Exchange rate

[Sprogster]

I don't think you are in a minority at all allanb, as my guess is that most Brits living in France are probably 'inactifs' reliant on some form of UK source investrment or pension income.

In the early nineties, when the £ last slumped retired Brits returned to the UK in large numbers from countries like Spain and France and sadly I believe history may repeat itself.

The upside is that those who return will get a lot more £'s for their euros!

[ali-cat]

Personally I've no problem with New Deal style pump priming public expenditure on key strategic infrastructure projects creating jobs at source and for suppliers and meeting long term infrastructure needs.  What I object to is the reintroduction of cheap credit to purchase DVDs; HDTVs; PS3s; Blackberrys; gooseberrys and all the other tat that people think they can't live without - all to keep the retail tills ringing.

Mr Cat

 

[WJT]

[quote user="ErnieY"]People can't spend what they don't have or cannot borrow.

If those who have money save there is more in the system available for banks etc. to lend.

I did say I'm no economist, not even O-level maths, just seems logical [:$]

[/quote]

Ernie, this is a little long but well worth a look. I think it explains everything!

Chrispp posted it on the other forum and I have since forwarded to a few family members that have found it extremely interesting. The worst part is that it is dated 2006! Very scary indeed particularly for the UK that is mostly an economy made up by the financial sector.[:'(]

http://video.google.com/videoplay?docid=-9050474362583451279&ei=jb4rScDqOaf22QKc0OTEBQ&q=money+as+debt+by+paul+grignon

[velcorin]

The financial world has been a very difficult place in which to live over the last 6 months. I will try to explain this, as none of the media sources seems to willing to do so, but this is not my area of expertise, I work with corporate debt.

The "Mark to Market" accounting rules have totally destroyed the asset base of all banks, not only in the UK, but also in the Benelux countries, Switzerland, Germany, Spain and the US. These rules have to be suspended. As it stands at the moment if a bank makes a loan/mortgage it effectively has to book that as a Bad Debt on day 1, as under the "Mark to Market" rules, the value of that product is what someone else is willing to pay for it now, today. Today nobody will buy it from the bank, therefore it is worth nothing. That is why you see the effective nationalisation of banks in Germany, France, UK, etc, because for accounting purposes they have no shareholder equity left. Historically it was Pension Funds and foreign investors who purchased these products, now they invest in Government Bonds (Gilts, Bunds, etc). Governments then lend this money to the banks, because nobody else will due to their lack Equity, and the reason for their lack Equity takes us back to the "Mark to Market" rules.

In reality, the worst mortgage/loan deliquency rate of any western European bank (Belgian) is 2%. Therefore in the real (very simple)world we could recapitalise all the banks to the tune of 98% of their assets.

Seems simple to me, but then I work in a much simpler world.

Going back to the original issue of exchange rates, there is one industry on which the world relies, and has done for hundreds of years, and that is banking, without it there is no manufacturing, no retailing, no services, etc. The UK is THE global giant of banking, in my 'umble opinion you will not see the UK join the Euro, and you will not see Sterling recover until the bank industry is fixed.

[Pierre ZFP]

[quote user="ErnieY"]People can't spend what they don't have or cannot borrow.

[/quote]

I've not looked at the link supplied by WJT yet  but isn't it the fact that people spent (spend) what they don't have that got us into this mess ?

[WJT]

Velcorin, I would be interested in your opinion of the above link "Money as debt". Your comment on the world relying on the banking industry and the UK being THE global giant of banking is what I find very frightening at the moment. But it does explain the desire of the government of wanting the UK public to spend and incur more and more debt.

[velcorin]

I would like to see it, but "Access Denied" (it's my work Server).

[AnOther]

[quote user="Pierre ZFP"]

[quote user="ErnieY"]People can't spend what they don't have or cannot borrow.[/quote]

I've not looked at the link supplied by WJT yet  but isn't it the fact that people spent (spend) what they don't have that got us into this mess ?

[/quote]Meant in the present tense not the past !

[AnOther]

wjt's video is 47 minutes long, a bit too much for a tea break, but there seem to be any number of places to download it instead.

Google Money as Debt download

[Quillan]

What on earth are you going to make in these factories that you are going to build with borrowed money. No point in cloths, their made in Asia, grey goods, well Hoover is now a Tesco supermarket, Dyson moved his production out. Whats the incentive to build a new factory when just about everything you can think of to manufacture is made outside the country and for a much, much cheaper price. We simply can't afford to manufacture in the UK. Please don't quote the Japanese car makers, they only screwdriver in the UK so they can sell within the EU and got a big subsidy when they built their factory.

