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Euro Trumps The Pound.  
User currently offlineFXramper From United States of America, joined Dec 2005, 7263 posts, RR: 85
Posted (5 years 8 months 1 day 9 hours ago) and read 2616 times:
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What a screwy state of world economy. I guess someone saw this coming?  confused 

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDeya8Ha_0Vk

35 replies: All unread, showing first 25:
 
User currently offlineKlaus From Germany, joined Jul 2001, 21442 posts, RR: 54
Reply 1, posted (5 years 8 months 1 day 8 hours ago) and read 2587 times:



Quoting FXramper (Thread starter):
I guess someone saw this coming?

From Do We Want The Euro In The UK - Volume 3 — Non Aviation Forum | Airliners.net (September 2005):

Quoting Klaus (Reply 22):
I would actually prefer Britain to ride out the impending burst of the real estate bubble before they join the Euro. If they joined before that, we would all have to pay for it due to an overinflated accession course for the Pound. If they'll join after that, the course will be more realistic.

Just saying...


User currently offlineElite From Hong Kong, joined Jun 2006, 2796 posts, RR: 10
Reply 2, posted (5 years 8 months 1 day 7 hours ago) and read 2573 times:

Britain will manage to ride it out, but will the Pound gain enough against the Euro for the British to keep the pound?

User currently offlineKlaus From Germany, joined Jul 2001, 21442 posts, RR: 54
Reply 3, posted (5 years 8 months 1 day 7 hours ago) and read 2554 times:

Quoting Elite (Reply 2):
Britain will manage to ride it out, but will the Pound gain enough against the Euro for the British to keep the pound?

A currency is not viable by reaching high speculative exchange rates (as the Pound has done in recent years) but by being sufficiently resistant against speculation and by being backed by a sufficiently solid real-life economy which ultimately provides its real value.

Britain could certainly continue with the Pound for the long term, but that comes with its own costs and risks as we see; The same would apply for an accession to the Euro. Ultimately it is a cost/benefit calculation either way, besides the obvious psychological/emotional issues.

[Edited 2008-12-30 00:05:21]

User currently offlineAverageUser From , joined Dec 1969, posts, RR:
Reply 4, posted (5 years 8 months 1 day 1 hour ago) and read 2463 times:



Quoting Klaus (Reply 3):
besides the obvious psychological/emotional issues.



Quoting Klaus (Reply 3):
and by being backed by a sufficiently solid real-life economy which ultimately provides its real value.

Yes that's how the song goes, the British will enjoy joining the Eurozone in their mental department so much that their real-life productivity jumps 100%, just like it has done in the Eurozone proper already!


User currently offlineOA260 From Ireland, joined Nov 2006, 26929 posts, RR: 58
Reply 5, posted (5 years 8 months 1 day 1 hour ago) and read 2456 times:

The UK wont go into the Euro and this 1 Euro 1 Pound will not be a long term thing.

Its great news for me though getting paid in Euro and living on the border between the Pound and Euro Zone. I have been doing all my shopping in the North of Ireland. It was good value before the Pound slumped but now its amazing value.


User currently offlineElite From Hong Kong, joined Jun 2006, 2796 posts, RR: 10
Reply 6, posted (5 years 8 months 1 day 1 hour ago) and read 2453 times:



Quoting OA260 (Reply 5):
The UK wont go into the Euro

If things get bad enough, then maybe... "till the British public sees fit". I don't think the UK can continue to hold out forever, unfortunately.


User currently offlineOA260 From Ireland, joined Nov 2006, 26929 posts, RR: 58
Reply 7, posted (5 years 8 months 1 day 1 hour ago) and read 2445 times:



Quoting Elite (Reply 6):
I don't think the UK can continue to hold out forever, unfortunately.

But even though some suffer a weak Pound is good for exports. I know a few business owners that are happy with the weak Pound.They export to the Euro Zone so their products are now more competitive.


User currently offlineAndaman From , joined Dec 1969, posts, RR:
Reply 8, posted (5 years 8 months 19 hours ago) and read 2312 times:



Quoting OA260 (Reply 5):
now its amazing value.

This is really good news for us Euro-zoners planning to visit UK soon, I have been avoiding London for many years...

The pound has seen many ups and downs.
I remember in late 1980's it was common to make package holidays (for a week!) from HEL to London, about everything was less expensive in UK then. My first flight to London was a charter on Air UK Leisure.


