G B P Warning For Brits; Possible Sterling Crisis !

[chiang mai]

Here's what UBS thinks about Sterling exchange rates:

"We think currency markets are not pricing in the risks that sterling faces over the next year,” said Mansoor Mohi-uddin, chief currency strategist at UBS, in a research note.

“Even without an outright crisis the conduct of economic policy will remain highly challenging over the next twelve months as the next election looms and politicians face persistently high rates of unemployment. In terms of fiscal policy, Britain has less room for manoeuvre than is commonly believed.”

UBS recommends selling the pound after its rally in the second quarter.

Risks to the value of sterling include planned large rises in net public debt, to close to 80pc of GDP in the coming five years, and the possibility of a hung Parliament after the next general election, which would weaken the government of the day’s ability to tighten fiscal policy enough to stave off a currency crisis.

However, Mr Mohi-uddin said Britain is in a much better position than it was in 1976, when the pound collapsed and Britain ultimately had to be rescued by the International Monetary Fund. That is because the Bank of England is independent, so monetary policy is less at risk from political interference.

“To avoid a sequel, Britain must tighten fiscal policy when the economy recovers and raise interest rates,” he said.

The pound could return to the lows of the end of 2008 and start of 2009, which could be the “new ‘fair values’” of sterling, if the Government fails to control fiscal policy as it did in the mid-1970s.

IF our man is correct that means fair value is GBP/USD at 1.46 and GBP/THB at 51, IF!

[thaibeachlovers]

Here's what UBS thinks about Sterling exchange rates:

"We think currency markets are not pricing in the risks that sterling faces over the next year," said Mansoor Mohi-uddin, chief currency strategist at UBS, in a research note.

"Even without an outright crisis the conduct of economic policy will remain highly challenging over the next twelve months as the next election looms and politicians face persistently high rates of unemployment. In terms of fiscal policy, Britain has less room for manoeuvre than is commonly believed."

UBS recommends selling the pound after its rally in the second quarter.

Risks to the value of sterling include planned large rises in net public debt, to close to 80pc of GDP in the coming five years, and the possibility of a hung Parliament after the next general election, which would weaken the government of the day's ability to tighten fiscal policy enough to stave off a currency crisis.

However, Mr Mohi-uddin said Britain is in a much better position than it was in 1976, when the pound collapsed and Britain ultimately had to be rescued by the International Monetary Fund. That is because the Bank of England is independent, so monetary policy is less at risk from political interference.

"To avoid a sequel, Britain must tighten fiscal policy when the economy recovers and raise interest rates," he said.

The pound could return to the lows of the end of 2008 and start of 2009, which could be the "new 'fair values'" of sterling, if the Government fails to control fiscal policy as it did in the mid-1970s.

IF our man is correct that means fair value is GBP/USD at 1.46 and GBP/THB at 51, IF!

They MUST raise interests rates. What has been forgotten in all the furore is that millions depend on interest on savings to live. Currently I receive 0% on my bank account. I, and I'm sure most, will at the first opportunity move my money overseas to a country that believes in rewarding it's savers. It's not the bad old days when I had to get permission to take more than a small amount out of the country ( don't know if that applies to the UK, but did in my home country ). The government seems to believe that the only solution is to give huge amounts of the taxpayer's money to the banks, no strings attached, but forgets that without jobs the tax receipts go down, and unemployment payments go up.

The other thing I take issue with, is that the government seems to think the only long term solution is to make people borrow to buy rubbish again, which is exactly what got us into the poo in the first place.

The present situation is the perfect opportunity to reorganise things so that consumption is not the only indication of prosperity, but of course the present bunch of incompetents are too thick to understand the alternatives. I doubt any of them would still have a job in the private sector after their bungling.

Edited July 15, 2009 by thaibeachlovers

[thaibeachlovers]

How to save the UK economy.

There are 20M people in the labour force over 50. Give these people 1 Million pound to take early retirement. Out of that money they must:

1 Have a house built. This has builders gainfully employed

2 Buy a British built car, again people gainfully employed

3 1 Weeks holiday in the Uk

4 Spend 50K on Booze or tobacco. This puts money into the treasury.

Problem solved.

Excellent idea. Just one small problem - where does the £20 trillion come from to pay for this ??

Good point.

My solution would be much the same, except the money would be given to people after they reached adulthood, and they could repay it over their lifetime.

