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Pound BELOW parity?


NormanH
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[quote user="powerdesal"]Hagar,

A Govt is supposed to look ahead, plan ahead, consider the future possibilities / probabilities and, above all, look after the country to the best benefit of the citizens. Can you honestly, hand-on-heart say the present Govt have done that?

[/quote]

No - but why would I? - what gives you the idea that I am a supporter of the present British Government ? (or the 70's Labour one for that matter).

All I have done is present some "properly researched" facts and figures coupled with some mild critiscm of Thatcher and her people.

rgds

Hagar

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One man's facts are another's propaganda, whether red or blue, neither of which party I support.

But I think it is difficult to deny that a right wing US administration, followed by right wing or right leaning UK governments, have allowed or encouraged the present situation.

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I have read this thread with interest and increasing amusement. Interest because I am interested in money on an international level and amusement because most of you seem to watch too much television.

Politicians cannot control money or markets in the twenty first century. Money/markets are affected by global circumstance. Politicians on the television pretend to their electorate that they are doing something. Hands on the tiller, Captain Brown or Bush in charge. It's all intended illusion.

Brown thinks he can save the world by borrowing hideous sums of money only to stack up debt for the next government who win power and a new generation of employees who will have to pay it all back through much higher taxation.

His and Bush’s policies are doomed to fail. Keynes and his economics belong in the past not this present day.

Even Central Bankers are completely neutered in the new situation. The ECB are still behind the curve holding on fast to a principle and illusion that a strong currency will see them through. Interest rates have ceased to mean very much in global economies and the words or intentions of politicos even less. Rates round the world will drop to near zero and have virtually little effect on anything.

The world’s industrial capitalist nations need to journey through a period of retrenchment and reorganisation. So emerging fitter and leaner for the challenges waiting for us all. There is pain now and pain in the short to medium term. However long term I expect our economies to rebound.

The world will be a different place in economic terms then. However I expect the USA to still dominate, China to struggle, Russia to be enveloped in economic stagnation and Europe to grind slowly on. The UK should be responsive to these necessary changes as financial services slowly respond to a low global valued currency.

Happy 2009 to all those investors who ran for cover a year ago.

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[quote user="Logan"]I have read this thread with interest and increasing amusement. Interest because I am interested in money on an international level and amusement because most of you seem to watch too much television. Politicians cannot control money or markets in the twenty first century. Money/markets are affected by global circumstance. Politicians on the television pretend to their electorate that they are doing something. Hands on the tiller, Captain Brown or Bush in charge. It's all intended illusion. Brown thinks he can save the world by borrowing hideous sums of money only to stack up debt for the next government who win power and a new generation of employees who will have to pay it all back through much higher taxation. His and Bush’s policies are doomed to fail. Keynes and his economics belong in the past not this present day. Even Central Bankers are completely neutered in the new situation. The ECB are still behind the curve holding on fast to a principle and illusion that a strong currency will see them through. Interest rates have ceased to mean very much in global economies and the words or intentions of politicos even less. Rates round the world will drop to near zero and have virtually little effect on anything. The world’s industrial capitalist nations need to journey through a period of retrenchment and reorganisation. So emerging fitter and leaner for the challenges waiting for us all. There is pain now and pain in the short to medium term. However long term I expect our economies to rebound. The world will be a different place in economic terms then. However I expect the USA to still dominate, China to struggle, Russia to be enveloped in economic stagnation and Europe to grind slowly on. The UK should be responsive to these necessary changes as financial services slowly respond to a low global valued currency. Happy 2009 to all those investors who ran for cover a year ago.[/quote]

 

You don't expect Europe to tear apart and the euro collapse in your scenario then? The impression I get is the World  has never been in a position that the present financial crises places it in. That we have had the period of feast and now it's famine time would add up but I would be interested to know how you arrive at your predictions.

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Politicians can't fix it but they can certainly make things worse.

I disagree, however, Logan to the extent that I think governments might have avoided the mess we are in by maintaining tighter regulation (e.g. lending restrictions and monitoring the true asset/liability ratios of banks.) As we have seen, left to their own devices in a largely unregulated market, the banks and related parties have been entirely irresponsible in the name of progress and in the interest of greed, indeed actively encouraged by the US administration. Central banks, accountable to governments, should have imposed/reimposed - and enforced - restrictions to stop them, however unpopular or reactionary it might have appeared at the time. The ordinary man in the street could have told them that something was wrong, with credit being thrust at all and sundry and property prices rising beyond reason - so why didn't those supposedly "in charge" recognise it and do something about it?

You are no doubt right that it will sort itself out eventually but, unless the unbelievably massive debt is somehow magically written off, it is going to take vastly longer than the couple of years or so politicians are projecting. World War II is credited by many for providing the "magic" that brought an end to the 30s depression....