User currently offlineEgmcman From United Kingdom, joined Jun 2005, 898 posts, RR: 8
Reply 9, posted (5 years 8 months 19 hours ago) and read 2298 times:



Quoting AverageUser (Reply 4):
Yes that's how the song goes, the British will enjoy joining the Eurozone in their mental department so much that their real-life productivity jumps 100%, just like it has done in the Eurozone proper already!

We won´t it´s only a few politicians who would like us to.

Quoting OA260 (Reply 5):
The UK wont go into the Euro and this 1 Euro 1 Pound will not be a long term thing

Exactly ,until recently it was great for Brits visiting the USA as the Dollar was week.

Quoting OA260 (Reply 7):
But even though some suffer a weak Pound is good for exports. I know a few business owners that are happy with the weak Pound.

As with everything in life there is an upside. British factories could be selected to produce goods instead of ones in the Euro zone due to favorable exchange rate.


In Gibraltar today they preferred goods being paid in Pounds.

Quoting Elite (Reply 6):
If things get bad enough, then maybe... "till the British public sees fit". I don't think the UK can continue to hold out forever, unfortunately.

Isn't there a risk if more Euro zone countries enter recession then the value € will drop?


User currently offlineKlaus From Germany, joined Jul 2001, 21442 posts, RR: 54
Reply 10, posted (5 years 8 months 19 hours ago) and read 2297 times:



Quoting AverageUser (Reply 4):
Yes that's how the song goes, the British will enjoy joining the Eurozone in their mental department so much that their real-life productivity jumps 100%, just like it has done in the Eurozone proper already!

Please re-check the productivity numbers after subtracting the purely ficticious money that's just going up in smoke simply because it never really existed anywhere but in some of the books.

The numbers had been heavily skewed by the inflated bubbles in the anglo-american finance system, but the normalization to realistic values is apparently under way.


User currently offlineKlaus From Germany, joined Jul 2001, 21442 posts, RR: 54
Reply 11, posted (5 years 8 months 19 hours ago) and read 2273 times:



Quoting Egmcman (Reply 9):
As with everything in life there is an upside. British factories could be selected to produce goods instead of ones in the Euro zone due to favorable exchange rate.

Except for easily replaceable commodity goods the fluctuations will remain an impediment. It is more difficult than ever to commit to a longer-term contract if the prices can go all over the place at a moment's notice.

Quoting Egmcman (Reply 9):
Isn't there a risk if more Euro zone countries enter recession then the value € will drop?

Against what? Trade within the Eurozone would not be affected even then. Prices would still remain stable. And with the Euro flooding an increasing share of the global currency reserves right at this point I'm not really worrying all that much. Most of the continental EU has kept its focus on actual manufacturing and development of goods and services outside of the financial area. Which will probably turn out to be a strength in the difficult phase we're entering.

Britain's trade with EU partners is more than half of the total – staying outside of the Eurozone subjects pretty much all of Britain's foreign trade to potentially severe fluctuations. British manufacturers will have to eat up the fluctuation costs even in intra-european trade since they have to compete with european manufacturers who have direct market access without currency risks.

Without the inflated finance casino running at full RPM any more, it could get a bit difficult to prop up the remaining british manufacturers against these risks.


User currently offlineAverageUser From , joined Dec 1969, posts, RR:
Reply 12, posted (5 years 8 months 18 hours ago) and read 2256 times:



Quoting Klaus (Reply 10):
purely ficticious money

I think you're after the term fiat currency, which means currency lacking any intrinsic value. What we have here is a very intricate set of mutual agreements, but I would not go as far as calling any such set purely "fictitious". The value of a purely fictitious currency could be decreased, increased or annuled at the turn of the hat.

I should think Klaus that if you look around you in the Eurozone, you'll see quite a few cases of that "fictitious money" at work, i.e. commitments that never will be honoured.


User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 13, posted (5 years 8 months 18 hours ago) and read 2248 times:



Quoting OA260 (Reply 5):
The UK wont go into the Euro and this 1 Euro 1 Pound will not be a long term thing.

I agree.. highfive 



"Up the Irons!"
User currently offlineEgmcman From United Kingdom, joined Jun 2005, 898 posts, RR: 8
Reply 14, posted (5 years 8 months 18 hours ago) and read 2248 times:



Quoting Klaus (Reply 11):
Except for easily replaceable commodity goods the fluctuations will remain an impediment. It is more difficult than ever to commit to a longer-term contract if the prices can go all over the place at a moment's notice.

