UK Pound Collapse 47.99 against the Baht

[andyww]

There is far too much pessimism around the pound as has been pointed out. Abrak gves me the impression that the UK economy will never recover. Has an economy ever not recovered after say 2 years ?- I know Japan had stagnation for ages!

Well the UK economy has actually been in recession since 2004, for 8 years. This was masked though by smoke and mirrors. That was the time when the banks started to lend out money that didnt exist. The years since then, and before the credit crunch were all on the back of an illusion of wealth when there was in fact none.

Thats why the UK will not get out of the current recession for a very long time, its already been going on for 8 years and the fact it was hidden for much of that time makes it all the more difficult to overcome. Much like a building with no foundations, all appears fine until sudden collapse but the problem was always there.

[Chaimai]

There is far too much pessimism around the pound as has been pointed out. Abrak gves me the impression that the UK economy will never recover. Has an economy ever not recovered after say 2 years ?- I know Japan had stagnation for ages!

Well the UK economy has actually been in recession since 2004, for 8 years. This was masked though by smoke and mirrors. That was the time when the banks started to lend out money that didnt exist. The years since then, and before the credit crunch were all on the back of an illusion of wealth when there was in fact none.

Thats why the UK will not get out of the current recession for a very long time, its already been going on for 8 years and the fact it was hidden for much of that time makes it all the more difficult to overcome. Much like a building with no foundations, all appears fine until sudden collapse but the problem was always there.

Hyperbole and conjecture !

Please provide tangible EVIDENCE (not waffle) for the "UK being in recession since 2004".

FACT - the UK has officially exited recession. Source: Office for National Statistics:-The UK recession has officially ended after the latest GDP figures from the Office for National Statistics (ONS) revealed that the economy grew by 0.1% in the fourth quarter of 2009.

Not difficult to deal in FACT - now you have a go andyww

[Naam]

There is far too much pessimism around the pound as has been pointed out. Abrak gves me the impression that the UK economy will never recover. Has an economy ever not recovered after say 2 years ?- I know Japan had stagnation for ages!

Well the UK economy has actually been in recession since 2004, for 8 years. This was masked though by smoke and mirrors. That was the time when the banks started to lend out money that didnt exist. The years since then, and before the credit crunch were all on the back of an illusion of wealth when there was in fact none.

Thats why the UK will not get out of the current recession for a very long time, its already been going on for 8 years and the fact it was hidden for much of that time makes it all the more difficult to overcome. Much like a building with no foundations, all appears fine until sudden collapse but the problem was always there.

you mean today is march 31, 2012?

[Thai at Heart]

There is far too much pessimism around the pound as has been pointed out. Abrak gves me the impression that the UK economy will never recover. Has an economy ever not recovered after say 2 years ?- I know Japan had stagnation for ages!

Well the UK economy has actually been in recession since 2004, for 8 years. This was masked though by smoke and mirrors. That was the time when the banks started to lend out money that didnt exist. The years since then, and before the credit crunch were all on the back of an illusion of wealth when there was in fact none.

Thats why the UK will not get out of the current recession for a very long time, its already been going on for 8 years and the fact it was hidden for much of that time makes it all the more difficult to overcome. Much like a building with no foundations, all appears fine until sudden collapse but the problem was always there.

In which case can you tell us also who is going to win the 2010 election in the UK? I am sure a few of us would like to have your crystal ball on that one.

[Abrak]

Hyperbole and conjecture !

Please provide tangible EVIDENCE (not waffle) for the "UK being in recession since 2004".

FACT - the UK has officially exited recession. Source: Office for National Statistics:-The UK recession has officially ended after the latest GDP figures from the Office for National Statistics (ONS) revealed that the economy grew by 0.1% in the fourth quarter of 2009.

Not difficult to deal in FACT - now you have a go andyww

Chiangmai,

I would start by looking at this evidence below.

It was basically compiled by Alan Geenspan in 2006 which shows how mortgage equity withdrawals contributed to growth in the US. Without MEW there really would have been no real growth after 2000. His work on this is available at the Fed web site.

