Is the UK heading for a credit downgrade? Can Sterling hold?
Discussion
If the ratings issued by Standard & Poor's (S&P), Moody's and Fitch were of critical importance they would have been side-lined long ago. It is preposterous to consider that 3 agencies with a combined revenue of circa $5.5bn can dictate terms to the global economy. In short, if they mattered they would be silently disbanded and marginalised.
baz1985 said:
If the ratings issued by Standard & Poor's (S&P), Moody's and Fitch were of critical importance they would have been side-lined long ago. It is preposterous to consider that 3 agencies with a combined revenue of circa $5.5bn can dictate terms to the global economy. In short, if they mattered they would be silently disbanded and marginalised.
Once again it is not the power of the Agencies that concern me. You may well be correct. The agencies may be powerless.My concern is with the question can the UK economy recover?
With the current government policies?
Or are we already beyond the tipping point of being smothered in debt, perceived to be failing and sliding steadily down into the mire?
I fear the latter. I think far more draconian cuts in Benefits are essential.
But it is the opinions of others I seek.
Johnnytheboy said:
I'm an economic ignoramus, but surely if a credit downgrade weakens the won't this have the silver lining of promoting our ability to sell to export?
You're quite right.Everyone wants our recovery to grow faster and be more stable and a return to 'normality', but there are two groups of people.
The first group think 'normality' is 2007, a booming economy based mostly on smoke, mirrors and a huge unsustainable 'service' industry where we all make our money doing the sorts of things we used to do ourselves back when we had time to do them, because we werent so busy doing things for everyone else. The banking sector being one of the very few way money flows from the rest of the world into Britain, but mostly it just span around Britain at great speed before flowing straight out of Britain and into the factories of Germany, India and the Far East.
Your average Daily Wail reader doesn't give a flying one, about the deficit unless the papers tell them to. They love a 'powerful' Pound because it means you can buy chrome Taiwanese toasters in Sainsburys for 9 to replace the 6 month old one that broke this morning, the bill in the French cafe on Hols cost less on the Credit Card account that's cleared every other year with the remortgage of the stupidly spiralling valued house and all the flats they bought which lay empty. It also plays to the patriotic pride.
AKA The Easy way, a 5-10 year at best sticking plaster over the broken leg.
The second group know 'normality' is more like the 70's before the Unions and Maggie ruined everything with their petty spats.
People worked and made things, some sold here, some sold abroad, the public bought some things made here, some aboard. Stuff cost more, but it was valued by its owner more. A lot more like Germany's economy.
AKA the hard way, a long term solution which if carefully managed could really mean an end to huge booms and busts, not completely because collective greed is impossible to completely mitigate.
When the crash first happened, there was a lot of appitite for the hard way from all corners of the Commons and the Public in general, now, no one seems to care, they just want to feel rich again, very soon.
I agree with most of the cuts, they've been done with a lot of thought, but I already hear the call for tax cuts at all levels - yes that will help the economy in the short run, we might well sell a few more iPads and Cups of Latte on the hightstreet, but that's the easy way. We should be using that money to help bright people with good ideas set up manufactoring businesses and give tax breaks to those who do to keep the plants in the UK.
/Rant
Edited by P-Jay on Friday 16th March 13:31
Johnnytheboy said:
I'm an economic ignoramus, but surely if a credit downgrade weakens the won't this have the silver lining of promoting our ability to sell to export?
Well there has been a "fight to the bottom" for the past couple of years with countries wanting their currency to be "cheaper" than others to keep a lid on their bal of payments.In theory loss of a rating means your debt servicing cost goes up. In reality it doesn't or Greece would be paying the same as my Nephew on his Credit Card.
Sterling is not too bad at present it is in the 1.56 - 1.59 $ range, a short while ago it was 1.52 - 1.57.
As a consumer you would prefer a higher rate, petrol and imported goods are cheaper.
If you are an exporter the inverse is true, take your pick.