It´s become increasingly obvious to most people that the UK will only be producing high value goods and be used as centre for research and development. Most people here care about one thing alone price not where a product was manufactured. All commodities valuees can fluctuate.


User currently offlineKlaus From Germany, joined Jul 2001, 21442 posts, RR: 54
Reply 15, posted (5 years 8 months 18 hours ago) and read 2241 times:



Quoting AverageUser (Reply 12):
I think you're after the term fiat currency, which means currency lacking any intrinsic value.

No. I am not talking about printing currency, I am talking about ficticious accounting on the basis of ficticious returns on real (and/or ficticious) investments.

That is going up in smoke right now.

Quoting AverageUser (Reply 12):
I should think Klaus that if you look around you in the Eurozone, you'll see quite a few cases of that "fictitious money" at work, i.e. commitments that never will be honoured.

We're currently in a phase where large volumes of such ficticious commitments are being realized and adjusted accordingly. And depending on the relative exposure it hits different countries to a different extent.

My personal view is that we are not really in a recession so much as we are simply re-scaling the ficticious part of the growth in recent years back to what it really was – it just hits the books right now while the ficticious numbers of the past years remain standing, nominally.

Of course there are additional repercussions and damages which follow directly or indirectly from the delayed re-adjustment which would have been avoidable with a steady but slower growth; But I think the most important thing is to take the previous numbers with more than just a grain of salt and to view the current changes in relation of that.


User currently offlineEgmcman From United Kingdom, joined Jun 2005, 898 posts, RR: 8
Reply 16, posted (5 years 8 months 18 hours ago) and read 2230 times:



Quoting Klaus (Reply 15):
My personal view is that we are not really in a recession so much as we are simply re-scaling the ficticious part of the growth in recent years back to what it really was – it just hits the books right now while the ficticious numbers of the past years remain standing, nominally.

If that´s more than two quarters of negative growth that then it is a recession by my understanding of when the term is used by politicians.


User currently offlineSlz396 From , joined Dec 1969, posts, RR:
Reply 17, posted (5 years 8 months 18 hours ago) and read 2228 times:



Quoting FXramper (Thread starter):
What a screwy state of world economy

It certainly demonstrates what a strong currency the Euro is...

Who would have thought a supra-national currency created less than 10 years ago, would become the world's preferred legal tender and one of the strongest currencies in the world???

Wonder what the Euro-sceptics will now say to throw mud at it?
What they have said about it in the past, certainly makes very good reading...  Wink


Quoting OA260 (Reply 5):
The UK wont go into the Euro

If they wait much longer, the EU will simply BUY the entire UK for a few euro's.  Smile


User currently offlineKlaus From Germany, joined Jul 2001, 21442 posts, RR: 54
Reply 18, posted (5 years 8 months 18 hours ago) and read 2225 times:



Quoting Egmcman (Reply 16):
If that´s more than two quarters of negative growth that then it is a recession by my understanding of when the term is used by politicians.

Of course it is, nominally.

It just isn't caused so much by the actual economic performance suddenly dropping off but rather by us now realizing and acknowledging that the performance had actually been lower for some time already. There are of course some additional effects on top of that, but to a large degree it is just people waking up to an already pre-existing reality which they had ignored, hoping that the promised fantastical gains were real.


User currently offlineOA260 From Ireland, joined Nov 2006, 26929 posts, RR: 58
Reply 19, posted (5 years 8 months 16 hours ago) and read 2192 times:



Quoting Slz396 (Reply 17):
the EU will simply BUY the entire UK for a few euro's. Smile

I think they have more pressing issues in Brussels like trying to help the locals find a government  Wink


User currently offlineAlessandro From , joined Dec 1969, posts, RR:
Reply 20, posted (5 years 8 months 15 hours ago) and read 2161 times:

Sterling isn´t alone, Swedish crown as slumped against the Euro as well...

User currently offlineAverageUser From , joined Dec 1969, posts, RR:
Reply 21, posted (5 years 8 months 14 hours ago) and read 2140 times:



Quoting Klaus (Reply 15):

No. I am not talking about printing currency, I am talking about ficticious accounting on the basis of ficticious returns on real (and/or ficticious) investments.

