Sterling in deep trouble
Dec 3rd, 2008, 06:01 PM
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Sterling in deep trouble
Here is an interesting story from the Times of London:
http://tinyurl.com/64yzqx
If the Bank of England cuts interest rates, we may very soon be talking parity with the euro and $1.25 against the US currency.
http://tinyurl.com/64yzqx
If the Bank of England cuts interest rates, we may very soon be talking parity with the euro and $1.25 against the US currency.
Dec 3rd, 2008, 09:14 PM
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And why is parity with the euro "trouble"?
If it gets to parity it'll be because of low interest rates. Exports will get cheaper: repatriated profits (and therefore dividends) from global businesses like BP and HSBC will get higher. With commodity prices tumbling, imported energy and raw materials won't get dearer.
If ever there was a great time to devalue, it's now. If that means a bit less travel abroad - well, sorry Florida: you'll have to stand on your own feet for a while.
If it gets to parity it'll be because of low interest rates. Exports will get cheaper: repatriated profits (and therefore dividends) from global businesses like BP and HSBC will get higher. With commodity prices tumbling, imported energy and raw materials won't get dearer.
If ever there was a great time to devalue, it's now. If that means a bit less travel abroad - well, sorry Florida: you'll have to stand on your own feet for a while.
Dec 3rd, 2008, 10:13 PM
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That's the economist's theory and that's what a certain bird brain named George W. Bush, you've heard of him no doubt, kept telling Americans when the USD was in the pits a while ago. It didn't seem really to work out that way.
BTW, and I sure don't mean this in any condescending way or anything like that, I just had some company from one of my British friends for the past week. He told me, despite the drop of sterling, most things are still cheaper in the USA than at home in the UK for whatever that means; it's just not as dirt cheap as it was last year.
BTW, and I sure don't mean this in any condescending way or anything like that, I just had some company from one of my British friends for the past week. He told me, despite the drop of sterling, most things are still cheaper in the USA than at home in the UK for whatever that means; it's just not as dirt cheap as it was last year.
Dec 3rd, 2008, 11:09 PM
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If an overvalued currency is such a terrific thing, why are the Democrats - including St Obama of Hot Air - yammering on so much about how awful it is that China is "manipulating" its currency to make it "unfairly" cheap?
It's not "birdbrain" Bush who's been whingeing for the past eight years that the dollar's worth too much and needs substantial further devaluation against China.
It's official Democrat policy.
It's not "birdbrain" Bush who's been whingeing for the past eight years that the dollar's worth too much and needs substantial further devaluation against China.
It's official Democrat policy.
Dec 4th, 2008, 12:43 AM
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Ah dear flanner...
You're a closet Republican..I would never have believed it from the tone of your posts....
Seriously, I don't think either party has a real policy regarding the dollar...I once heard Bush at his famous press conference when asked about his policy on the dollar simply state he supports a strong dollar but there was no follow up (this was the same press conference when somebody asked him about $4/gallon gas in California when he responded I didn't know gas was $4/gallon....but I have to say this for him on that, he was a man far ahead of his times (or at least 8 months ahead of his time...
It still amazes me, frankly, how with the US economy in shambles, the dollar has shot up, against most currencis big time including sterling, the euro, the Canadian dollar, the Australian dollar, the Swiss Franc...it's not very long ago, for example, that Canadians were pounding their chests that the Canadian dollar had achieved parity with the US dollar and as a matter of fact passed it slightly yet when last I checked, the CAD was just under 80¢ US and perhaps the most imortant currency of all, at least to Bush, was around $45 a barrel.
It is indeed a crazy world now isn't it.
You're a closet Republican..I would never have believed it from the tone of your posts....
Seriously, I don't think either party has a real policy regarding the dollar...I once heard Bush at his famous press conference when asked about his policy on the dollar simply state he supports a strong dollar but there was no follow up (this was the same press conference when somebody asked him about $4/gallon gas in California when he responded I didn't know gas was $4/gallon....but I have to say this for him on that, he was a man far ahead of his times (or at least 8 months ahead of his time...
It still amazes me, frankly, how with the US economy in shambles, the dollar has shot up, against most currencis big time including sterling, the euro, the Canadian dollar, the Australian dollar, the Swiss Franc...it's not very long ago, for example, that Canadians were pounding their chests that the Canadian dollar had achieved parity with the US dollar and as a matter of fact passed it slightly yet when last I checked, the CAD was just under 80¢ US and perhaps the most imortant currency of all, at least to Bush, was around $45 a barrel.
