Baht-uk Pound

[Merangue]

I think the UK is in a better postion than Europe because it can manage its currency and is a lot more flexible . Also I think it is in a better position than the US that has mounting problems that are not going to disapear in a short time .

So in that case I see the pound going up towards 60 to the Baht .

A valid point which i missed out earlier.

[HardenedSoul]

I think the UK is in a better postion than Europe because it can manage its currency and is a lot more flexible . Also I think it is in a better position than the US that has mounting problems that are not going to disapear in a short time .

So in that case I see the pound going up towards 60 to the Baht .

Great Scott, man, BEHAVE !

Britain cannot manage its currency. Monetary policy has run out of bullets. Rates cannot go any lower hence the turn to quantitative easing. The market - I say again - the market determines what currencies are worth against others, not the government. The Bank of England will not raise interest rates for fear of sending the economy into an even deeper recession.

One day very soon, the UK Treasury will find that no one is going to buy the debt it is issuing to pay for the bailout of the banking system. On that day, they will be presented with some pretty stark options.

These will include:

a) doing nothing and watching the yields demanded by the market to take on UKplc debt rise and thereby forcing up long-term interest rates elsewhere

getting the Bank of England to expand its quantitative easing so that it can buy the treasury bonds that foreign and domestic investors won't touch with a barge pole without higher yields.

c) going to the IMF for a bailout

Who knows, maybe the pound will go to 60THB, maybe it won't but common sense would seem to indicate that commodity currencies like Aussie and Canadian dollars would be a good place to park your paper money if you need to have it. Personally, gold's done a sterling (sorry) job for me since October '07 and it's got a lot further to go.

[chiang mai]

I think the UK is in a better postion than Europe because it can manage its currency and is a lot more flexible . Also I think it is in a better position than the US that has mounting problems that are not going to disapear in a short time .

So in that case I see the pound going up towards 60 to the Baht .

A valid point which i missed out earlier.

Meranque, I don't know where you go to get the data to help you form your views but can I suggest you read Roger Bootle. Roger is the MD of Capital Economics and is the economic adviser to Deloittes and he writes for the Telegraph on occasion. Go to the Telegraph web site and look under economics and see a series of articles on many aspects of the things we have discussed here.

[vedantafx]

It's simply that when I read a thread you are there and I disagree with what you write in the main.

On previous threads I pointed why I felt your predictions were wrong, not just wrong but wholly wrong. Central to this is your belief is that the pound will fall to 35bt. You regarded this as a historical norm, in part accurate but only in as much as it was fixed at a particularly unrealistic price against the dollar with disasterous consequences. When challenged to provide figures you did not do so. Nor acknowledge the effect of inflation in eroding currency values- on this point I'm not so sure of relative diffs. myself.

Then we were given all sorts of reasons as to why powerhouse Thailand would motor through the recession leaving UK standing. They seemed to revolve around the notion that demand would pick up in Asia from other countries, but it is clear that all countries are in the mire, and Asia seems very dependent on the west for demand. Thailand's contraction in particular seems alarming, especially given that it is still an emerging market. And it's performance is weak anyway and has been for years.

You have taken many aspects and glorified them where Thailand is concerned and downplayed them where UK is concerned. Where you acknowledge a problem you simply dismissed it as trivial, eg, the decline in tourism, as if a few percent made no difference! I know this thread is about UK and Thailand, but you do seem to be oblivious to the plight of other countries. Sure the UK is in big trouble so is every major economy in fact some worse.

As far as I can see though the UK has awful public finances and the only storm could be a major breakdown if it fell in to a position of default, and indeed Moodys changed it's rating to negative. It's taken to be a shot across the bows and I think we can take it as read that public spending will be massively reduced in coming years. Thailand on the other hand seems to have balanced finances for the time being, but later not so.

I can't predict a rate and it is best if we all say we are guessing- yes guessing. I think it's also best to average out, in effect change money in chunks if poss.

Well my stalking friend I'm not sure that what you have written here is entirely accurate in as much as I don't recall you ever pointing out in any detail why you disagree with my earlier opinion - nor do I see the links I asked you to provide to support your claims nor do I see evidence to support your theory that the UK economy is better than some! But never mind, let's go back in time and start again shall we!! For the purposes of our disagreement on these matters let's refer to the following as my baseline post shall we, that way we have a point of reference:

In a separate thread some time ago a poster stated that he saw GBP strengthening to 80 Baht per Pound and I replied by way of contrast saying that over the next seven to ten years I see THB strengthening to around 35/40 per Pound. In the short term I said I see THB weakening to the mid 50's (+/- a 10% margin of error) and there after I see THB strengthening against the Pound. When asked why I was so bullish on THB I replied that I thought the UK economy would soon see a second tranche of falls in value and that the effects of QE and government debt would linger far longer and have a greater impact than the effects of the loss of tourists and exports would on the THai GDP - in summary I said I thought that Thailand would recover more quickly than the UK.

In respect of tourism: I said that the current 7% of GDP generated by tourism was not a huge number and that even if arrivals are down 50% for a twelve month period (which they are not), a 50% drop in tourism revenues would only be temporary and would likely be made up again by tourists from other destinations over time - regardless, 3.5% of GDP remains a small number.

Going into the recession I said that Thailand was better positioned than many countries, mainly as a result of the discipline instilled into it by the IMF following the 1997 crash. Foreign reserves are at an enviable level of circa 120 bill (the UK I think is around 17 bill), government borrowings is placed mainly with their regional trading parties and their own national banks (not the other way around as in the case of the UK!) and their central bank is well respected (not like the BOE unfortunately). Indeed, I read a survey in the past week that showed the top twenty countries most likely to be the LEAST impacted by the global recession and six of those countries were in Asia with Thailand being around number fourteen as I recall.

As for exports: I said that less around 50% of Thailands exports are to regional destinations and it is mainly the other 50% to the west that has been effected as a result of the recession. I said that I see Thailand's economy picking up again quickly once the latter 50% starts to grow again and that there will little overhang on the economy resulting from gearing up once again or from social readjustment (unemployed workers in Thailand will return to their villages and farms to pursue other work but will return to employment quickly as soon as it becomes available - western cultures tend to rely heavily on social support from central government which in many cases is a disincentive to return to full time paid employment quickly, case in point the percentage of the UK population who exists on benefits).

AS for historic exchange rates: what I said was that there has been an emotional attachment by many to a GBP/THB exchange rate of 70 for many years but that rate does not reflect fair or true value. Prior to 97 I said that the rate was around 35, or about 20 to the USD as I recall and that rate was closer to the real value. But there is no peg between THB and USD (as in the case of say Hong Kong where HKD is pegged to USD) and the only real link between the two currencies lies in the fact that BOT export bills are settled in USD. Today the BOT manipulates its currency to try and ensure a) there are no wild and sudden swings, and to ensure that THB remains competitive against a basket of regional currencies.

Now, I think that's pretty much all I have said previously on this subject but no doubt you will tell me if I have missed anything. What I have also said is that I am not an expert on economics but the above represents my opinion and am quite happy for my opinions to be challenged constructively. Your task now is to tell us all why my opinion is dangerous, where it could cost people money and if you like, why you disagree (but with supportive links only this time or your credibility might take a hit).

