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

Currency Markets: Next Big Sub Prime Blow Up London

Recommended Posts

http://www.dailyfx.com/story/currency/gbp_...keyword=article

British Pound Hit by Fear that the Next Big Blowup Could be in the UK

Tuesday, 21 August 2007 21:33:12 GMT
Aug 21 - British Pound Hit by Fear that the Next Big Blowup Could be in the UK
Aug 21 - Scant U.K. Fundamentals to Support Pound
Aug 17 - Volatility Rocks the British Pound
Aug 16 - Stronger UK Retail Sales Fails to Help the British Pound
Aug 15 - British Pound Slips as Bank of England Moves Further Away from Raising Rates
Aug 15 - BoE Minutes Show 9-0 Vote To Keep Rates
Aug 13 - With Pound Bidders On Vacation, Sterling Drops Further
Aug 09 - Improvement in Trade Surplus Fails to Help the British Pound
Aug 09 - U.K. Trade Gap Shrinks
Aug 08 - British Pound Rallies in Anticipation of 6 Percent Interest Rates from Bank of England
Aug 08 - Sterling Lifted By BoE Inflation Report
Aug 07 - British Pound Slips Ahead of Quarterly Inflation Report
Aug 07 - UK Retail Sales Growth Rate Falls to 8-year Low
Aug 06 - British Pound Hit by Foot and Mouth Disease Outbreak
Aug 06 - U.K. Struggles Amidst News of a Foot-and-Mouth Disease Outbreak
Aug 03 - British Pound Breaks 2.04, Quarterly Inflation Report Expected Next Week
Aug 02 - Sterling Weakens Post BoE Meeting
Written by Kathy "Catherine" Lien, Chief Strategist
The British pound under performed both the Euro and US dollar today on concerns that the
next big subprime blowup could be in the UK.
There has also been talk that a UK hedge fund or insurance company could be in trouble.
The Bank of England also confirmed that a UK bank (possibly Barclays) used the standby facility at a penalty rate of 6.75 percent to cover a shortfall in funding. This is the first time that the emerging lending facility has been tapped since the beginning of the subprime crisis. As the problems grow, so will expectations that the Bank of England will keep interest rates unchanged for the remainder of the year.

So far, the subprime problem has been a US related one as far as the currency markets have been concerned. The slowly dawning fact that the UK are in much more trouble than the US with regard to a housing bubble is finally here. Given the enormous power of the currency markets where a single day's trading is bigger than all the world's SMs combined, its a guage to keep a close eye on. If the markets decide subprime is going to impact the UK in a significant way the pound is basically toast.

Edited by Realistbear

Share this post


Link to post
Share on other sites

Poisons...mud...hatch

Share this post


Link to post
Share on other sites

HPI & Sterling is toast.

Listen, all BTLers out there: you're not only in for a fall of 30-50% in house prices, the pound will tank at the same time. This could therefore easily become a 60-75% loss(*). Sell all your houses and buy some gold to be on the safe side. The average house is at the moment at 550oz. Buy back once they're below 100oz.

EDIT: (*) Only if you bought cash. However, if you bought on leverage (i.e. a mortgage)... :ph34r:

Edited by Goldfinger

Share this post


Link to post
Share on other sites

And one doesn't have as much to do with the other as your friend seems to think.

A sub-prime blow-out in the UK could spur players to run to gilts. It might inspire sterling repatriation, it might be seen (or considered) to undermine the global system more than the UK; there are as many interpretations as one wishes. I know you want sterling to fall but I wouldn't bet on Kathy if I were you.

And how did it underperform? What's the criteria that represents underperformance? I just checked and it went up. Going up is not generally considered to be underperforming, unless Kathy thinks it should have gone up a bit more. Have you checked Kathy's history? How is she doing prediction-wise? Does she peg it:

  • every day,
  • a lot,
  • sometimes,
  • never?

One must always consider the source.

I'm not saying that sterling will never or can never go down but this is like listening to people making connections between global warming and 4 by 4s or the correlation between markets.

It's delusion. (And anyone who thinks that I'm wrong about market correlation is invited to go make trillions of dollars out of that knowledge instead of boring the tits off me here with it.)

As a matter of fact, what happened to the dollar when the fear struck? Did it crash? Did it go down?

Cable is having a wee rest while it decides which way is easiest. Kathy's bank may have a few short positions and they've asked her to try to trash it on telly in the hopes that a few traders might see an easy mark.

Here's another story from the web:

"The twit who predicted three major market routs in the nineties and clings to the idea that the world is facing an economic meltdown said today that he never met a single currency strategist that knew as much about currencies as kissing their bosses' arrses. In the nineties Mr. Stars was completely discredited after actually predicting things instead of talking horseshit for big money. Kathy Lien, on the other hand, is known to smooch her bosses' comfort pillows daily and is therefore widely reported by 22-year old girls pretending to be reporters: more importantly; and she has been on the box: something which proves she must know what she's talking about. Market wags are said to be dumping cable by the skiploads after Kathy's latest call."

:P

(edited for apostrophes)

Edited by dstars

Share this post


Link to post
Share on other sites
Guest Winnie
And one doesn't have as much to do with the other as your friend seems to think.