It would however be dependent on them achieving a reasonable level of education, qualifying at some sort of occupation, and paticipating in some type of national service.

No cash would be given, of course.

Of course, if they refused to work, they would lose it all.

[chiang mai]

How to save the UK economy.

There are 20M people in the labour force over 50. Give these people 1 Million pound to take early retirement. Out of that money they must:

1 Have a house built. This has builders gainfully employed

2 Buy a British built car, again people gainfully employed

3 1 Weeks holiday in the Uk

4 Spend 50K on Booze or tobacco. This puts money into the treasury.

Problem solved.

Excellent idea. Just one small problem - where does the £20 trillion come from to pay for this ??

Good point.

My solution would be much the same, except the money would be given to people after they reached adulthood, and they could repay it over their lifetime.

It would however be dependent on them achieving a reasonable level of education, qualifying at some sort of occupation, and paticipating in some type of national service.

No cash would be given, of course.

Of course, if they refused to work, they would lose it all.

Since we're dreaming, I might add a point or two:

Anyone who is overweight must correct the problem within x months or suffer financial penalties thus relieving the strain on the NHS plus making people look more appealing and generally improving the outlook of the general population;

Those convicted of murder, assault or sex crimes also lose their entitlement with their monies going to the Police Authority budget - those convicted would be incarcerated on the Isle of White for life;

Illegal immigrants would be required to work off their passage home , plus any associated costs - the cost of repatriation to be worked off, under supervision (on the Isle of White) , beforehand;

Government employees caught fiddling expenses or abusing perks and/or their position to be relocated to live a life of their choosing, on the Isle of White.

[sanmiguellight]

Since we're dreaming, I might add a point or two:

Anyone who is overweight must correct the problem within x months or suffer financial penalties thus relieving the strain on the NHS plus making people look more appealing and generally improving the outlook of the general population;

Those convicted of murder, assault or sex crimes also lose their entitlement with their monies going to the Police Authority budget - those convicted would be incarcerated on the Isle of White for life;

Illegal immigrants would be required to work off their passage home , plus any associated costs - the cost of repatriation to be worked off, under supervision (on the Isle of White) , beforehand;

Government employees caught fiddling expenses or abusing perks and/or their position to be relocated to live a life of their choosing, on the Isle of White.

I'd vote for you, except i'd take away most the police budget as i fcuken hate them.

[LaoPo]

Positive news for a change ?

Pound a Buy Before ‘Steep’ U.K. Recovery, Jen Says (Update1)

By Anchalee Worrachate and Ye Xie

July 15 (Bloomberg) -- The British pound’s decline has been overdone and investors should buy the currency to prepare for a “steep” economic recovery, said Stephen Jen, managing director of macro and currencies at BlueGold Capital Management LLP.

The currency will have to appreciate to about $1.75 from $1.63 now to reflect the economic potential of the U.K., Jen said. That would be the highest level since October. He expects the dollar to weaken as a “lukewarm” recovery in the U.S. will reduce the greenback’s safe-haven appeal.

“A lot of people seem to be bearish on the pound at the moment because it’s so easy to tell a U.K.-negative story,” Jen said in an interview in London yesterday. “The U.K. may actually recover earlier and steeper than the euro zone. The country has a very aggressive monetary policy and a cheap currency. And it’s underowned.”

U.K. unemployment claims rose the least in a year in June, the Office for National Statistics said today. The U.K. housing market improved last month as more London real-estate agents and surveyors said home values increased rather than fell for the first time in 20 months, the Royal Institution of Chartered Surveyors reported yesterday.

The pound rose to $1.6384 as of 11:35 a.m. in London, from $1.6308 yesterday. It was at 85.88 pence per euro, from 85.62.

Interest-Rate Cuts

The U.K currency has lost 18 percent against the dollar and 7.6 percent against the euro in the past year as the economy sank into the worst recession in a generation. The central bank cut the benchmark interest rate to a record low of 0.5 percent and print money to buy government debt and other assets this year in an attempt to revive the economy.

BlueGold was set up in February 2008 by former commodity traders Pierre Andurand and Dennis Crema. Jen joined the hedge fund in May after 13 years at Morgan Stanley.

More hedge funds and large speculators have positioned for a decline in the pound against the dollar rather than a rise -- so-called net shorts -- every week since August, according to figures from the Commodity Futures Trading Commission.