All pretty much beyond our control and often beyond the control of those elected into the asylum.
P-Jay said:
Johnnytheboy said:
I'm an economic ignoramus, but surely if a credit downgrade weakens the won't this have the silver lining of promoting our ability to sell to export?
You're quite right.Everyone wants our recovery to grow faster and be more stable and a return to 'normality', but there are two groups of people.
The first group think 'normality' is 2007, a booming economy based mostly on smoke, mirrors and a huge unsustainable 'service' industry where we all make our money doing the sorts of things we used to do ourselves back when we had time to do them, because we werent so busy doing things for everyone else. The banking sector being one of the very few way money flows from the rest of the world into Britain, but mostly it just span around Britain at great speed before flowing straight out of Britain and into the factories of Germany, India and the Far East.
Your average Daily Wail reader doesn't give a flying one, about the deficit unless the papers tell them to. They love a 'powerful' Pound because it means you can buy chrome Taiwanese toasters in Sainsburys for 9 to replace the 6 month old one that broke this morning, the bill in the French cafe on Hols cost less on the Credit Card account that's cleared every other year with the remortgage of the stupidly spiralling valued house and all the flats they bought which lay empty. It also plays to the patriotic pride.
AKA The Easy way, a 5-10 year at best sticking plaster over the broken leg.
The second group know 'normality' is more like the 70's before the Unions and Maggie ruined everything with their petty spats.
People worked and made things, some sold here, some sold abroad, the public bought some things made here, some aboard. Stuff cost more, but it was valued by its owner more. A lot more like Germany's economy.
AKA the hard way, a long term solution which if carefully managed could really mean an end to huge booms and busts, not completely because collective greed is impossible to completely mitigate.
When the crash first happened, there was a lot of appitite for the hard way from all corners of the Commons and the Public in general, now, no one seems to care, they just want to feel rich again, very soon.
I agree with most of the cuts, they've been done with a lot of thought, but I already hear the call for tax cuts at all levels - yes that will help the economy in the short run, we might well sell a few more iPads and Cups of Latte on the hightstreet, but that's the easy way. We should be using that money to help bright people with good ideas set up manufactoring businesses and give tax breaks to those who do to keep the plants in the UK.
/Rant
Edited by P-Jay on Friday 16th March 13:31
I reiterate you concern with manufacturing returning to the UK.
I am old enough to remember Troumph, Royal Enfield, Velocette, Douglas, Vincent, James, Francis Barnett, Ariel, BSA, Sunbeam, Norton, Villiers, Watsonian, all motorcycle makers, and a whole host of others long forgotten and Standard, Triumph, Riley, Woleseley, MG, Morris, Austin, Rover and so on all of whom assembled cars in the UK from components supplied mainly from other firms like Burman, Hardy Spicer, Girling, Lockheed, Armstrong, Heppolite, Coventry Gauge and Tool, Rudge Whitworth and so on.
Every one gone.
The tragedy is that there was a huge skilled workforce, famous throughout the world employed within the UK all paying taxes all able to have decent working lives, none claiming Benefits. All gone.
That is why I question the reality of our recovery.
Where is the growth in exports coming fro. Not from benefits claimants certainly.
Are the governments policies adequate? I fear not.
Steffan said:
Agreed. Clearly based upon this the efforts of government are well intentioned but lacking in bite.
I reiterate you concern with manufacturing returning to the UK.
I am old enough to remember Troumph, Royal Enfield, Velocette, Douglas, Vincent, James, Francis Barnett, Ariel, BSA, Sunbeam, Norton, Villiers, Watsonian, all motorcycle makers, and a whole host of others long forgotten and Standard, Triumph, Riley, Woleseley, MG, Morris, Austin, Rover and so on all of whom assembled cars in the UK from components supplied mainly from other firms like Burman, Hardy Spicer, Girling, Lockheed, Armstrong, Heppolite, Coventry Gauge and Tool, Rudge Whitworth and so on.