It is indeed a crazy world now isn't it.
Dec 4th, 2008, 01:18 AM
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Yes it certainly is. At one stage the Aussie dollar was supposed to be at parity with the USD by Christmas and gas was to be AUD$2 per litre. Now the Aussie dollar is at 64cents to the US and gas is AUD$1.03 per litre. It means we can't travel overseas,but we can sure drive our cars a lot further.
Dec 4th, 2008, 01:32 AM
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No US party has a policy on the dollar?
Well, that'll be news to the recipients of Obama's promises.
"immediate investigation into China's...currency manipulation" The Democratic Platform for America
"China must change its policies, including its foreign exchange
policies" Epistle of St Obama to the Textile Industry. October 24, 2008
The Democrats are either lying, or they believe the dollar needs to be devalued against the currency of its major trading partner. All this crap about "manipulation" is just trying to blame the Chinese for the fact that they want a weaker dollar.
Well, that'll be news to the recipients of Obama's promises.
"immediate investigation into China's...currency manipulation" The Democratic Platform for America
"China must change its policies, including its foreign exchange
policies" Epistle of St Obama to the Textile Industry. October 24, 2008
The Democrats are either lying, or they believe the dollar needs to be devalued against the currency of its major trading partner. All this crap about "manipulation" is just trying to blame the Chinese for the fact that they want a weaker dollar.
Dec 4th, 2008, 05:27 AM
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Hi xyz,
>It still amazes me, frankly, how with the US economy in shambles, the dollar has shot up, against most currencis ....<
Because everyone else is in worse shape.
At the moment, currency traders consider the dollar the safest place to put their money.
There are also Sovereign Wealth Funds and other high rollers who are buying US equities, real estate, etc.
>It still amazes me, frankly, how with the US economy in shambles, the dollar has shot up, against most currencis ....<
Because everyone else is in worse shape.
At the moment, currency traders consider the dollar the safest place to put their money.
There are also Sovereign Wealth Funds and other high rollers who are buying US equities, real estate, etc.
Dec 4th, 2008, 06:05 AM
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A few musings on currency values.
Back in the days of the Hanseatic League national currencies could be adulterated, and therefore devalued, by the sovereign.
A strong currency, one that was not adulterated, would be readily accepted by the traders.
Thus, national prosperity was, to a great extent, dependent on a strong currency.
As economic ideas shifted toward Mercantilism, nations attempted to maintain their own prosperity by encouraging exports and lowering imports.
The more successful nations developed colonial empires, huge stocks of gold and other precious metals, and their currency was more readily accepted (strong) in international trade.
It was thought that huge stocks of bullion were all that was necessary to a prosperous society.
Adam Smith showed that this was not true.
In fact, mercantilist trade barriers result in all nations being poorer than they could be under a free trade scheme.
Separating currency from stocks of gold is a very, very recent development.
It was 1933 when FDR forbade private holding of gold bullion.
It was only 1971, when Nixon took the US completely off the gold standard.
So, it has been only for the last generation that exchange rates have been allowed to freely float.
There are still mercantilists (eg, China) and gold bugs (eg, Ron Paul) who believe that all of the world's currencies must be backed by some form of solid material (usually gold and silver) that can be hoarded in times of economic decline.
Pish tosh.
"Diamonds are a girl's best friend".
Back in the days of the Hanseatic League national currencies could be adulterated, and therefore devalued, by the sovereign.
A strong currency, one that was not adulterated, would be readily accepted by the traders.
Thus, national prosperity was, to a great extent, dependent on a strong currency.
As economic ideas shifted toward Mercantilism, nations attempted to maintain their own prosperity by encouraging exports and lowering imports.
The more successful nations developed colonial empires, huge stocks of gold and other precious metals, and their currency was more readily accepted (strong) in international trade.
It was thought that huge stocks of bullion were all that was necessary to a prosperous society.
Adam Smith showed that this was not true.
In fact, mercantilist trade barriers result in all nations being poorer than they could be under a free trade scheme.
Separating currency from stocks of gold is a very, very recent development.
It was 1933 when FDR forbade private holding of gold bullion.
It was only 1971, when Nixon took the US completely off the gold standard.
So, it has been only for the last generation that exchange rates have been allowed to freely float.
There are still mercantilists (eg, China) and gold bugs (eg, Ron Paul) who believe that all of the world's currencies must be backed by some form of solid material (usually gold and silver) that can be hoarded in times of economic decline.
Pish tosh.
"Diamonds are a girl's best friend".
