Is the end nigh for the Euro? [vol. 3]

[LongQ]

Andy Zarse said:

RYH64E said:

Andy Zarse said:

It's called the international banking system...

Millions of people will be desperately trying to get hold of new Drachmas to spend on their Greek holidays which will, all of a sudden, be much better value after default...

Devaluing currency to make exports cheap makes imports damn expensive, especially with a new currency that's not likely to have much confidence. Anything priced in USD, such as fuel, is going to be extortionately expensive.

Yes, true to an extent but devaluation's never as bad as folk expect. Of course at the moment nobody can afford fuel anyway as they're too poor to buy it. Choose your poison I guess; but I'd take the poison that offered some hope for the future, one without the Euro doomsday machine attached.

See, this is where everything will soon change and the "Green" investments will pay off.

Once all the energy comes from free renewables the market dynamics will change.

OK, so raw materials may cost a bit more with devaluation but for most countries the major significant external influence of that is related to energy production of some sort.

If you get the recycling right many of the raw materials needs might be found to be in place already. Add in the free energy and the problem evaporates.

Obviously there would be loads of other benefits too - people leaving the country taking pressure off the infrastructure for example. No need to import all that copper for piping and wiring for new housing we would not need to pick just one example. Also fewer MPs required as the population drops. And fewer of their placemen in the other house.

Of course it would not be all good news but in the medium term there is no reason to assume it would be all bad for everyone. As has been said for many generations - it's an ill wind that blows nobody any good.

[Andy Zarse]

Claudia Skies said:

Andy Zarse said:

devaluation's never as bad as folk expect

What?

Devaluation. It's never as bad a folk expect.

[Claudia Skies]

Thanks, that's a very clear explanation.

[Andy Zarse]

Claudia Skies said:

Thanks, that's a very clear explanation.

My pleasure. Your question was possessed of equal clarity.

[Andy Zarse]

Spain's export driven recovery is no longer export driven. Exports down 1.2% y-o-y in June.

Going well isn't it...

[Mermaid]

Never mind the Euro, Sterling strength seems to be on the wane.

[Gargamel]

Mermaid said:

Never mind the Euro, Sterling strength seems to be on the wane.

I think that is a good thing.

My take is a lot of money came in on the expectation we were about to increase interest rates (and the EZ was still cutting) Now that doesn't look likely so the money is moving on.

Just a theory though.

[turbobloke]

Gargamel said:

Mermaid said:

Never mind the Euro, Sterling strength seems to be on the wane.

I think that is a good thing.

My take is a lot of money came in on the expectation we were about to increase interest rates (and the EZ was still cutting) Now that doesn't look likely so the money is moving on.

Just a theory though.

Seems reasonable. At some point in time approaching May 2015 the Labour lead in most opinion polls may have an efect.

[anonymous-user]

Gargamel said:

I think that is a good thing.

My take is a lot of money came in on the expectation we were about to increase interest rates (and the EZ was still cutting) Now that doesn't look likely so the money is moving on.

Just a theory though.

IMO you're spot on. Scottish independence, however likely or not, will also weigh on the pound until the vote.

Edited by anonymous-user on Tuesday 19th August 15:14

[Digga]

fblm said:

Scottish independence, however likely or not, will also weigh on the pound until the vote.

Demand for sterling will rocket once it's certain we'll never have to suffer another useless jockanese chancellor.

[Andy Zarse]

Digga said:

fblm said:

Scottish independence, however likely or not, will also weigh on the pound until the vote.

Demand for sterling will rocket once it's certain we'll never have to suffer another useless jockanese chancellor.

I put it to you, Alistair Darling was both Scotch and a decent chancellor!*






*with due respect to the utter shambles he was left to clear up by you know who...

[Digga]

Andy Zarse said:

Digga said:

fblm said:

Scottish independence, however likely or not, will also weigh on the pound until the vote.

Demand for sterling will rocket once it's certain we'll never have to suffer another useless jockanese chancellor.

I put it to you, Alistair Darling was both Scotch and a decent chancellor!*






*with due respect to the utter shambles he was left to clear up by you know who...

He may or may not have been a decent enough bloke, but he had the look of a rabbit caught in two sets of headlights; one of his own, economically lunatic party and the other of the abyss the nation teetered on at the time.