Now I know of no detailed work that has been done on the UK but it is not a huge leap of faith to assume that the UK was a debt driven growth model that actually wasnt there the same as Greece. So proving real growth based on massive increases of debt is not difficult. Showing there was any without it, is more tricky.

http://www.calculatedriskblog.com/2007/01/...ct-on-2007.html

Edited March 31, 2010 by Abrak

[chiang mai]

Hyperbole and conjecture !

Please provide tangible EVIDENCE (not waffle) for the "UK being in recession since 2004".

FACT - the UK has officially exited recession. Source: Office for National Statistics:-The UK recession has officially ended after the latest GDP figures from the Office for National Statistics (ONS) revealed that the economy grew by 0.1% in the fourth quarter of 2009.

Not difficult to deal in FACT - now you have a go andyww

Chiangmai,

I would start by looking at this evidence below.

It was basically compiled by Alan Geenspan in 2006 which shows how mortgage equity withdrawals contributed to growth in the US. Without MEW there really would have been no real growth after 2000. His work on this is available at the Fed web site.

Now I know of no detailed work that has been done on the UK but it is not a huge leap of faith to assume that the UK was a debt driven growth model that actually wasnt there the same as Greece. So proving real growth based on massive increases of debt is not difficult. Showing there was any without itr, is more tricky.

For Chiangmai read Chaimai on this one.

[Abrak]

For Chiangmai read Chaimai on this one.

Apologies included the link.

[Chaimai]

For Chiangmai read Chaimai on this one.

Apologies included the link.

Noted - apology not necessary, I will try not to post too close to chiang mai in future.

The graph/analysis was interesting but no more.

Growth in developed countries has often been fuelled by debt. A HP loan to purchase a car, a mortgage to buy a house, bank loan to buy an assey, bank overdraft to support working capital. Borrowed money is always part of the GDP dynamic.

As always, such charts only give part of the story. What about the time that I raised capital on my house (MEW) to acquire an overseas property. The cash raised from the exercise did not touch the UK economy - debt servicing added to the lender's profits though. Similarly, what about inward investment - you would need to put a balance of payments chart, for loan capital movements, alongside the simplistic MEW chart for a wider picture.

The other side of the coin is 'de-gearing' - something that has been happening in many countries in recent years. This creates nothing, it simply moves asset classes.

[Abrak]

Well this is where the economics gets difficult.

Essentially Greenspan argued almost like you that a house is a productive asset and therefore you taking money out of the house was productive. Now 95% of economists would argue against that and still do.

Most would argue that your house price was a product of income (see Schiller) and all you did was to transfer assets from one country into another. Now the transfer of capital is good for the country involved (the chances are there exchange rate is undervalued) so maybe good for you but it must be at the expense of the country you are living in. Now if you take your argument to the lowest common denominator you will realize you have no money to exchange and your property price will fall.

[Chaimai]

Well this is where the economics gets difficult.

Essentially Greenspan argued almost like you that a house is a productive asset and therefore you taking money out of the house was productive. Now 95% of economists would argue against that and still do.

Most would argue that your house price was a product of income (see Schiller) and all you did was to transfer assets from one country into another. Now the transfer of capital is good for the country involved (the chances are there exchange rate is undervalued) so maybe good for you but it must be at the expense of the country you are living in. Now if you take your argument to the lowest common denominator you will realize you have no money to exchange and your property price will fall.

Understood. This is where the economics merry-go-round keeps going - the simplicity of your final comment is counter-balanced-ish by cross flows of capital. The Germans taking capital (effectively being forced to do so) out of Spain was arguably the major factor in the plunge in values there. The reality is that such action by the Germans (coupled with a slowing of investment from other European countries) proved that you cannot just keep building on every acre of land and expect values to rise each year.

Supply and demand dictates otherwise and a market will always find it's own level (excluding certain 'external factors' ).