Every one gone.
The tragedy is that there was a huge skilled workforce, famous throughout the world employed within the UK all paying taxes all able to have decent working lives, none claiming Benefits. All gone.
That is why I question the reality of our recovery.
Where is the growth in exports coming fro. Not from benefits claimants certainly.
Are the governments policies adequate? I fear not.
There are little sparks of great manufacturing still here, but its specialist 'high-end' stuff typically. I reiterate you concern with manufacturing returning to the UK.
I am old enough to remember Troumph, Royal Enfield, Velocette, Douglas, Vincent, James, Francis Barnett, Ariel, BSA, Sunbeam, Norton, Villiers, Watsonian, all motorcycle makers, and a whole host of others long forgotten and Standard, Triumph, Riley, Woleseley, MG, Morris, Austin, Rover and so on all of whom assembled cars in the UK from components supplied mainly from other firms like Burman, Hardy Spicer, Girling, Lockheed, Armstrong, Heppolite, Coventry Gauge and Tool, Rudge Whitworth and so on.
Every one gone.
The tragedy is that there was a huge skilled workforce, famous throughout the world employed within the UK all paying taxes all able to have decent working lives, none claiming Benefits. All gone.
That is why I question the reality of our recovery.
Where is the growth in exports coming fro. Not from benefits claimants certainly.
Are the governments policies adequate? I fear not.
I think eventually market forces will balance the books, or we'll be blown into the 3rd world. China, India and their neighbours grow richer by the day, their Governments seem to be doing everything they can to slow growth, especially spending, but even China can't hold off for ever - in 10-15 years time it might be cheaper to build a Car/Computer/Toaster here in the West than it is in the Far East and you'll see the Chinese former housewife earning the equivalent of 30k a year walking other peoples dogs and spending it all on Western made consumer crap she doesnt need.
But will we be making it in Britain, or will we be sat in the ruins of a former G8 Country with all our young talented people shooting off to live in a fast-paced, economically vibrant Poland?
Steffan said:
Troumph
Still around and very profitable. It's pointless to reminisce over old names, as only the largest and fittest survive in the modern age. We need to become a world exporter, and not rely on our Euro neighbours who let's face it are some combination of inefficent, corrupt and backstabbing.Edited by fido on Friday 16th March 14:30
Caulkhead said:
The potential downgrading of our credit rating has very little to do with the way the government are handling our debt which the agencies themselves all still consider credible. It's all about the agencies concern about how well the UK can survive the imminent implosion of the euro.
Given my default topic I can hardly disagree!!! I Agree!!!!!In which case why are the markets rising?
I think it is fools gold mesmerising dreamers. There will be an awful drop.
Steffan said:
P-Jay said:
Johnnytheboy said:
I'm an economic ignoramus, but surely if a credit downgrade weakens the won't this have the silver lining of promoting our ability to sell to export?
You're quite right.Everyone wants our recovery to grow faster and be more stable and a return to 'normality', but there are two groups of people.
The first group think 'normality' is 2007, a booming economy based mostly on smoke, mirrors and a huge unsustainable 'service' industry where we all make our money doing the sorts of things we used to do ourselves back when we had time to do them, because we werent so busy doing things for everyone else. The banking sector being one of the very few way money flows from the rest of the world into Britain, but mostly it just span around Britain at great speed before flowing straight out of Britain and into the factories of Germany, India and the Far East.
Your average Daily Wail reader doesn't give a flying one, about the deficit unless the papers tell them to. They love a 'powerful' Pound because it means you can buy chrome Taiwanese toasters in Sainsburys for 9 to replace the 6 month old one that broke this morning, the bill in the French cafe on Hols cost less on the Credit Card account that's cleared every other year with the remortgage of the stupidly spiralling valued house and all the flats they bought which lay empty. It also plays to the patriotic pride.
AKA The Easy way, a 5-10 year at best sticking plaster over the broken leg.