“The pound at the current level is quite cheap for a currency of a country that has a very unique status in an important part of the world,” Jen said. “If you are a young professional and you want to make it big in Europe, the place to go is London.”

‘Beaten Up’

Job openings in London’s financial-services industry rose in June to the highest level this year, according to a survey by recruitment firm Morgan McKinley.

The Bank of England expects economic growth to start picking up in the second half of this year and it should be “better established” in 2010, the Manchester Evening News cited Deputy Governor Charles Bean as saying in an interview.

“The U.K. has been beaten up so much in the recession that you should see a relatively strong bounce,” Jen said.

The dollar may weaken as the U.S. goes through a “U- shaped” recovery, a scenario where the economy rebounds gradually after a protracted slump, Jen said. Australia and New Zealand’s dollars and Brazil’s real should be favored as a pickup in commodity prices supports the nations’ economies.

The dollar typically rises in an environment where the U.S. either heads toward a so-called hard-landing or a strong recovery, according to Jen. Anything in between will lead to a sale, he said, adding any decline in the U.S. currency is likely to be moderate.

“It’s time to sell the dollar because the recovery will be lukewarm,” he said. “Having said that, we have to be selective in choosing which currencies to buy as growth in the U.S. will be so modest that some economies may not permit their currencies to strengthen against the dollar.”

The Dollar Index, which the ICE uses to track the U.S. currency against the euro, yen, pound, Canadian dollar, krona and Swiss franc, fell 0.7 percent to 79.65 today. It dropped 2.1 percent since the start of this year.

Source: Bloomberg

LaoPo

[LaoPo]

But.....

Think tank warns on UK finances

The deteriorating state of UK public finances means the next government will have to deliver tax rises and spending cuts, a think tank has warned.

The Centre for Business and Economic Research (CEBR) says a £100bn programme of cuts and tax rises is needed to repair the UK's public finances.

The CEBR says its proposed programme is needed to get the UK's budget deficit down to £50bn by 2014/15.

The UK recorded a record budget deficit of almost £90bn in 2008/09.

'Political necessity'

The CEBR says that if the Conservative party wins the next general election then the deficit will be plugged with £20bn in tax rises and £80bn in spending cuts.

And it says if Labour holds on to power then it predicts £40bn in tax rises and £60bn in spending cuts.

"It is likely that any government - particularly a new one - will be forced by political necessity to announce its fiscal consolidation programme early while it is still possible to blame the need for it on the previous government," said CEBR chief executive Douglas McWilliams.

"And it will look to achieve most of its results within a parliament."

The CEBR believes that the UK economy will contract by 4.1% this year - a more pessimistic outlook than the official 3.5% Treasury estimate - before growing by 0.6% next year and 0.9% in 2011.

Mr McWilliams said the recovery would be "sluggish", which will lead to lower tax revenues and more money spent on unemployment benefits.

Story from BBC NEWS:

http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8147099.stm

LaoPo

[chiang mai]

Positive news for a change ?

Pound a Buy Before ‘Steep’ U.K. Recovery, Jen Says (Update1)

By Anchalee Worrachate and Ye Xie

July 15 (Bloomberg) -- The British pound’s decline has been overdone and investors should buy the currency to prepare for a “steep” economic recovery, said Stephen Jen, managing director of macro and currencies at BlueGold Capital Management LLP.

The currency will have to appreciate to about $1.75 from $1.63 now to reflect the economic potential of the U.K., Jen said. That would be the highest level since October. He expects the dollar to weaken as a “lukewarm” recovery in the U.S. will reduce the greenback’s safe-haven appeal.

“A lot of people seem to be bearish on the pound at the moment because it’s so easy to tell a U.K.-negative story,” Jen said in an interview in London yesterday. “The U.K. may actually recover earlier and steeper than the euro zone. The country has a very aggressive monetary policy and a cheap currency. And it’s underowned.”

U.K. unemployment claims rose the least in a year in June, the Office for National Statistics said today. The U.K. housing market improved last month as more London real-estate agents and surveyors said home values increased rather than fell for the first time in 20 months, the Royal Institution of Chartered Surveyors reported yesterday.

The pound rose to $1.6384 as of 11:35 a.m. in London, from $1.6308 yesterday. It was at 85.88 pence per euro, from 85.62.