You have to have money to lend, money to lend comes from personal savers, pension investments and shares. Don't think pension pots are safe either, wait till you get your annual statement, if your really lucky you may have the same amount as last year in your pot. I don't think I shall even bother to open mine this year.

Foreign investors have to see appealing interest rates to send money to the UK and they have to know its secure, they don't want the bank to go under. To be able to give them that interest rate the banks have to do something with the money, they invest in business. Its the same with building societies, people have to invest so they can lend to borrowers. As Ernie said if the bank is empty how can you lend money. Its not being an economist or clever even its just plain old common sense something sadly missing in some places at the moment.

Say what you will about Euroland but their interest rate is .5% higher than the UK and is definitely seen as being more secure than the UK, the least the UK should have done is match the Euro interest rate if it really wanted to cut the rate. By the way Barclay's are already saying that interest rates will be cut by another 1% in the new year. That's traditionally when everyone is skint after Christmas and its not till the end of Feb that they start to spend again, not the brightest of moves.

People are scared to death at the moment and if this stupid and grossly incompetent government, now managed by a bloke (that when he was chancellor said you can't spend your way out of trouble) who thinks that by cutting 2.5% of VAT (and then put 3.5% back on 18 months later) and reduce interest rates is really going to get people back borrowing and spending money then he has his head well an truly up his own rectum. Peoples perspective is that you can't even put your money in banks because they might go under when ironically the best place to put your money now is actually in Northern Rock because its owned by the government. Want a nice Saab car (convertible), on the news today they showed that £30k Saabs have had £10k knocked off the price, thats a 33.3% reduction. With a 2% interest rate, VAT down 2.5% you would think they would be queuing round the block and biting the guys hand off but no the showroom was empty and they are not the only one. My point, you can't make people spend money if they don't want to.

No, what this idiot is going to do, borrow a shed load of money on top of what he has already borrowed, bring forward new hospital and school builds, investment in transport and the general infrastructure. Well if thats not a political thing I don't know what is, more schools and hospitals built under Labours last term in office than at any over time.............................. by the way national dept is so big that you guys owe more money per head than any other country outside of the USA and your kids will spend the whole of their lives paying it off.

I'm sorry but low interest rates and borrowing shed loads of money is not the way to go.

Well spotted Pierre yet its conveniently forgotten now. Manufacturing countries geared up to service this frenzy of buying using other peoples money. Now buyers can't afford the repayments they go bust and nothing is bought. What some are saying is never mind even though you didn't pay the last lot back here's some more go spend it because we have to keep these greedy manufactures in business. This is exactly why people are not spending money.

Still there's always the Olympics to look forward too [8-)] .

[Quillan]

I see the pound went north by about half a cent when they dropped the interest rate and then it started heading back south again in just over an hour so that gives us an idea of they think about sterling. Rate is 1.1547 and dropping when I posted.

[WJT]

[quote user="ErnieY"]wjt's video is 47 minutes long, a bit too much for a tea break, but there seem to be any number of places to download it instead.

Google Money as Debt download

[/quote]

I know it is long but I think is really worth a watch. Perhaps you could pause it over several tea breaks.[:)]

[Jako]

[quote user="bigears"]the uk doesn't need europe or the euro, bring back the empire, rule britannia[/quote]

Well, if that were possible, yes the empire would be a big enough internal market.

In all other cases ( the real world [8-|] ) the UK economy is simply too small.

The UK has two options:

1- join the dollarzone

2- join the eurozone.

[AnOther]

I've long been a supporter of an independent currency, not for nothing is (was) UK the center of the financial world, but through a combination of greed, incompetence, and poor leadership, to name but a few, it's now been relegated to virtual 3rd world status and complete impotence with very little prospect of ever regaining it's former position and it's for that reason I think Euro membership is inevitable, eventually.

As in bed as UK is with the US I don't see an alignment with the dollar being in any way beneficial and probably counter productive as it would further alienate UK from Europe.

Regarding bringing forward great and good public works and projects remember, in common with massive numbers of schools and hospitals etc. already built, many of these will likely be funded under PFI which is nothing more than a long term mortgage and yet more debt for the already overburdened taxpayer to service.

