Pound Starting To Stenghen.

[chiang mai]

Many reason's for it to happen, maybe not in that time frame. If it did, petrol would rise 25% imagine the CPI fiqures, you would have double digit interest rates in the blink of an eye..........the UK would be decimated.

Bring it on.

"Bring it on"... because ?

Neil's looking for double digit interest rates on his investments, bad lad! Sometimes though when I read the UK papers I reckon this could be a good thing, maybe a shock of that magnitude would finally knock some common sense into a few heads, and, property prices would become more sensible very quickly. Hmm, actually I'm with Neil on this point!!

[chiang mai]

I know it's not easy to understand but do try to keep up, what these bankers are saying is two things - the first is that markets would respond badly if too much deficit was cut too early, and between the lines the second is that there would be a similar outcome if there was a hung Parliament. Personally, I reckon there's probably something like a forty per cent chance of seeing that outcome before May, a $1.05 Pound and a sub par Euro, care to make a small side bet with me MMB?

Many reason's for it to happen, maybe not in that time frame. If it did, petrol would rise 25% imagine the CPI fiqures, you would have double digit interest rates in the blink of an eye..........the UK would be decimated.

Bring it on.

As I see it the deflation/inflation debate is coming to an end except in Europe. Money will be printed, exchange rates competitive devalued, debts increased until inflation and low interest rates are so damaging they have to be reversed. A commitment has been made to these policies that people will be able to look Bernanke in the eye and say 'we are impressed in your policy towards having a strong dollar.'

Yup!

[neil324]

Many reason's for it to happen, maybe not in that time frame. If it did, petrol would rise 25% imagine the CPI fiqures, you would have double digit interest rates in the blink of an eye..........the UK would be decimated.

Bring it on.

"Bring it on"... because ?

Neil's looking for double digit interest rates on his investments, bad lad! Sometimes though when I read the UK papers I reckon this could be a good thing, maybe a shock of that magnitude would finally knock some common sense into a few heads, and, property prices would become more sensible very quickly. Hmm, actually I'm with Neil on this point!!

Not because of investments, inflation would cancel it out anyway. I'm sick of the in-debted being bailed out by the prudent.

[neil324]

http://www.telegraph.co.uk/news/election-2...c-disaster.html

I guess the elections will choose which way we go from here.

There seems to be two camps right now:-

1. Stop being a debt junkie and go cold turkey - if we do we are all doomed.

2. Keep the stimulus going and all the zombies lurching forward - if we do we are all doomed.

The country has boxed itself in perfectly.

[chiang mai]

http://www.telegraph.co.uk/news/election-2...c-disaster.html

I guess the elections will choose which way we go from here.

There seems to be two camps right now:-

1. Stop being a debt junkie and go cold turkey - if we do we are all doomed.

2. Keep the stimulus going and all the zombies lurching forward - if we do we are all doomed.

The country has boxed itself in perfectly.

It's all politics Neil, all parties are playing on the fear factor of the population - unfortunately, one of them is correct and the others are wrong, trouble is, nobody is certain which! As you say, boxed perfectly. How does that song go, "And it's one two three what are we waiting for ....."!

[churchill]

Is somebody gunning for a fight to take eyes off the ecomomy ?

Navy intercepts Argentinian warship near British waters

http://www.telegraph.co.uk/news/7313829/Na...ish-waters.html

[Chaimai]

Personally, I reckon there's probably something like a forty per cent chance of seeing that outcome before May, a $1.05 Pound and a sub par Euro, care to make a small side bet with me MMB?

If you are serious CM, I will take that small bet. Your post suggests that I have a 60% chance of winning.

Funny, I have of course no basis for saying there's a forty percent chance but the key is that there is a reasonable chance and there is a precedent, we have seen GDP/USD parity before. This is a real nightmare time for me at present and doubtless for others also. When GBP/USD is in the range of around 1.40 to 1.60, historically it's really difficult to determine which way it might go and I'm late in protecting some Sterling that's laying around. I think of this range as the danger zone because it's 50/50 as to which way it will swing, on the balance of probability however I reckon it's going downwards from here.

CM, you will finish up with splinters in your ar5e if you sit on the fence too long .

Do I get my 1,000 Baht bet on your original assertion ?

[chiang mai]

Personally, I reckon there's probably something like a forty per cent chance of seeing that outcome before May, a $1.05 Pound and a sub par Euro, care to make a small side bet with me MMB?

If you are serious CM, I will take that small bet. Your post suggests that I have a 60% chance of winning.