[Abrak]

The other side of the coin is 'de-gearing' - something that has been happening in many countries in recent years. This creates nothing, it simply moves asset classes.

Actually Chaimai (got it right this time).

The onus on you is that gearing creates value. Of course de-gearing simply moves wealth from asset classes but essentially it is not about adding value but simply about adding risk.

It is essentially borrowing tomorrows income for future income. If you wish you to argue that you have simply transferred future wealth to the present, I will accept it.

Where I am not happy is the concept that borrowing future growth is a reflection of future growth when inherently it should be the other way round.

And consider this. Increasing gearing must ultimately lead to bankruptcy so whatever value it has must lead to a finite end. (If you increase debt verses income, assuming a positive interest rate, income can cannot cover debt service.)

Ultimately ever increasing gearing must be destructive.

Edited March 31, 2010 by Abrak

[andyww]

FACT - the UK has officially exited recession. Source: Office for National Statistics:-The UK recession has officially ended after the latest GDP figures from the Office for National Statistics (ONS) revealed that the economy grew by 0.1% in the fourth quarter of 2009.

Not difficult to deal in FACT - now you have a go andyww

More smoke and mirrors. The government achieved this remarkable feat by the simple act of printing money.

Heres another one: The unemployment total reduced in the past month. They did this by creating more public-sector jobs.

[mommysboy]

Is the pound coming back? or just short term rally? Much better news coming out of UK. I think the economy is on the mend. My guess is it will go to US 1.55 and 50baht.

[Naam]

Is the pound coming back? or just short term rally? Much better news coming out of UK. I think the economy is on the mend. My guess is it will go to US 1.55 and 50baht.

your reasoning, thinking and guessing lacks logic. no offence meant!

[chiang mai]

Is the pound coming back? or just short term rally? Much better news coming out of UK. I think the economy is on the mend. My guess is it will go to US 1.55 and 50baht.

Is the pound coming back? - No

or just short term rally? - Yes

Much better news coming out of UK. - a good manufacturing PMI report.

I think the economy is on the mend. - er, no!

My guess is it will go to US 1.55 and 50baht. - possibly but only briefly, keep your eye on 1.57, if it breaks that level then it may be sustained.

Edited April 2, 2010 by chiang mai

[mommysboy]

Is the pound coming back? or just short term rally? Much better news coming out of UK. I think the economy is on the mend. My guess is it will go to US 1.55 and 50baht.

your reasoning, thinking and guessing lacks logic. no offence meant!

Ok, thanks for letting me know, at least I escaped a silly pic.

Now we all tap things out in notation now and then, but really, that grammar!!!

[Spee]

FACT - the UK has officially exited recession. Source: Office for National Statistics:-The UK recession has officially ended after the latest GDP figures from the Office for National Statistics (ONS) revealed that the economy grew by 0.1% in the fourth quarter of 2009.

Not difficult to deal in FACT - now you have a go andyww

More smoke and mirrors. The government achieved this remarkable feat by the simple act of printing money.

Heres another one: The unemployment total reduced in the past month. They did this by creating more public-sector jobs.

And the US is currently surpassing this in spades. The home mortage crisis is far from over. The money printing issue is far from over. Greenspan's predications were done with the assumption that Congress & Executive fiscal policiy could be maintained with the controls of the Constitution. However, in today's environment, all bets are off. These two branches of government have overstepped their constitutional bounds by so far so fast, that no one can predict where this all is headed. By sound economic analysis, the UK and US are headed directly for economic disaster, and god only knows where this is headed either economically, politically or militarily.

[lannarebirth]

The other side of the coin is 'de-gearing' - something that has been happening in many countries in recent years. This creates nothing, it simply moves asset classes.

Actually Chaimai (got it right this time).

The onus on you is that gearing creates value. Of course de-gearing simply moves wealth from asset classes but essentially it is not about adding value but simply about adding risk.

It is essentially borrowing tomorrows income for future income. If you wish you to argue that you have simply transferred future wealth to the present, I will accept it.

