The Pound Sterling Is Becoming Toilet Paper!!

creeper1

Yet again the euro and pound sterling are reaching parity. What an unattractive investment the UK is. Analysts were predicting growth by now in the UK. It hasn't happened and it's not going to happen. As warned by Jim Rogers in January there is no hope for the UK.

This is despite the fact that many of the major European economies are now out of recession. And the euro, fortuately for Ireland, has been a good store of strenght. It is has kept it's value due to the wise policies of the ECB which remembers clearly what happened in the Weimer Republic in Germany before the second world war.

The bank of England is printing money like there is no tomorrow. What an idiotic policy. All those English a year ago thinking that they were rich a year ago now find themselves a dawm site poorer. When they go abroad they will soon feel that pain in their poket.

What is next for the UK? Hyperinflation that's what! And a currency better used as toilet paper than anything else!

Amhran Nua

creeper1 wrote: »

Yet again the euro and pound sterling are reaching parity.

Its great for their exports and domestic manufacturers though.

Sea Sharp

I doubt they're looking at hyper-inflation, but inflation yes. Give it 5 years and things will balance out. wages will go up in proportion to costs etc..

ei.sdraob

Amhran Nua wrote: »

Its great for their exports and domestic manufacturers though.

Yes thats right

make everyone 30% poorer thru printing money which is the ultimate stealth tax as it robs everyone

in order that few companies export more

:rolleyes:



i sure hope your party doesnt not advocate such sly and unfair transfer of wealth from everyone to few


and what does the UK have to show for printing 200billion pounds (actually they are too cheap to print that! they just added few zeros to certain bank accounts)

nothing... nada ....


their economy is still shrinking and exports are still falling, and the are planning to printy printy more

now compare that to Germany and France which are out of recession already

ednwireland

ei.sdraob wrote: »

Yes thats right

make everyone 30% poorer thru printing money which is the ultimate stealth tax as it robs everyone

a good old devaluation sorry fiscal easing back to recession and inflation for the UK methinks

SkepticOne

creeper1 wrote: »

Yet again the euro and pound sterling are reaching parity.

So the Euro is already toilet paper and sterling is now joining it.

ei.sdraob

ednwireland wrote: »

a good old devaluation sorry fiscal easing back to recession and inflation for the UK methinks

yeh tinkering with low rates is one of the reasons for this recession/depression

so what do they do? lower rates more and they are now essentially negative rates thanks to printing

leninbenjamin

seems the British haven't learned from this recession at all.

SkepticOne

Somehow I doubt they will be coming to Ireland to learn about economic management.

old boy

SkepticOne wrote: »

Somehow I doubt they will be coming to Ireland to learn about economic management.

they will be coming to find out how not to. i do not think the uk tresuary will be headhunting a certain lenihan b.

MrMicra

ei.sdraob wrote: »

Yes thats right

make everyone 30% poorer thru printing money which is the ultimate stealth tax as it robs everyone

in order that few companies export more

That's precisely right. The government has favoured wealth creators over wealth holders.
It is a logical and sensible policy and one which I wish was open to us in Ireland.
Essentially you get the deflationary hit over and done with in a year and can move forward from a lower base.

ei.sdraob

MrMicra wrote: »

That's precisely right. The government has favoured wealth creators over wealth holders.
It is a logical and sensible policy and one which I wish was open to us in Ireland.
Essentially you get the deflationary hit over and done with in a year and can move forward from a lower base.

you dont understand

DEVALUATION TAXES EVERYONE AND EVERYTHING

please read the above until it sinks in

in the UK the devaluation in last few years is equivalent to 30% tax on everything and everyone from the poorest to the richest
everything in the economy gets taxed in this stealthy manner and the wealth is stolen and redistributed to few companies who export or who have access to the newly printed money

devaluation penalizes the savers and the responsible parties! the lack of savings and abuse of credit is what got us here, more of the same wont help

that is grossly unfair, there is a reason why we have sliding scale taxation system, as a 30% tax would hit the poorest quartile alot harder than 30% on the richest quartile

SLUSK

MrMicra wrote: »

That's precisely right. The government has favoured wealth creators over wealth holders.
It is a logical and sensible policy and one which I wish was open to us in Ireland.
Essentially you get the deflationary hit over and done with in a year and can move forward from a lower base.

