Monday, December 1, 2008

“No more Boom and Bust”?

Sterling plunges against dollar

"Sterling has fallen sharply against the dollar as yet more bad economic data points towards a prolonged recession and further interest rate cuts. The pound was down 5.2 cents to $1.486, its largest one day fall in percentage terms since sterling crashed out of the Exchange Rate Mechanism (ERM) in 1992".

Posted by alan @ 10:21 PM (1442 views)
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28 thoughts on ““No more Boom and Bust”?

  • planning4acrash says:

    We just take these figures like water off a duck’s back now. In 1992, that one event was over the news for weeks, now all we get is Baby P, even though this crash will most likely cause more deaths and delay more births than one could ever count.

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  • And the BoE’s response to the credit binge?

    More credit.

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  • There comes a point when interest rates can be cut no more, bailouts have dried up and everyone knows someone who has lost their if they are still fortunate enough to have theirs. Once this point is reached we may once again see some semblance of balanced reporting as the newspapers in this country finally realise that they may actually need people to buy their papers or will they want government bailout cash as well.

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  • I don’t know whether it is a function of my maturing as an individual – but it didn’t used to be like this did it?

    Something happened to this country in the mid nineties. We collectively lost the plot. We lost sight of what it meant to do the right thing, to choose the hard route in order to benefit in the long term.

    The first time I noticed it was the nation’s reaction to Diana’s death. I’m not saying it wasn’t a sad event, but I watched in disbelief as the nation, including previously salient people around me, decided the best thing to do was have a group “outpouring of grief” about a woman they didn’t know.

    Then came Blair and the first ever tabloid government. Then came Big Brother and Pop Idol. One by one, these things etched themselves into our existence. Listen to the kids on X-factor talking about what they want. They want to sing – that’s all they want to do. They want to sing.

    There TV programs being made about the making of a TV program which documents people attempting to get famous by simply wanting to be famous.

    Now we have a tabloid financial system.

    We seem to have lost sight of what is important. We have become fat, lazy and hypnotised by things that don’t really matter whilst the bedrock upon which we built our pit of sloth starts to crumble.

    Our children are doomed environmentally, economically and politically. None of them will notice it though because they are either too stupid to or just don’t think they have to worry about it.

    I despair.

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  • “There TV programs being made about the making of a TV program which documents people attempting to get famous by simply wanting to be famous”

    I like that phrase. That’s one for writing down, that is.

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  • planning4acrash says:

    Jackass, you are correct.

    Greenspan legalized Derivatives, and, via things like Credit Default Swaps, we saw a shadow banking system balloon into over a quadrillion dollars, many thousand times larger than the entire GDP of the planet. It was created so that the corporate financiers could purchase assets, literally to buy up the world, but, it has begun to implode prior to them pulling off their plan, hence, the potential collapse of Western Capitalism as we know it. Bob Chapman of theinternationalforecaster.com suggests that it started to implode, because banking analyst Meredith Whitney of Oppenheimer 1-1/2 years ago blew the whistle on Citigroup upsetting the plan.

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  • Jackas at 11.43pm

    Best post ever mate – and dead on!

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  • There are adverts on television trying to persuade children to study “science and maths” because then they could design a roller-coaster or work in animal conservation (cue picture of rhinoceros).

    Wrong. Just wrong. Its all going wrong.

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  • At least the government aren’t wasting billions of pounds trying to save the currency like the Tories did in 1992 and like the Russians are doing now.

    Sterling’s fall will be good for the economy in the long run. A weak pound helps struggling exporters, and cheaper labour costs will encourage foreign direct investment (e.g. Honda and Nissan factories in Swindon and Sunderland). Personally I’m slightly annoyed that my foreign holidays will become more expensive, but balanced against cheaper house prices it doesn’t seem so bad.

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  • jackas,

    I beg to differ. How would you encourage children to study science and maths? “Hey kids, study maths and you could be like Stephen Hawking!” Not exactly sexy, is it?

