The economic consequences of Brexit

[anonymous-user]

youngsyr said:

You weaken your argument by selectively editing your numbers...

Nope just working from memory. Google the chart. In the big scheme of things Brexit, so far, has had an irrelevant, if unusually sudden, move. In any event one of the biggest benefits of a free floating currency is that a fall is usually stimulatory, particularly in a low inflation environment. You can continue to worry about it if you like, that's your prerogative.

[anonymous-user]

don4l said:

post Brexit news!

Perhaps we should wait until Brexit has happened before we get exited at "post-Brexit news".

Keep in mind that we haven't exited the EU yet, and won't do so for some time.

[Derek Smith]

jsf said:

3 years ago the cost of a litre of fuel in Italy was 1.83 Euro, it is currently at 1.44 Euro, you've never had it so good.

Now I'm confused. The poster I replied to was suggesting that the drop in the value of the £ was down to Brexit. I was surprised we had left; you'd think they'd have put something in the papers, but there you go.

Now I'm no mathematical adequate, by you suggest I've never had it so good, yet the value of the £ has dropped since the vote so one would assume I had it better a month or so ago. But you are saying this is not so it seems. But that must be wrong.

If the value of the £ was at a certain level then this would have been based on, perhaps, greater performance by the UK in comparison to those in the Eurozone. In other words, we worked for it.

I won't save much in fuel as I'll only drive locally, and for a few days, and pay for the car hire at the new rate of exchange. We've got trips planned: Pompeii being one destination I'm really looking forward to. I couldn't pay for the trips before I went so now have to fork out at the new conversion rate. Then there're the taxes, again which I pay once there.

Never, had it so good, eh? I'd check your calculator if I were you.

[Derek Smith]

Greg66 said:

don4l said:

post Brexit news!

Perhaps we should wait until Brexit has happened before we get exited at "post-Brexit news".

Keep in mind that we haven't exited the EU yet, and won't do so for some time.

You'd think someone would have mentioned it to him before page 144.

[youngsyr]

fblm said:

youngsyr said:

You weaken your argument by selectively editing your numbers...

Nope just working from memory. Google the chart. In the big scheme of things Brexit, so far, has had an irrelevant, if unusually sudden, move. In any event one of the biggest benefits of a free floating currency is that a fall is usually stimulatory, particularly in a low inflation environment. You can continue to worry about it if you like, that's your prerogative.

When I see a 10% drop overnight to a 31 year record low - that's not the sort of thing that I just write off as "business as usual". Like the record low interest rate and new QE announcement, it has to be taken into consideration when we point out the near universal good news regarding the economy we're seeing in the press.

[youngsyr]

Derek Smith said:

...
I won't save much in fuel as I'll only drive locally, and for a few days, and pay for the car hire at the new rate of exchange. We've got trips planned: Pompeii being one destination I'm really looking forward to. I couldn't pay for the trips before I went so now have to fork out at the new conversion rate. Then there're the taxes, again which I pay once there.

Word of advice Derek - Pompeii is spectacular, but it's also like walking around a stone oven in the Mediterranean sun. Take a frozen bottle of water, an umbrella for shade and try to visit early morning/late evening if possible.

[anonymous-user]

youngsyr said:

When I see a 10% drop overnight to a 31 year record low - that's not the sort of thing that I just write off as "business as usual". Like the record low interest rate and new QE announcement, it has to be taken into consideration when we point out the near universal good news regarding the economy we're seeing in the press.

I didn't say it was business as usual. It's unusual but so is voting to rewrite your relationship with your major trading partners so the FX/IR move is neither unexpected nor particularly worrying... I trade fx and interest rate derivatives; I have absolutely nothing to gain from fooling myself or anyone else and I'm not at all worried about sterling; as I said you are free to worry about it if you like, I'm just suggesting it's a waste of your energy.

[Jockman]

youngsyr said:

Derek Smith said:

...
I won't save much in fuel as I'll only drive locally, and for a few days, and pay for the car hire at the new rate of exchange. We've got trips planned: Pompeii being one destination I'm really looking forward to. I couldn't pay for the trips before I went so now have to fork out at the new conversion rate. Then there're the taxes, again which I pay once there.

Word of advice Derek - Pompeii is spectacular, but it's also like walking around a stone oven in the Mediterranean sun. Take a frozen bottle of water, an umbrella for shade and try to visit early morning/late evening if possible.

Agreed.

You're about to find out how small people were in those days.

