Tuesday, Oct 13, 2009

Pound continues its descent on Deflation fears

Citywire: Pound continues its descent on inflation fears

The pound continued its decline against other major currencies this morning as fears that inflation has tumbled further below target weighed.
Dipping to levels not seen for over half a year, sterling hit a low against the euro of €1.065, down around a third of a cent from opening levels, marking its lowest ebb since late March against the single European currency. It also slid against the dollar in early trading, back under the $1.58 level at $1.5738 at its lowest point. The currency had already taken a hit yesterday after the government announced it was selling off a number of assets - including the country's student loan book and the Dartford Tunnel - and today the trend continued as investors fretted over the impending inflation data.

Posted by jack c @ 09:19 AM (1739 views)
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21 Comments

1. crunchy said...

: )

Tuesday, October 13, 2009 09:24AM Report Comment
 

2. crunchy said...

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=396ed8e5-123e-4fd1-9b99-302837a07823

Oops another leak.

Tuesday, October 13, 2009 09:32AM Report Comment
 

3. alan said...

I get the impression that the government is getting rattled, resulting in this sell off. I'm not sure how foreign governments view this but the announced moves sound like selling of the family silver. Two possible problems:

1. I thought that the Dartford QE2 tunnel fees were to be cut once the finance had been paid back, in the original plans 40 years ago. People won't like that, they've bought them already.

2. Won't the BoE be forced to raise Interest Rates to keep foreign cash in this country at some stage?

Tuesday, October 13, 2009 09:36AM Report Comment
 

4. This comment has been removed as it was found to be in breach of our Blog Policies.

 

5. crunchy said...

4. jackas said..."F*ck you if you have saved money and are renting. Seriously - f*ck you. You idiot."


We are looking after our buddies and must keep the creative balance sheets up at all costs, even if that means over the long term.

The crash is becoming the carrot that some UKers will never see. A would call it a scam, but hey I'm just a nutter!

Tuesday, October 13, 2009 09:58AM Report Comment
 

6. the number cruncher said...

This is a deliberate policy

IMO forces are at work in the UK and America to deliberately devalue the currency, instead of assets, and avoid the rush to liquidity. It could be the first shots in the anti competitive trade war that will spark off a vicious circle of global depression.

I think the policy of the UK and USA is based on the debt-devaluation model and trying to avoid that at all costs(this is what Benanke did his academic work in). But there is little talked about the collapse in world trade and the devaluation of sterling and the dollar will precipitate this.

If all the libertarians on HPC excuse my bleeding heart socialism, we are at the moment seeing a collapse in world trade, nearly 10% this year, which is affecting third world countries far worse than our own. These countries will respond to our devaluation in a slump that could see world trade sump by another 40% over the coming years.

Tuesday, October 13, 2009 10:00AM Report Comment
 

7. stillthinking said...

Callaghan gave an apology on behalf of the Labour party for unsuccessfully trying this policy in the past, perhaps thats where El Gordo got it from.

Tuesday, October 13, 2009 10:10AM Report Comment
 

8. alan said...

"IMO forces are at work in the UK and America to deliberately devalue the currency".

I'm not a conspiracy theorist, but things point that way. The dollar will just drop, with the £ along with it. This leaves the Euro in a difficult position, whether to follow or have exports priced out by the exchange rates. The way I see things the US bought a lot of goods from the world and now wants to pay the sellers in devalued dollars. How long can they play that trick??

Tuesday, October 13, 2009 10:22AM Report Comment
 

9. crunchy said...

8. alan said...The way I see things the US bought a lot of goods from the world and now wants to pay the sellers in devalued dollars.
How long can they play that trick??

It is a "nonsense" they cannot do it. They can play this destruction out untill they replace the dollar with a new currency type.

Tuesday, October 13, 2009 10:30AM Report Comment
 

10. the number cruncher said...

This video from Peter Schiff is interesting as he predicts this moment and its consequences well

http://www.youtube.com/watch?v=lj0gg3rmpj0&feature=channel_page

Tuesday, October 13, 2009 10:38AM Report Comment
 

11. smugdog said...

There seems to be a lot of rattled people on here today. It's sapping my positivity.

Tuesday, October 13, 2009 10:41AM Report Comment
 

12. uncle tom said...

"The way I see things the US bought a lot of goods from the world and now wants to pay the sellers in devalued dollars.
How long can they play that trick??"

"It is a "nonsense" they cannot do it. They can play this destruction out untill they replace the dollar with a new currency type"


Actually they can, and inevitably will.

China signed up to the idea of vendor financing the US on a massive scale, mainly (I think) to put Uncle Sam on a leash - making the US dependant on China, but not the other way round.