Interest-Rate Cuts

The U.K currency has lost 18 percent against the dollar and 7.6 percent against the euro in the past year as the economy sank into the worst recession in a generation. The central bank cut the benchmark interest rate to a record low of 0.5 percent and print money to buy government debt and other assets this year in an attempt to revive the economy.

BlueGold was set up in February 2008 by former commodity traders Pierre Andurand and Dennis Crema. Jen joined the hedge fund in May after 13 years at Morgan Stanley.

More hedge funds and large speculators have positioned for a decline in the pound against the dollar rather than a rise -- so-called net shorts -- every week since August, according to figures from the Commodity Futures Trading Commission.

“The pound at the current level is quite cheap for a currency of a country that has a very unique status in an important part of the world,” Jen said. “If you are a young professional and you want to make it big in Europe, the place to go is London.”

‘Beaten Up’

Job openings in London’s financial-services industry rose in June to the highest level this year, according to a survey by recruitment firm Morgan McKinley.

The Bank of England expects economic growth to start picking up in the second half of this year and it should be “better established” in 2010, the Manchester Evening News cited Deputy Governor Charles Bean as saying in an interview.

“The U.K. has been beaten up so much in the recession that you should see a relatively strong bounce,” Jen said.

The dollar may weaken as the U.S. goes through a “U- shaped” recovery, a scenario where the economy rebounds gradually after a protracted slump, Jen said. Australia and New Zealand’s dollars and Brazil’s real should be favored as a pickup in commodity prices supports the nations’ economies.

The dollar typically rises in an environment where the U.S. either heads toward a so-called hard-landing or a strong recovery, according to Jen. Anything in between will lead to a sale, he said, adding any decline in the U.S. currency is likely to be moderate.

“It’s time to sell the dollar because the recovery will be lukewarm,” he said. “Having said that, we have to be selective in choosing which currencies to buy as growth in the U.S. will be so modest that some economies may not permit their currencies to strengthen against the dollar.”

The Dollar Index, which the ICE uses to track the U.S. currency against the euro, yen, pound, Canadian dollar, krona and Swiss franc, fell 0.7 percent to 79.65 today. It dropped 2.1 percent since the start of this year.

Source: Bloomberg

LaoPo

Horse poo poo, a contrairian view and nothing more by an investment manager who's trying to make his mark in the firm he just joined.

"BlueGold was set up in February 2008 by former commodity traders Pierre Andurand and Dennis Crema. Jen joined the hedge fund in May after 13 years at Morgan Stanley".

Gimme your money!!!

[phutoie2]

So whats Mohi-uddin at UBS's view then?- contrairian poo poo too I suspect.

Hung parliaments??, giv me a break

[chiang mai]

So whats Mohi-uddin at UBS's view then?- contrairian poo poo too I suspect.

Hung parliaments??, giv me a break

A fair point but I'm not sure it's apples and apples. Mr newbie wrote that, "U.K. unemployment claims rose the least in a year in June", unfortunately he missed the fact that very shortly after he wrote his piece the UK Government announced that latest figures showed an, "Increase of 281,000 in the three months to May takes jobless total to 2.38 million". Sooo, breaks are due where?

[Chaimai]

Mr newbie wrote that, "U.K. unemployment claims rose the least in a year in June", unfortunately he missed the fact that very shortly after he wrote his piece the UK Government announced that latest figures showed an, "Increase of 281,000 in the three months to May takes jobless total to 2.38 million". Sooo, breaks are due where?

In 1992 Unemployment in UK was 3 million

[manuchaomk]

GBP £ currency is dead already !

[Chaimai]

GBP £ currency is dead already !

Could you provide a little more definition for this inane comment

[chiang mai]

Mr newbie wrote that, "U.K. unemployment claims rose the least in a year in June", unfortunately he missed the fact that very shortly after he wrote his piece the UK Government announced that latest figures showed an, "Increase of 281,000 in the three months to May takes jobless total to 2.38 million". Sooo, breaks are due where?

In 1992 Unemployment in UK was 3 million

So?

[Chaimai]

the UK Government announced that latest figures showed an, "Increase of 281,000 in the three months to May takes jobless total to 2.38 million".

So......... ?

[chiang mai]

the UK Government announced that latest figures showed an, "Increase of 281,000 in the three months to May takes jobless total to 2.38 million".