[anonymous-user]

Derek Smith said:

If the value of the £ was at a certain level then this would have been based on, perhaps, greater performance by the UK in comparison to those in the Eurozone. In other words, we worked for it.

You remainers seem keen on 'experts' so perhaps it's worth noting the IMF said GBP was 12-18% overvalued prior to Brexit and is still overvalued now! Regarding your european trip perhaps some perspective is needed... EURGBP back to the bad old days of 2013!

[Digga]

Jockman said:

Agreed.

You're about to find out how small people were in those days.

TBF bacon shrivels up under the grill. That's just conjecture.

[rs1952]

Dr Jekyll said:

SilverSixer said:

Sounds like it would be a brilliant idea then for Scotland to go independent, and start its own, weak currency (let's call it the 'Jocko') in order to address the trade deficit they would inevitably be starting out with. Imagine, they could start it off at 10 Euros to the Jocko, and then watch it slide down to parity, perhaps beyond if they're lucky, rubbing their hands with glee about all the lovely new exporting opportunities and the demolition of their trade deficit. Soon, they will be in economic nirvana, and will have a smashing little exchange rate like Italy and Turkey used to have, maybe even reach that golden zone of 1,000,000 Jockos to the Euro.

Anyone got Sturgeon's phone number, I think don4l's got a plan.

If a country has a trade deficit then devaluing the currency is exactly the right plan. In fact a trade deficit simply shows that the currency is overvalued in the first place.

Well, it certainly worked for Germany in the 1920s didn't it?

And more recently, it worked exceptionally well for Zimbabwe. They were issuing 100 trillion dollar banknotes at one time. Do you fancy buying one?

http://banknoteworld.com/shop/Zimbabwe-Currency/?g...

The populations of both countries were, of course, over the moon with their situation. Especially Germany

[anonymous-user]

rs1952 said:

Well, it certainly worked for Germany in the 1920s didn't it?

And more recently, it worked exceptionally well for Zimbabwe. They were issuing 100 trillion dollar banknotes at one time. Do you fancy buying one?

http://banknoteworld.com/shop/Zimbabwe-Currency/?g...

The populations of both countries were, of course, over the moon with their situation. Especially Germany

With respect that's a stupid comparison. Weakening your currency because it's too strong in an otherwise deflationary environment is hardly comparable to hyperinflation and completely debasing your currency is it?

[rs1952]

fblm said:

rs1952 said:

Well, it certainly worked for Germany in the 1920s didn't it?

And more recently, it worked exceptionally well for Zimbabwe. They were issuing 100 trillion dollar banknotes at one time. Do you fancy buying one?

http://banknoteworld.com/shop/Zimbabwe-Currency/?g...

The populations of both countries were, of course, over the moon with their situation. Especially Germany

With respect that's a stupid comparison. Weakening your currency because it's too strong in an otherwise deflationary environment is hardly comparable to hyperinflation and completely debasing your currency is it?

Neither Germany nor Zimbabwe set out to deliberately trash their currency. A correction turned into a fall and then a landslide and then an earthquake, and in essence the markets took them there.

It could never happen with the £ could it? Not even if half the City went to Frankfurt as a result of Brexit...

[don4l]

PurpleMoonlight said:

catso said:

don4l said:

People ask about the effects on importers. The good news is that importers will be badly hit. Imports are not good for an economy. It is much better to manufacture goods than to import them.

Thanks for that

The products I import from Italy are not made here (and that goes for a lot of technical/manufacturing equipment).

My customers are UK manufacturers, so the higher prices are actually hurting an already battered UK manufacturing industry...

I think Don would like to close the boarders and make the UK self sufficent. Doesn't to seem work all that well for North Korea but hey, we'll be fine .....

Nonsense. I fully support free trade.

It is basic economics that it is better to manfufacture than to import.

[don4l]

minimoog said:

Don4l please promise us you'll never stop posting. Watching you make a monumental tit of yourself day after day is the single best thing about this whole ststorm.

Hello minimoog.

Do you remember writing that post?

We were discussiing the construction industry, and I didn't share your pessimism.

So, who is the monumental tit now?

http://www.dailymail.co.uk/news/article-3755545/De...

Consumer spending up. Unemployment down. Stock markets (Both FTSE100 & 250) up. Bank lending up.

The fact that Brexit won is the best thing that has happened for decades.

[don4l]

Greg66 said:

don4l said:

post Brexit news!

Perhaps we should wait until Brexit has happened before we get exited at "post-Brexit news".