The second group know 'normality' is more like the 70's before the Unions and Maggie ruined everything with their petty spats.
People worked and made things, some sold here, some sold abroad, the public bought some things made here, some aboard. Stuff cost more, but it was valued by its owner more. A lot more like Germany's economy.
AKA the hard way, a long term solution which if carefully managed could really mean an end to huge booms and busts, not completely because collective greed is impossible to completely mitigate.
When the crash first happened, there was a lot of appitite for the hard way from all corners of the Commons and the Public in general, now, no one seems to care, they just want to feel rich again, very soon.
I agree with most of the cuts, they've been done with a lot of thought, but I already hear the call for tax cuts at all levels - yes that will help the economy in the short run, we might well sell a few more iPads and Cups of Latte on the hightstreet, but that's the easy way. We should be using that money to help bright people with good ideas set up manufactoring businesses and give tax breaks to those who do to keep the plants in the UK.
/Rant
Edited by P-Jay on Friday 16th March 13:31
I reiterate you concern with manufacturing returning to the UK.
I am old enough to remember Troumph, Royal Enfield, Velocette, Douglas, Vincent, James, Francis Barnett, Ariel, BSA, Sunbeam, Norton, Villiers, Watsonian, all motorcycle makers, and a whole host of others long forgotten and Standard, Triumph, Riley, Woleseley, MG, Morris, Austin, Rover and so on all of whom assembled cars in the UK from components supplied mainly from other firms like Burman, Hardy Spicer, Girling, Lockheed, Armstrong, Heppolite, Coventry Gauge and Tool, Rudge Whitworth and so on.
Every one gone.
The tragedy is that there was a huge skilled workforce, famous throughout the world employed within the UK all paying taxes all able to have decent working lives, none claiming Benefits. All gone.
That is why I question the reality of our recovery.
Where is the growth in exports coming fro. Not from benefits claimants certainly.
Are the governments policies adequate? I fear not.
Is it because it's just out of recent memory and so is the easiest period to see through rose tinted glasses?
Open your eyes: the world has moved on! Half of it isn't communist anymore for a start and a significant portion of that part are happy to work their fingers to the bones in horrific conditions for peanuts, so why on Earth would you want to go back 30 years and try and compete with them?
We couldn't compete 30 years ago with all sorts of barriers to trade that existed at the time, why do you believe we can compete now?
In my opinion, we need to control the excesses of our capitalist economy (perhaps we could start by governments not turning a blind eye to massive credit bubbles), return to Keynesian economics (i.e. pay down debt in the good times and incur more in the bad times to stimulate growth thus acting as a natural brake on extremes of the economic cycle) and concentrate on industries where we have competitive advantage, such as hi-tech manufacturing, biotech and God forbid, finance. That way we can benefit from the poor sods in emerging markets rather than kill ourselves trying to beat them at their own game.
It's worth pointing out that the finance industry isn't the work of the devil; it's fundamental to the effective working of the modern world and we happen to be uniquely placed thanks to historical and geographical factors to be a world leader in it. To give up that position and go back to basic manufacturing is nothing short of madness.
On that note, let's also not forget that Europe isn't on the brink of self-destructing due to the banks - sure they played a part in the initial stages, but the fact that so many Western governments went on a massive and unsustainable credit binge at the height of one of the biggest booms in history is the key factor. That has absolutely nothing to do with the finance industry - Greece doesn't even have a finance industry to speak of - can you name a single Greek owned bank?!
youngsyr said:
What is it with people about hankering after the past as if it were some utopian era? And what's so special about the "manufacturing golden age" of the 1970s?
Is it because it's just out of recent memory and so is the easiest period to see through rose tinted glasses?
Open your eyes: the world has moved on! Half of it isn't communist anymore for a start and a significant portion of that part are happy to work their fingers to the bones in horrific conditions for peanuts, so why on Earth would you want to go back 30 years and try and compete with them?