[OldyamYams]

Quillan

I think you have got it just about spot on.

When this lot of idiots and nincompoops came in to office Britain had one of the best balance of payment records

in the civilised world, because the Tories under Maggie had made sure that the loans owed to the IMF by the previous Labour Government were paid back before they they could give any  thing  to Joe Public.

What did the great and fantastic (sarcasm by the way) Gordon do when he got into number 11?

He started to Borrow it all back again plus many more billions on top, so that Britain is now the pauper of the world.

It is a sheer impossibility to borrow, borrow  and borrow without one day facing the day of reckoning.

It's not us the older generation who will suffer the most for this governments incompetence, but our children and grandchildren. I dread to think what sort of a financial world they will be living in.

Dave 

From Wolverhampton until 30 Jan next year then  Deux-Sevre  (HE-------LP)

[velcorin]

Quillan. Normally I read what you have to say with interest, but in this instance I feel I need to correct some inaccuracies.

I worked for Dyson in Finance as my first job out of Uni. Siting a factory requiring in excess of 1000 manual workers in Malmesbury, the arcetyple "chocolate box" Cotswold small town, population less than 5000, mainly retired Major-Generals, was insane. We were busing workers in from Bristol, 50 miles away, there was absolutely no local workforce, the company was rapidly going insolvent. Malaysia was the ONLY answer, to this monumental co*k-up.

Re car manufacturing, this is one of my industries these days. Toyota Burnaston, is a 100% integrated plant. Design centre, engines, body shells, paint shop, production line. They make more cars than BMW globally at that one site Avensis and Auris (Corolla), they also make the kits for the french to bolt together as the Aygo. Nissan is 100% integrated, 450,000 vehicles, Micras and Qashqai. Honda, Swindon is 100% integrated. Global production for Civic, Accord, CRV and Jazz, 300,000 vehicles. UK is also the global production site for all Ford and BMW engines. Ford Dagenham now employs more people than it was making cars. (Does this make the German Ford and BMW plants "just screwdriver operations"?). Add in the BMW Mini, and the other odds and sods, they all make the UK Europe's 3rd biggest car manufacturer and as virtually all these cars go for export, UK is the 2nd biggest exporter.

That all said, car manufacturing is probably the last thing to be involved in at the moment. Renault's Sandonville plant which makes the Laguna shut until mid-January 2009 back in mid-October, holiday for some employees, redundancy for nearly 2000. Peugeot shut the Rennes 407 plant 2 weeks ago until February (I haven't got a figure for redunancies). Contrasted with Toyota Burnaston cancelling the Saturday overtime shift for a month, but Honda shutting for February and March.

Our projections for our product production for 2009 considers a 45% year on year decline in European vehicle production. We cannot switch this off and on, so that is all the vehicles Europe will be able to make. 45% less, potentially 1.5 million redundencies, if the EU has to buy all those extra vehicles itself I would consider it money well spent, as the alternative is just too appalling. However something has to be done in the next 1-2 months.

[allanb]

[quote user="Sprogster"]I don't think you are in a minority at all allanb, as my guess is that most Brits living in France are probably 'inactifs' reliant on some form of UK source investment or pension income.[/quote]Sorry, you misunderstood.  I meant that we (expats relying on a sterling pension) are only a small minority of the British people.  What's bad for us is not necessarily bad for the UK population as a whole.

[Quillan]

Velcorin, I don't think I need to be corrected (in the nicest way) about Dyson, what I implied was that its was cheaper for them to manufacture outside the UK which you have confirmed.

I must be honest I am no expert of car manufacturing which your comments have highlighted and I stand corrected. As far as I was aware initially the factory up near Sunderland was heavily subsidised by Thatcher to create long term jobs for those that got made redundant when the shipyards closed. It also gave the manufacturer (Nisan) a place in Europe, I do roughly remember that the first cars were screwdriver-ed, there was a documentary about it at the time (the late 1980's). They had to start using EU components over a set period to be able to continue to sell within the EU. I am living in the past a bit, I didn't know that her tiny seed had now grown so big and employed so many people and manufactured so much within Europe.

I don't know much about Toyota at Derby but I did live for many years near Dagenham and can remember it being demolished although as you say it now just makes diesel engines but a lot of them, over a million a year perhaps. Dunton used to be one of my clients in the IT industry.

