Pound collapses on dour BoE report and prospect for lower rates.

purch

Of course there were no parties as the pound did not reach parity !!

The 1.0508 was hit at about 11.10 AM, and as it went back through 1.06 in less than a minute, we all knew it wouldn't happen..............so we all went out and had a "damp" Lunch ........not really a party, but we sank a few bottles of Bolly anyway !!!!

EdInvestor

eeja wrote: »

True . What is happening now is that the vultures from all over the world are descending on London to buy up all the Rolex's and Mercedes cars and other luxury goods at bargain prices in pound terms before their list price goes up

There's no doubt about it, recessions are great for people who have money.Amazing bargains to be found all over the place, not least because firms often can't follow currencies up in full because of competition in the domestic market. The net result is they usually force suppliers to reduce wholesale prices.

mrposhman

eeja wrote: »

True . What is happening now is that the vultures from all over the world are descending on London to buy up all the Rolex's and Mercedes cars and other luxury goods at bargain prices in pound terms before their list price goes up

Your looking at this whole situation from one side - currency values.

You have to look at the wider problem, I see you've dutifully ignored my point about unemployment.

Hey, lets throw high interest rates into the mix as it seems you want them higher.

Well, we've all seen the reports in the news recently about small businesses coming into trouble and house repossessions being up a huge amount year on year. The vast majority of small businesses will have a good proportion of lending, this may be on fixed rate deals, but others are also on variable loans, variable mortgages and variable overdrafts. The variable element is whats important here and buy reducing interest rates it not only encourages people to spend when they aren't, but it also reduces the cost of lending to small businesses who when sales decrease may find it difficult to repay their lending.

Following on from this, if the amount of lending that is unpaid (bad debts) continues to increase and bankruptcies increase then banks will recover this money in other ways, guess what.....................this would lead to higher interest rates or fees returning on accounts thus further increasing the pressure on businesses and homeowners.

try doing what the BOE do and look at the economy as A WHOLE and not by pidgeon holing everything into the currency.

eeja

mrposhman wrote: »

Your looking at this whole situation from one side - currency values.

You have to look at the wider problem, I see you've dutifully ignored my point about unemployment.

Hey, lets throw high interest rates into the mix as it seems you want them higher.

Well, we've all seen the reports in the news recently about small businesses coming into trouble and house repossessions being up a huge amount year on year. The vast majority of small businesses will have a good proportion of lending, this may be on fixed rate deals, but others are also on variable loans, variable mortgages and variable overdrafts. The variable element is whats important here and buy reducing interest rates it not only encourages people to spend when they aren't, but it also reduces the cost of lending to small businesses who when sales decrease may find it difficult to repay their lending.

Following on from this, if the amount of lending that is unpaid (bad debts) continues to increase and bankruptcies increase then banks will recover this money in other ways, guess what.....................this would lead to higher interest rates or fees returning on accounts thus further increasing the pressure on businesses and homeowners.

try doing what the BOE do and look at the economy as A WHOLE and not by pidgeon holing everything into the currency.

Every single word you write is true . Ever since Karl Marx we have had the Capitalists and the Socialists. Your view is Socialist...nothing wrong with that. If you want to see the other side of the coin go to Fox news ( on Sky) or CNBC. The big issue in the US now is whether to bail out GM the largest car maker in the USA which is on the verge of going bust.Its share price of $3 is what it was in 1943 !!. The socialists (small s) talk about the 2.5 million jobs at risk if it goes bankrupt and the capitalists are saying let them go bust..they dont deserve a bail out. Bush has shown himself to be against the bail-out. Surprised ? Doesn't need votes now! If I remember correctly British Leyland the largest UK carmaker was allowed by the government of the time to go bust. Please correct me if I am wrong.
PS I heard on the news a few months ago that its well known and popular Chairman Lord Stokes had died)

alchemistkevin

EdInvestor wrote: »

Yes it's really noticeable how prices of all the Made in China goods on the High Street are zooming up, isn't it?

