I the £ on an up againt the euro???

[Jako]

[quote user="just john "]I have to say that despite the current situation I still believe the Euro is vastly overvalued, [/quote]

True, but the Euro is only overvalued to the Chinese Renmibi. Not to the US dollar and definitely not to the GB pound.

With a debt to GDP of 180% ( if you are not cooking the books, so including the bank bailouts) and a budget deficit of 13% the UK is far worse then Greece. The UK economy is only running on extra printed money (=stealing money right out of your pocket) , devaluing the pound ( more theft from your wallet)  , issuing more and more gilts and rising inflation ( =more theft )

Inflation is low in the Euro zone, issuing bonds is much better controlled and the ECB is not allowed to print money to monetise the debt. And that is bad?

I am glad I live in the Euro zone, not in a Zimbabwe-style little island just off the EU coast with a capital called Reykjavik on the Thames.

 

 

 

[Quillan]

You have answered that a lot better than I from a technical point of view. I have always said, when this subject is discussed, from the very beginning its not that the Euro has got strong its the Pound that has become weak. I can think of a few reasons why the Pound has become weak and you have listed most of them but I struggle to find anything which makes the Pound the same and the Euro become stronger.

[just john]

I can only say that when we bought our projet it was not a money pit, of course events and exchange rates have changed, but I did heed the advice I was given by a couple of friends,

1 There are two good days of ownership of a yacht, the day you buy it and the day you sell it . . . .

2 If it floats, flies or fornicates, it is more cost effective to rent by the hour, Paul mentioned this one !

edit

Is national debt of the UK, even nearing 100% of GDP any big deal? At the end of WWI (1919) it stood at 135%. For nearly 15 years from 1923 it stood above 150%. Then just after WWII it ballooned to 238%! Our Empire was built on debt.

History proves a country can live with large deficits for years, is it different when the debt is more political? The risks that creditworthiness of the UK by creditors puts the country in a weak position. 30% of gilts are owned by fickle foreigners. Is this how we want to run the place?

[velcorin]

It may also be worth considering that the UK owns 25% of US government debt, and 40% of German government debt. Both countries have Debt to GDP ratios greater than the UK, as you say, in the grand scheme of things it is completely irrelevant what the ratio is...................at it's simplest level UK foreign assets vastly outweigh foreign assets held in the UK. Cash in foreign assets, repay foreign debt, hey presto the UK is quids in.

[pachapapa]

[quote user="velcorin"]

It may also be worth considering that the UK owns 25% of US government debt, and 40% of German government debt. Both countries have Debt to GDP ratios greater than the UK, as you say, in the grand scheme of things it is completely irrelevant what the ratio is...................at it's simplest level UK foreign assets vastly outweigh foreign assets held in the UK. Cash in foreign assets, repay foreign debt, hey presto the UK is quids in.

[/quote]

Or perhaps both are reluctant to "invest" in UK debt.[:D]

[velcorin]

PPP, don't be disingenious, you know perfectly well what is happening, who is involved, and why [:D]

[Jako]

[quote user="velcorin"]

It may also be worth considering that the UK owns 25% of US government debt, and 40% of German government debt. Both countries have Debt to GDP ratios greater than the UK, as you say, in the grand scheme of things it is completely irrelevant what the ratio is...................at it's simplest level UK foreign assets vastly outweigh foreign assets held in the UK. Cash in foreign assets, repay foreign debt, hey presto the UK is quids in.

[/quote]

Check your sources.

The UK owns just  4.8% of  foreign held  US debt at 178 billion dollars (dec 2009) which is even less than the 200 billion newly printed pounds the BoE created in 2009 and neither the US nor Germany comes close to the real UK's debt to gdp ratio.

I hope Gordon has the IMF on speeddial.

[velcorin]

Thanks Jako. I would advise our Economic Research Unit in Germany that they are incorrect to use the CIA and Bundesbank as sources for their Quarterly Bulletins, however you’ll have to excuse me if I do not, as it may not be advantageous for my further career development.