So......... ?

If you don't have a point to make regarding your earlier post on jobless numbers, that's cool, happy to have you around.

[Chaimai]

the UK Government announced that latest figures showed an, "Increase of 281,000 in the three months to May takes jobless total to 2.38 million".

So......... ?

If you don't have a point to make regarding your earlier post on jobless numbers, that's cool, happy to have you around.

CM, as you well-know, it is all about the bigger picture not just headlines. The market understands it - FTSE up 108 (OK, it will go down tomorrow, but I am prepared to wait for that brickbat ) Goodnight.

[mommysboy]

Here's what UBS thinks about Sterling exchange rates:

"We think currency markets are not pricing in the risks that sterling faces over the next year," said Mansoor Mohi-uddin, chief currency strategist at UBS, in a research note.

"Even without an outright crisis the conduct of economic policy will remain highly challenging over the next twelve months as the next election looms and politicians face persistently high rates of unemployment. In terms of fiscal policy, Britain has less room for manoeuvre than is commonly believed."

UBS recommends selling the pound after its rally in the second quarter.

Risks to the value of sterling include planned large rises in net public debt, to close to 80pc of GDP in the coming five years, and the possibility of a hung Parliament after the next general election, which would weaken the government of the day's ability to tighten fiscal policy enough to stave off a currency crisis.

However, Mr Mohi-uddin said Britain is in a much better position than it was in 1976, when the pound collapsed and Britain ultimately had to be rescued by the International Monetary Fund. That is because the Bank of England is independent, so monetary policy is less at risk from political interference.

"To avoid a sequel, Britain must tighten fiscal policy when the economy recovers and raise interest rates," he said.

The pound could return to the lows of the end of 2008 and start of 2009, which could be the "new 'fair values'" of sterling, if the Government fails to control fiscal policy as it did in the mid-1970s.

IF our man is correct that means fair value is GBP/USD at 1.46 and GBP/THB at 51, IF!

A very balanced assessment in my view, I think we can assume fiscal policy will be controlled and interest rates can only go one way, but my concern is that the recovery will be stunted. My feeling is today's valuation is 'fair price', after all every other economy is facing severe challenges too.

[caf]

How to save the UK economy.

There are 20M people in the labour force over 50. Give these people 1 Million pound to take early retirement. Out of that money they must:

1 Have a house built. This has builders gainfully employed

2 Buy a British built car, again people gainfully employed

3 1 Weeks holiday in the Uk

4 Spend 50K on Booze or tobacco. This puts money into the treasury.

Problem solved.

Excellent idea. Just one small problem - where does the £20 trillion come from to pay for this ??

Good point.

My solution would be much the same, except the money would be given to people after they reached adulthood, and they could repay it over their lifetime.

It would however be dependent on them achieving a reasonable level of education, qualifying at some sort of occupation, and paticipating in some type of national service.

No cash would be given, of course.

Of course, if they refused to work, they would lose it all.

So where does the money come from?

And where does the money come from for the enhanced education you are suggesting?

The armed services do not want conscripts. And even if they did where does the money come from to cover that cost?

[bungy007]

Here's what UBS thinks about Sterling exchange rates:

"We think currency markets are not pricing in the risks that sterling faces over the next year," said Mansoor Mohi-uddin, chief currency strategist at UBS, in a research note.

"Even without an outright crisis the conduct of economic policy will remain highly challenging over the next twelve months as the next election looms and politicians face persistently high rates of unemployment. In terms of fiscal policy, Britain has less room for manoeuvre than is commonly believed."

UBS recommends selling the pound after its rally in the second quarter.

Risks to the value of sterling include planned large rises in net public debt, to close to 80pc of GDP in the coming five years, and the possibility of a hung Parliament after the next general election, which would weaken the government of the day's ability to tighten fiscal policy enough to stave off a currency crisis.

However, Mr Mohi-uddin said Britain is in a much better position than it was in 1976, when the pound collapsed and Britain ultimately had to be rescued by the International Monetary Fund. That is because the Bank of England is independent, so monetary policy is less at risk from political interference.

"To avoid a sequel, Britain must tighten fiscal policy when the economy recovers and raise interest rates," he said.

The pound could return to the lows of the end of 2008 and start of 2009, which could be the "new 'fair values'" of sterling, if the Government fails to control fiscal policy as it did in the mid-1970s.