Keep in mind that we haven't exited the EU yet, and won't do so for some time.

I find it amusing that you Remainers are so willing to move the goalposts in such a shameless fashion.

Don't you remember what you wrote before the referendum?

You were firmly of the opinion that we would suffer terribly immediately after a "Leave" vote.

Here are a couple of reminders.

The first is from the day before the vote:-

Greg66 said:

With these feet said:

Head of Tate & Lyle said on the news today the EU was the reason the company made no profit.
Yet another big player squashed by the EU? You can almost see every big company apart from those in banking brought to their knees. How long before the destruction of London's banking industry begins?

If we vote to leave, roughly 48 hours from now.

Here is another:-

Greg66 said:

The Guardian reports:

"A day after the newspaper’s front page editorial, beseeching voters to “BeLEAVE in Britain”, the tabloid put together a bizarre pastiche involving Remain’s dwindling poll lead, “nasty Euro moths” and what a large sub-headline described as a “Brexit Rocket Boost to Shares”. What makes this last item the stand-out in this bizarre brew is that the big financial story overnight had been the £30bn wiped off the FTSE on Tuesday, which was widely thought to be associated with the surging position of the leave camp in the latest polls.

The “rocket-boost” claim was repeated and attributed to “analysis” in the text of the story on the front page, but only readers who pressed on to the bottom of the second column of the story on the second page got any indication of what this claim was based on, a Deutsche Bank research note which observed that European shares were set to tank by around 10% in the event of Britain voting leave, but also suggested that the slide in UK shares could be somewhat smaller, leading to a relative over-performance of around 5%."

Good luck spinning that into "huge UK growth after a Brexit vote". Is this the note written by an analyst, or is it the official view of DB?

Once again, you were expecting immediate consequences.

There has been huge growth after "the Brexit vote".

It is really odd. If I make a prediction that turns out to be wrong, and especially if it turns out to be monumentally wrong, then I take a step back and re-evualate my position.

You made predictions that were wrong.

[anonymous-user]

don4l said:

Once again, you were expecting immediate consequences.

There has been huge growth after "the Brexit vote".

It is really odd. If I make a prediction that turns out to be wrong, and especially if it turns out to be monumentally wrong, then I take a step back and re-evualate my position.

You made predictions that were wrong.

Those are two of the most gigantic lies you have peddled during your time on this forum. And that's saying something, because you've really spouted some absolute whoppers.

When you are caught with your lying trousers round your ankles smack bang in the middle of the park, your MO is to skulk off into the bushes, wait for things to move on, and then return more brazen than ever.

In this mini dialogue you've utterly shamelessly and dishonestly segued from talking about Brexit to the Brexit vote as if there is no difference between them.

To adopt your classic posting style:

I can't believe anyone is so stupid as to believe that.

Which means you've been completely dishonest.

Or are you just that stupid?

Which is it? Incredibly stupid, or outlandishly dishonest?

We know that words are your "thing". Nor are numbers your "thing". And you admit you don't understand finance. You have a good grasp of the WEEE Regulations though, and the £500 or so a year they cost your business which seems (on your account) to have placed it on the very of some sort of permanent financial calamity.

So whatever you are, we can add ill-informed to the list.

And if you really believe that the EU hasn't been planning the destruction of the banking industry in London since the vote, you must be stupid. Perhaps you're ill-informed, stupid and dishonest.

Who knows? Who cares? Not me.

[anonymous-user]

rs1952 said:

Neither Germany nor Zimbabwe set out to deliberately trash their currency. A correction turned into a fall and then a landslide and then an earthquake, and in essence the markets took them there.

It could never happen with the £ could it? Not even if half the City went to Frankfurt as a result of Brexit...

You might want to google image search 'money supply weimar republic' and 'money supply uk'. Of course hyperinflation is not impossible in the UK, but it is highly improbable. You and youngsyr can worry about it if you like.

[Digga]

don4l said:

We were discussiing the construction industry, and I didn't share your pessimism.
.

Apropos of UK construction, SME housebuilder destruction (at the hands of the banks, post GFC) is clear:

https://twitter.com/resi_analyst/status/7683909049...

Edited by Digga on Thursday 25th August 07:33

[SunsetZed]

Can anyone point me to facts / graphs showing government spending excluding debt payments over the last 20 years? I've had a look on google but couldn't find anything.

The background is I'm having a discussion with someone who doesn't understand compound interest and this might make it easier to explain the increasing debt payments the government pays and why other spending is being cut to balance it, thanks!