How many new investors do you think you will get into a country with a depreciating currency? Alot of wealth will leave the country and alot of jobs will be lost in the future because of loss of purchasing power.

I am not familiar of any country that has succesfully inflated itself to wealth. If inflation was a good idea Zimbabwe would be a rich country.

leninbenjamin

MrMicra wrote: »

It is a logical and sensible policy and one which I wish was open to us in Ireland. Essentially you get the deflationary hit over and done with in a year and can move forward from a lower base.

it doesn't solve anything. All it does is stave off an inevitable recession. The American's did this (or something similar) after 9/11 and that caused the sub prime thing that kicked the whole thing off globally.

harsea8

what has this got to do with Irish economy? Just looks like another chance for brit-bashing thread by the usual bigoted twats

ei.sdraob

harsea8 wrote: »

what has this got to do with Irish economy? Just looks like another chance for brit-bashing thread by the usual bigoted twats

some here think that if we here in Ireland still had the punt

we could have devalued/printed our way out of this mess

which is a fairly terrible idea whichever way you look at it, and looking at UK with a much larger economy its not helping there either

btw here in Ireland we dont say "twats"

harsea8

ei.sdraob wrote: »

some here think that if we here in Ireland still had the punt

we could have devalued/printed our way out of this mess

which is a fairly terrible idea whichever way you look at it, and looking at UK with a much larger economy its not helping there either

btw here in Ireland we dont say "twats"

if that was the OP reason for posting (which I seriously doubt) the fact is we don't have the punt, so we can't do this.....so ultimately this is a pointless discussion

and btw, I'm in Ireland and I use the word twat...does that somehow make my opinion less valid than you (who I assume uses traditionally irish swear words)

ei.sdraob

harsea8 wrote: »

if that was the OP reason for posting (which I seriously doubt) the fact is we don't have the punt, so we can't do this.....so ultimately this is a pointless discussion

yes its is a pointless discussion, the idea of knocking down the remaining pillar thats holding up what remains of the economy is plain daft

but i suppose some people have fantasies of the "olde days"

harsea8 wrote: »

and btw, I'm in Ireland and I use the word twat...does that somehow make my opinion less valid than you (who I assume uses traditionally irish swear words)

good! if you were from the UK it would have been "bloody twaaaatss"

SkepticOne

People seem to be holding up Ireland as an example to Britain of the effectiveness of currency union.

I've got a feeling that in Britain they are more likely to use Ireland as an illustration of why currency union is a bad idea.

ei.sdraob

SkepticOne wrote: »

People seem to be holding up Ireland as an example to Britain of the effectiveness of currency union.

I've got a feeling that in Britain they are more likely to use Ireland as an illustration of why currency union is a bad idea.

and they do

the ECB did have low rates (never mind that BOE's and FED's were lower and still lower)

which wasnt good for Ireland


but just because there is cheap money available doesnt mean a country cant use it wisely, countries like Germany invested wisely the cheap money during the boom years into renewables and are now a world leader

we instead build houses and shoebox apartments



a comparison can be made with overweight people, just because food is cheap in mcdonalds doesnt mean you have to eat the whole shop

SkepticOne

ei.sdraob wrote: »

but just because there is cheap money available doesnt mean a country cant use it wisely, countries like Germany invested wisely the cheap money during the boom years into renewables and are now a world leader

I think you may be confusing cause and effect here. Money was cheap in the eurozone because the Germans during that time, as well as a number of other countries, due to their economic slump, were saving rather than spending. Hight rates simply would not have been appropriate. It is not that they took advantage of low interest rates, they were part of the cause of low interest rates.