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  • drewster – do you really believe that or did you just read that in a text book?

    What exactly are we exporting these days? Whiskey? Reality TV show formats?

    Would it be good news for the economy if our currency devalues so much that we can compete with China and India making cheap sports shoes?

    And, whilst they might not be throwing billions at defending the pound – did you see the pre-budget report the other day? That had the word billions in it too. Hundreds of them.

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  • Re – science and maths.

    Why does science and math have to be sexy? Why do we have to pretend that its sexy? Its not sexy. But it is essential for a developed economy that it continues to push the barriers of the subject. Do you think we’d find the next Alan Turing with those adverts?

    Do you think maths is sexy? Do you think maths should be touted as sexy?

    Its just plain wrong.

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  • wealthyvagrant says:

    Spot on jackas, completely agree with you

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  • jackas,

    There are still plenty of companies exporting from the UK. They don’t tend to attract the headlines because they aren’t glamourous or over-paid like bankers and lawyers and media.

    Regarding the lower pound, my point is that we shouldn’t view the currency as a national virility symbol. As a country, we’ve been importing more than we’ve exported for many years now – it was only the “hot money” flow from investors that kept the pound strong. A lower pound seems inevitable to me (feel free to disagree with reasoned arguments).

    Re the education system: I don’t personally think maths should be sexy. But wishing never made anything happen (I’ve been wishing house prices down for a number of years now). In the real world encouraging students into maths and science requires the full range of marketing techniques, including roller-coasters.

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  • Drew,

    In my view the currency is being sacrificed in an attempt to sustain unsustainable house prices – thats why I’m p1ssed about it.

    RE the advert – kids shouldn’t need promises of roller-coasters and rhinoceroses in order to bribe them away from “media studies” and “sports science” into doing some hard work. They should be forced to take Maths to at least O-Level standard (which these days is probably 1st year undergraduate level). That’s my point. We’ve lost the plot.

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  • Jackas @ 3 – enjoyed that, but I beg to differ. We lost the plot when everything, but EVERYTHING, became about securing a ‘career’ and making money. Inventions and inspiration do not come in an office in front of Microsoft Windows. No wonder kids want something easy when we have sucked the life out of learning and turned it into the long path to a slow death of corporate dronism. Maths and science are ‘sexy’ when they are about discovery. When they point to a dull grey life in a dull grey office designing something that will be consigned to the scrapheap in a years time or listening to management speak while pushing numbers round a spreadsheet then i’m seeing the kid’s point of view. What do you want to be when you grow up, son? An astronaut? No, no – a middle manager in Unspired, inc. is what you want…..Where is the passion? What happened to aspiring to something more?

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  • jack,

    I understand your concern on house prices, but I think a falling pound will just scare off the “hot money” flows, thus making house prices fall more (especially in prime London). Coinsider also the migration flows – whether its American bankers, French chefs, or Polish plumbers, they’re all heading home to stronger currencies. That will have an effect on property demand. Even with the falling pound, credit is getting tighter and job losses are increasing. There’s no way this government can support house prices.

    Re education, you’re right that it would be good to keep maths & science on the curriculum for longer, in favour of soft subjects like drama or sports studies. It’s just easier if you can encourage the kids to take an active interest in it, rather than shoving it down their throats. I’ll stop there because even the experts disagree on teaching styles (learning-by-rote versus other types of learning). The topic is far too big to explore in this blog.

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  • Shippy,

    We’ve come a long way. Think back to 1968/9 and the Ken Loach film ‘Kes’ – I for one would rather work in a “soulless” office than a death trap of a mine pit.

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  • Planning4acrash says:

    “We lost the plot when everything, but EVERYTHING, became about securing a ‘career’ and making money”

    Not really, almost, it was when fiat money went crazy, particularly via derivatives, which distorted prices. Sound money properly values the needs and wants of people ensuring that people only gain money by meeting other people’s needs. So, true capitalism is great.

