Thursday, December 6, 2007

Stand by for £1.20 a litre petrol and £2 for a loaf of bread.

Stg hits 4-1/2 yr low vs euro, eyes on rate decision

By 1514 GMT, the euro had risen as high as 72.32 pence, just a little below its 72.55 pence all-time high, set in May 2003. The pound was down 1.3 percent versus the dollar at $2.0324, having hit its lowest since mid October. Because those with serious debt want the party to continue the uk economy has to be trashed in the process. By hook or by crook people will have to face up to the fact that their house is worth alot less than it is today.

Posted by sovietuk @ 08:30 AM (903 views)
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13 thoughts on “Stand by for £1.20 a litre petrol and £2 for a loaf of bread.

  • I just told my boss, if they cut rates today I’m leaving the country.

    Seriously. Thios is no fun anymore….

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  • speculatorone says:

    I am amazed by the media coverage about interest rates this time. All the talk about cutting rates and not much about the cost of our other indirect costs we have to pay. As I have said before, I speak to one particular agent regularly and he firmly believes that when the BoE start trimming the rate, agents will be back on track and they will be putting prices up again. The worrying thing is I can see that happening, then where will we be, surely we cannot spend your way out of a down turn?

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  • Do you remember the sterling crisis of the early 80’s (1982-1985) when £1=$1. I wouldn’t worry to much about it about this, as the pound sterling, miraculously increased in value around 30% or so in weeks. The “Big Boys” are playing monopoly, and we are merely “the Boot” landing on Mayfair with a Hotel.

    The sterling crisis has come and gone, like many others before, I’m sure we will get through this one too. Human Nature.

    Answer: Just buy half a loaf or car share! Both environmentally friendly 😉

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  • And what will they do if inflation keeps going up which is highly likely despite their attempts to fiddle it? They can hardly put rates straight back up again in the near future because this will look like dithering. Seems like Mervyn better get his pen sharpened!
    p.s. if you look at newspaper websites its interesting to note that the most of the comments from members of the public are against a cut!

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  • Don’t worry still plenty of credit crunch to prevent good mortgage deals in the market – and killing the pound will import inflation so homeowners have the choice – cheap mortgage payments and £10 for a loaf of bread, or affordable food and “serves you right for borrowing too much and not considering the fact that interest rates may rise” mortgage payments.

    Same goes for Bush’s deal to stop the credit crunch in america whereby lenders have agreed to fix mortgage rates at their teaser rates – that will bury the lenders, and I think it’s too late to change sentiment about the US housing market – they are definitely in a FEAR phase!! – so I think it will only make matters worse.

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  • stillthinking says:

    Umm. If the money supply has stopped growing, but the momentum of the economy has carried on, then economic growth is relatively larger than the money supply and we are entering deflation. Let us say for example, that rates are dramatically lowered. Then what? The housing crash is effectively underway, the ability of the banks to lend to the consumer will still be restricted. Perhaps this move will help consumer sentiment for Christmas, but what else? There will still be millions of mortgages resetting in 2008 at higher rates.
    Potentially lowering rates could backfire completely if no change is provoked by demonstrating that events have moved out of the hands of the policymakers. Don’t forget that the most often criticism levelled at the Japanese government about their reaction to their property crash, was that they -didn’t- let enough banks fail so they could move on.
    What have we done already? The largest state support to a bank in the history of the world.

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  • Dollar was seriously oversold so a short squeeze was inevitable (although as ever its timing thats the key). I agree about the pound was looking to short against the Swissy but upside target to see short not made. still will await another upward move in the pound (which may or may not happen) For gold looks like a break of spot below $777 would be a fall to around $750 and from there I’d be a buyer, since there was no follow through above the $800 yesterday. This is quite a pivotal day for gold, if it breaks yesterdays high to the upside expect more follow through to test the highs. This was prob co-incide with dollar weakness after a bounce – $ oversold also against Euro. These are all just short term technical views – they dont alter the fundemental view. I agree with inbreda – the dollar moves up because the government has recognised the problem and done SOMETHING. That has led to short covering and killing the bears. Course these are just views. Its good to share.

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  • stillthinking says:

    I don’t think that gold is getting ready for a rally. I always had my suspicions about gold as I personally started to get itchy about buying a few coins, which means that the whole party is already finished and ready to flop. Gold looks like it has peaked to me.

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  • My mate in Versailles asked me where this will all stop. The Euro is going up and up.

    If the BoE cut rates and the US cuts again we could be in a race to the bottom. Then nobody will be able to afford French cheese and the “booze cruise” from Folkestone will be a total waste of time for the Brits. Prices will be too high.

    I think this could kill Airbus…unless the ECB cuts…!

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  • tyrellcorporation says:

    The crazy thing is that the BoE have seen what’s happened in the US as a result of slashing rates – nothing. The housing market is still going down and the dollar has plunged. The results are right under their collective noses and yet they are still likely to cut IMHO.

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  • I say Merv has bottle and in a close call, may well have the casting vote, HOLD

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  • Hey still thinking…. geting itchy?… different views are good but i dont really see that you getting itchy is an indicator worth following! – No offence! You can look everywhere and find either Gold going through the roof or falling through the floor. Thats what a market is all about. I’d be a long term buyer for small amounts, then scale up if there is a fall – since when (or if dep[ending on your viewpoint) fiat money really becomes a fact it will explode to the upside and prob be too late to get in. But generally wouldnt buy above $800 at the moment…….. Have you looked at Mary’s contribution from Money week? I wrote the above without the benefit of that. So he and I are both on the same “wavelength” pardon the pun!!! In any case its basically a hedge against the dollar too.

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  • speculatorone says:

    wdbeast, but ultimately he will be doing what Mr Bean tells him to do…

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