IF our man is correct that means fair value is GBP/USD at 1.46 and GBP/THB at 51, IF!

A very balanced assessment in my view, I think we can assume fiscal policy will be controlled and interest rates can only go one way, but my concern is that the recovery will be stunted. My feeling is today's valuation is 'fair price', after all every other economy is facing severe challenges too.

And as the interest rates rise as they are bound to do, so you will see the UK go back down the toilet. So many properties were bought at prices that were affordable due to such abnormally low interest rates. For the GBP to become attractive it will have to raise rate significantly and family budgets will be stretched. It sounds like a repeat of the early 90s is sadly on the cards

[Chaimai]

And as the interest rates rise as they are bound to do, so you will see the UK go back down the toilet. So many properties were bought at prices that were affordable due to such abnormally low interest rates. For the GBP to become attractive it will have to raise rate significantly and family budgets will be stretched. It sounds like a repeat of the early 90s is sadly on the cards

Nonsense. If UK interest rates (on their own) it is more likely that Sterling will increase in value as people switch into a higher yielding currency. I am more inclined to think that there will be more of a coordinated increase in rates and that will not happen until the economy is proved to be in recover. You should expect to enjoy exceptionally/artificially low rates for the next 18 momths. Thereafter, do not panic, there will have to be a lot of half-point rises to even get to 5% BBR.

This is far removed from the scenario of the 90's in the UK. Then, interest rates were well into double digits, as was inflation. Unemployment hit 3m by 1992. I think this one will feel like the early 90's because of the depth and severity of it. Many people have survived because interest rates are so low.

Properties have not been bought with borrowing at "abnormally" low interest rates.

When I worked in banking we could take any 10 year period in the 20th century and show that BBR was above 10% more often than it was below. Single digit interest rates have been a feature of the last 10 years and I will never see BBR at over 10% again in my lifetime (I hope to have another 30 years )

[DarloKnight]

So whats Mohi-uddin at UBS's view then?- contrairian poo poo too I suspect.

Hung parliaments??, giv me a break

A fair point but I'm not sure it's apples and apples. Mr newbie wrote that, "U.K. unemployment claims rose the least in a year in June", unfortunately he missed the fact that very shortly after he wrote his piece the UK Government announced that latest figures showed an, "Increase of 281,000 in the three months to May takes jobless total to 2.38 million". Sooo, breaks are due where?

Out of the 2.38 million unemployed I wonder how many are actually British? We have had such a large influx of migrant EU workers who will also be included in these figures!!

The Migrant workers have soon caught on to the benefits system I know this first hand having worked for a company that employs them. Also they claim child benefit for their children that are not even living in this country.

Anothor point with the migrant workers is at the end of the UK tax year they like to claim back the tax they have paid over the 12 months of working, I don't understand how they get away with this and them claiming their tax back meens less money going back into the system.

I think this is also a contribution factor to the effects of the economy.

[thaibeachlovers]

Since we're dreaming, I might add a point or two:

Anyone who is overweight must correct the problem within x months or suffer financial penalties thus relieving the strain on the NHS plus making people look more appealing and generally improving the outlook of the general population;

Those convicted of murder, assault or sex crimes also lose their entitlement with their monies going to the Police Authority budget - those convicted would be incarcerated on the Isle of White for life;

Illegal immigrants would be required to work off their passage home , plus any associated costs - the cost of repatriation to be worked off, under supervision (on the Isle of White) , beforehand;

Government employees caught fiddling expenses or abusing perks and/or their position to be relocated to live a life of their choosing, on the Isle of White.

I'd vote for you, except i'd take away most the police budget as i fcuken hate them.

Agreed, and lots of them would also be spending time on the Isle of White!

[dmax]

None of them were smart enough to prevent the current meltdown.

Why should this crystal ball, bill of goods be better.

Wonder if they are betting men.

Bubba

totally agree with you there,,if all these bloody geniuses had forecast this whole mess in the first place eh???

[sanmiguellight]

Properties have not been bought with borrowing at "abnormally" low interest rates.

Yes they were, Greenspan said interest rates were kept low to keep the economy moving, same rules applied in the UK.

[thaibeachlovers]

How to save the UK economy.