Point to add. Thai banks are rock solid. They didnt buy the MBS, CDO's, ABS etc etc...Bangkok Bank is in a strong position along with many oif the Singapore banks, Standard Charter and UOB.

[MJP]

It's simply that when I read a thread you are there and I disagree with what you write in the main.

On previous threads I pointed why I felt your predictions were wrong, not just wrong but wholly wrong. Central to this is your belief is that the pound will fall to 35bt. You regarded this as a historical norm, in part accurate but only in as much as it was fixed at a particularly unrealistic price against the dollar with disasterous consequences. When challenged to provide figures you did not do so. Nor acknowledge the effect of inflation in eroding currency values- on this point I'm not so sure of relative diffs. myself.

Then we were given all sorts of reasons as to why powerhouse Thailand would motor through the recession leaving UK standing. They seemed to revolve around the notion that demand would pick up in Asia from other countries, but it is clear that all countries are in the mire, and Asia seems very dependent on the west for demand. Thailand's contraction in particular seems alarming, especially given that it is still an emerging market. And it's performance is weak anyway and has been for years.

You have taken many aspects and glorified them where Thailand is concerned and downplayed them where UK is concerned. Where you acknowledge a problem you simply dismissed it as trivial, eg, the decline in tourism, as if a few percent made no difference! I know this thread is about UK and Thailand, but you do seem to be oblivious to the plight of other countries. Sure the UK is in big trouble so is every major economy in fact some worse.

As far as I can see though the UK has awful public finances and the only storm could be a major breakdown if it fell in to a position of default, and indeed Moodys changed it's rating to negative. It's taken to be a shot across the bows and I think we can take it as read that public spending will be massively reduced in coming years. Thailand on the other hand seems to have balanced finances for the time being, but later not so.

I can't predict a rate and it is best if we all say we are guessing- yes guessing. I think it's also best to average out, in effect change money in chunks if poss.

Well my stalking friend I'm not sure that what you have written here is entirely accurate in as much as I don't recall you ever pointing out in any detail why you disagree with my earlier opinion - nor do I see the links I asked you to provide to support your claims nor do I see evidence to support your theory that the UK economy is better than some! But never mind, let's go back in time and start again shall we!! For the purposes of our disagreement on these matters let's refer to the following as my baseline post shall we, that way we have a point of reference:

In a separate thread some time ago a poster stated that he saw GBP strengthening to 80 Baht per Pound and I replied by way of contrast saying that over the next seven to ten years I see THB strengthening to around 35/40 per Pound. In the short term I said I see THB weakening to the mid 50's (+/- a 10% margin of error) and there after I see THB strengthening against the Pound. When asked why I was so bullish on THB I replied that I thought the UK economy would soon see a second tranche of falls in value and that the effects of QE and government debt would linger far longer and have a greater impact than the effects of the loss of tourists and exports would on the THai GDP - in summary I said I thought that Thailand would recover more quickly than the UK.

In respect of tourism: I said that the current 7% of GDP generated by tourism was not a huge number and that even if arrivals are down 50% for a twelve month period (which they are not), a 50% drop in tourism revenues would only be temporary and would likely be made up again by tourists from other destinations over time - regardless, 3.5% of GDP remains a small number.

Going into the recession I said that Thailand was better positioned than many countries, mainly as a result of the discipline instilled into it by the IMF following the 1997 crash. Foreign reserves are at an enviable level of circa 120 bill (the UK I think is around 17 bill), government borrowings is placed mainly with their regional trading parties and their own national banks (not the other way around as in the case of the UK!) and their central bank is well respected (not like the BOE unfortunately). Indeed, I read a survey in the past week that showed the top twenty countries most likely to be the LEAST impacted by the global recession and six of those countries were in Asia with Thailand being around number fourteen as I recall.

As for exports: I said that less around 50% of Thailands exports are to regional destinations and it is mainly the other 50% to the west that has been effected as a result of the recession. I said that I see Thailand's economy picking up again quickly once the latter 50% starts to grow again and that there will little overhang on the economy resulting from gearing up once again or from social readjustment (unemployed workers in Thailand will return to their villages and farms to pursue other work but will return to employment quickly as soon as it becomes available - western cultures tend to rely heavily on social support from central government which in many cases is a disincentive to return to full time paid employment quickly, case in point the percentage of the UK population who exists on benefits).

AS for historic exchange rates: what I said was that there has been an emotional attachment by many to a GBP/THB exchange rate of 70 for many years but that rate does not reflect fair or true value. Prior to 97 I said that the rate was around 35, or about 20 to the USD as I recall and that rate was closer to the real value. But there is no peg between THB and USD (as in the case of say Hong Kong where HKD is pegged to USD) and the only real link between the two currencies lies in the fact that BOT export bills are settled in USD. Today the BOT manipulates its currency to try and ensure a) there are no wild and sudden swings, and to ensure that THB remains competitive against a basket of regional currencies.

Now, I think that's pretty much all I have said previously on this subject but no doubt you will tell me if I have missed anything. What I have also said is that I am not an expert on economics but the above represents my opinion and am quite happy for my opinions to be challenged constructively. Your task now is to tell us all why my opinion is dangerous, where it could cost people money and if you like, why you disagree (but with supportive links only this time or your credibility might take a hit).

Point to add. Thai banks are rock solid. They didnt buy the MBS, CDO's, ABS etc etc...Bangkok Bank is in a strong position along with many oif the Singapore banks, Standard Charter and UOB.

This is what I understand. Due to the IMF back in 1997, following the bailout banned fractional reserve banking or something like that.

Anyone?

[HardenedSoul]

I think the UK is in a better postion than Europe because it can manage its currency and is a lot more flexible . Also I think it is in a better position than the US that has mounting problems that are not going to disapear in a short time .

So in that case I see the pound going up towards 60 to the Baht .

A valid point which i missed out earlier.

Meranque, I don't know where you go to get the data to help you form your views but can I suggest you read Roger Bootle. Roger is the MD of Capital Economics and is the economic adviser to Deloittes and he writes for the Telegraph on occasion. Go to the Telegraph web site and look under economics and see a series of articles on many aspects of the things we have discussed here.

While you're there, read some of Liam Halligan's musings too.

[mommysboy]

And I can agree with most of that, as a short and medium term picture because you are referring to a timescale of around one year as far as I can tell. But my reference to 35, which seems to be the bone of contention here, is in a timescale of seven to ten years.

It is here i do not entirely agree with you. Thailand is a mess and is likely to take a lot more than 1 year to sort itself out. Even then i do not see a rate of 1-35 being a realistic likelyhood.

Thailand had a false rate pre 97 and that in part caused the original crash in the first place. All the old Tiger economies which were punching way above their weight at the time, crashed drastically Thailand probably the worst of the lot and whilst i do see a readjustment over time i cannot see a return to 1-35 anytime in the next 20 years never mind 7-10 years.

Thailand has in many ways fallen behind its local rivals over the last decade again in part to the political state it is in. Where do you get your reasoning suggesting it is poised to make a great comeback on the next decade? All i can see is trouble for the country until the political upheavals are complete. Whilst there is a body we should not talk about. If and when that body ceases to be an influence i can see Thailand becoming worse not better for some time.

As has been pointed out to CM, the 35 rate was never a historical norm or the product of a fair market rate.

