The $2 Quid...

[Moo]

... although no idea how long for. Question is, is this a "the dollar gets weaker because of the extra, new, nasty bank trouble", or "CPI is 3,8%, we're expecting Sterling IR rises now"?

[sambino]

I thought Mervs Remit was too get us back to CPI of 2% its nearly double that surely IRs must rise ?

[redgenieuk]

I thought Mervs Remit was too get us back to CPI of 2% its nearly double that surely IRs must rise ?

They surely should.

They probably won't.

[Tiger Woods?]

... although no idea how long for. Question is, is this a "the dollar gets weaker because of the extra, new, nasty bank trouble", or "CPI is 3,8%, we're expecting Sterling IR rises now"?

Both.

[Mondo]

I thought Mervs Remit was too get us back to CPI of 2% its nearly double that surely IRs must rise ?

A note on the Bank of England website regarding their remit states:

The Bank’s monetary policy objective is to deliver price stability – low inflation – and, subject to that, to support the Government’s economic objectives including those for growth and employment. Price stability is defined by the Government’s inflation target of 2%. The remit recognises the role of price stability in achieving economic stability more generally, and in providing the right conditions for sustainable growth in output and employment. The Government's inflation target is announced each year by the Chancellor of the Exchequer in the annual Budget statement.

and goes on to say:

A target of 2% does not mean that inflation will be held at this rate constantly. That would be neither possible nor desirable. Interest rates would be changing all the time, and by large amounts, causing unnecessary uncertainty and volatility in the economy. Even then it would not be possible to keep inflation at 2% in each and every month. Instead, the MPC’s aim is to set interest rates so that inflation can be brought back to target within a reasonable time period without creating undue instability in the economy.

Basically, they'll use interest rates to keep inflation at around 2% in the long term, allowing for variation as the situation demands... and the situation is now demanding!

And FWIW, while short term the dollar is getting toasted by the pound, I think longer term we're looking at somewhere around 1.6 dollars to the pound (cue 'Pound Crashing, Armagideon is Here' HPC threads), a big drop from where we're at now but still IMO a reasonable place to be.

[beefheart]

the dollar is toast.

fannie and freddie are leveraged into the thousands of trillions.

yes thats right TRILLIONS.

the elite are buying up the planet and leaving the taxpayers with the bill.

[jp1]

$2 to the £ - Yey Hey! - going to USA for hols next week

[Extradry Martini]

Cable has been in the same rough 8% range for the last 2 years.

And in my view, it's more likely to go lower than higher over the next 6 months...

Edited July 15, 2008 by Extradry Martini

[beefheart]

$2 to the £ - Yey Hey! - going to USA for hols next week

hmm......

have they rolled out the tazer bracelets for airline passengers to the USA yet?

oh and prepare to be fingerprinted and have blood taken when you get there.

[Mondo]

Cable has been in the same rough 8% range for the last 2 years.

<massive demonstration of ignorance>

Cable?

</massive demonstration of igorance, for now>

[AvidFan]

The $2 pound is making me feel very patriotic this morning. Just goes to show you what good economic management can do for a country. To think, we're TWICE as good as the Americans.

With a steady hand, maybe we can track the dollar to oblivion and maintain the 2:1 ratio.

[beefheart]

The $2 pound is making me feel very patriotic this morning. Just goes to show you what good economic management can do for a country. To think, we're TWICE as good as the Americans.

With a steady hand, maybe we can track the dollar to oblivion and maintain the 2:1 ratio.

you mean like

2*0 = 0

[deflation]

oh and prepare to be fingerprinted and have blood taken when you get there.

The fingerprint is taken as an image scan as you put it on a little window at passport control (no ink) and they take a digital picture of your face.

Visa waiver still in force as long as your passport has the little chip in it or it has the machine-readable writing with chevrons in it at the back. This is 99% of all UK passports. Only those who had one issued abroad a few years ago (posted there or had one stolen) may have a problem. Many embassies abroad now issue the digital ones.

[AvidFan]

you mean like

2*0 = 0

I hadn't thought of it like that. At the limit, currency ratios can be anything in fact.

Does this mean that Forex is going to get a little choppy at the very end?

[R K]

I thought we weren't supposed to see $2 cable ever again?

How can this possibly be?

[Minos]

I thought we weren't supposed to see $2 cable ever again?

How can this possibly be?

The sunset wasn't all it's cracked up to be.