[Gluestick]

If anyone wants a nice headache, then here are the B of E's Official Figures.

http://www.bankofengland.co.uk/statistics/reserves/Tempoutput.xls

 

[Boscoe]

It basically comes down to this... If you were a reserve manager which would you rather hold, Sterling or Euro? The Eurozone has it's problems but Britain's are arguably much worse.

[Quillan]

As Ogden Nash once said " Bankers are just like everyone else........ except richer".

[Gluestick]

[quote user="Boscoe"]It basically comes down to this... If you were a reserve manager which would you rather hold, Sterling or Euro? The Eurozone has it's problems but Britain's are arguably much worse.
[/quote]

Nice concept.

Unfortunately the realities of operating fiat currencies which are all freely floating and membership of IMF and World Bank, obliges Central Banks to support each other by holding certain reserve levels of each major trading currency.

Furthermore, as say Britain trades significantly (Now I would suggest somewhat cynically, too significantly!), with the Eurozone and the USA, as well as Japan and Asia, in order to smooth the irregularities of Balance of Trade flows and cycles, then it is inevitable that the Central Bank (B of E) will hold serious reserve assets of all these nation state's currencies.

Globalisation additionally, has created more inflow-outflow patterns from Inwards and Outwards investment.

Q: yes I like Ogden Nash too: however my favourite cynical take on banking and international finance came from the Canadian humorist writer, Stephen Leacock.

Scroll down to the piece "How to Borrow Money".

As fresh today as it was in the 1930s............

http://www.scribd.com/doc/222156/Short-Circuits-1938-by-Stephen-Leacock

 

[NickP]

[quote user="Boscoe"]It basically comes down to this... If you were a reserve manager which would you rather hold, Sterling or Euro? The Eurozone has it's problems but Britain's are arguably much worse.
[/quote]

Yes I agree, but once the reserve managers and their mates in finance have ripped the "reed" out of Sterling they will turn their attentions to the Euro.They can't loose, the only  looser is the man on the street, who because of the money manipulators; gets a terrible interest on his savings and pays a high price for borrowing. But having said that someone has to pay for the bankers bonus perks, we couldn't expect the parasites to earn normal persons wages could we?

[just john]

[quote user="NickP"] But having said that someone has to pay for the bankers bonus perks, we couldn't expert the parasites to earn normal persons wages could we?[/quote]

I'm surprised more bankers have have not to sprung to the defense of this erroneous assumption, my understanding is that all bankers are not the same and most of the guys who screwed up have quietly been offered a warm bath and a razor or been allowed to slip away; consequently the guys left are charged with making boodles in a different way to overcome the debt and build reserves. Presumably only the successful ones are getting the bonuses, even when the boodle made has not wiped out the deficiency in a single stroke. Where the bonuses are not suffiecient they have left to pastures new where the boodle is great enough . . . or am I being naive . . .

 

[Quillan]

Your dead right there Just John. This sorry affair has been a golden opportunity for the banks to get rid of their 'dead wood' and those that have done well have been well rewarded which given what they do and the hours they work is quite right. I have always believed you pay on result, if you don't perform you get nothing and shown the door.

[NickP]

[quote user="just john "]

[quote user="NickP"] But having said that someone has to pay for the bankers bonus perks, we couldn't expert the parasites to earn normal persons wages could we?[/quote]

I'm surprised more bankers have have not to sprung to the defense of this erroneous assumption, my understanding is that all bankers are not the same and most of the guys who screwed up have quietly been offered a warm bath and a razor or been allowed to slip away; consequently the guys left are charged with making boodles in a different way to overcome the debt and build reserves. Presumably only the successful ones are getting the bonuses, even when the boodle made has not wiped out the deficiency in a single stroke. Where the bonuses are not suffiecient they have left to pastures new where the boodle is great enough . . . or am I being naive . . .

[/quote]

Sorry John but you are naive, because  my comment is not an erroneous assumption, it is an opinion, an opinion based on my dealings with the financial services. Also I am of the opinion that the banks have kept the gamblers in the hope of getting them out of the mess that are in, and if it doesn't work, well they will come crying to us again to bail them out.