Part of CM's belief is indeed that social unrest will be greater in the west than in the east. I still can't see how that can be substantiated or justified either.

CM seems not to take note that Thailand is in a mess, and no doubt the 7.1% contraction will be spirited away as trivial using his 50/50 technique to be nothing more than a blip.

As far as I can see the only fair point in any analysis is the UK debt issue, and to be sure it has much debt. If it were perceived that UK could not meet it's liabilities that could well lead to a crisis, and indeed one leading agency has changed it's stance to the UK albeit only slightly ( the same agency actually downgraded Thailand 2 months ago). But again it's not thought that this is likely to happen, and as has to be repeatedly and tirelessly explained the UK is no better nor worse off than any other major economy when measured across a wide number of issues, and indeed against Thailand too which is also becomingly rapidly immersed in economic woes of its own, and could be seen to be actually worse off.

MC is in fact predicting if you like an inverse crash to what happened to Thailand in 97, this might be plausible if the UK were thought to be especially vulnerable, and Thailand enjoying a boom, but neither are in place.

And in fact all his analysis tends to detract away from a possible and tangible collapse in the bt, given that it is widely regarded as overly strong, and that a weak bt would in fact be advantageous to nearly everyone.

There is another point yet to be discussed. There can be little doubt that the pound and other currencies have been fertile ground for the money market manipulators, as have many other sovereign currencies. There is every possibility that as gains become less and indeed fingers get burnt, that attention will turn to the next bubble currency, that will put the bt in the firing line.

[mommysboy]

Mommysboy, the UK is in a far more precarious state than its peers. The populus is in debt up to its eyeballs, its property market is on its knees and soon to be on its back, it doesn't have a manufacturing sector worth mentioning, North Sea oil is virtually a spent resource, the public debt is over 30% of GDP and growing and the country relies very heavily on a financial sector that WILL be over-regulated in the months going forward to prevent a re-occurence of this type of crisis.

Both RBS and Lloyd's are going to need more money from the government and, frankly, may have be nationalized. I'd be interested to hear your comments on why you think the Treasury and the FSA have refused to release results of the stress tests on UK banks ? I could be wrong but I think it's because there are huge shrtfalls in their capital which will only be made whole by a rights issue to the market or a bailout by the government. In the case of Lloyd's - already 70% owned by the taxpayer, we are talking about nationaization.

I can't find a shred of a news report to substantiate your statements about recent stress tests or bail outs for RBS and Lloyds and really I am now very well read regarding RBS. It would be necessary if the world economy were to lurch again, but this would be a world situation and again something not peculiar to the UK.

Can you provide the links ?

[MJP]

I think the UK is in a better postion than Europe because it can manage its currency and is a lot more flexible . Also I think it is in a better position than the US that has mounting problems that are not going to disapear in a short time .

So in that case I see the pound going up towards 60 to the Baht .

Great Scott, man, BEHAVE !

Britain cannot manage its currency. Monetary policy has run out of bullets. Rates cannot go any lower hence the turn to quantitative easing. The market - I say again - the market determines what currencies are worth against others, not the government. The Bank of England will not raise interest rates for fear of sending the economy into an even deeper recession.

One day very soon, the UK Treasury will find that no one is going to buy the debt it is issuing to pay for the bailout of the banking system. On that day, they will be presented with some pretty stark options.

These will include:

a) doing nothing and watching the yields demanded by the market to take on UKplc debt rise and thereby forcing up long-term interest rates elsewhere

getting the Bank of England to expand its quantitative easing so that it can buy the treasury bonds that foreign and domestic investors won't touch with a barge pole without higher yields.

c) going to the IMF for a bailout

Who knows, maybe the pound will go to 60THB, maybe it won't but common sense would seem to indicate that commodity currencies like Aussie and Canadian dollars would be a good place to park your paper money if you need to have it. Personally, gold's done a sterling (sorry) job for me since October '07 and it's got a lot further to go.

+1

UK gilts strike on the cards, shortly followed by a call to the IMF where the caller is likely to get a rude awakening.

[HardenedSoul]

Mommysboy, the UK is in a far more precarious state than its peers. The populus is in debt up to its eyeballs, its property market is on its knees and soon to be on its back, it doesn't have a manufacturing sector worth mentioning, North Sea oil is virtually a spent resource, the public debt is over 30% of GDP and growing and the country relies very heavily on a financial sector that WILL be over-regulated in the months going forward to prevent a re-occurence of this type of crisis.

Both RBS and Lloyd's are going to need more money from the government and, frankly, may have be nationalized. I'd be interested to hear your comments on why you think the Treasury and the FSA have refused to release results of the stress tests on UK banks ? I could be wrong but I think it's because there are huge shrtfalls in their capital which will only be made whole by a rights issue to the market or a bailout by the government. In the case of Lloyd's - already 70% owned by the taxpayer, we are talking about nationaization.

I can't find a shred of a news report to substantiate your statements about recent stress tests or bail outs for RBS and Lloyds and really I am now very well read regarding RBS. It would be necessary if the world economy were to lurch again, but this would be a world situation and again something not peculiar to the UK.

Can you provide the links ?

I have. Post #56 but to save you the bother http://www.bloomberg.com/apps/news?pid=new...id=ah46_sK09p9o

U.K. Treasury Refuses to Release Stress Tests on RBS, Lloyds

May 22 (Bloomberg) -- The U.K. refused to release the results of stress tests conducted on British banks, two weeks after the Federal Reserve said similar reviews showed 10 U.S. lenders needed to raise a total of $74.6 billion.

Publishing the information may increase instability and force the government to take further action to shore up the U.K. financial system, the Treasury said in response to a Freedom of Information Act request by Bloomberg News that sought the test results and criteria used to evaluate banks. U.S regulators said publishing their findings would ease concerns about lenders.

“Keeping the information under wraps will only serve to create more uncertainty in the long term,” Vince Cable, the opposition Liberal Democrats’ spokesman on treasury issues, said in an e-mailed statement. “We need a system that is as open and as transparent as that in the United States.”

The Financial Services Authority carried out stress tests on U.K. banks earlier this year to determine their ability to withstand losses amid the worst recession in 60 years. Barclays Plc is the only bank to have disclosed its results, saying it will continue to meet the regulator’s capital requirements under various credit risk, market risk and economic scenarios.

Disclosure of the results “at this time may lead to uncertainty in financial markets, either in relation to specific institutions or more generally,” the Treasury said in its response to Bloomberg. “Such instability could require further action by the authorities.”

The same request to the FSA was rejected on the grounds it would be too costly to retrieve the documents. Lesley Richardson, an FSA freedom of information officer, said the results wouldn’t be released in any case because the information was confidential.

Bank Aid

The U.K. has committed as much as 1.4 trillion pounds ($2.2 trillion) to bolster the nation’s banking system through direct investments, asset insurance and underwriting loans. The government has nationalized Northern Rock Plc and Bradford & Bingley Plc, and taken controlling stakes Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.

The scenarios used to test Barclays’ assets included a 50 percent drop in U.K. house prices and a recession lasting two years, the Financial Times reported in March, without saying where it got the information. Alistair Smith, a Barclays spokesman, declined to comment.

The Federal Reserve gave banks six months to fill any capital shortfalls identified by the U.S. tests or face expanded federal ownership. At the time, Chairman Ben S. Bernanke said releasing the findings should reassure investors about the soundness of the financial system.