We couldn't compete 30 years ago with all sorts of barriers to trade that existed at the time, why do you believe we can compete now?
In my opinion, we need to separate the excesses of our capitalist economy (perhaps we could start by governments not turning a blind eye to massive credit bubbles), return to Keynesian economics (i.e. pay down debt in the good times and incur more in the bad times to stimulate growth) and concentrate on industries where we have competitive advantage, such as hi-tech manufacturing, biotech and God forbid, finance. That way we can benefit from the poor sods in emerging markets rather than kill ourselves trying to beat them at their own game.
It's worth pointing out that the finance industry isn't the work of the devil; it's fundamental to the effective working of the modern world and we happen to be uniquely placed thanks to historical and geographical factors to be a world leader in it. To give up that position and go back to basic manufacturing is nothing short of madness.
On that note, let's also not forget that Europe isn't on the brink of self-destructing due to the banks - sure they played a part in the initial stages, but the fact that so many Western governments went on a massive and unsustainable credit binge at the height of one of the biggest booms in history is the key factor. That has absolutely nothing to do with the finance industry - Greece doesn't even have a finance industry to speak of - can you name a single Greek owned bank?!
It's not hankering for a rose tinted past, but giving an example of when Britain last had anything like a balanced economy where we didn't have to rely on a single industry and a continuing rising pound to pay for virtually every single consumer item we buy. Is it because it's just out of recent memory and so is the easiest period to see through rose tinted glasses?
Open your eyes: the world has moved on! Half of it isn't communist anymore for a start and a significant portion of that part are happy to work their fingers to the bones in horrific conditions for peanuts, so why on Earth would you want to go back 30 years and try and compete with them?
We couldn't compete 30 years ago with all sorts of barriers to trade that existed at the time, why do you believe we can compete now?
In my opinion, we need to separate the excesses of our capitalist economy (perhaps we could start by governments not turning a blind eye to massive credit bubbles), return to Keynesian economics (i.e. pay down debt in the good times and incur more in the bad times to stimulate growth) and concentrate on industries where we have competitive advantage, such as hi-tech manufacturing, biotech and God forbid, finance. That way we can benefit from the poor sods in emerging markets rather than kill ourselves trying to beat them at their own game.
It's worth pointing out that the finance industry isn't the work of the devil; it's fundamental to the effective working of the modern world and we happen to be uniquely placed thanks to historical and geographical factors to be a world leader in it. To give up that position and go back to basic manufacturing is nothing short of madness.
On that note, let's also not forget that Europe isn't on the brink of self-destructing due to the banks - sure they played a part in the initial stages, but the fact that so many Western governments went on a massive and unsustainable credit binge at the height of one of the biggest booms in history is the key factor. That has absolutely nothing to do with the finance industry - Greece doesn't even have a finance industry to speak of - can you name a single Greek owned bank?!
Look past the smoke and mirrors of high level economics and look at the simple stuff - the 'Rich' west has spent the last 30+ years doing nothing really than using inflation and borrowing to create more money and then spending it abroad.
As a former RBS wage slave it would be hard for me to blame the recession on the Banks, They caused the crash that started it, but it was coming one way or the other and nothing could have stopped it.
No one wants a return of the sweatshops and seeing people sewing trainers for 3 a day, but we have to start making some stuff and selling it pretty bloody soon, or we'll be in the exact same boat 5-10 years from now.
youngsyr said:
What is it with people about hankering after the past as if it were some utopian era? And what's so special about the "manufacturing golden age" of the 1970s?
Is it because it's just out of recent memory and so is the easiest period to see through rose tinted glasses?
The 70s was by no means a golden age; but it was the last time that making things was what we did. Is it because it's just out of recent memory and so is the easiest period to see through rose tinted glasses?
youngsyr said:
Open your eyes: the world has moved on! Half of it isn't communist anymore for a start and a significant portion of that part are happy to work their fingers to the bones in horrific conditions for peanuts, so why on Earth would you want to go back 30 years and try and compete with them?