Funny, I have of course no basis for saying there's a forty percent chance but the key is that there is a reasonable chance and there is a precedent, we have seen GDP/USD parity before. This is a real nightmare time for me at present and doubtless for others also. When GBP/USD is in the range of around 1.40 to 1.60, historically it's really difficult to determine which way it might go and I'm late in protecting some Sterling that's laying around. I think of this range as the danger zone because it's 50/50 as to which way it will swing, on the balance of probability however I reckon it's going downwards from here.

CM, you will finish up with splinters in your ar5e if you sit on the fence too long .

Do I get my 1,000 Baht bet on your original assertion ?

Not to worry, I did the deal already so I'm feeling a little bit better about things, never thought I'd see the day though where I'd trade at that price - fortunately I'm already well in the money despite the trade being less than ten hours old.

Ummm, Baht 1,000 you say, perhaps I missed where we agreed/suggested/mentioned/even vaguely hinted at that number, perhaps you can point me at the reference - it's possible of course that we did agree such things but given that today is a significant birthday of mine, I'm now officially in the older person category and you know how we older folks tend to forget stuff, Alzheimers and all that. Anyway, back to our discussion about, er, um,.... what was it again!

Edited February 25, 2010 by chiang mai

[neil324]

All this talk this week about more QE, maybe the GDP fiqures tommorrow are going to be rivsed down.

[mommysboy]

CM

You and at least one other poster have pointed to 35-40 bt. being realistic on the basis of some historical norm or precedent. But is that really the case? The bt was pegged for a number of years and there really isn't a reliable body of stats. even over the last 30 years as we've had some pretty incredible events even since 1995. You just can't come up with anything approaching a truthful average, so you have to disregard full stop IMHO.

Further despite all that has happened over the past year (perhaps 11-13 months- not sure) here we are with the pound values in the 48-50bt zone,ie, same/same as is said in these parts. That's despite a pretty catastrophic year for GB economy and a not so bad one for Thailand.

Then how does a prediction of 35-40 bt hold weight? Surely a sensible prediction would work on the constraint that long term is up for GBP and down for THB?

More subjectively! I find it a little strange that numerous Thai goods, notably electronics, but also beer , work out more expensive because of exchange rate fluctuations. Can that be right? Is Thailand really so much more affluent than UK that a rank higher than UK is justified. I get confused at this point, because although I understand Thailand would 'appear' to have fiscal balance and 'appear' to be in good shape, I see a rather poor country with no welfare state and poor infrastructure- in many ways a worse place than 5 years ago.

On to the dollar, you say that there is a precedent for parity. Certainly there is nothing in the last 40 years. gain are you sure? Surely such a condition would be an extreme too- ie, UK extremely low, US riding high. All major economies seem to be in much the same predicament.

[chiang mai]

CM

You and at least one other poster have pointed to 35-40 bt. being realistic on the basis of some historical norm or precedent. But is that really the case? The bt was pegged for a number of years and there really isn't a reliable body of stats. even over the last 30 years as we've had some pretty incredible events even since 1995. You just can't come up with anything approaching a truthful average, so you have to disregard full stop IMHO.

Further despite all that has happened over the past year (perhaps 11-13 months- not sure) here we are with the pound values in the 48-50bt zone,ie, same/same as is said in these parts. That's despite a pretty catastrophic year for GB economy and a not so bad one for Thailand.

Then how does a prediction of 35-40 bt hold weight? Surely a sensible prediction would work on the constraint that long term is up for GBP and down for THB?

More subjectively! I find it a little strange that numerous Thai goods, notably electronics, but also beer , work out more expensive because of exchange rate fluctuations. Can that be right? Is Thailand really so much more affluent than UK that a rank higher than UK is justified. I get confused at this point, because although I understand Thailand would 'appear' to have fiscal balance and 'appear' to be in good shape, I see a rather poor country with no welfare state and poor infrastructure- in many ways a worse place than 5 years ago.

On to the dollar, you say that there is a precedent for parity. Certainly there is nothing in the last 40 years. gain are you sure? Surely such a condition would be an extreme too- ie, UK extremely low, US riding high. All major economies seem to be in much the same predicament.

Take a look at MJP's post number 132 in this thread, there's a graph there that shows some pretty reliable numbers, exchange rates going back over thirty years - so yes, there are some pretty reliable stats to work with and yes, there is reliable data. I think part of your confusion MMB is that you keep referring to the "peg" but you have to remember that it was THB/USD that was pegged and not GBP/THB.