Haven't seen a new clearance sale for ........ .. gosh, it must be minutes.... :rolleyes:

Its funny how you post like an 'expert' on here and then come out with such a statement. Guess you're one of the self made ones, the ones who don't think economics make any sense.

wkt54

I live in France, pay 7,000 euros a year rent, plus all my bills and spending money taken from my Nationwide building society account.

So the fall is really affecting me compared to last year when it was 1.47.

Dopple

What do people think is the 6-month outlook for the pound vs dollar?
Will it stay below 1.50 on a consistant basis?

eeja

purch wrote: »

The 1.0508 was hit at about 11.10 AM, and as it went back through 1.06 in less than a minute, we all knew it wouldn't happen..............so we all went out and had a "damp" Lunch ........not really a party, but we sank a few bottles of Bolly anyway !!!![/quote

My goodness purch is indeed a heayweight expert in the markets and full credit to his expertise.
When we read the above posting we probably could not understand why he should have celebrated as after all the pound could have resumed its fall minutes later.
Had you listened to CNBC just now talking about the 500 point rally on the Dow which started just one hour before the close yesterday we would all have understood. It seems a rule of the market that when a market hits a previous low and goes even lower to hit a fresh new low any rebound that takes place is a sign the markets have found 'bottom' and therefore every investor will want to come in and buy. This is exactly what happened on Wall St yesterday evening. Clearly the $1.05 reached was recognised as the bottom so when it turned around and headed upwards to $1.06 the dealers including purch knew it was time to celebrate as a bottom had been reached. I think we should all be very grateful that we have some one of his expertise and knowledge on this forum.

mrposhman

eeja wrote: »

Every single word you write is true . Ever since Karl Marx we have had the Capitalists and the Socialists. Your view is Socialist...nothing wrong with that. If you want to see the other side of the coin go to Fox news ( on Sky) or CNBC. The big issue in the US now is whether to bail out GM the largest car maker in the USA which is on the verge of going bust.Its share price of $3 is what it was in 1943 !!. The socialists (small s) talk about the 2.5 million jobs at risk if it goes bankrupt and the capitalists are saying let them go bust..they dont deserve a bail out. Bush has shown himself to be against the bail-out. Surprised ? Doesn't need votes now! If I remember correctly British Leyland the largest UK carmaker was allowed by the government of the time to go bust. Please correct me if I am wrong.
PS I heard on the news a few months ago that its well known and popular Chairman Lord Stokes had died)

Not really, I'm not a socialist, I'm looking at it from a management accounting point of view.

Large business - I don't side at all with the unions etc who state that RBS shouldn't release staff as they have taken money from the government (got nothing to do with the fact they have more staff!!). Large businesses generally have more cash and have better liquidity situations than small businesses, therefore will usually take longer to run out of cash and can usually "ride out" a reduction in turnover. Some staff may be lost but these will come back when sales rise.

Small businesses - Lower liquidity levels, lack of access to cash and very vunerable. They are more likely to go bust resulting in certain markets being absorbed into larger competitors ultimately meaning that these jobs are lost forever.

More unemployment = less tax = more unemployment benefit = more tax for everyone else = everyones standard of living goes down and UK PLC.

Its numbers not socialist views.

jon3001

Pound Sterling is next Icelandic Krona:
http://blogs.ft.com/maverecon/2008/11/how-likely-is-a-sterling-crisis-or-is-london-really-reykjavik-on-thames/

With the pound sterling dropping like a stone against most other currencies and long-term interest rates on UK sovereign debt beginning to edge up, this is a good time to revisit a suggestion I made earlier on a number of occasions, that there is a non-trivial risk of the UK becoming the next Iceland.

Parity between euro and sterling expected by end of 2009
http://ftadviser.com/FTAdviser/Investments/AssetClass/MoneyMarkets/Cash/News/article/20081112/11001b48-b0b5-11dd-a1f7-00144f2af8e8/Parity-between-euro-and-sterling-expected-by-end-of-2009.jsp

The recession could result in a parity between the euro and sterling by the end of 2009, commentators have warned, as the pound plunged again this week and the euro hit an all time high against sterling yesterday.