Ultimately this will prove very costly to the Chinese, but as they have built their economic development on the back of this strategy, they will, in the final analysis; probably look back, and think of it as a price that was worth paying...

Tuesday, October 13, 2009 10:50AM Report Comment
 

13. crunchy said...

Did Peter Schifty say something about higher food prices. Well I never.

Loving it today!

Tuesday, October 13, 2009 10:54AM Report Comment
 

14. crunchy said...

12. uncle tom

We shall see how this plays out in time. Thanks for your input, as always.

Tuesday, October 13, 2009 11:06AM Report Comment
 

15. hpwatcher said...

This video from Peter Schiff is interesting as he predicts this moment and its consequences well

http://www.youtube.com/watch?v=lj0gg3rmpj0&feature=channel_page


Great performance from Peter, basically a pretty solid forcast.

Interest rates going up seems to be the key message.

Tuesday, October 13, 2009 11:16AM Report Comment
 

16. jackas said...

Has Peter Schiff got any track record of being correct?

I prefer listening to Vi goons with permed hair.

Tuesday, October 13, 2009 01:04PM Report Comment
 

17. george monsoon said...

Not been on here for some time. The house price crash is just such an insignificant factor in my life right now, I have not been interested at all, and to be honest, I don't really subscribe to the gloating view of the majority of money oriented people who blog on here. I think this is going to be my last post. So all you ex-pats and cash rich 50 somethings, enjoy your life. I will trudge on with my enforced slavery and never ever buy a house. Time for the revolution.!!!!

Here is my current financial situation, and the difference that three months can make. Back in July, I had no debt, no credit cards and nearly £1000 saved My car needed 400 quid repairs for a part that cost 5 quid to make in China, rising bills took the rest of the savings and I Just had to put 1000 quid on my credit card when the wifes car died last week., my 2 overdrafts are now at their £300 limit (and they are now charging me £1 a day while I am in the red) and the cost of living just keeps on going up and up.... I had no debt until 3 months ago. That has now changed and with no home of my own.. things are looking very very bleak.

You enjoy your global elitist narrow minded view that this depression is accidental, due to mismanagement and greed. I know the truth. Goldman Sachs, Rothschild and the other super greedy power mongers are manufacturing this hardship to bring in their global currency. Next to fall will be the Pound as we get forced to move to the dollar.. They know the public are getting wise to this, why do you think the cameras are going up everywhere. The police state is here. Its too late to fight back, just run.

Tuesday, October 13, 2009 01:23PM Report Comment
 

18. george monsoon said...

Should have said Euro, not dollar.

Tuesday, October 13, 2009 01:31PM Report Comment
 

19. crunchy said...

18. george, sorry to hear that.

You share your name with George Orwell. Did you ever wonder why Orwell died just one year after the release of 1984.

You are right on most of the above. Start living your life with that knowledge and use any new solid information to dodge future bullets.

We can all "cheat" as well as our enemies. Good luck with your New Life. I love it personally and will never turn back. All the best.

PS Don't get depressed get even by trying to control as much as your life as you possibly can. That is going to require some money

in the future. Don't knock it!

Tuesday, October 13, 2009 02:27PM Report Comment
 

20. matt_the_hat said...

monsoon this ones for you....

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption in high places will follow, and the money-power of the country will endeavor to prolong it's reign by working upon the prejudices of the people until the wealth is aggregated in a few hands and the Republic is destroyed.” - could have been spoken yesterday

Tuesday, October 13, 2009 02:38PM Report Comment
 

21. mountain goat said...

Smugdog I see your point, winter blues setting in early here on hpc.coop. We had the boom now comes the payback. In hindsight, of course the system was going to try fight back by trashing our savings. But those savings were made off the back of this bubble too, so we should not complain too hard. Last year I felt that the world's economy was like the cartoon coyote running on air after going off the edge of a cliff. I still feel the same, if not more. Houses are more affordable today than last year and this long term trend will not change. We should all dabble in a bit of investing just to experience that prices go up and down all the time, but in the end fundamentals do matter. Long term, deflation is in charge and money printing government intervention won't change that. All I need to do is sit back and watch the coyote run on air. This is my reason to be cheerful part 3. Reasons 1 & 2 are to do with things other than money.

GM I grew up in South Africa under an Apartheid regime that imposed increasing draconian rule as it got closer and closer to collapse. Increasing government intervention and control is a sign of weakness and indication that it will one day be forced to stop defending the old ways.

Tuesday, October 13, 2009 02:53PM Report Comment
 

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