As for GBP/USD parity: I can't remember the year but you can google that just as easily as I can, failing that take a look at Oanda or something similar, 199x or similar as I recall, I'm not going to do it tonight because it's my birthday and I've other things in mind. I'll perhaps give you my views on the other parts of your question tomorrow.

[chiang mai]

GBP/USD parity was almost reached in that year. In Januray 1985, GBP/USD was as low as 1.0520. Close enough for horse shoes.

[Chaimai]

Funny, I have of course no basis for saying there's a forty percent chance but the key is that there is a reasonable chance and there is a precedent, we have seen GDP/USD parity before. This is a real nightmare time for me at present and doubtless for others also. When GBP/USD is in the range of around 1.40 to 1.60, historically it's really difficult to determine which way it might go and I'm late in protecting some Sterling that's laying around. I think of this range as the danger zone because it's 50/50 as to which way it will swing, on the balance of probability however I reckon it's going downwards from here.

CM, you will finish up with splinters in your ar5e if you sit on the fence too long .

Do I get my 1,000 Baht bet on your original assertion ?

Not to worry, I did the deal already so I'm feeling a little bit better about things, never thought I'd see the day though where I'd trade at that price - fortunately I'm already well in the money despite the trade being less than ten hours old.

Ummm, Baht 1,000 you say, perhaps I missed where we agreed/suggested/mentioned/even vaguely hinted at that number, perhaps you can point me at the reference - it's possible of course that we did agree such things but given that today is a significant birthday of mine, I'm now officially in the older person category and you know how we older folks tend to forget stuff, Alzheimers and all that. Anyway, back to our discussion about, er, um,.... what was it again!

The figure of 1,000 was not mentioned - I quantified it for the sake of defining a "small side bet". I will leave it to your memory to decide if the bet is on. Happy Birthday, enjoy what is left of your day.

[Chaimai]

GBP/USD parity was almost reached in that year. In Januray 1985, GBP/USD was as low as 1.0520. Close enough for horse shoes.

.... and last year I bought Dollars at 1.9950. That is a long way from GBP/USD parity when is a statistically improving UK economy. I cannot accept that 'sentiment' (even adversely fuelled by political speculation) could drag Sterling that far.

Is the Dollar really so strong. The first 60% of the Financial Crisis thread was stating that the States/Dollar would take 100 years to recover ?

The pimps and whores in the financial markets will love the swings as they make little in calm waters.

[12DrinkMore]

CM

You and at least one other poster have pointed to 35-40 bt. being realistic on the basis of some historical norm or precedent. But is that really the case? The bt was pegged for a number of years and there really isn't a reliable body of stats. even over the last 30 years as we've had some pretty incredible events even since 1995. You just can't come up with anything approaching a truthful average, so you have to disregard full stop IMHO.

A truthful average? Not reliable stats? Come on, the GBP/THB exchange rate has figures going back since we were chiseling stones.

Then how does a prediction of 35-40 bt hold weight? Surely a sensible prediction would work on the constraint that long term is up for GBP and down for THB?

Sorry, but that is surely a shot in your own foot? What sensible prediction would work on the constraint that long term is up for GBP? But as you say in the next sentence, "more subjectively"

More subjectively! I find it a little strange that numerous Thai goods, notably electronics, but also beer , work out more expensive because of exchange rate fluctuations. Can that be right? Is Thailand really so much more affluent than UK that a rank higher than UK is justified. I get confused at this point,

In order to rid yourself of the confusion, you must deny any "subjective" and "the UK is great" thoughts and look at the matter totally objectively.

- Electronics more expensive, where? they are all cheaper in Thailand, maybe in the UK they are more expensive, but the GBP has lost 30% of its value, or hadn't you noticed?

- Beer more expensive? You have to be joking, I am spending less on beer than I was a year ago, and not due to lower consumption.

because although I understand Thailand would 'appear' to have fiscal balance and 'appear' to be in good shape, I see a rather poor country with no welfare state and poor infrastructure- in many ways a worse place than 5 years ago.

You have simply not thought this through.

Thailand has an excellent balance of trade, a very stable currency due to the excellent management by Tarisa against a basket of currencies, the country may be "poor" in respect of all the welfare benefits that the UK pays, but these benefits are a major part of the massive problem the UK faces. The civil service pensions and wages, the welfare state, the eight million non-economically-productive spongers, the further eight million civil servant leeches killing the industrial productive workers with taxes, the destructive banking system in the UK (there is not a single Thai bank with financial problems, they are all subject to stringent conditions), and Thailand has a political system which, even if it is full of kids squabbling for power, will not be allowed to bring the country into economic ruin, the Chinese mentality and businessmen will ensure that.