    ——

    President Andrew Jackson 1829-1837: “you are a den of Vipers! I intend to rout you out, and by the Eternal God I will rout you out. If the people only understood the rank injustice of our money and banking system, there would be a revolution before morning.””It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes.”

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  • We import from the far east, i’m sure theres many companies like ours, and with the falling pound we are in deep Sh*&t

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  • Larry Pickleman says:

    before you rule, you have have passion and desire to rise up, better yourself etc. but we have ruled for so long that complacency has become the parasite that eats our log term structures. when i was at uni a long time ago, i had a part time job in the royal mail,and a guy said to me, “the reason that the royal mail is failing is that management will never employ anyone smarter than themselves.” when i started to think about it, and applied that notion to other established systems, it became more and more obvious that he was right. to the point where people now infiltrate structures not because of their passion and belief in it, but their ability to blag the system for their own ends. and now here we find ourselves in a society governed by blaggers. congratulations everyone. we’ve done each other proud.

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  • amjidk,

    If you don’t mind me asking, what kind of business is it? If it’s retail or retail supply chain then I’m afraid you’re in trouble. In both Britain and the US there is currently an oversupply of shops and shopping centres; in the US many smaller malls are closing down, it’s only a matter of time before the UK high street shrinks too. This will be a tough time for retailers, particularly those who sell imported goods. Many will have to close entirely.

    The same applies to companies which sell imported goods to other businesses. If you’re selling imported goods (e.g. computer hardware) business-to-business then rising import costs will negatively affect the bottom line. In those situations, both consumers and companies alike will increasingly “make-do-and-mend” rather than buy new every time.

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  • “thats why I’m p1ssed about it”

    * p1ssed off

    p1ssed = Uhmerican.

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  • Drewster

    Gordon Brown and Badger AKA the UK Government have borrowed probably in the region of £750,000,000,000 to help the poor old UK, who do you think they have borrowed it from and do you think exchange reates effect that repayment?

    Also there is the matter of Bank and UK funds, do you think they are all UK funded, ie to you think overseas investors place money in the UK funds – well they do to the tune of 100s of Billions of pounds. As the pound falls and interest rates get lowered that money will be withdrawn the end result being that while Honda ( has its own problems in the US and at home ) might be able to invest in its UK factories it certainly wont be holding any of its funds in the UK, it also makes borrowing costs higher long term as funds are no longer available to lend.

    A double edged sword and sadly Badger and Gordon can only see one side of it, sorry but they both have limited experience of life and that is now tragically becoming obvious, expect another 1% rate cut this week and desperate news after Christmas.

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  • Disagree withn most above. It’s far simpler. It’s a perception of where the rewards (money and fame) are. People have just followed that perception, ‘cos that’s where the rewards and money are ……… media, sport and finance. Now, why did Isambard not have this problem?

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  • 18. drewster said…
    “Shippy,

    We’ve come a long way. Think back to 1968/9 and the Ken Loach film ‘Kes’ – I for one would rather work in a “soulless” office than a death trap of a mine pit.”

    Perhaps part of the problem is that you see these as the only choices. Our education system has one purpose now – to produce a seamless flow of obedient workers and subservient consumers to slot straight into the system, just educated enough to function efficiently. Independant thinking and questioning are not required or welcomed anymore.

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  • 19. Planning4acrash said…

    “Not really, almost, it was when fiat money went crazy, particularly via derivatives, which distorted prices. Sound money properly values the needs and wants of people ensuring that people only gain money by meeting other people’s needs. So, true capitalism is great.”

    And the focus is still on gaining money. Did any of the great inventors work specifically to gain money?

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  • The big problem is money became a goal rather than a tool of trading.I hope we can come back to a more civilised society based on real achievements, instaed of material accumulation. I am just fed up about all these stupid and uneducated nouveaux-riches poseurs.

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