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The present crisis had no resemblance to the 1928 Wall Street crash and subsequent depression. There have been many other serious recessions which always seem the worst of the worst until they are over. Currently I don't rate this one much more than the others which happened for slightly different reasons. Recessions are part of the capitalist economic cycle. Politicians call it boom and bust. The idea that they have the power to end it is simply dishonest.

I can't write here the reasons for my analysis Devon it would bore you and the forum witless.

I agree with Alan that there has been a serious failure of regulation in both the US and UK. However when the regulators fail to do their job the market does it for them with the more severe consequences we suffer from currently..
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Hi, I am one of those bankers!

All I would say is that banks are regulated. They can only lend within those regulations, and those regulations are set by government. In the case of the USA, President Carter pushed banks to lower their lending criteria (or face in many cases discrimination cases) and persuaded lending intermediaries Fannie Mae and Freddie Mac to buy lower grade mortgages from the banks. In the UK, banks were allowed to lend 100% mortgages, lend on many multiples of earnings, permit self certification etc etc, and all the time the Government raised stamp duty and encouraged buy to let. No wonder, in a competitive market place, the market became too leveraged. So yes, the banks shoulder blame, but people shouldn't be blinkered in to thinking that everything that is happening is because of banks, it is governements who are also at fault, but accept no blame. That is the biggest con.

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And also blame also rests with the man on the street - who borrowed way beyond his means, tarted for cheaper and cheaper fixed rate deals knowing full well he couldn't afford the repayments if the rate went up, bought the second car on tick because it was so much easier if the Mrs could drive the kids to school, had that holiday on his fifth credit card 'cus his Mrs was moaning that her friend was going abroad for the third time this year, bought his kids a Nintendo Wii on a store card (well the store were offering a discount if he took out the card).......

...and then expects help from the government when he can't meet his mortgage repayments.  Because, of course, we have all learned over recent months that the banks have an obligation to rescue such idiots from themselves. S o d the careful savers....

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George Soros has an interesting line on this in the China Daily

"The salient feature of the crisis is that it was not caused by some external shock....It was generated by the financial system itself.

This fact - a defect inherent in the system - contradicts the generally

accepted theory that financial markets tend toward equilibrium and

deviations from the equilibrium occur either in a random manner or are

caused by some sudden external event to which markets have difficulty

in adjusting."

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Yep George always has a point of view! Did he quote that in the context of the CDO debacle in particular, or the housing market and credit crunch in general? The banks are the cogs in the gearbox, it is the Governments who choose the direction to drive, and the Central banks who change the gears. One aspect that has been unfortunate in this crisis is that Central Banks and Governments played the blame game for too long at the onset of the funding crisis. It meant that rather than look for solutions, they wanted to punish banks for their poor risk management and subsequent funding difficulties. Gordon Brown has steadfastly refused to take any accountability, and the BOE, ECB FED took far too long to realise that banks could no longer be efficient intermediaries for lending, until their balance sheets were repaired. Now that countries are using their Central Banks as the clearing house, and providing funding , we are gradually seeing the liquidity logjam ease. Hence the LIBOR rates gradually, but consistently converging with policy rates.
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[quote user="baypond"]Yep George always has a point of view! Did he quote that in the context of the CDO debacle in particular, or the housing market and credit crunch in general? The banks are the cogs in the gearbox, it is the Governments who choose the direction to drive, and the Central banks who change the gears. One aspect that has been unfortunate in this crisis is that Central Banks and Governments played the blame game for too long at the onset of the funding crisis. It meant that rather than look for solutions, they wanted to punish banks for their poor risk management and subsequent funding difficulties. Gordon Brown has steadfastly refused to take any accountability, and the BOE, ECB FED took far too long to realise that banks could no longer be efficient intermediaries for lending, until their balance sheets were repaired. Now that countries are using their Central Banks as the clearing house, and providing funding , we are gradually seeing the liquidity logjam ease. Hence the LIBOR rates gradually, but consistently converging with policy rates.[/quote]

He is developing a general theory:

"

I have developed an alternative theory, which holds that financial

markets do not reflect the underlying conditions accurately. They

provide a picture that is always biased or distorted in some way or

another. More importantly, the distorted views held by market

participants and expressed in market prices can, under certain

circumstances, affect the so-called fundamentals that market prices are

supposed to reflect.

I call this two-way circular connection between market prices and

the underlying reality "reflexivity". I contend that financial markets

are always reflexive and on occasion they can veer quite far away from

the so-called equilibrium. In other words, financial markets are prone

to produce bubbles."

It's worth a read if you click on the blue link in my post above.

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Jolly good.  It'll make a change from the usual cans of Dulux Vinyl Matt.

Hot news - just found out that glacé cherries are a good buy in the UK if you make your own cakes etc - we bought half a kilo at the local market this morning and were slightly taken aback when the stallholder asked for 10 euros-and-change, i.e. 21 euros a kilo.  Checked on Tesco website in the UK and French Clacé Cherries are 65p for 100g, £6.50 a kilo.

I'm thinking of taking a trailer and filling up with candied fruit to open a stall over here. [:D]

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