Transparency Questioned

“The transparency of companies over the last few months has significantly improved so it is ironic that the one body who isn’t joining in the transparency is the regulator itself,” said Ian Gordon, an analyst at Exane BNP Paribas in London.

Representatives of RBS, Lloyds, Northern Rock and HSBC Plc declined to comment on whether they passed the U.K.’s stress tests when contacted by Bloomberg News.

Bank stress test results should be made public to improve risk management, Andrew Haldane, executive director for financial stability at the Bank of England, said in a speech in February.

“There is a case for having these results set out regularly in firms’ public reports,” he said. “Having a standardized, published set of such stress-testing results would help improve financial markets’ understanding and hence pricing of bank-specific risk.”

Haldane wasn’t available for comment yesterday.

As far as I'm aware, April Fool's Day has long gone so this is not a wind up. It's there. It's clear and it's in black and white.

The world economy doesn't have to lurch again - the damage to Britain's financial architecture is already done. The US has shown that it doesn't matter how much stimulus, how many TARPs, TALFs, Term Auction Facilities and Freddie Mac/Fannie Mae bailouts you throw at the problems, you can't stop the housing market falling especially as foreclosures are accelerating. All those CDOs held by RBS are getting more toxic by the day and as they're linked to US home values, the problems for that bank are going to get worse.

Edited May 25, 2009 by HardenedSoul

[mommysboy]

Mommysboy, the UK is in a far more precarious state than its peers. The populus is in debt up to its eyeballs, its property market is on its knees and soon to be on its back, it doesn't have a manufacturing sector worth mentioning, North Sea oil is virtually a spent resource, the public debt is over 30% of GDP and growing and the country relies very heavily on a financial sector that WILL be over-regulated in the months going forward to prevent a re-occurence of this type of crisis.

Both RBS and Lloyd's are going to need more money from the government and, frankly, may have be nationalized. I'd be interested to hear your comments on why you think the Treasury and the FSA have refused to release results of the stress tests on UK banks ? I could be wrong but I think it's because there are huge shrtfalls in their capital which will only be made whole by a rights issue to the market or a bailout by the government. In the case of Lloyd's - already 70% owned by the taxpayer, we are talking about nationaization.

I can't find a shred of a news report to substantiate your statements about recent stress tests or bail outs for RBS and Lloyds and really I am now very well read regarding RBS. It would be necessary if the world economy were to lurch again, but this would be a world situation and again something not peculiar to the UK.

Can you provide the links ?

I have. Post #56 but to save you the bother http://www.bloomberg.com/apps/news?pid=new...id=ah46_sK09p9o

U.K. Treasury Refuses to Release Stress Tests on RBS, Lloyds

May 22 (Bloomberg) -- The U.K. refused to release the results of stress tests conducted on British banks, two weeks after the Federal Reserve said similar reviews showed 10 U.S. lenders needed to raise a total of $74.6 billion.

Publishing the information may increase instability and force the government to take further action to shore up the U.K. financial system, the Treasury said in response to a Freedom of Information Act request by Bloomberg News that sought the test results and criteria used to evaluate banks. U.S regulators said publishing their findings would ease concerns about lenders.

"Keeping the information under wraps will only serve to create more uncertainty in the long term," Vince Cable, the opposition Liberal Democrats' spokesman on treasury issues, said in an e-mailed statement. "We need a system that is as open and as transparent as that in the United States."

The Financial Services Authority carried out stress tests on U.K. banks earlier this year to determine their ability to withstand losses amid the worst recession in 60 years. Barclays Plc is the only bank to have disclosed its results, saying it will continue to meet the regulator's capital requirements under various credit risk, market risk and economic scenarios.

Disclosure of the results "at this time may lead to uncertainty in financial markets, either in relation to specific institutions or more generally," the Treasury said in its response to Bloomberg. "Such instability could require further action by the authorities."

The same request to the FSA was rejected on the grounds it would be too costly to retrieve the documents. Lesley Richardson, an FSA freedom of information officer, said the results wouldn't be released in any case because the information was confidential.

Bank Aid

The U.K. has committed as much as 1.4 trillion pounds ($2.2 trillion) to bolster the nation's banking system through direct investments, asset insurance and underwriting loans. The government has nationalized Northern Rock Plc and Bradford & Bingley Plc, and taken controlling stakes Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.

The scenarios used to test Barclays' assets included a 50 percent drop in U.K. house prices and a recession lasting two years, the Financial Times reported in March, without saying where it got the information. Alistair Smith, a Barclays spokesman, declined to comment.

The Federal Reserve gave banks six months to fill any capital shortfalls identified by the U.S. tests or face expanded federal ownership. At the time, Chairman Ben S. Bernanke said releasing the findings should reassure investors about the soundness of the financial system.

Transparency Questioned

"The transparency of companies over the last few months has significantly improved so it is ironic that the one body who isn't joining in the transparency is the regulator itself," said Ian Gordon, an analyst at Exane BNP Paribas in London.

Representatives of RBS, Lloyds, Northern Rock and HSBC Plc declined to comment on whether they passed the U.K.'s stress tests when contacted by Bloomberg News.

Bank stress test results should be made public to improve risk management, Andrew Haldane, executive director for financial stability at the Bank of England, said in a speech in February.

"There is a case for having these results set out regularly in firms' public reports," he said. "Having a standardized, published set of such stress-testing results would help improve financial markets' understanding and hence pricing of bank-specific risk."

Haldane wasn't available for comment yesterday.

As far as I'm aware, April Fool's Day has long gone so this is not a wind up. It's there. It's clear and it's in black and white.

The world economy doesn't have to lurch again - the damage to Britain's financial architecture is already done. The US has shown that it doesn't matter how much stimulus, how many TARPs, TALFs, Term Auction Facilities and Freddie Mac/Fannie Mae bailouts you throw at the problems, you can't stop the housing market falling especially as foreclosures are accelerating. All those CDOs held by RBS are getting more toxic by the day and as they're linked to US home values, the problems for that bank are going to get worse.

Thank you. This is indeed interesting but it refers to tests done regarding the last bail out as far as I can tell. I don't think they are valid now, and indeed the recent US tests did in fact lead to great share volatility. I suppose the results will tell all. RBS and LLoyds simply couldn't stand further bail outs frankly, but couldn't be nationalised either as they are way too big. This hasn't made UK news at all, or t least to any great effect.

[HardenedSoul]

Thank you. This is indeed interesting but it refers to tests done regarding the last bail out as far as I can tell. I don't think they are valid now, and indeed the recent US tests did in fact lead to great share volatility. I suppose the results will tell all. RBS and LLoyds simply couldn't stand further bail outs frankly, but couldn't be nationalised either as they are way too big. This hasn't made UK news at all, or t least to any great effect.

But the volatility was in the "right" direction as far as the test subjects were concerned, wasn't it ?

Look, personally, I'm convinced that those US stress tests were a huge con to get the market to take up rights issues from Bank of America/Merrill Lynch, Citigroup, Morgan Stanley and the other usual suspects. They want to repay TARP funds so the government will get off their backs over things like executive compensation etc. The US government knows that when the credit card and commercial loan shoes drop, these banks are gonna be back for more dosh but they'll have a hard time getting Congress to dish out another few hundred billion dollars.