And this is a point I would like to stress.

Asia is run economically by the Chinese. They are businessmen and understand business, production, buying and selling goods, what is real profit and loss in the long term. The UK is run by politicians pandering to voters and bankers lining their own pockets for their short term gain. The Chinese will simply NOT ALLOW STUPIDITY AND SELFISHNESS TO HINDER THEIR LONG TERM PROSPERITY.

Social welfare on a scale similar to the UK, pandering to minorities, donating taxes to keep the idle in luxury or providing cash to allow poor to produce brats? Forget it. This is why the Asians are resourceful and hard working. You may not have observed this, but very few have any social benefits, but they are all prepared to chip in and work to earn a living. And a lot can now afford the 30 inch lcd TV, the computer, have internet.

The superiority of the West is declining, face the facts. Huge successful civilisations have come and gone in the last thousand years or so, I can see no reason why the next few years will not see the demise of wealth of more than a few countries. The Incas, the Romans, the Angkor Wat lot had huge success. Now it is maybe the turn of the indebted, impoverished, overtaxed, badly managed and still arrogant UK to fail and become history?

Edited February 25, 2010 by 12DrinkMore

[MJP]

Now on a practical level, for those concerned about this developing situation, I really do recommend you download that spreadsheet I posted a page or so back, 'clear' the entires in the yellow cells and do your own. It really does help.

[Chaimai]

The superiority of the West is declining, face the facts. Huge successful civilisations have come and gone in the last thousand years or so, I can see no reason why the next few years will not see the demise of wealth of more than a few countries. The Incas, the Romans, the Angkor Wat lot had huge success. Now it is maybe the turn of the indebted, impoverished, overtaxed, badly managed and still arrogant UK?

Maybe that is why a few of us have set our stall out in the Far East

[MJP]

Subconsciously, I think that's why I've made no effort to relocate daughter to the West. Our living standard there would not begin to compare to what it is here. She's actually set for life here, which is what matters.

The superiority of the West is declining, face the facts. Huge successful civilisations have come and gone in the last thousand years or so, I can see no reason why the next few years will not see the demise of wealth of more than a few countries. The Incas, the Romans, the Angkor Wat lot had huge success. Now it is maybe the turn of the indebted, impoverished, overtaxed, badly managed and still arrogant UK?

Maybe that is why a few of us have set our stall out in the Far East

[mommysboy]

Of course I'd noticed the 30%drop! And believe me it's painful for me as much as anyone.

Regarding the stuff about the Asian business and life ethic. Come off it mate!!!! I mean how long have you been in Thailand? This is one of the most corrupt societies in the world.

Thailand is also completely underdeveloped and largely without a welfare system. I can't see its development taking just a few years. But ok, let's assume there is going to be a massive explosion of growth, the masses would demand all the things the west has had, in fact they are doing that now. They wouldn't settle for a life of poverty, poor housing and no medical system. That all costs money.

Let's look at this from the opposite angle. A drop of 32 baht to pound (even 40bt), via parity with the dollar. That would make the UK one heck of an attractive place to set up your global business. Most things produced in Thailand could be produced cheaper and better in UK. Bring it on I say! Uk would be great again within 10 years. And like you I feel it's high time people had to work for a living again.

The welfare sysytem in UK can not be sustained- we all know that!

On to crucial matters, beer, you are not buying the beer in Thailand cheaper than 1 year ago are you? Am I missing something important her?

[mommysboy]

MJP

Subconsciously, I think that's why I've made no effort to relocate daughter to the West. Our living standard there would not begin to compare to what it is here. She's actually set for life here, which is what matters.

How can you justify this statement in all honesty? If you returned to UK I think you'd qualify for all sorts of benefits at present. You'd have access to the welfare system, with all that brings. And a decent standard of schooling.

My nieces have grown up to progress to higher education, have benefited from thousands of pounds of health care, each have a car, and their lives are good.

[mommysboy]

GBP/USD parity was almost reached in that year. In Januray 1985, GBP/USD was as low as 1.0520. Close enough for horse shoes.

I stand corrected- near enough!

But how would that follow today?. The respective economies are in much the same positon. Wouldn't the conditions needed to tip the UK in to freefall be a result of global crisis again.

