to less consumption (but not necessarily a reverse in the trade deficit, because we may still spend the same amount of pounds but those pounds are now buying less)

Sorry to have bit your head off a little but I was a bit red ragged because it looked as if you were refuting my post with no effort and a reference to the author, rather than to explicit content that would show my error. Perhaps you didn't intend it as a snub, and I over reacted.

No worries - it did come across as very obtuse - the only error was in my limited understanding - just didn't get that buying pounds doesn't make any difference to the exchange rate unless they are hoarded; it seems illogical unless you see the whole picture - I'm more than happy to have the pound vicious circle theory debunked; was worried that things were (somehow) even worse than they appear!

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It boils down to this: if UK assets are seen as a safe / good investment in global terms and nobody is stopping foreigners from buying them then foreigners will compete in FX markets to exchange their foreign currencies for pounds, since UK assets must be bought with pounds, but foreigners tend to hold other currencies. So this pushes up the value of the pound.

Once the assets are held overseas then the longer term effect on the currency is negative, because income from the assets must be repatriated abroad. Then the foreign owners of the UK assets will be competing to sell pounds in order to repatriate their profits.

frug.

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No worries - it did come across as very obtuse - the only error was in my limited understanding - just didn't get that buying pounds doesn't make any difference to the exchange rate unless they are hoarded; it seems illogical unless you see the whole picture - I'm more than happy to have the pound vicious circle theory debunked; was worried that things were (somehow) even worse than they appear!

[/quote

It's just supply and demand. If net demand is increasing, then the price goes up (or exchange rate in this case)

If you buy pounds, you're a buyer. If you buy an asset (no matter where it is) using those pounds, you become a seller. So unless there is a net hoarding (spending less than gaining), no exchange rate change on average

A currency is no different to any other commodity (except its specific utility is for indirect exchange). Like houses. They're going up because lots of people want to own them - more than one of them especially! (if there was no net increase in demand, then the prices wouldn't be going up) If people decide they want out, those prices will tumble.

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No need to tie yourselves in knots!

The rate of UK companies being purchased is a function of an ongoing trade imbalance. (-4% of GDP 2007).

Prevoiusly foreigners who ran up huge reserves of pounds were happy investing them in bonds (cash), and UK plc's domestic and overseas equity earnings cancelled out the interest costs we had to pay to them.

Now they are buying up the best UK assets to get a better long term return on capital. Both are because IRs are too low.

UK PLC has now been overtaken by domestic housing assets which are now 60% of net wealth.

Whether you believe you are really richer because your lung is valued at £3 million or £10 is up to you to decide.

But for the foreigners it matters little.

A high pound and healthy consumer spending usually leads to more imports.

If foreigners stopped flushing us with cash, then our trade deficit would leave us exposed as a country with a massively overinflated public sector and little real tradables base other than people traffiking.

Just like what happened to Argentina. (They had dollars propping up thier real purchasing power and rich lifestyle).

Edited by brainclamp

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Shocking facts:

Argentina was the most open economy in the world prior to its 2001 debt implosion.

http://www.nationsencyclopedia.com/America...INVESTMENT.html

"Argentina's economy, at first benefiting from the tie to the US dollar in quelling hyperinflation and attracting records levels of direct and portfolio investment, was then hurt by the tie, first when interest rates were raised in the United States in the late 1990s, making Argentina's borrowing costs and export prices uncompetitive, and then from 2001, when the dollar tie served a means of importing the US recession into Argentina's already contracting and heavily indebted economy"

Could it be?

"The UK's economy, at first benefiting from the tie to the carry trade, pegged currencies and low price imports in quelling hyperinflation and attracting records levels of direct and portfolio investment, was then hurt by the tie, first when interest rates were raised in China in the late 2000s, making the UK's borrowing costs and export prices uncompetitive, and then from 2010, when the tie served a means of importing Asias necessary slowdown into the UKs already contracting and heavily indebted economy"

Edited by brainclamp

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No need to tie yourselves in knots!

The rate of UK companies being purchased is a function of an ongoing trade imbalance. (-4% of GDP 2007).

Prevoiusly foreigners who ran up huge reserves of pounds were happy investing them in bonds (cash), and UK plc's domestic and overseas equity earnings cancelled out the interest costs we had to pay to them.

Now they are buying up the best UK assets to get a better long term return on capital. Both are because IRs are too low.

UK PLC has now been overtaken by domestic housing assets which are now 60% of net wealth.

Whether you believe you are really richer because your lung is valued at £3 million or £10 is up to you to decide.

But for the foreigners it matters little.

A high pound and healthy consumer spending usually leads to more imports.

If foreigners stopped flushing us with cash, then our trade deficit would leave us exposed as a country with a massively overinflated public sector and little real tradables base other than people traffiking.

Just like what happened to Argentina. (They had dollars propping up thier real purchasing power and rich lifestyle).

Your post is utterly irrelevant. And you have not elucidated on the matter one bit.