Ok, this is a bit hard for me to follow right now, sorry. So what you're saying is in fact a huge accounting blunder, perhaps even a criminal one, going on in the UK, and that said accounting does not concern any (fiat) money issued by a central bank at all?
Taking what you say at the face value, I would say the central bank is off the hook and any losses only fictional, since the instrument of that loss is a fictional one as well, right?

You'd just say something like: "the confidence on getting the expected return on your investment failed across the market" and that would be it. The term you were perhaps seacrhing for in the above is in fact derivative instrument -- a return on those will also fail rapidly when the primary market fails.


User currently offlineWunalaYann From Australia, joined Mar 2005, 2839 posts, RR: 25
Reply 22, posted (5 years 8 months 14 hours ago) and read 2120 times:



Quoting FXramper (Thread starter):
Euro Trumps The Pound

With due respect, I think the thread title is misleading as I personally do not see an exchange rate as the reflection of a competition between two currency zones, but simply the forces of supply and demand, combined with psychological factors at play.

I do not think the Pound and the Euro compete against each other. For what would they fight anyway?

Quoting Klaus (Reply 10):
The numbers had been heavily skewed by the inflated bubbles in the anglo-american finance system, but the normalization to realistic values is apparently under way.

If you are talking about some bubbles such as the real estate one, I entirely agree. I think we are only seeing valuations coming back to reality and banks adjusting to customers' actual income and assets accordingly.

I do not see how house prices can increase by 10% a year over long period when economic and demographic growths point to 2-to-4% a year in the vast majority of developed countries.

Just wondering.


User currently offlineSignol From United Kingdom, joined Oct 2007, 3003 posts, RR: 8
Reply 23, posted (5 years 8 months 4 hours ago) and read 2029 times:



Quoting WunalaYann (Reply 22):
I personally do not see an exchange rate as the reflection of a competition

An Australian comedian on Mock the Week some time ago (I forget his name but he has a wooden leg) said that he watched the 2003 Rugby World Cup Final in England. Amongst other chants, the crowd in the pub were singing "We get 2 dollars to the pound"... [to the tune of "He's got the whole world in his hands"]  Smile

signol



Flights booked: none :(
User currently offlineEgmcman From United Kingdom, joined Jun 2005, 898 posts, RR: 8
Reply 24, posted (5 years 8 months 3 hours ago) and read 2009 times:



Quoting Elite (Reply 6):
If things get bad enough, then maybe... "till the British public sees fit". I don't think the UK can continue to hold out forever, unfortunately

If you were to ask most of our major political parties about having a referendum on the giving up the Pound in favour of the Euro they would not hold one because of they know the the electorate would say no resoundingly.

It´s all about confidence Gordon Brown and Alistair Darling´s management of the UK economy. The UK has been badly hurt by Icelandic crisis as many retailers are owned by Icelandic companies and banking crisis which has affected house prices.


25 SKAirbus : I don't think Denmark will enter the euro even though there will possibly be a referendum later this year... Denmark's economy hasn't been hit as hard
26 Klaus : What are you talking about? At this point our economy is still doing pretty well, with an excellent christmas season in retail and a stable currency.
27 SKAirbus : Well although there is a fixed exchange rate the Danish national bank still has the ability to change interest rates... that is pretty independent
28 Post contains links and images Klaus : That's not what you posted the first time, but okay about that... You're just still wrong, apparently: www.denmark.dk The problem is that the peg to
29 Baroque : Excellent Klaus. And I am not being sarcastic. It is by far the best Orwellian phrasing of the current disaster to the world financial systems that I
30 Post contains links and images Klaus : The central banks had only a secondary role in the whole affair – especially the US Federal Reserve handled interest rates and money supply as if
31 Post contains links Baroque : Yes, I had not thought of the IID, it certainly had many features in common with those damned certificates of deposit. Except I think a statistician
32 Klaus : Well, maybe not necessarily 100%, but still far in excess of the risk coverage people deemed necessary... Yeah, I'm all out of sugar frosting on that
33 AverageUser : I think you're contradicting yourself, if you say "the whole affair". You always rejoiced in the past in the "price stability" that your beloved ECB
34 Baroque : Yes, no and I don't think we know yet to those questions in order. Yes we had huge house price inflation, the graphs that Alan Kohler (now there is a
35 Post contains links OA260 : UK public still opposed to joining euro despite slide Monday January 12 2009 BRITISH voters have maintained their opposition to adopting the euro, the
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