So, they did some stress tests and they've told everyone the banks are actually not so bad. Private and retail investors daft enough to believe the results buy stock so the banks can pay off TARP which then goes back to the taxpayers, right ? Erm, well . . . not quite.

Last week, whilst giving testimony at one of those ridiculous hearings in Washington, Tim Geithner was asked:

"What happens to the TARP funds if and when they're paid back ?"

He replied with something along the lines of "They will be recycled back into the TARP program, not given back to taxpayers"

TARP guidelines say that for every $1 the TARP gets back, then that's another $1 we can lend out again.

This means that they're expecting to have to fund another bailout.

You've gotta hand to 'em. They've pulled a blinder. They've duped the private and retail investors into giving the banks the capital they need so they can get TARP money back because they know they're going to have to lend it out again the next time the banks come calling and this time, they don't have to go to Congress or try the patience of the American people.

[mommysboy]

Thank you. This is indeed interesting but it refers to tests done regarding the last bail out as far as I can tell. I don't think they are valid now, and indeed the recent US tests did in fact lead to great share volatility. I suppose the results will tell all. RBS and LLoyds simply couldn't stand further bail outs frankly, but couldn't be nationalised either as they are way too big. This hasn't made UK news at all, or t least to any great effect.

But the volatility was in the "right" direction as far as the test subjects were concerned, wasn't it ?

Look, personally, I'm convinced that those US stress tests were a huge con to get the market to take up rights issues from Bank of America/Merrill Lynch, Citigroup, Morgan Stanley and the other usual suspects. They want to repay TARP funds so the government will get off their backs over things like executive compensation etc. The US government knows that when the credit card and commercial loan shoes drop, these banks are gonna be back for more dosh but they'll have a hard time getting Congress to dish out another few hundred billion dollars.

So, they did some stress tests and they've told everyone the banks are actually not so bad. Private and retail investors daft enough to believe the results buy stock so the banks can pay off TARP which then goes back to the taxpayers, right ? Erm, well . . . not quite.

Last week, whilst giving testimony at one of those ridiculous hearings in Washington, Tim Geithner was asked:

"What happens to the TARP funds if and when they're paid back ?"

He replied with something along the lines of "They will be recycled back into the TARP program, not given back to taxpayers"

TARP guidelines say that for every $1 the TARP gets back, then that's another $1 we can lend out again.

This means that they're expecting to have to fund another bailout.

You've gotta hand to 'em. They've pulled a blinder. They've duped the private and retail investors into giving the banks the capital they need so they can get TARP money back because they know they're going to have to lend it out again the next time the banks come calling and this time, they don't have to go to Congress or try the patience of the American people.

One thing is for sure this whole banking crisis be it in UK, US or anywhere is one big con start to finish.

Here's part of my assertion that some other economies are having it worse, at least in terms of GDP:

http://www.dailymail.co.uk/news/article-11...-GDP-falls.html

I think pretty much everyone is in the cart.

[MJP]

Thank you. This is indeed interesting but it refers to tests done regarding the last bail out as far as I can tell. I don't think they are valid now, and indeed the recent US tests did in fact lead to great share volatility. I suppose the results will tell all. RBS and LLoyds simply couldn't stand further bail outs frankly, but couldn't be nationalised either as they are way too big. This hasn't made UK news at all, or t least to any great effect.

But the volatility was in the "right" direction as far as the test subjects were concerned, wasn't it ?

Look, personally, I'm convinced that those US stress tests were a huge con to get the market to take up rights issues from Bank of America/Merrill Lynch, Citigroup, Morgan Stanley and the other usual suspects. They want to repay TARP funds so the government will get off their backs over things like executive compensation etc. The US government knows that when the credit card and commercial loan shoes drop, these banks are gonna be back for more dosh but they'll have a hard time getting Congress to dish out another few hundred billion dollars.

So, they did some stress tests and they've told everyone the banks are actually not so bad. Private and retail investors daft enough to believe the results buy stock so the banks can pay off TARP which then goes back to the taxpayers, right ? Erm, well . . . not quite.

Last week, whilst giving testimony at one of those ridiculous hearings in Washington, Tim Geithner was asked:

"What happens to the TARP funds if and when they're paid back ?"

He replied with something along the lines of "They will be recycled back into the TARP program, not given back to taxpayers"

TARP guidelines say that for every $1 the TARP gets back, then that's another $1 we can lend out again.

This means that they're expecting to have to fund another bailout.

You've gotta hand to 'em. They've pulled a blinder. They've duped the private and retail investors into giving the banks the capital they need so they can get TARP money back because they know they're going to have to lend it out again the next time the banks come calling and this time, they don't have to go to Congress or try the patience of the American people.

One thing is for sure this whole banking crisis be it in UK, US or anywhere is one big con start to finish.

Here's part of my assertion that some other economies are having it worse, at least in terms of GDP:

http://www.dailymail.co.uk/news/article-11...-GDP-falls.html

I think pretty much everyone is in the cart.

Uber correcto!

But here's the thing. Keep consuming like we were. No planet left quite soon. Money or planet, money or planet . . . just can't decide?

[chiang mai]

And I can agree with most of that, as a short and medium term picture because you are referring to a timescale of around one year as far as I can tell. But my reference to 35, which seems to be the bone of contention here, is in a timescale of seven to ten years.

It is here i do not entirely agree with you. Thailand is a mess and is likely to take a lot more than 1 year to sort itself out. Even then i do not see a rate of 1-35 being a realistic likelyhood.

Thailand had a false rate pre 97 and that in part caused the original crash in the first place. All the old Tiger economies which were punching way above their weight at the time, crashed drastically Thailand probably the worst of the lot and whilst i do see a readjustment over time i cannot see a return to 1-35 anytime in the next 20 years never mind 7-10 years.

Thailand has in many ways fallen behind its local rivals over the last decade again in part to the political state it is in. Where do you get your reasoning suggesting it is poised to make a great comeback on the next decade? All i can see is trouble for the country until the political upheavals are complete. Whilst there is a body we should not talk about. If and when that body ceases to be an influence i can see Thailand becoming worse not better for some time.

As has been pointed out to CM, the 35 rate was never a historical norm or the product of a fair market rate.

Part of CM's belief is indeed that social unrest will be greater in the west than in the east. I still can't see how that can be substantiated or justified either.

CM seems not to take note that Thailand is in a mess, and no doubt the 7.1% contraction will be spirited away as trivial using his 50/50 technique to be nothing more than a blip.

As far as I can see the only fair point in any analysis is the UK debt issue, and to be sure it has much debt. If it were perceived that UK could not meet it's liabilities that could well lead to a crisis, and indeed one leading agency has changed it's stance to the UK albeit only slightly ( the same agency actually downgraded Thailand 2 months ago). But again it's not thought that this is likely to happen, and as has to be repeatedly and tirelessly explained the UK is no better nor worse off than any other major economy when measured across a wide number of issues, and indeed against Thailand too which is also becomingly rapidly immersed in economic woes of its own, and could be seen to be actually worse off.

MC is in fact predicting if you like an inverse crash to what happened to Thailand in 97, this might be plausible if the UK were thought to be especially vulnerable, and Thailand enjoying a boom, but neither are in place.