[anonymous-user]

Andy Zarse said:

Digga said:

fblm said:

Scottish independence, however likely or not, will also weigh on the pound until the vote.

Demand for sterling will rocket once it's certain we'll never have to suffer another useless jockanese chancellor.

I put it to you, Alistair Darling was both Scotch and a decent chancellor!*






*with due respect to the utter shambles he was left to clear up by you know who...

Digga, ha! Unfortunately when an independant Scotland can't meet the Maastricht criteria for EU entry and spirals into poverty, England will end up picking up the pieces...

AZ, how much do you recon Darling actually did? I'm not sure why but I always assumed it was still Brown making all the big decisions (like blocking BARC/LEH).

[Cunning Punt]

fblm said:

when an independant Scotland can't meet the Maastricht criteria for EU entry

This very thread suggests that that ^ might be no bad thing.

fblm said:

and spirals into poverty

Quite possibly. OTOH, Iceland seems to be doing ok

[DJRC]

Both wrong chaps. There hasn't been any expectation of a rate rise in the UK and there won't be one for another 12months. There hasn't been a chance in hell of a uk rate rise at any point in the last yr...it would have been economic and political suicide.
Nor does any expectation of labour in 2015 have an impact. For one it's a less than 50% chance, two if it happens there is no prediction of anything tangible to price in and lastly it won't affect. The uk economically until 2016 at the earliest, therefore nobody cares.
The up sterling rise has been driven by simple easy money making. Sterling looked strong and the euro weak. The worrying thing is if it carries on! I suspect the market is happy at 1.25 for now and will take stock for a while. We are at a pause moment because the financial strength Europe had displayed gaining got castled in the last set of economic data.
Personally I would love anything and everything that happened to ensure a weak sterling, I'd quite happily see you lot thrown to the dogs but it isn't going to happen and whatever odds you can get on labour losing the next election I'd take now. Those odds are only going to shorten.

[RYH64E]

DJRC said:

Both wrong chaps. There hasn't been any expectation of a rate rise in the UK and there won't be one for another 12months. There hasn't been a chance in hell of a uk rate rise at any point in the last yr...it would have been economic and political suicide.

That's not what I hear or see. For the last six months or so all of the currency market updates I'm sent have said that sterling strength was due to expectations of a rate increase as the economy recovers, and that the recent fall is due to such expectations receding, which certainly tallys with what I've seen. I only really follow GBP vs USD, not so interested in EUR movements.

[Mermaid]

RYH64E said:

That's not what I hear or see.

Mixed messages from Carney, and moving goalposts.

[RYH64E]

Mermaid said:

RYH64E said:

That's not what I hear or see.

Mixed messages from Carney, and moving goalposts.

Most of the reports I read suggest expectation (or not, as the case may be) of an interest rate hike is the key determinant for Sterling strength/weakness at present, for example here's this morning's update from one of the reports:

Random market report said:

Sterling hits a 4-month low as disappointing UK CPI data worsens interest rate outlook.

The Pound has strengthened ahead of the BoE MPC minutes as hope remains over interest rate prospects.

The Pound hit a 4-month low on Tuesday after UK CPI inflation data showed price pressures easing more than expected in July. The consumer price index in Britain fell to 1.56% from 1.9% in July, pulling further away from the Bank of England’s 2.0% target and reducing the chances for an interest rate hike before the end of this year.

The Bank of England publishes the minutes from its August monetary policy meeting at 09:30 (BST) today. The policy committee have thus far been unified over interest rates but with the increase in dovish statements from governor Carney, investors are hoping some members may have begun to express support for raising interest rates.

[Andy Zarse]

Mermaid said:

RYH64E said:

That's not what I hear or see.

Mixed messages from Carney, and moving goalposts.

There's a new verb in the OED; to carney. It means to totally blow your credibility in less than twelve months.

Honestly, every time the man opens his mouth something completely different comes out. And look at that clueless woman he appointed. He's reduced the position of Governor to little more than that of Court Jester, IMO. At least Merv was consistent; wrong but consistent...

[Andy Zarse]

Digga said:

...he had the look of a rabbit caught in two sets of headlights; one of his own, economically lunatic party and the other of the abyss the nation teetered on at the time.

Do you know, I'd forgotten about that. Yes he did often look scared witless, though given his predicament of being caught between the crunch on one side and an raving megalomaniac on the other, I'm not surprised.