No New Stimulus? (ft)

Generali

Rochdale_Pioneers wrote: »

Indeed - not only does our failure yesterday look like a blip, but then I hear about how germany has fared - 2 failures this year alone, 8 failures last year - all without anyone catastrophising things and claiming that "the markets have spoken".

Do "the markets" - if indeed they can be assigned group behaviour - have the slightest idea what they are doing? If they do why is it then that our currency and everyone else's currencies keep pogoing up and down as "the markets" stampede around looking for a non-existant safe haven?

Markets don't have a single behaviour. They are the amalgamated decisions of 'actors' in the market which allow for price discovery.

I used to work in FX many years ago. It was amazing to watch the price change as a large order was worked through.

geoffky

what you lot are not getting is yesterdays auction was for gilt but todays auction was for index linked gilt...very big difference.....so its inflation here we come

Degenerate

Generali wrote: »

My guess is that consumption in the UK and US has some way to fall and that is going to be a painful process as it'll be forced to happen by declining exchange rates.

Only net consumption has to fall to correct the imbalance. This could be achieved with no decrease in actual consumption by means of import substitution and/or increased exports. Declining exchange rates are indeed a major catalyst for this, but I don't see what makes it so painful. Compare our recent GDP drops to a major exporter such as Germany, and it seems evident to me that it's more painful to be a producer nation, dependent on consumer demand, than a consumer nation forced to tighten your belt a bit.

Degenerate

geoffky wrote: »

what you lot are not getting is yesterdays auction was for gilt but todays auction was for index linked gilt...very big difference.....so its inflation here we come

They were also 40-year gilts, which are not much of a benchmark for anything.

Generali

Degenerate wrote: »

Only net consumption has to fall to correct the imbalance. This could be achieved with no decrease in actual consumption by means of import substitution and/or increased exports. Declining exchange rates are indeed a major catalyst for this, but I don't see what makes it so painful. Compare our recent GDP drops to a major exporter such as Germany, and it seems evident to me that it's more painful to be a producer nation, dependent on consumer demand, than a consumer nation forced to tighten your belt a bit.

It is going to hurt net exporters too.

The trouble is from the UK's pov, if you substitute £2 Chinese t-shirts with £10 British ones than your standard of living drops by £8 each time you buy one. The same will apply across the board.