Euro crisis

[Justayellowbadge]

Firstly, please excuse my ignorance.

There is, we are told, a Euro crisis. Meltdown. The end of the Euro, Eurozone and even europe itself have been prophecized.

Yet the pound and euro seem to be level pegging, pretty much.

If it is so bad, why can't we buy BMWs for a fiver?

Is Sterling essentially in the same crisis?

[sleep envy]

Who buys our exports?

[Digga]

Lots of other Eeyore and Eu threads already ongoing.

Try this one: http://www.pistonheads.com/gassing/topic.asp?h=0&a...

[Crusoe]

because we printed billions of "free" £ which keeps the £ to euro rate about the same

[Justayellowbadge]

sleep envy said:

Who buys our exports?

Yours?

Very wealthy Porsche enthusiasts.

[sleep envy]

Justayellowbadge said:

Yours?

Very wealthy Porsche enthusiasts.

That's true however even they are feeling the pinch and I'm having to put off my upgrade for a year or so.

[Mermaid]

Digga said:

Lots of other Eeyore and Eu threads already ongoing.

Try this one: http://www.pistonheads.com/gassing/topic.asp?h=0&a...

& this one

http://www.pistonheads.com/gassing/topic.asp?h=0&a...

[Justayellowbadge]

Digga said:

Lots of other Eeyore and Eu threads already ongoing.

Try this one: http://www.pistonheads.com/gassing/topic.asp?h=0&a...

This isn't really about that, despite the title - I'm more curious as to why, if there is this disaster, Sterling isn't getting stronger against this supposedly toxic currency.

[Eric Mc]

We may not be in the Euro but were too damn close to the blast when it all blows to pieces.

[Mermaid]

Justayellowbadge said:

This isn't really about that, despite the title - I'm more curious as to why, if there is this disaster, Sterling isn't getting stronger against this supposedly toxic currency.

Our own issues & the market thinks Euro woes will be sorted out.

[munky]

Justayellowbadge said:

Digga said:

Lots of other Eeyore and Eu threads already ongoing.

Try this one: http://www.pistonheads.com/gassing/topic.asp?h=0&a...

This isn't really about that, despite the title - I'm more curious as to why, if there is this disaster, Sterling isn't getting stronger against this supposedly toxic currency.

the euro is made of of several parts though isn't it. Some of which are better than sterling, some of which are worse. The good parts are larger but fewer than the more numerous but smaller bad parts.

Clear?

[CypherP]

Justayellowbadge said:

This isn't really about that, despite the title - I'm more curious as to why, if there is this disaster, Sterling isn't getting stronger against this supposedly toxic currency.

Because we're all fked. And people called Siobhan are spending £3,200 of benefit payments to buy their children christmas presents while the rest of the country makes up for other people's mistakes.

Ah.. England..

[Bluebarge]

Justayellowbadge said:

This isn't really about that, despite the title - I'm more curious as to why, if there is this disaster, Sterling isn't getting stronger against this supposedly toxic currency.

Because over 60% of our trade is with the EU, most of that is with the Eurozone. They go, we go. Banks are predicting a 5% contraction in UK economy next year if Euro breaks up/

[sleep envy]

Bluebarge said:

Banks are predicting a 5% contraction in UK economy next year if Euro breaks up/

>wince<

[Eric Mc]

CypherP said:

Justayellowbadge said:

This isn't really about that, despite the title - I'm more curious as to why, if there is this disaster, Sterling isn't getting stronger against this supposedly toxic currency.

Because we're all fked. And people called Siobhan are spending £3,200 of benefit payments to buy their children christmas presents while the rest of the country makes up for other people's mistakes.

Ah.. England..

Siobhán - come on, spell it right.

[Digga]

Justayellowbadge said:

Digga said:

Lots of other Eeyore and Eu threads already ongoing.

Try this one: http://www.pistonheads.com/gassing/topic.asp?h=0&a...

This isn't really about that, despite the title - I'm more curious as to why, if there is this disaster, Sterling isn't getting stronger against this supposedly toxic currency.

What about this then? http://www.pistonheads.com/gassing/topic.asp?h=0&a...

[Justayellowbadge]

Digga said:

What about this then? http://www.pistonheads.com/gassing/topic.asp?h=0&a...

Had seen that, and no.

Oddly enough, I do have a strong sense of not starting duplicate threads!

[Kermit power]

munky said:

the euro is made of of several parts though isn't it. Some of which are better than sterling, some of which are worse. The good parts are larger but fewer than the more numerous but smaller bad parts.

Clear?

I think it was the Economist who compared the Euro to a sinking ship. The middle of the ship might still be at sea level (which in the analogy we can take to be the exchange rate against the pound), but this is just because the big chunk under the waves is being counterbalanced by the other big chunk with its arse stuck up in the air above.

OK, the Economist might've used more polite language, but essentially people have been rushing to get out of Greek, Spanish, Italian and other basket case government bonds and rushing to put their money somewhere safer. Germany has been one of these "somewhere safer" destinations, and it's nice and easy, as your funds are already in Euros, so the money all rushes off there.

If Germany hadn't been in the Eurozone then all the other members would be utterly fked and the value of the Euro would currently be somewhere halfway down the Marianas trench and accelerating. Germany, however, would be equally fked under those circumstances, as the even greater rush to the safe haven that the DM would've been would see them hurtling off through the stratosphere in search of new planets, but starting to suffer oxygen starvation.

In some ways, we should be glad that our economy is also suffering. Sterling is viewed as a safe haven at the moment, so we've got very, very low borrowing costs, but because the economy is suffering, we're not seeing the value of Sterling rise out of control. Whilst it might be nice to have a strong pound when you're going on holiday or buying a nice, shiny new imported toy, that only goes so far. Then you end up like Switzerland, who are really suffering at the moment because of the insane strength of the Swiss Franc.

[Mikeyboy]

munky said:

the euro is made of of several parts though isn't it. Some of which are better than sterling, some of which are worse. The good parts are larger but fewer than the more numerous but smaller bad parts.

Clear?

well this and the fact that we have spent some of the last 3 years printing more money. So sterling follows the law of supply and demand. There is more supply of sterling and so the price drops versus other currencies. This is why the dollar also hasn't strengthened as much as it should have.

One of the main reasons the Euro is in the state its in now is that Greece and Spain etc cannot do this.

Oh and also the little matter of our Interest rates being lower than out inflation; Every pound you own increases by the interest rate set by the BoE year on year. But then you have to discount the inflation figure from that growth.
At the moment this means that the pound is getting less and less valuable. And we go back to supply (too much) and Demand (not enough)