A sub-prime blow-out in the UK could spur players to run to gilts. It might inspire sterling repatriation, it might be seen (or considered) to undermine the global system more than the UK; there are as many interpretations as one wishes. I know you want sterling to fall but I wouldn't bet on Kathy if I were you.

And how did it underperform? What's the criteria that represents underperformance? I just checked and it went up. Going up is not generally considered to be underperforming, unless Kathy thinks it should have gone up a bit more. Have you checked Kathy's history? How is she doing prediction-wise? Does she peg it:

  • every day,

  • a lot,

  • sometimes,

  • never?

One must always consider the source.

I'm not saying that sterling will never or can never go down but this is like listening to people making connections between global warming and 4 by 4s or the correlation between markets.

It's delusion. (And anyone who thinks that I'm wrong about market correlation is invited to go make trillions of dollars out of that knowledge instead of boring the tits off me here with it.)

As a matter of fact, what happened to the dollar when the fear struck? Did it crash? Did it go down?

Cable is having a wee rest while it decides which way is easiest. Kathy's bank may have a few short positions and they've asked her to try to trash it on telly in the hopes that a few traders might see an easy mark.

Here's another story from the web:

"The twit who predicted three major market routs in the nineties and clings to the idea that the world is facing an economic meltdown said today that he never met a single currency strategist that knew as much about currencies as kissing their bosses arrses. In the nineties Mr. Stars was completely discredited after actually predicting things instead of talking horseshit for big money. Kathy Lien, on the other hand, is known to smooch her bosses' comfort pillows daily and is therefore widely reported by 22-year old girls pretending to be reporters: more importantly; and she has been on the box: something which proves she must know what she's talking about. Market wags are said to be dumping cable by the skiploads after Kathy's latest call."

:P

(edited for apostrophes)

Absinthe anyone?

Share this post


Link to post
Share on other sites
Here's another story from the web:

"The twit who predicted three major market routs in the nineties and clings to the idea that the world is facing an economic meltdown said today that he never met a single currency strategist that knew as much about currencies as kissing their bosses arrses. In the nineties Mr. Stars was completely discredited after actually predicting things instead of talking horseshit for big money. Kathy Lien, on the other hand, is known to smooch her bosses' comfort pillows daily and is therefore widely reported by 22-year old girls pretending to be reporters: more importantly; and she has been on the box: something which proves she must know what she's talking about. Market wags are said to be dumping cable by the skiploads after Kathy's latest call."

:P

(edited for apostrophes)

saucer of milk Mr Stars? ;):lol:

Share this post


Link to post
Share on other sites
saucer of milk Mr Stars? ;):lol:

Indeed, but that doesn't mean it doesn't get to the heart of matters. Idiot strategists are wonderful negative indicators. I used to listen to and analyse every single one (that got coverage) every single day.

The only pundit I ever heard who always made sense was George Soros. (What are the odds?) The rest sounded like children (the same children that Gordo used to advise him).

"Remniscence of a Stock Operator," "The Alchemy of Finance," and anything at all by Sperandeo. These are the places one can find knowledge. There can be no such thing as a strategist working at a bank who can properly analyse events. There is simply too much politics. Even if they found someone who had a chance, it would be impossible. It's better that they just get it wildly wrong and then, after they make a bundle out of the middle (us) we can ascribe them with inside knowledge or superior insight (in retrospect, of course; none of this stuff works before the fact).

These things are important to bear in mind as events evolve. They are not simply bitchy remarks (although I would hope that they do contain that function also; I like a good bitch ;) )

Share this post


Link to post
Share on other sites
Indeed, but that doesn't mean it doesn't get to the heart of matters. Idiot strategists are wonderful negative indicators. I used to listen to and analyse every single one (that got coverage) every single day.

The only pundit I ever heard who always made sense was George Soros. (What are the odds?) The rest sounded like children (the same children that Gordo used to advise him).

"Remniscence of a Stock Operator," "The Alchemy of Finance," and anything at all by Sperandeo. These are the places one can find knowledge. There can be no such thing as a strategist working at a bank who can properly analyse events. There is simply too much politics. Even if they found someone who had a chance, it would be impossible. It's better that they just get it wildly wrong and then, after they make a bundle out of the middle (us) we can ascribe them with inside knowledge or superior insight (in retrospect, of course; none of this stuff works before the fact).

These things are important to bear in mind as events evolve. They are not simply bitchy remarks (although I would hope that they do contain that function also; I like a good bitch ;) )

You're "pushing at an open door" here DS, one of your recurring themes that resonates with me strongly is the story of prescience (or often just straight talking common sense) ridiculed, overlooked, and met with outright hostility because it acts as a brake upon the prevailing gravy train, no doubt already running at way beyond a safe speed, and seeming that it may de-rail at any moment.

I sacrificed a supposedly "promising" career in stockbroking in 1999 due to my repeated naivety in insisting that the markets were due to crash. I was naive because it turns out that my bosses actually agreed with me, and sold out the business (at a massive profit, and to a much larger transnational concern) mere days from what transpired to be the market peak. Of course, it simply wouldn't do for one of the staff to undermine the plan, I guess.