But surely these companies will be effected by Europe as most is for export, Ford for instance, no point in building engines if they are not making the cars in Europe to fit them in to. Same with BMW, in fact if there is no market for exports then no amount of investment will fix the problem.

[dragonrouge]

Now simply retired but after a career in banking as in Regional Director when banking was banking then into telecomms and when head of Public Sector for a major but not as in BT then absolute career change into the law.

Forget about banking in those days we were let us say more 'tight' then as compared today.  One of my old Directors used to say '.....it is easy to lend the secret is to get it back with some interest and which is our profit.......'  He was a Scot but so unlike those of current days.

Then to comms and where at the end of the day the public dictated that it was a product and thus whomever provided the product at the lowest cost obtained the business.  Some of you may remember the good old BT days when a minimum cost was 4.2ppm.  Then of course B Thatcher opened the floodgates and now it is very much the case that local calls will shortly become free and national and long distance calls are just less than 1ppm.  So folks in those days the Directors were saying add value but what they were saying was that shareholders and shareholder values are behind all of this lets look after them.

If let us say we were pitching for the whole of the voice network for HMG it was pence per minute that was driving the deal, nothing else if someone from let us say Abertillery in Wales (and I am from Wales) was cheapest and they came up with the security  issues then of course they obtained the business.

Then to the law and if I were to arrive at court at say 9.30am then delays and the case was only heard after say 14h.00 then I have been there for say four hours and I get if I am lucky then just about £80 and which is committed to overheads and the like and the net net bottom line is just £20.  Its pile them high and sell them cheap that is what our legal system is all about. Forget about when is innocent until proven guilty but this is alltogether a differing scenario.  As in the court decision today as to DNA for those not convicted of a criminal offence but whose DNA is still on file.

I had enough and no more for me thus retirement.

Things have changed.

Finally as in comms both customer service and let us say the engineering have moved to India for what simply lower costs.  Then pose a question to someone in the sub continent 'I am from Pontygwaith but my plants are in Treorchy and the other two in Blaencwm and Ynyshir' can you see where we are going.

We are becoming if not have become a society that is driven by bottom line costs.

[AnOther]

wjt:

Well I have just finished watching Money As Debt and I was transfixed, a complete revelation, thank you very much. I don't think I'd be exaggerating if I said that I think I learnt more in that 47 minutes then in almost as many years !

The problem is, now I really am scared [:-))]

[Danny]

here is another film along similar lines

http://video.google.com/videoplay?docid=6076118677860424204

very American based but interesting none the less

Danny

[WJT]

Ernie, I agree, I thought it was very interesting. It is very sad that it was made in 2006 before the credit crunch and no one was able to stop what was happening. After seeing it, I now understand why the governments need us all to be in debt at the moment.

We aren't in debt and have been very prudent and unfortunately we as many others are being kicked in the teeth with the way things are turning out with low interest on savings, pensions and property prices. We were planning to sell our property in the UK to move to France permanently but that dream is very distant at the moment. Oh yea and the crash of the pound.[:(]

I am going to bed now and will watch Danny's video tomorrow. I am already having nightmares as it is. [:)]

[Quillan]

I have just finished watching the film and very good I thought it was to. It has definitely changed my perspective although to be honest I can't see it changing, to many people getting very rich. Seems I was totally wrong about saving then, sorry.

[WendyG]

Having worked all my life, been prudent and saved for a reasonable retirement, now, due to the total incompetennce of this government, I am finding that the interest on my savings has and is falling at an alarming rate.  All the talk is about the people who have borrowed, in some cases, far too much, to fund a lifestyle beyond their means, but hardly anything about the prudent people who are now finding it difficult to live.

I do not take expensive holidays, constantly change my carpets, furniture etc.  Do not smoke or drink excessively but am now worrying how I am to live a normal life.  I know there are people worse off but nevertheless when you have saved and planned for retirement it is scary to see it all slipping away.

Now in my 70s I do not have the option of returning to work, if there should be any.

I have just seen headlines on one paper re the savers.  I find it amazing to hear people on tv saying they think the interest rate should be zero.  Why do they think people should lend them money for nothing?!

Having had my moan I shall go and feed the cat!

WendyG

[Bugsy]

I've had an idea !

Its so simple !

We need to forget about money completely, do away with all the greedy banks and money markets  and start using wampum again................[:P]

[IMG]http://i129.photobucket.com/albums/p211/Bugbear2/93364-004-B4E9833A.jpg[/IMG]

.