And in fact all his analysis tends to detract away from a possible and tangible collapse in the bt, given that it is widely regarded as overly strong, and that a weak bt would in fact be advantageous to nearly everyone.

There is another point yet to be discussed. There can be little doubt that the pound and other currencies have been fertile ground for the money market manipulators, as have many other sovereign currencies. There is every possibility that as gains become less and indeed fingers get burnt, that attention will turn to the next bubble currency, that will put the bt in the firing line.

Now you're getting silly, the Oanda currency conversion site can be found here http://www.oanda.com/convert/fxhistory, go check out the history and stop grasping at straws and asking for links of known entities. What I said was around 37, not 35 and having just looked I see that the average between 1993 and 1997 was in fact 39 where it started at a high of 37 in 1993 and rose to 41 in 1997 prior tot he crash.

The 7.1% contraction, es it's important but there again so are the corresponding contractions taking place in the West.

Social unrest: it's a small point in this discussion but nevertheless a point to consider and I'll remind you that Thailand is effectively a military state controlled by the army, enuf said.

Increasingly you come across as one of that group who cannot accept that a country such as Thailand might be in a better position than mother England - were you posting a few months ago telling us all that the Baht was bound to crash and would return to 75, most probably I would guess! You really should look at the progress made by Thailand since 1997 when the IMF forced substantial change - not only that but look at the change in positioning and strength of the Far Eastern and ASEAN economies and political alliances versus the West over that same time frame, Thailand has made much progress and you should not under estimate it.

[chiang mai]

It's simply that when I read a thread you are there and I disagree with what you write in the main.

On previous threads I pointed why I felt your predictions were wrong, not just wrong but wholly wrong. Central to this is your belief is that the pound will fall to 35bt. You regarded this as a historical norm, in part accurate but only in as much as it was fixed at a particularly unrealistic price against the dollar with disasterous consequences. When challenged to provide figures you did not do so. Nor acknowledge the effect of inflation in eroding currency values- on this point I'm not so sure of relative diffs. myself.

Then we were given all sorts of reasons as to why powerhouse Thailand would motor through the recession leaving UK standing. They seemed to revolve around the notion that demand would pick up in Asia from other countries, but it is clear that all countries are in the mire, and Asia seems very dependent on the west for demand. Thailand's contraction in particular seems alarming, especially given that it is still an emerging market. And it's performance is weak anyway and has been for years.

You have taken many aspects and glorified them where Thailand is concerned and downplayed them where UK is concerned. Where you acknowledge a problem you simply dismissed it as trivial, eg, the decline in tourism, as if a few percent made no difference! I know this thread is about UK and Thailand, but you do seem to be oblivious to the plight of other countries. Sure the UK is in big trouble so is every major economy in fact some worse.

As far as I can see though the UK has awful public finances and the only storm could be a major breakdown if it fell in to a position of default, and indeed Moodys changed it's rating to negative. It's taken to be a shot across the bows and I think we can take it as read that public spending will be massively reduced in coming years. Thailand on the other hand seems to have balanced finances for the time being, but later not so.

I can't predict a rate and it is best if we all say we are guessing- yes guessing. I think it's also best to average out, in effect change money in chunks if poss.

Well my stalking friend I'm not sure that what you have written here is entirely accurate in as much as I don't recall you ever pointing out in any detail why you disagree with my earlier opinion - nor do I see the links I asked you to provide to support your claims nor do I see evidence to support your theory that the UK economy is better than some! But never mind, let's go back in time and start again shall we!! For the purposes of our disagreement on these matters let's refer to the following as my baseline post shall we, that way we have a point of reference:

In a separate thread some time ago a poster stated that he saw GBP strengthening to 80 Baht per Pound and I replied by way of contrast saying that over the next seven to ten years I see THB strengthening to around 35/40 per Pound. In the short term I said I see THB weakening to the mid 50's (+/- a 10% margin of error) and there after I see THB strengthening against the Pound. When asked why I was so bullish on THB I replied that I thought the UK economy would soon see a second tranche of falls in value and that the effects of QE and government debt would linger far longer and have a greater impact than the effects of the loss of tourists and exports would on the THai GDP - in summary I said I thought that Thailand would recover more quickly than the UK.

In respect of tourism: I said that the current 7% of GDP generated by tourism was not a huge number and that even if arrivals are down 50% for a twelve month period (which they are not), a 50% drop in tourism revenues would only be temporary and would likely be made up again by tourists from other destinations over time - regardless, 3.5% of GDP remains a small number.

Going into the recession I said that Thailand was better positioned than many countries, mainly as a result of the discipline instilled into it by the IMF following the 1997 crash. Foreign reserves are at an enviable level of circa 120 bill (the UK I think is around 17 bill), government borrowings is placed mainly with their regional trading parties and their own national banks (not the other way around as in the case of the UK!) and their central bank is well respected (not like the BOE unfortunately). Indeed, I read a survey in the past week that showed the top twenty countries most likely to be the LEAST impacted by the global recession and six of those countries were in Asia with Thailand being around number fourteen as I recall.

As for exports: I said that less around 50% of Thailands exports are to regional destinations and it is mainly the other 50% to the west that has been effected as a result of the recession. I said that I see Thailand's economy picking up again quickly once the latter 50% starts to grow again and that there will little overhang on the economy resulting from gearing up once again or from social readjustment (unemployed workers in Thailand will return to their villages and farms to pursue other work but will return to employment quickly as soon as it becomes available - western cultures tend to rely heavily on social support from central government which in many cases is a disincentive to return to full time paid employment quickly, case in point the percentage of the UK population who exists on benefits).

AS for historic exchange rates: what I said was that there has been an emotional attachment by many to a GBP/THB exchange rate of 70 for many years but that rate does not reflect fair or true value. Prior to 97 I said that the rate was around 35, or about 20 to the USD as I recall and that rate was closer to the real value. But there is no peg between THB and USD (as in the case of say Hong Kong where HKD is pegged to USD) and the only real link between the two currencies lies in the fact that BOT export bills are settled in USD. Today the BOT manipulates its currency to try and ensure a) there are no wild and sudden swings, and to ensure that THB remains competitive against a basket of regional currencies.

Now, I think that's pretty much all I have said previously on this subject but no doubt you will tell me if I have missed anything. What I have also said is that I am not an expert on economics but the above represents my opinion and am quite happy for my opinions to be challenged constructively. Your task now is to tell us all why my opinion is dangerous, where it could cost people money and if you like, why you disagree (but with supportive links only this time or your credibility might take a hit).

Point to add. Thai banks are rock solid. They didnt buy the MBS, CDO's, ABS etc etc...Bangkok Bank is in a strong position along with many oif the Singapore banks, Standard Charter and UOB.

This is what I understand. Due to the IMF back in 1997, following the bailout banned fractional reserve banking or something like that.

Anyone?

The crisis was caused by too much foreign debt (170% of GDP) and Thailand cutting its peg against USD. It's for this reason in part that Thailand is now sensitive to capital inflow amounts. IMF bailout conditions included independence of the Thai central bank, ratio and reserve management and capital adequacy controls, transparency and reporting controls. Fractional banking was a later phenomenon that was not fully adopted by Asian banks by virtue of the foregoing controls. Prior to the crash in 1997 the Baht was pegged at 25 baht per USD but changed dramatically when the peg was removed. Highlighted text for the benefit of Mommysboy who misses these points on occasion!