MrMicra

ei.sdraob wrote: »

you dont understand

DEVALUATION TAXES EVERYONE AND EVERYTHING

The tone of your response is rude and inappropriate. Please do not pretend to a level of education and intelligence that you do not posess.
I may not understand the effects of a devaluation (though I am certain that I understand those effects better than you) but I do understand how to use an apostrophe when using a contraction.

ei.sdraob wrote: »

you dont understand

DEVALUATION TAXES EVERYONE AND EVERYTHING

A devaluation is not a tax. It is the destruction of the stored wealth of a country in order ensure that the country can continue to produce wealth in the future.

ei.sdraob wrote: »

the wealth is stolen and redistributed to few companies who export or who have access to the newly printed money

The wealth is not stolen it is destroyed. It is destroyed in order to be recreated later.

ei.sdraob wrote: »

devaluation penalizes the savers and the responsible parties!

Quite correct.

ei.sdraob wrote: »

the lack of savings and abuse of credit is what got us here, more of the same wont help

A lack of saving and the abuse of credit are not the same thing.

ei.sdraob wrote: »

that is grossly unfair, there is a reason why we have sliding scale taxation system, as a 30% tax would hit the poorest quartile alot harder than 30% on the richest quartile

A devaluation is not a tax.

MrMicra

creeper1 wrote: »

It is has kept it's value due to the wise policies of the ECB which remembers clearly what happened in the Weimer Republic in Germany before the second world war.

If your grasp of economics is as good as your grasp of history you should go to work for the department of finance; the German hyperinflation was in 1923. It was certainly before the second world war.

ei.sdraob

MrMicra wrote: »

A devaluation is not a tax.

fine so

call it a robbery

either way it makes everyone poorer for the sake of a few

c montgomery

MrMicra wrote: »

The tone of your response is rude and inappropriate. Please do not pretend to a level of education and intelligence that you do not posess.

??????????????

Pot, kettle anyone!!!!!!!!

sceptre

Those of you who are getting personal with your fellow contributors will stop it now please. Kindly regard that as a non-negotiable instruction. You are aware of how to report posts to the moderators (little warning triangle) and those of who who chose to fling muck back should have been clicking on that instead.

ei.sdraob wrote: »

btw here in Ireland we dont say "twats"

I say it quite often. It's frequently politer than what I really want to say. Having said that, calling a fellow member on the politics forum a twat is a no-no.

thebman

We better hope the sterling doesn't become toiler paper, Britain is a large export market for Ireland, it would fook us up too.

ardmacha

We better hope the sterling doesn't become toiler paper, Britain is a large export market for Ireland, it would fook us up too.

True. While wiping your a**e with QEII has a certain appeal, an orderly currency market is essential in a divided country which trades much with Britain. But along with a general slow decline in Sterling there will be short term fluctuations that will be damaging.

johnnyskeleton

ei.sdraob wrote: »

you dont understand

DEVALUATION TAXES EVERYONE AND EVERYTHING

please read the above until it sinks in

in the UK the devaluation in last few years is equivalent to 30% tax on everything and everyone from the poorest to the richest

It's a subsidy to people who are net debtors as they now have to repay less (if their debt is held in sterling).

ei.sdraob

johnnyskeleton wrote: »

[/B]

It's a subsidy to people who are net debtors as they now have to repay less (if their debt is held in sterling).

yep

the people who are most reckless get of easy while the sensible savers get hit

johnnyskeleton

ei.sdraob wrote: »

yep

the people who are most reckless get of easy while the sensible savers get hit

That is the point though - it is not a tax on everybody but rather a transfer of wealth from the net paper currency asset holders (creditors) to the net debtors.