[MJP]

http://www.guardian.co.uk/business/2010/fe...be-in-recession

The realization that a. Brown is in fact bonkers, always has been, b. the QE experiment has failed (it never even was Keynesian because they borrowed during the boom only to really borrow during the bust, c. the UK is still in recession following a revision of the GDP figures for the last quarter, d. real possibility of a hung parliament.

Be in no doubt, this could and is likely to, go the distance.

I know, it's not too much fun for me either.

GBP/USD parity was almost reached in that year. In Januray 1985, GBP/USD was as low as 1.0520. Close enough for horse shoes.

I stand corrected- near enough!

But how would that follow today?. The respective economies are in much the same positon. Wouldn't the conditions needed to tip the UK in to freefall be a result of global crisis again.

Edited February 25, 2010 by MJP

[MJP]

That was before. This is now. I have no access to the welfare system, also I don't want it, always stood on own two feet. Always will. She's in private school here, it's actually pretty good. House prices are way too high in the UK, the whole thing there is just a non-starter. Work is dead. I mean dead. You don't have the freedom to be poor in the UK, if you have no access to the welfare state. Here I can keep the standard of living at an acceptable level.

MJP

Subconsciously, I think that's why I've made no effort to relocate daughter to the West. Our living standard there would not begin to compare to what it is here. She's actually set for life here, which is what matters.

How can you justify this statement in all honesty? If you returned to UK I think you'd qualify for all sorts of benefits at present. You'd have access to the welfare system, with all that brings. And a decent standard of schooling.

My nieces have grown up to progress to higher education, have benefited from thousands of pounds of health care, each have a car, and their lives are good.

[MJP]

Pound could collapse in weeks

[MJP]

BBC put on red alert for election call

[MJP]

But of utmost importance in our time of crisis

[Naam]

GBP/USD parity was almost reached in that year. In Januray 1985, GBP/USD was as low as 1.0520. Close enough for horse shoes.

I stand corrected- near enough! But how would that follow today?. The respective economies are in much the same positon. Wouldn't the conditions needed to tip the UK in to freefall be a result of global crisis again.

1985 should not be used as a reference. the economic situtations were completely different and the USD was skyhigh vs. all currencies (its value doubled vs. Deutsche Mark in a few years). the opposite happened GBP/USD only a few years before (1981) when one Pound bought 2.44 US-Dollars.

[chiang mai]

Of course I'd noticed the 30%drop! And believe me it's painful for me as much as anyone.

Regarding the stuff about the Asian business and life ethic. Come off it mate!!!! I mean how long have you been in Thailand? This is one of the most corrupt societies in the world.

Thailand is also completely underdeveloped and largely without a welfare system. I can't see its development taking just a few years. But ok, let's assume there is going to be a massive explosion of growth, the masses would demand all the things the west has had, in fact they are doing that now. They wouldn't settle for a life of poverty, poor housing and no medical system. That all costs money.

There is a fairly well developed welfare system in existence in Thailand, the framework is in place and it functions although it is nowhere near the scale of comparable systems in the West. Employers and employees make monthly payments and at retirement age, pensions are paid out, the system also covers medical insurance at decent hospitals.

Let's look at this from the opposite angle. A drop of 32 baht to pound (even 40bt), via parity with the dollar.

This statement makes me a little nervous because I can't immediately see what numbers you're using when you say 32 or 40 and it seems there may be a typo in your wording, can you please clarify? As things stand I refer to parity as meaning one GBP equals the same value as one USD. USD if currently worth 33 Baht and GBP around 50 although under any scenario that created parity the ratio between the two would almost certainly change.

The welfare sysytem in UK can not be sustained- we all know that!

On to crucial matters, beer, you are not buying the beer in Thailand cheaper than 1 year ago are you? Am I missing something important her?

[chiang mai]

GBP/USD parity was almost reached in that year. In Januray 1985, GBP/USD was as low as 1.0520. Close enough for horse shoes.

I stand corrected- near enough!

But how would that follow today?. The respective economies are in much the same positon. Wouldn't the conditions needed to tip the UK in to freefall be a result of global crisis again.

It might be something along the lines of a slightly stronger USD, a slightly stronger THB and a much weaker GBP, all of the movement doesn't have to come from one single currency, it will likely be a combination of moves by several, not catastrophic at all in global terms.

[churchill]

Pound could collapse in weeks

Shock! Jim Rogers didn’t say sterling shall collapse!

http://ftalphaville.ft.com/blog/2010/02/26...shall-collapse/