Edited May 26, 2009 by chiang mai

[cocopops]

Fractional banking was a later phenomenon that was not fully adopted by Asian banks by virtue of the foregoing controls.

Obvious bullshit. Or at least very deceptive. The fractional reserve banking system is ubiquitous. And hundreds of years old.

[chiang mai]

Fractional banking was a later phenomenon that was not fully adopted by Asian banks by virtue of the foregoing controls.

Obvious bullshit. Or at least very deceptive. The fractional reserve banking system is ubiquitous. And hundreds of years old.

Or even, god forbid, mistaken!

But if you say so, I thought that IMF regulations in the late 1997 precluded fractional banking, at least in the same way that it was undertaken in the West. That is to say that the IMF regulations covering reserves, capital adequacy and lending would not allow it.

Edited May 26, 2009 by chiang mai

[chiang mai]

And only today Thailand reported a 7.1% contraction in GDP 1st quarter- and it isn't even a mature economy.. It's now officially in recession. Read the report in Bangkok Post or News Clippings forum. Neither the figures nor what is said give any comfort, quite the opposite. The figures seem to me to be particularly bad. Quite apart from the slump in world demand, Thailand now has a credibility problem, and a strong currency that makes it's products less attractive. I can't see why posters should feel so confident that Thailand will recover more quickly, it strikes me the smart buyer will be looking at China, or S. Korea, and might be thinking it's time to switch production to Vietnam or Cambodia. Thailand's public finances are sound though, although that can't remain so as it will (and is) have to borrow heavily to support an extremely ailing economy.

BTW, that's a 7% contraction over the same quarter last year, now that I've read it. And that compares to the UK how?

[mommysboy]

And only today Thailand reported a 7.1% contraction in GDP 1st quarter- and it isn't even a mature economy.. It's now officially in recession. Read the report in Bangkok Post or News Clippings forum. Neither the figures nor what is said give any comfort, quite the opposite. The figures seem to me to be particularly bad. Quite apart from the slump in world demand, Thailand now has a credibility problem, and a strong currency that makes it's products less attractive. I can't see why posters should feel so confident that Thailand will recover more quickly, it strikes me the smart buyer will be looking at China, or S. Korea, and might be thinking it's time to switch production to Vietnam or Cambodia. Thailand's public finances are sound though, although that can't remain so as it will (and is) have to borrow heavily to support an extremely ailing economy.

BTW, that's a 7% contraction over the same quarter last year, now that I've read it. And that compares to the UK how?

Well somewhat worse I think - I posted the link earlier: but here it is again:

http://www.dailymail.co.uk/news/article-11...-GDP-falls.html

In fact worse than every other nation in the G7 possibly Japan excepted.

But this is not just about UK/Thailand is it?

The point is that every nation is in the cart.

To look at the UK in isolation is a mistake that seems to have been made over and over again, and not just by you.

Actually, the one thing that would support your theory is the awful UK public sector burden. Curiously you seem not to have made much of that. Most everything else you've written is erroneous or just rhetoric.

[ace]

.........

Election or no, the pound will be on the ropes again sooner than you think and here's the reason why: The UK's Financial Services Authority is refusing to make public the results of the stress tests conducted on UK banks. Think about that for a second - the regulator of Britain's banking industry is refusing to give the British public and investors access to information that would reveal how much capital these banks are likely to need to get through this recession. Jeez, at least the Yanks released their results regardless of how unstressful their stress tests were.

............

I read that too today (about the FSA) - it's not a good sign. I think common consensus is that UKP is going up on hopes that the next government will sort out finances. Let's hope so, but remember the term Stagflation? It's a real concern.

[mommysboy]

Hardened Soul- ref your very interesting find on Bloomsberg- UK stress tests :

I think it seems to be one of those pieces of weekend journalism! It didn't seem to have any effect on the market. I think the actuality of what actually happened, ie, the huge bail outs it provoked carried more weight and the general consensus is that the bad news is out. It's in effect old news.

It is a terrifying thought though- if the world were to lurch deeper in to recession again, all the world's banks would be in terrible trouble though, and the world economy too.

Like many perhaps you are fixed on the UK in particular. Early on the IMF did forecast that UK would suffer the most but this has not proved true- at least yet.

Ironically export driven countries, who relied on profligate countries for income seemed to have been worst hit. Funny old world!

[mommysboy]

Fractional banking was a later phenomenon that was not fully adopted by Asian banks by virtue of the foregoing controls.

Obvious bullshit. Or at least very deceptive. The fractional reserve banking system is ubiquitous. And hundreds of years old.

Well not total BS, some Asian countries were not able to partake, it was not an option. Pity that regulation did not apply to the world!

[MJP]

Hardened Soul- ref your very interesting find on Bloomsberg- UK stress tests :

I think it seems to be one of those pieces of weekend journalism! It didn't seem to have any effect on the market. I think the actuality of what actually happened, ie, the huge bail outs it provoked carried more weight and the general consensus is that the bad news is out. It's in effect old news.

It is a terrifying thought though- if the world were to lurch deeper in to recession again, all the world's banks would be in terrible trouble though, and the world economy too.

Like many perhaps you are fixed on the UK in particular. Early on the IMF did forecast that UK would suffer the most but this has not proved true- at least yet.

Ironically export driven countries, who relied on profligate countries for income seemed to have been worst hit. Funny old world!

Inevitable I think.

[mommysboy]

Hardened Soul- ref your very interesting find on Bloomsberg- UK stress tests :

I think it seems to be one of those pieces of weekend journalism! It didn't seem to have any effect on the market. I think the actuality of what actually happened, ie, the huge bail outs it provoked carried more weight and the general consensus is that the bad news is out. It's in effect old news.

It is a terrifying thought though- if the world were to lurch deeper in to recession again, all the world's banks would be in terrible trouble though, and the world economy too.

Like many perhaps you are fixed on the UK in particular. Early on the IMF did forecast that UK would suffer the most but this has not proved true- at least yet.

Ironically export driven countries, who relied on profligate countries for income seemed to have been worst hit. Funny old world!

Inevitable I think.

Probably not, but as a side issue perhaps a greater danger is the threat of global warming as you have pointed out, and this whole slump may give some 'breathing space' literally.

[MJP]

Hardened Soul- ref your very interesting find on Bloomsberg- UK stress tests :

I think it seems to be one of those pieces of weekend journalism! It didn't seem to have any effect on the market. I think the actuality of what actually happened, ie, the huge bail outs it provoked carried more weight and the general consensus is that the bad news is out. It's in effect old news.

It is a terrifying thought though- if the world were to lurch deeper in to recession again, all the world's banks would be in terrible trouble though, and the world economy too.

Like many perhaps you are fixed on the UK in particular. Early on the IMF did forecast that UK would suffer the most but this has not proved true- at least yet.

Ironically export driven countries, who relied on profligate countries for income seemed to have been worst hit. Funny old world!

Inevitable I think.

Probably not, but as a side issue perhaps a greater danger is the threat of global warming as you have pointed out, and this whole slump may give some 'breathing space' literally.

It is inevitable. Look at unemployment rising. 100,000 a month in the UK. Blanchflower reckons at least another 1,000,000 by early next year, probably higher. This feeds through into reduced consumption (bloody good thing too, IMO).