So while I personally think inflation is a terrible idea, I may be a minority in that view and it may be formed by my aversion to debt and preference for savings over consumption. But if the majority of people want to effect this transfer of wealth, and the government supports them, they can and will do it and moreover they will feel that it is a massive success.

I also disagree that the ECB is entirely sensible in this regard, and I suspect that they have engaged in a very low level form of quantative easing. For example, extending unlimited credit to banks which are bailed out by government bonds which themselves can be used to repay the original debts is a very creative way, in my opinion, of effecting an increase in the money supply without overtly printing money or directly injecting it into the economy.

As sterling and USD become weaker and the rest of the world seems like they are following suit the pressure on the ECB mounts to inflate in unison with the other countries.

One final point which I think is important is that the effects of quantitative easing may not be felt until recessions end. So a long period of recession/stagnation with deflation or price stability could be followed by a small upturn and a large (disporportionatly so) increase in inflation.

kaiser sauze

ei.sdraob wrote: »

their economy is still shrinking and exports are still falling, and the are planning to printy printy more

now compare that to Germany and France which are out of recession already

I haven't heard anything about the UK government preparing for more quantitative easing. I do prepare to be corrected.

However, you are not correct about Germany and France.

SkepticOne

I think the sterling is probably at the appropriate level currently to stimulate jobs. While savings, of course, suffer, jobs are probably more important at present.

Low sterling is probably more of a worry for Ireland since we export a lot to Britain yet our currency determined by the economy of the EU as a whole.

eoinbn

It's widely expect that many of the world's leading economic powers will be defaulting on debt over the next few years-this is just the first stage.

ei.sdraob

SkepticOne wrote: »

I think the sterling is probably at the appropriate level currently to stimulate jobs. While savings, of course, suffer, jobs are probably more important at present.

Low sterling is probably more of a worry for Ireland since we export a lot to Britain yet our currency determined by the economy of the EU as a whole.

so what do you propose

we make everyone in Ireland 30%+ poorer

just so a section of the economy keeps exporting to UK?

yeh thats gonna work, look at the murder that the PS are screaming when asked to accept cuts....




how this for an idea?!

why not stop all this meddling in the markets? thats what got alot of economies so screwed up in the first place

or how about the business's being affected learn a new word > diversification

and yes my own company exports to the US, so we get hit by currency fluctuations too, but you learn to take advantage of it not sink because of currency changes

SkepticOne

ei.sdraob wrote: »

so what do you propose

we make everyone in Ireland 30%+ poorer

just so a section of the economy keeps exporting to UK?

yeh thats gonna work, look at the murder that the PS are screaming when asked to accept cuts....

Nevertheless we have to recognise that low sterling relative to the euro is a problem for those euro countries that export to Britain. Ultimately Ireland's economic survival depends on its ability to export.

murphaph

Devaluing your currency is indeed a cut in the spending power of the people. Ireland is tied closely to the UK as it is still our largest trading partner. Ireland cannot devalue its currency anymore so we need to cut real wages and export at a competitive price to the UK (and elsewhere). There really is no other option. Wages are and will fall further in the private sector as a matter of course (or jobs will be lost completely), whereas the govt needs to step up to the plate and cut the public sector costs to a level where they are actually affordable to a lower paid private sector.

RiverWilde

Ah no the govt. won't stand up to the public service. They'll magnanimously step back from the precipice and gleefully hammer social welfare recipients and cut a large chunk from child benefit and/or pensions.

Riv

Curious Geroge

edited

sceptre

This thread isn't about the costs of the Irish public service (as a jaded hint, *every* thread doesn't have to be). Read the first post or even the thread title for a better idea of what the thread is about. Then post with that in mind.

ei.sdraob

Curious Geroge wrote: »

Yes, its a easy solution..

you dont understand

devaluation makes everyone equally poorer

everyone

SLUSK

If depreciating a currency is a good way to "create" jobs Zimbabwe should have zero unemployment

On a more serious note look at the US, their currency has depreciated alot but they still have lots of trouble with unemployment.

ei.sdraob

SLUSK wrote: »

If depreciating a currency is a good way to "create" jobs Zimbabwe should have zero unemployment

On a more serious note look at the US, their currency has depreciated alot but they still have lots of trouble with unemployment.