We couldn't compete 30 years ago with all sorts of barriers to trade that existed at the time, why do you believe we can compete now?
Manufacturing doesn't have to be about the race to the bottom and sweat shops. Although it's an over-used example, what is the manufacturing powerhouse of Europe? Germany. They aren't well known for being poor.We couldn't compete 30 years ago with all sorts of barriers to trade that existed at the time, why do you believe we can compete now?
youngsyr said:
In my opinion, we need to control the excesses of our capitalist economy (perhaps we could start by governments not turning a blind eye to massive credit bubbles), return to Keynesian economics (i.e. pay down debt in the good times and incur more in the bad times to stimulate growth thus acting as a natural brake on extremes of the economic cycle) and concentrate on industries where we have competitive advantage, such as hi-tech manufacturing, biotech and God forbid, finance. That way we can benefit from the poor sods in emerging markets rather than kill ourselves trying to beat them at their own game.
The problem with Keynesianism is that you can fudge it, exactly as Gordon Brown did in 2007. I recall watching him in Parliament and telling them that we were at the bottom of the cycle. Ho ho ho. The government should live within its means wherever possible, and not plan to borrow; it's a mug's game.Nobody is arguing that we should go back to matchstick production; there's no point since we can't compete.
youngsyr said:
It's worth pointing out that the finance industry isn't the work of the devil; it's fundamental to the effective working of the modern world and we happen to be uniquely placed thanks to historical and geographical factors to be a world leader in it. To give up that position and go back to basic manufacturing is nothing short of madness.
On that note, let's also not forget that Europe isn't on the brink of self-destructing due to the banks - sure they played a part in the initial stages, but the fact that so many Western governments went on a massive and unsustainable credit binge at the height of one of the biggest booms in history is the key factor. That has absolutely nothing to do with the finance industry - Greece doesn't even have a finance industry to speak of - can you name a single Greek owned bank?!
TT Hellenic Postbank, although I might have googled it. On that note, let's also not forget that Europe isn't on the brink of self-destructing due to the banks - sure they played a part in the initial stages, but the fact that so many Western governments went on a massive and unsustainable credit binge at the height of one of the biggest booms in history is the key factor. That has absolutely nothing to do with the finance industry - Greece doesn't even have a finance industry to speak of - can you name a single Greek owned bank?!
Banking is not a problem - everyone understands that it's a good idea to lend money to people. The problem occurs with things like leveraged buyouts, where profit is made regardless of success or failure, and Collateralised Debt Obligations, where nobody is fully aware of the risks they're buying into, which do not actually give a benefit to society in terms of enabling things (as opposed to money) to be made. That sort of thing has to be cracked down on, and it will take global action, of the order of a new Bretton Woods (although definitely not actually a new Bretton Woods) to fix it.
BarryGibb said:
davepoth said:
and Collateralised Debt Obligations, where nobody is fully aware of the risks they're buying into,
rly?The USA is prosecuting many Bankers and Mortgage packagers on just that basis currently.
The USA believe that the investors were deliberately misled as to the reality of the complex financial instruments used in package mortgages as were the FED, the FSA and Uncle Tom Cobley.
I agree with davepoth and the USA.
Very few individuals understood the real effect of what they were buying into. Certainly not the investors.
It was deliberate fraud and should be seen as such.
Steffan said:
BarryGibb said:
davepoth said:
and Collateralised Debt Obligations, where nobody is fully aware of the risks they're buying into,
rly?The USA is prosecuting many Bankers and Mortgage packagers on just that basis currently.
The USA believe that the investors were deliberately misled as to the reality of the complex financial instruments used in package mortgages as were the FED, the FSA and Uncle Tom Cobley.
I agree with davepoth and the USA.
Very few individuals understood the real effect of what they were buying into. Certainly not the investors.
It was deliberate fraud and should be seen as such.
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