There are 20M people in the labour force over 50. Give these people 1 Million pound to take early retirement. Out of that money they must:

1 Have a house built. This has builders gainfully employed

2 Buy a British built car, again people gainfully employed

3 1 Weeks holiday in the Uk

4 Spend 50K on Booze or tobacco. This puts money into the treasury.

Problem solved.

Excellent idea. Just one small problem - where does the £20 trillion come from to pay for this ??

Good point.

My solution would be much the same, except the money would be given to people after they reached adulthood, and they could repay it over their lifetime.

It would however be dependent on them achieving a reasonable level of education, qualifying at some sort of occupation, and paticipating in some type of national service.

No cash would be given, of course.

Of course, if they refused to work, they would lose it all.

So where does the money come from?

And where does the money come from for the enhanced education you are suggesting?

The armed services do not want conscripts. And even if they did where does the money come from to cover that cost?

I'm surprised you take a daydream seriously!

However;

If Britain accepted that they are no longer a "world power" and got out of all those overseas "adventures" they could probably afford it easily. Realising that a new Polaris system is a waste of money would be a step in the right direction. It would also help if they did something about the illegal immigrants, and stopped paying benefits and NHS treatment for people that shouldn't receive them. They found a few zillion easily enough to buy their mates in the banks out of the poo.

I never said "enhanced" education. Just finishing secondary school would be a good thing.

I also never said anything about the armed services. National service can take many forms. The only requirement would be that it instill discipline in the feral youth that today terrorises Britain ( they certainly scare the sh*t out of me when I'm unfortunate enough to be in their proximity ).

While you may not agree that Singapore is a top place to live, they make EVERYONE do national service, or at least they did when I lived there, and they don't seem to have problems with feral youth, nor do they have a problem with dole bludgers, and for a country that has no natural resources, everyone seems to have an excellent standard of living. Perhaps if Britain didn't have the old class attitudes that they know better than anyone else, they might be able to learn something from other countries.

[LaoPo]

4 Reasons Why the British Pound Is Set To Soar Again!

By: Sean Hyman Wednesday, July 15, 2009 12:38 PM

Today, I want to share with you, four crucial reasons why I believe that the British pound is about to soar once again vs. the U.S. dollar.

Even though the pound (GBP) has been stuck in a range bound pattern for a month and a half now, things are about to change.

Here’s why:

1. The U.K. “unemployment claims” figures have been headed down ever since the huge spike up in March. In fact, the latest numbers came out this morning. What did it show? There was a positive revision (improvement) in the previous month’s unemployment numbers to 30.8K. The latest numbers were expected to come in at 41.4K but ended up coming in at a much lower 23.8K. Lower unemployment claims is a bullish sign for their economy and therefore, for their currency as well.

2. The U.S. Dollar Index continues to fall. While the dollar index has been in a downtrend ever since early March...it’s been consolidating sideways for about a month and a half now. Some speculated that it would turn back upward. However, I felt that due to the poor fundamentals, excessive money printing, Obama’s policies and higher unemployment than much of the world, that the technical trend would therefore continue. Yesterday and today, the index has decisively broken lower yet again, helping the GBP/USD to bolt higher. (Chart in the video portion of the blog.)

3. The inflation in the U.K. is still at 1.8% on a year over year basis, while many countries out there have “negative inflation” aka “deflation”. So with the U.S. having -1.3% inflation and the U.K. having +1.8% inflation, my bets are for the pound to appreciate over that of the U.S. dollar, since inflation spurs eventual rate hikes, which spurs investment in a currency with a growing interest rate yield. (Chart – in the video blog)

4. Stocks have gotten a recent boost in the last few days as a notable improvement in corporate earnings has fueled a better sentiment and higher stock prices. When investors are willing to take upon the risk to buy stocks, they also load up on more aggressive currencies too, such as the GBP. (See the chart inside the video blog that compares the S&P 500 with the British pound.)

So it’s no wonder that the pound hit bottom in the February/March area on the charts and has headed up overall since as unemployment improved and stocks stabilized while the dollar broadly turned lower and U.K. inflation remained notably much higher than most other currencies, particularly the dollar!

This is why we have the uptrend on the GBP/USD chart below. The four reasons that I give above cannot be ignored and are not “fleeting” points but are points that will continue to impact the pound for months to come. So if your analysis agrees with mine, then buy the GBP/USD!

The Pound Recovers as it enjoys “Fundamental & Technical Edges” over the Greenback!