US tried to get China to stop keeping their currency artificially low and devalued (and keeping average Chinese alot poorer than they should be)

so US are now embarking on their own race the bottom with the Chinese, making own citizens poorer

anyways if everyone is engaging in devaluation, then the net effect is nothing

SkepticOne

ei.sdraob wrote: »

US tried to get China to stop keeping their currency artificially low and devalued (and keeping average Chinese alot poorer than they should be)

It all depends on the priority of the country. If wealth preservation is the priority then you don't devalue. If economic stimulus is the priority then devaluing is one of the options. Neither approach is appropriate in all situations and both approaches can be carried to excess and are ultimately unsustainable. The Chinese policy of keeping the dollar high and the Yuan low is now coming to an end. It will be interesting to see the effects on the world as well as within China.

creeper1

The pound is dropping so fast and if it does level with the euro or drop below it will have some interesting consequences.

IF my memory serves me right then the minimum wage in the UK is around five pounds fifty. Let's say you are one of the thousands of people in the UK busting your ass for the minimum wage. You work full time 37.5 hours

Let's do some simple mathematics 37.5 x 5.50 equals 206.25. :eek:
The dole in Ireland is 205 euros.

So in other words busting your ass in the UK gets you the same amount of money as being on the dole in Ireland.

Ireland should be on the guard for lazy chavs entering for the good benefits. This is a serious issue.

creeper1

It is a good correlation that is drawn between Zimbabwe and the UK because the two economies are beginning to resemble each other.

As for the comment that a devalued pound will be good for exports, well that would be fine and dandy if they did export anything.

Off the top of my head I can only think of three things they export - Rolls Royce (I am sure they are just selling like hotcakes in a recession :rolleyes:), beef and Manchester United merchandise.

IF things keep going the way they are they WILL export something that will be useful to THEIR economy - benefit hungry chavs.

ei.sdraob

Oct. 27 (Bloomberg) -- Germany has clawed its way out of recession. France is growing again. The U.S. is starting to expand. Even Ireland, one of the countries worst hit by the credit crunch, isn’t contracting anymore.

And yet the U.K. economy keeps on getting smaller. Last week, the government said gross domestic product dropped 0.4 percent in the third quarter. Expectations that Britain would join most of the rest of the world in staging a modest recovery turned out to be misplaced.

At this rate, even Iceland will pull out of recession before the U.K. does.

Prime Minister Gordon Brown keeps boasting he has the right policies to guide the country out of the woods. The truth is that they aren’t working and they won’t anytime soon.

Before it can recover, the U.K. needs a 180-degree change in direction. It must curb the budget deficit, support the pound, stop printing money, and cut taxes.

This is now the longest recession since records began in 1955. While the rest of the world recovers, the U.K. hasn’t. There is no sign of life in manufacturing, nor much in retail or services. The pound edges closer to parity with the euro every week: When it does, expect it to go into freefall.

Household Debt

It isn’t hard to figure out why. The U.K. economy was puffed up on a wave of borrowing and speculation. According to Dublin-based Goodbody Stockbrokers, U.K. households have debts worth 183 percent of disposable income. That is the highest of any major economy. Even the U.S. is only on 134 percent, while in comparable European countries, the ratios are far lower: In France, it is just 100 percent, and in Germany 99 percent.

The U.K. used to have a private debt problem. Now it has a private and a public debt problem. A collapse in tax revenue coupled with rising welfare bills to pay for the increase in unemployment has led to a widening gap between what the government receives and what it pays every month.

In September, it ran a 14.8 billion-pound ($24.6 billion) deficit, the biggest ever recorded for that month. The half-year shortfall was the largest since records began in 1946, when the country still had the small matter of World War II to pay for.