Share this post


Link to post
Share on other sites
I sacrificed a supposedly "promising" career in stockbroking in 1999 due to my repeated naivety in insisting that the markets were due to crash. I was naive because it turns out that my bosses actually agreed with me

"It's better fail conventionally than succeed unconventionally" as some goon once said...

Share this post


Link to post
Share on other sites
Absinthe anyone?

Make mine a double. Has sterling melted down yet? Hey Kathy, I listened to you and stuck my wad on a cable short and now I'm skint and homeless. What are you going to do about it?

Goldfinger: Sterling may or may not tank and it may or may not be at the same time as house prices. But if it is to, as you say, tank; then exactly when is that going to happen?

Put it another way; how much do I stand to lose before I win? For all I see for sterling is blue skies and butterflies. I'll sell it when it's going to tank and that, if it should occur, is not going to be yesterday as Kathy claims.

Gold is risky and hard to trade. I recommended a buy in 1999 and I'd be out of that by now. I wouldn't short it but buying now is really quite a hopeful punt. Indeed, if it went to 900; 'then' would be the time to start feeling for the downside. It's just not widely held or traded enough in the places where all the terror is going to take place.

The talk here of a sterling crash is like the talk here before Q1, 2007 of a house price crash. It was a fantasy until all the factors were firmly in place - and it still has not happened. (Although I do expect it around October 2007 for a couple of years.)

Drawing lines between events and instruments is not as obvious as it can (apparently) seem.

Share this post


Link to post
Share on other sites

The talk here of a sterling crash is like the talk here before Q1, 2007 of a house price crash. It was a fantasy until all the factors were firmly in place - and it still has not happened. (Although I do expect it around October 2007 for a couple of years.)
My oft stated position too. I wasn't sure until mid April, and I think some indices (DCLG for certain) will still be showing MoM positive till the end of the year. But October is the month where we will be able to point at official figures and say "thats what I was banging on about in the spring". Of course, by then all the property can't fall people will have seen the light and will tell us the "top" was Q4. Based on the highest prices achived on the last properties to sell in the last areas to slow, they'll be right. But just as I know the last bull market in housing finished on the morning of August 1988, I also know that this Millennium Boom ended in spring of 07. I'm sure history will be able to point to a spurious trigger.

Share this post


Link to post
Share on other sites
Goldfinger: Sterling may or may not tank and it may or may not be at the same time as house prices. But if it is to, as you say, tank; then exactly when is that going to happen?

...

Gold is risky and hard to trade. I recommended a buy in 1999 and I'd be out of that by now. I wouldn't short it but buying now is really quite a hopeful punt. Indeed, if it went to 900; 'then' would be the time to start feeling for the downside. It's just not widely held or traded enough in the places where all the terror is going to take place.

Like RB says, Sterling will tank when Gordon's miracle economy quite obviously has popped. As for gold, it had a first ran-up until May last year. It's consolidating, time to add to your position. IMO, we will soon see very explosive movements. Demand is high, and the current crisis will finally remind people of what real and good money is. And then, there is China... :ph34r:

Edited by Goldfinger

Share this post


Link to post
Share on other sites

I don't why, but I get the impression RB has a vested interest in cable crashing. It seems for, at the very least, several months (but maybe years?) he has been posting only negative stories relating to sterling and calling the top. Whilst there is nothing intrinsically wrong with doing that, at some point it has to be considered that either RB is very premature with his 'down with the pound' calls or he is just wrong. Full stop.

Constantly attempting to talk the pound down doesn't make it happen and undermines credibility. Whilst I agree with RB that sterling IS overvalued - PPP suggests 1.66 - that doesn't mean any correction will occur in the next 5 months. At some point in the future, due to the cyclical nature of all markets, cable WILL come back to 1.6000 - if I post that every week for the next 10-15 years eventually I WILL be right. There has to be a tipping point when I go from being insightful to just plain wrong. Any mug can tell you that cable will drop big-time at some point - timing, as always, is the difference between an armchair economist into George Soros.

I have no beef with RB, nor do I entirely disagree with his fundamental viewpoint, but I feel the need to give balance to his argument.

For the record, cable is UP 200 pips on the week, over 300 since last weeks lows. I am not suggesting that we are about to see another amazing bull run, but it is hardly a currency in turmoil. When I see drops of 1000+ pips a week, every week - THEN it's in turmoil!

Share this post


Link to post
Share on other sites
So far, the subprime problem has been a US related one as far as the currency markets have been concerned. The slowly dawning fact that the UK are in much more trouble than the US with regard to a housing bubble is finally here. Given the enormous power of the currency markets where a single day's trading is bigger than all the world's SMs combined, its a guage to keep a close eye on. If the markets decide subprime is going to impact the UK in a significant way the pound is basically toast.

Oh yes. UK Plc is largely about financial services, and financial services seem to be producing a lot of toxic waste! Question is a fall against what? That's what I'm unsure about. YEN, CHF, USD, EUR, GLD? Everything? If so what's best for a punt? And would we just be the next domino in a series? Thoughts anyone?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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



×
×
  • Create New...

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.