Source: iStockAnalyst http://www.istockanalyst.com/article/viewa...ticleid/3350478

LaoPo

[phutoie2]

Report in the Daily Telegraph (online) from the IMF. A - MR Ajai Chopru after a fact finding tour of Britain in May, states GB has been getting the benefit of the doubt on market conditions and currency exchanges.

If PM Brown does not come up with a credible plan for reducing debt then (and I hate this phrase!) a 'run on the pound' could well happen.

Remember when the shadow chancellor used those same words a few months back now, a mighty ruckus!.

54-55 Baht to 1xGBP, take it now, me thinks???

[Chaimai]

Properties have not been bought with borrowing at "abnormally" low interest rates.

Yes they were, Greenspan said interest rates were kept low to keep the economy moving, same rules applied in the UK.

No they were not.

Economic fundamentals (and decent housekeeping. mainly control of inflation) kept interest rates 'low' (technical term, low is only relative to 'high').

Only in the last 6 months have we seen rates articially low. Mortgage borrowers have been coming of fixed rate deals and simply dropping onto the lenders Standard Variable Rate which have invariable resulted in a lower rate a[[lying to their borrowing.

There is nothing "abnormal" about sub 10% rates - these have been a feature of the last 15+ years. As far as buying property is concerned relatively long-term (10 years+) fixed rates of 5%-6% were available.

I believe that short-term fixed rates are not to anyone's advantage. A headline rate of, say, 3.99% but with hefty fees only distorts the picture. Buying a property should not be a short-term project - it should be viewed as a long-term investment.

Edited July 17, 2009 by Chaimai

[caf]

Good point.

My solution would be much the same, except the money would be given to people after they reached adulthood, and they could repay it over their lifetime.

It would however be dependent on them achieving a reasonable level of education, qualifying at some sort of occupation, and paticipating in some type of national service.

No cash would be given, of course.

Of course, if they refused to work, they would lose it all.

So where does the money come from?

And where does the money come from for the enhanced education you are suggesting?

The armed services do not want conscripts. And even if they did where does the money come from to cover that cost?

I'm surprised you take a daydream seriously!

However;

If Britain accepted that they are no longer a "world power" and got out of all those overseas "adventures" they could probably afford it easily. Realising that a new Polaris system is a waste of money would be a step in the right direction. It would also help if they did something about the illegal immigrants, and stopped paying benefits and NHS treatment for people that shouldn't receive them. They found a few zillion easily enough to buy their mates in the banks out of the poo.

I never said "enhanced" education. Just finishing secondary school would be a good thing.

I also never said anything about the armed services. National service can take many forms. The only requirement would be that it instill discipline in the feral youth that today terrorises Britain ( they certainly scare the sh*t out of me when I'm unfortunate enough to be in their proximity ).

While you may not agree that Singapore is a top place to live, they make EVERYONE do national service, or at least they did when I lived there, and they don't seem to have problems with feral youth, nor do they have a problem with dole bludgers, and for a country that has no natural resources, everyone seems to have an excellent standard of living. Perhaps if Britain didn't have the old class attitudes that they know better than anyone else, they might be able to learn something from other countries.

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I think you are the one daydreaming.

The Uk (Britain) gave up thinking it was a world power years ago ( around Suez) We did not go into Iraq ourselves but piggy-backed on America. For the wrong reasons in my view as we had no evidence of wmd and there was no UN mandate. But I reached that conclusion - rightly or wrongly - without emotion.

By using the word "adventures" you are showing your emotions are overriding your thought processes.

Illegal immigrants by definition are outside the radar so do not receive benefits or NHS treatment. They may be working here illegally but that is another matter. They should be deported and the system should be tightened but to say they receive benefits is not only inaccurate it shows muddled thinking.

Bank bail outs and QE have been handled badly ( as the imf are now commenting) but i suspect you would have been complaining vociferously if they had not done so and your bank had collapsed with your savings. lost. Had you thought about that?

I said enhanced education not university or tertiary education. I was taking your point "a reasonable level of education, qualifying at some sort of occupation" - any enhancement from the present position which you clearly fiind inadequate would cost money.

I took national service to mean conscription which I think is what you meant otherwise you would have said community or social service. You also refer now to the singapore model which is of course conscription.

Edited July 17, 2009 by caf