The U.K. is disappearing under a tidal wave of borrowing.

So far, the response from the government and the Bank of England has been straight out of the economics textbooks.

Ballooning Deficit

Interest rates have been cut, the government has maintained spending and allowed the deficit to balloon, the pound has depreciated against the euro, with the tacit support of the Bank of England and the government, and a program of “quantitative easing” has pumped cash into the system.

The economy has been stimulated, stimulated and stimulated again. It has failed to respond.

So what’s the answer? Yet more stimulus? More debt? Printing more money? Devaluing the pound by another 30 percent? There are plenty of people who would argue for all those.

And yet, as any doctor will tell you, when the patient doesn’t respond to the treatment, it’s time to change the medicine. In reality, the U.K. needs a total change of direction. It needs to do four things right away to get it back on the road to recovery.

First, stop printing money. There is no evidence to suggest the program of quantitative easing has done anything other than re-ignite another bubble. Stocks are soaring, the banks are minting money, and the property market, which never had a chance to correct, is starting to fizz again. But the U.K. didn’t need more debt-financed froth. It needed to start building new industries, and printing money isn’t helping that.

Unsustainable Debt

Two, get the budget deficit under control. At more than 12.5 percent of GDP, the U.K. is running up debts at an unsustainable rate. Everyone knows that taxes must rise to pay for it, and services are going to be cut as well. All it does is undermine confidence, and stop people spending now, because they know they will have to pay higher taxes further down the road.

Three, support the pound. A modern, advanced nation can’t devalue its way out of trouble. The idea that the U.K. is going to suddenly build lots of factories that compete with Eastern Europe and China on price is ridiculous. Britain can export plenty of things, but they are high-end, design and technology- intensive goods and services. Those products depend less on prices. There is no sign of exports picking up as a result of the pound’s collapse. All it does is destroy confidence.

Investment Destination

Four, cut taxes for business. The U.K. used to be the low- cost destination in Europe. It has squandered that position, ceding ground to Ireland, Switzerland and just about everywhere else. That is crazy. It will take massive investment to build the new industries and companies to replace those that have been hit by the credit crunch. Right now, the U.K. is raising taxes. How is that going to help? Slashing corporate-tax rates to match the 12.5 percent charged in Ireland would send a clear signal that Britain was a place to invest again.

The U.K. went into this recession in terrible structural shape. It was too reliant on banking and financial services, its competitiveness had slipped, the state was expanding in size, and it was building up too much debt. Getting out was always going to be a long, painful slog. Instead, it has been going for the quick fix of an artificial stimulus.

The trouble is, it’s not a fix and it’s not working. The only way the U.K. can save itself is with radical changes.

Four Ways to Pull an Economy Out of Recession: Matthew Lynn
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aYQ8dRWi2aGU


interesting article, i highlighted some bits

SkepticOne

ei.sdraob wrote: »

Even Ireland, one of the countries worst hit by the credit crunch, isn’t contracting anymore.

I'd be inclined to wait for more data before saying that.

ei.sdraob

SkepticOne wrote: »

I'd be inclined to wait for more data before saying that.

same

johnnyskeleton

ei.sdraob wrote: »

you dont understand

devaluation makes everyone equally poorer

everyone

I thought that we have already agreed that it does not.

johnnyskeleton wrote:

It's a subsidy to people who are net debtors as they now have to repay less (if their debt is held in sterling).

ei.sdraob wrote:

yep

the people who are most reckless get of easy while the sensible savers get hit

craichoe

ei.sdraob wrote: »

now compare that to Germany and France which are out of recession already

Don't know about france but Germany is not out of recession, they manufacture cars. They had a massive scrappage scheme all over the country hence increasing purchases and as a result increasing car production.

http://news.bbc.co.uk/2/hi/business/8233603.stm

Its played a big part, but has artificially increased sales and production.