[just john]

Bill thinks the seesaw is about to change The pound will rise as the euro heads south

 

[Quillan]

I don't know about anyone else but I am getting a bit fed up with all this "Sterling will get stronger and the Euro will get weaker". They have been saying this month in, month out, now for what, it must be a year now. Anyone remember the prediction about it being somewhere between 1.25 and 1.45 before Christmas (I wonder if my charity ever got its 50 Euros?). We are two months beyond Christmas and its still going down. These people always look for something to blame for the weak pound hence now they say its the forthcoming election. Well they knew there would be one in the UK for the last 4 years and roughly which month it would be in so why didn't they start moving money in to other currencies long before now? Moving big lumps of money away from sterling now is going to make other currencies look stronger or alternatively sterling look weaker. They are also buying Euros so what does that tell you?

What they need to do is raise interest rates to either the same as Europe or ideally just a bit higher. The reason for this is simple, you need people to invest their money in the UK. Look at it this way, when you go to the hole in the wall machine and take some money out it has to come from somewhere. Normally it comes from the other bloke standing at the counter inside the bank putting money in to his savings account. If nobody is putting money in because the interest rates are so low then there is no money left to put in the machine for you to take out. The only way to overcome this is to print money which is what is happening. The more money you print devalues the pound and inflation rises. OK its a simple example but the theory is not far wrong. Bankers will say "Oh come on it's not like that at all, we make money by borrowing and lending money" but is not that how they got in this mess, lending too much and buying dodgy debts?

On top of that you have an increasingly aging population who don't work. Traditionally amongst the working class you get your state pension plus the interest on your hard earned money you squirreled away over the years. The problem you are faced with now is that with interest rates so low you have to spend your capital thus making the pot of physical money in your savings account even smaller.

Another alternative, for those that work, is to borrow money. I see the rise again of money lending companies advertising on the TV, one company has for some time had its own TV channel! I have said for the last few years that freely lending money to people who can't afford to pay it back will end in tears and I don't think I was wrong. Real house repossessions are much higher than is printed because its 'second charge' loans that are defaulting and forcing the repossession, this does not go on the mortgage lenders default list because it was not the mortgage company that forced the repossession and they get paid first. The bottom line is that Joe Bloggs on the street is simply living beyond his means as is the UK. I guess I am 'old school' (thanks dad for teaching me) and if you can't afford something you either save up to buy it, make a few cuts in your monthly bills or simply don't buy it. So in my mind to borrow your way out of a situation is total folly because you know that someday you will have to pay it back and you are on the slippery path to bankruptcy. A classic, in the news, example of living beyond your means is Greece and quite rightly nobody is going to lend them money so they are going to have to make mega cuts.

Some might ask why countries are willing to even lend money to the UK well I think the answer is simple. The UK still has a lot of 'family silver' left in the cupboard and come the time we have t pay the money back and can't we will have to let them have the whats left of the family silver to pay the debt off.

Watching the opinion polls and the Tory slipping lead makes me think the Tories have more sense than we credit them for. I have said for this and the previous election that its not the one you want to win. Mark my words things are going to get very tough and very ugly in the UK over then nest 5 or 10 years, massive cuts to the public sector and loads of strikes just like in Greece. Inflation will increase dramatically and the pound will probably devalue even more because the UK is, as I said, simply living beyond its means.

Now over to the bankers and the economists amongst us who will say its utter tosh, shout me down and call me an idiot but I was not wrong about the exchange rate (OK only by a couple of cents) and I don't think I am far from wrong now. Don't forget its not in their interest for us to stop borrowing and spending money, to do so will have a massive impact on their industry.

 

[just john]

Blimey Q what side of the bed did you get out of[:)], There are a couple of chinks in your athinking, 1, Life goes on, 2 You don't kill the goose that lays the golden egg, even if you cut down its corn and let the plummage fall out.

I'm sure the IMF will find ways to extend repayment periods (even through 2nd and third loans; I see in these days of no interest to savers that loan interest rates are creeping up) after all most people pay in the end (did you pay off your mortgage or are you bankrupt). This whole thing is a game of how to make money and the fluctuations in the exchange rate are part of it; nothing I can think of stays up (or down) forever.[;-)]

[Quillan]

[quote user="just john "]

Blimey Q what side of the bed did you get out of[:)], There are a couple of chinks in your athinking, 1, Life goes on, 2 You don't kill the goose that lays the golden egg, even if you cut down its corn and let the plummage fall out.