[Extradry Martini]

<massive demonstration of ignorance>

Cable?

</massive demonstration of igorance, for now>

Apologies, the sterling-dollar exchange rate. It is known as "cable" because that was the way it was traded when it was the only generally traded currency pair.

[Realistbear]

... although no idea how long for. Question is, is this a "the dollar gets weaker because of the extra, new, nasty bank trouble", or "CPI is 3,8%, we're expecting Sterling IR rises now"?

The only thing holding sterling up is interest rates.

When you consider the fundamentals underpinning the miracle economy there is nothing there that would encourage faith in the pound:

1. Crashing house prices

2. Rising unemployment

3. Inflation at almost double the benchmark

4. A government in dissaray

5. NR

6. A&L

7. Trade deficits breaking all records

8. Government spending beyond EU limits and rising

Apart from the above sterling looks like a good bet. Taking the above into consideration I honestly can't see how it is holding on at these levels.

[Guest Mr Parry]

The only thing holding sterling up is interest rates.

When you consider the fundamentals underpinning the miracle economy there is nothing there that would encourage faith in the pound:

1. Crashing house prices

2. Rising unemployment

3. Inflation at almost double the benchmark

4. A government in dissaray

5. NR

6. A&L

7. Trade deficits breaking all records

8. Government spending beyond EU limits and rising

Apart from the above sterling looks like a good bet. Taking the above into consideration I honestly can't see how it is holding on at these levels.

Ever think other countries are in the same, if not worse trouble?

[bobthe~]

Ever think other countries are in the same, if not worse trouble?

Outside the US and excluding zimbabwe?

[Guest Mr Parry]

Outside the US and excluding zimbabwe?

Who would have thought the Swiss could be at such risk just because of UBS and Credit Swiss?

[Guest Bart of Darkness]

$2 to the £ - Yey Hey! - going to USA for hols next week

Excellent timing. What part are you going to?

[AvidFan]

Apart from the above sterling looks like a good bet. Taking the above into consideration I honestly can't see how it is holding on at these levels.

Because 30% of our GDP is still exports and 60% of that trade is with Europe. The pound has fallen 15% against the Euro since last summer, so we're dirt cheap to our major market.

In the states, 10% of their GDP is exports so they are really struggling to replace lost financial revenue with manufacturing revenue, even with a 40% decline in the dollar. It'll take forever in fact, so their capital is being drained at a rapid rate. Let's hope export revenue saves them before they are bankrupt...

[AvidFan]

The only thing holding sterling up is interest rates.

When you consider the fundamentals underpinning the miracle economy there is nothing there that would encourage faith in the pound:

1. Crashing house prices

2. Rising unemployment

3. Inflation at almost double the benchmark

4. A government in dissaray

5. NR

6. A&L

7. Trade deficits breaking all records

8. Government spending beyond EU limits and rising

Apart from the above sterling looks like a good bet. Taking the above into consideration I honestly can't see how it is holding on at these levels.

What would you like to use a model country? China?

1. Overpriced houses crashing in Shanghai and in fact in most of Asia now.

2. 200 million employed with 900 million still in poverty.

3. Inflation at 8.3% and rising. Tame for Asia in fact, India has 12% inflation, Vietnam 25%, Indonesia 11%...

4. Communism rules!

5. Capital markets correcting by over 50% and still falling...

6. 6% of China's GDP is spent on fuel subsidy, just so the economy can continue to function. We only spend 7.6% on healthcare in this country!

7. For every 1% rise in the value of the yuan, Chinese company profits fall by 4%. They now look to Malaysia and other countries for even cheaper labour to balance their books.

8. Rising oil prices killing the get-rich-quick export model.

9. Chinese government printing yuan to buy US treasury debt to suppress the currency, causing even more inflation.

Do you want a longer list?

Name me a country and I can damn it to hell...

Edited July 15, 2008 by AvidFan

[Minos]

The only thing holding sterling up is interest rates.

When you consider the fundamentals underpinning the miracle economy there is nothing there that would encourage faith in the pound:

1. Crashing house prices

2. Rising unemployment

3. Inflation at almost double the benchmark

4. A government in dissaray

5. NR

6. A&L

7. Trade deficits breaking all records

8. Government spending beyond EU limits and rising

Apart from the above sterling looks like a good bet. Taking the above into consideration I honestly can't see how it is holding on at these levels.

You talking about the YoooK or USA?