PS Bonds and cash are NOT the same thing. What an odd remark!

Edited by Far Out Bear

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I apologise.

Bonds are the equivalent of cash interest for foreign investors. They get simple interest at (currently) low rates.

UK PLC - the equity value of public companies - this income is higher than the recent bond yields.

Perhaps this paper by Prof. Nickell which says the same thing when puzzling over the trade deficit will help you.

http://www.bankofengland.co.uk/publication...6/speech271.pdf

http://neweconomist.blogs.com/new_economis...nt_account.html

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I apologise.

Government Bonds are the equivalent of cash interest for foreign investors. They get simple interest at (currently) low rates, and a guarnteed payment of the par value if held to maturity.

UK PLC - the equity value of public companies - this income is higher than the recent bond yields.

Perhaps this paper by Prof. Nickell which says the same thing when puzzling over the trade deficit will help you.

http://www.bankofengland.co.uk/publication...6/speech271.pdf

http://neweconomist.blogs.com/new_economis...nt_account.html

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What is also interesting about Argentina is that it also had very pro-immigration policies and a very high level of net immigration throughout the prior decade estimated at nearly 1 million people, with accelerating mass immigration creating problems even during the massive recession.

http://en.wikipedia.org/wiki/Immigration_to_Argentina

Edited by brainclamp

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We have the most open economy in the world, where foreign governments are free to buy former UK companies and our stock markets are now 50% foreign owned.

From this article on a US currency website:

If the pound's strength is even partly attributable to our UK-on-sale policy, aren't we in deep trouble?

- A high pound increases imports, increasing the cash flows into the sovereign wealth funds now buying UK companies.

- The dividends from UK plc will now also go into the sovereign funds, swelling them further

- The sovereign funds will convert more of their useless* dollars (perhaps even euros) into pounds where they can be spent, driving the pound up further

* Dubai Ports, Unocal

50% of the stock market in foreign hands isn't really a problem and there are an increasing number of foreign companies quoted on the LSE. This is largely reciprocated in UK holdings of overseas stocks.

I think many of the foreign companies/governments buying up UK firms will end up regretting it. They're paying top prices at the moment and this is made worse due to high sterling. The value of the company and future stream of earnings will drop if sterling falls.

What does annoy me is that we let certain strategic Uk assets fall into foreign ownership, in particular water companies, energy companies, firms like BAA etc (they can have the Abbey though!). Hopefully the regulatory authorities will make these unattractive to own in the long term and they'll sell them back for a fraction of what they paid.

The other annoying thing is when a UK company gets taken over by a foreign firm when the reverse is not possible because the other country doesn't have a market as free as ours. I think this was the case with Nestle's acquisition of Rowntree years ago.

As for the strong pound, this makes imports cheaper, which is actually good for the economy at the moment. Most of what we import isn't directly competing with local produce anyway, that all ended years ago, unlike the US who have more to gain from a weaker currency.

What we should be doing is buying up foreign assets to take advantage of sterling's strength rather than ploughing all our money into houses.

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Well it was quite a shock to see Argentina before its economic collapse into bartering, having one of the most open economies in the world and very high immigration levels. It shows what effect the currency exchange rate has on living standards while the money supply grows with large public spending against pegged currencies.

It is obvoiusly pretty BAD - not good, that we pay for our overspending with our productive assets. At some point we will chafe at the idea of perpetually paying tribute to creditors and owners abroad. A country that is now aspiring to an "Ownership Society" will not find happiness in a "Sharecropper's Society." (Warren Buffett)

NB: A sharecropper could not afford/buy the land he needed to subsist. He subsisted as a sort of slave through his labour toiling away paying annual rent to his idle master.

Kind of like the future here many face, as Labour have made housing more expensive for ordinary folk through the tax regieme.

50% of the stock market in foreign hands isn't really a problem and there are an increasing number of foreign companies quoted on the LSE. This is largely reciprocated in UK holdings of overseas stocks.

I think many of the foreign companies/governments buying up UK firms will end up regretting it. They're paying top prices at the moment and this is made worse due to high sterling. The value of the company and future stream of earnings will drop if sterling falls.

What does annoy me is that we let certain strategic Uk assets fall into foreign ownership, in particular water companies, energy companies, firms like BAA etc (they can have the Abbey though!). Hopefully the regulatory authorities will make these unattractive to own in the long term and they'll sell them back for a fraction of what they paid.

The other annoying thing is when a UK company gets taken over by a foreign firm when the reverse is not possible because the other country doesn't have a market as free as ours. I think this was the case with Nestle's acquisition of Rowntree years ago.

As for the strong pound, this makes imports cheaper, which is actually good for the economy at the moment. Most of what we import isn't directly competing with local produce anyway, that all ended years ago, unlike the US who have more to gain from a weaker currency.

What we should be doing is buying up foreign assets to take advantage of sterling's strength rather than ploughing all our money into houses.

Edited by brainclamp

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  • 356 The Prime Minister stated that there were three Brexit options available to the UK:

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal



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