I'm sure the IMF will find ways to extend repayment periods (even through 2nd and third loans; I see in these days of no interest to savers that loan interest rates are creeping up) after all most people pay in the end (did you pay off your mortgage or are you bankrupt). This whole thing is a game of how to make money and the fluctuations in the exchange rate are part of it; nothing I can think of stays up (or down) forever.[;-)]

[/quote]

The right side but I do get fed up, as I know a lot of others do, with all this stuff about Stirling and the Euro improving which it won't for some time.

I doubt the IMF will lend money to ordinary people, it goes to the state which the ordinary people have no say in how its to be spent nor do they see any benifit. The projected interest rates on 5 year saving bonds has gone down again, always a good indicator. My basic French savings account has been producing interest at 3.?% for over a year now, not much but beter than I would have got in the UK.

I paid my last mortgage off when I was 41 and have been living mortgage free for many a year. The most I owe is just under 20 Euros to my local builders merchant. Over the years the amount of credit allowed on my cards has gone down to almost nothing because I don't use them and pay at the end of the month (I had one to buy petrol with because it gave Airmiles and another to buy electrical goods because it gave you a free 3 year warranty extension). That's another way they entice you to borrow money, the more you borrow the more credit your allowed on your cards.

The thing is that live IS simple, its just others that make it difficult. An example that comes to mind is something I saw a while back, change of subject I know. The UK is spending something like £10M on designing a new numberplate system for cars to stop people stealing them. I figure that to dramatically reduce the theft of number plates they need to do the same as the French (and other countries), pop rivet them on. It's one thing silently unscrewing a couple of screws with a screwdriver you can keep it your pocket but another making a noise with a big battery drill which is difficult to hide. My point is we actively go looking for difficult ways to fix a problem which is expensive, not cost efficient and very complicated and often at the expense of somebody else, the tax payer.

[NickP]

John Wrote:  nothing I can think of stays up (or down) forever.

Might be a few old codgers on here, and I did mean codgers ,although??  may disagree with the second part of your comment John.[:D]

[Martin963]

FWIW I think you're quite right in essence Quillan.    Fudge or not,  the EU will find a way of protecting themselves collectively.

Whereas when the international markets turn their attention on Britain we will - when asked to account for 13 years of squandered money and delusional national deficit creating - find ourselves UTTERLY alone.   Our only friend will be the IMF,  and they will (rightly) exact a terrible price to rescue us.

Yes of course we can go on trashing the £ even more whilst politicians and (some) economists conotinue to believe that it's the solution to all our problems,   but we've done it so many times now (1966/67,  1976/77,  1991/2 and now) and we're STILL in far more of a mess than anyone else,   other than the true basket-cases such as Greece and Zimbabwe.

Did you know that the £ has even gone down significantly against the Moldovan whatever-they-use-there,  it's one of the poorest countries in Europe where people have next to nothing and yet the £ has gone down against it (source,  a charity that works over there).

Oh how I wish I'd moved money over to France when the £ bought €1.60,   but I was silly enough to grudgingly give you-know-who the benefit of the doubt when he told us of his "Golden Rules" and his prudence.

The next thing to go will be the inflation target and then we really are sunk in Britain......

[Gluestick]

[quote user="Quillan"]A classic, in the news, example of living beyond your means is Greece and quite rightly nobody is going to lend them money
[/quote]

Dateline: March 5th 2010

UK investors bought a fifth of the €5bn 10-year bonds sold by Greece yesterday. While Greek investors purchased 23% of the total issuance, foreign investors were led by the UK at 20% and Germany with 14%.Fund managers snapped up 39% of the issuance, followed by banks and insurance/pension investors with 24.5% each.

http://www.investmentweek.co.uk/investment-week/news/1595130/uk-investors-eur5bn-greek-bond-issue

Th float was three times over-subscribed, BTW...............

[Quillan]

Lets hope they have it right and don't get saddled with a dead horse. [;-)]

[Benjamin]

Don't worry Quillan. You can always flog a dead horse.  [:P]