This has only just begun old chap. Remember the 1990's recession? It was mild compared to this. How long did that last, at least 6 years?

[HardenedSoul]

Hardened Soul- ref your very interesting find on Bloomsberg- UK stress tests :

It is a terrifying thought though- if the world were to lurch deeper in to recession again, all the world's banks would be in terrible trouble though, and the world economy too.

Like many perhaps you are fixed on the UK in particular. Early on the IMF did forecast that UK would suffer the most but this has not proved true- at least yet.

Ironically export driven countries, who relied on profligate countries for income seemed to have been worst hit. Funny old world!

I fear you may be buying into the "green shoots" that have appeared - mostly to politicians and bankers, I might add - in a manner consistent with, say, the burning bush appearing only to Moses. There are no green shoots - there are only straws to be clutched at. Timely example, Case-Shiller report today said that home prices in 20 major US cities plunged 18.7% compared to the same time last year . . . 2.5 years after the housing crash started I mean, that is going some. Foreclosures are accelerating. More prime loans are going delinquent. More people are losing their jobs. I could go on but I use this to illustrate the short term outlook for my beloved Blighty.

Britain will - without doubt - suffer the same fate. We usually trail the Yanks by a year or so and we've all these wonderful setbacks, bulltraps and landmines to come.

Don't get me wrong, I'd love it if quantitative easing worked and everybody ran out to buy still-grossly-overpriced property, LCD TVs, Lotus Exiges and, once more, thought nothing of spending a fiver on a cup of milky froth and a blueberry muffin at that American chain but - and this is the killer - nowhere near as many people as before can afford to do so. Banks, hedge funds, insurers, pension funds, corporations, retailers and yes, individuals are deleveraging at best and clinging on for dear life at worst. The only ones leveraging up are governments like ours.

The exporters you allude to aren't in worse shape than Britain. The Chinese stumped up the mother of stimulus packages . . . in cash; readies; folding. Not a mickey mouse treasury in sight. Furthermore, their stimulus is working - consumers are buying goods, businesses are borrowing and their economy appears to be turning the corner. Their economy grew more than expected despite the predictions of the pro-US commentators who, by trying to depict China as being in the same boat as everyone else, reasoned that investors' money was safer tossed back into the black hole of US corporate and banking misery.

The fact is that China has BIG money sitting in foreign currency reserves. They can afford to spend because they saved while the sun was shining. They don't have the huge debt cancer afflicting Western nations and, like it or not, they're in a position to start asking for a bigger chair at the table.

[chiang mai]

And only today Thailand reported a 7.1% contraction in GDP 1st quarter- and it isn't even a mature economy.. It's now officially in recession. Read the report in Bangkok Post or News Clippings forum. Neither the figures nor what is said give any comfort, quite the opposite. The figures seem to me to be particularly bad. Quite apart from the slump in world demand, Thailand now has a credibility problem, and a strong currency that makes it's products less attractive. I can't see why posters should feel so confident that Thailand will recover more quickly, it strikes me the smart buyer will be looking at China, or S. Korea, and might be thinking it's time to switch production to Vietnam or Cambodia. Thailand's public finances are sound though, although that can't remain so as it will (and is) have to borrow heavily to support an extremely ailing economy.

BTW, that's a 7% contraction over the same quarter last year, now that I've read it. And that compares to the UK how?

Well somewhat worse I think - I posted the link earlier: but here it is again:

http://www.dailymail.co.uk/news/article-11...-GDP-falls.html

Most everything else you've written is erroneous or just rhetoric.

[mommysboy]

In no way do I see anything other than a hard slog for all economies most especially the western ones. I don't see an easy rebound for the UK which is encumbered by debt, and predict huge cuts in public spending, and house prices perhaps as much as 50% lower than from the peak and good job too. I also see the housing market staying sluggish and sterling remaining weak now that it has recovered from it's undershoot. Personal debt seems the only factor likely to lessen, and this already happening.

Yet the only conditions that would see the UK and it's currency collapse (let's not forget the topic and the point I'm arguing against) in the manner suggested would need to be worldwide and not peculiar to the UK. If this were to happen we'd be talking about just about every major economy going under, and no other economy would be able to survive this either, China included.

Regarding bt/pound. The only other scenario for a low currency rate would be the extreme success of the Thai economy and this is not a situation likely to happen, quite the opposite judging by current figures. Further Thailand as a performing economy is absolutely conditional on it's performance as an exporter, which as we have seen is conditional on world demand. Beyond that it also depends on Thailand's ability to compete, a strong bt would hamper that, in fact it is hampering that.

I'm attempting to find out just how Thailand is faring compared to it's neighbours via another thread, if anybody could contribute on that fair enough, but please contribute on that and only that.

[chiang mai]

In no way do I see anything other than a hard slog for all economies most especially the western ones. I don't see an easy rebound for the UK which is encumbered by debt, and predict huge cuts in public spending, and house prices perhaps as much as 50% lower than from the peak and good job too. I also see the housing market staying sluggish and sterling remaining weak now that it has recovered from it's undershoot. Personal debt seems the only factor likely to lessen, and this already happening.

Yet the only conditions that would see the UK and it's currency collapse (let's not forget the topic and the point I'm arguing against) in the manner suggested would need to be worldwide and not peculiar to the UK. If this were to happen we'd be talking about just about every major economy going under, and no other economy would be able to survive this either, China included.

Regarding bt/pound. The only other scenario for a low currency rate would be the extreme success of the Thai economy and this is not a situation likely to happen, quite the opposite judging by current figures. Further Thailand as a performing economy is absolutely conditional on it's performance as an exporter, which as we have seen is conditional on world demand. Beyond that it also depends on Thailand's ability to compete, a strong bt would hamper that, in fact it is hampering that.

I'm attempting to find out just how Thailand is faring compared to it's neighbours via another thread, if anybody could contribute on that fair enough, but please contribute on that and only that.

You over dramatize Mommysboy, I for one have never suggested the collapse of the Pound merely that THB may well revert back to pre 1997 levels in the next decade and I have set out the reasons why I think this in this thread and others. But in summary, the pre 1997 THB peg against USD of 25 would result in a GBP/THB rate of around 40, assuming a fair value rate of GBP/USD at 1.60. A reader in another thread chastised me recently and pointed out that the current fair value of GBP/USD is seen as 1.55 hence a slightly lower rate for GBP/THB. Indeed, we have already seen GBP/THB at 45 earlier this year during the fall of GBP against USD during the so called "undershoot" thus a return to that and the pre '97 levels are not totally unthinkable!

You've said in your posts that you think money is pouring back into UK equities, QE is over and done with and that the UK banks have been bailed out and have now returned to profit. Do you still believe those things or were they merely throw away lines? The answer to that question is important here because in part it shows the rate of recovery and may influence the longer term view of exchange rates.

Yes the UK economy is not in good shape and yes the Thai economy is suffering as a result of the global recession, but I would ask you to put aside your strongly pro-British Pound stance for a moment and look objectively at a point in the future when normal service has been resumed, when the value of the Pound is not sitting at 107% of its true value and when export flows have resumed. All factors considered, where is the rate likely to be then and is it totally incomprehensible to you that THB might be that much stronger?