Where I am not happy is the concept that borrowing future growth is a reflection of future growth when inherently it should be the other way round.

And consider this. Increasing gearing must ultimately lead to bankruptcy so whatever value it has must lead to a finite end. (If you increase debt verses income, assuming a positive interest rate, income can cannot cover debt service.)

Ultimately ever increasing gearing must be destructive.

With the caveat, that "ultimately" can sometimes be a very long time.

[lannarebirth]

Is the pound coming back? or just short term rally? Much better news coming out of UK. I think the economy is on the mend. My guess is it will go to US 1.55 and 50baht.

Is the pound coming back? - No

or just short term rally? - Yes

Much better news coming out of UK. - a good manufacturing PMI report.

I think the economy is on the mend. - er, no!

My guess is it will go to US 1.55 and 50baht. - possibly but only briefly, keep your eye on 1.57, if it breaks that level then it may be sustained.

Currently 1.60ish and falling.

[syd barrett]

Is the pound coming back? or just short term rally? Much better news coming out of UK. I think the economy is on the mend. My guess is it will go to US 1.55 and 50baht.

Is the pound coming back? - No

or just short term rally? - Yes

Much better news coming out of UK. - a good manufacturing PMI report.

I think the economy is on the mend. - er, no!

My guess is it will go to US 1.55 and 50baht. - possibly but only briefly, keep your eye on 1.57, if it breaks that level then it may be sustained.

Currently 1.60ish and falling.

???????

It is 1.52

[lannarebirth]

Is the pound coming back? or just short term rally? Much better news coming out of UK. I think the economy is on the mend. My guess is it will go to US 1.55 and 50baht.

Is the pound coming back? - No

or just short term rally? - Yes

Much better news coming out of UK. - a good manufacturing PMI report.

I think the economy is on the mend. - er, no!

My guess is it will go to US 1.55 and 50baht. - possibly but only briefly, keep your eye on 1.57, if it breaks that level then it may be sustained.

Currently 1.60ish and falling.

???????

It is 1.52

I think we're talking about resistance, but I seldom look at ultra short time frames, so you may be right.

[Penkoprod]

Currently 1.60ish and falling.

???????

It is 1.52

And climbing.....according to The Daily Express

Penkoprod

[Gambles]

Currently 1.60ish and falling.

???????

It is 1.52

And climbing.....according to The Daily Express

Penkoprod

longer term indebted nations need inflation and increased money supply + inflation = much weaker curencies

AT the moment they're having a real problem kick-starting inflation and they may continue to do sof ro some time to come.

As well as domestic real economy issues there's also a problem facing the deficit nations in that surplus nations don't want to see indebted nation currency depreciation or inflation

The dynamics of this battle are causing extreme currency volatility - there will be huge short term swings in both directions.

Any forecasts are inherently imperfect because the working out of this dynamic is inherently unclear.

But.........put a pistol to my head and I'd say that Dollars are likley to rally this year on greater weakness in other currencies (Pound, Euro, Yen), on flight to reserve currency, and on equity market weakness in H2.

Longer term gold and unindebted Asian currencies look best.

Right now, I would suggest that the key is to work out what your base currencies are and to align your income, assets and liabilities with that as best you can rather than guess currency directions - unless you're a whole lot smarter than everyone else out there. AT times like this you'd probably have to be crazy to issue currency forecasts.....but do contact me if you want ours

[mommysboy]

One stable country has worries over which democratic pro business party will be in power and this causes its currency to drop! Another coconut republic has yet another uprising and its currency goes from strength to strength.

In time old fashion I'm bound to ask, 'What's going on!!'. Whatever the game is it aint cricket that's for sure.

[Gambles]

One stable country has worries over which democratic pro business party will be in power and this causes its currency to drop! Another coconut republic has yet another uprising and its currency goes from strength to strength.

In time old fashion I'm bound to ask, 'What's going on!!'. Whatever the game is it aint cricket that's for sure.

The problem is that the stable country has the finances of a coconut republic and the coconut republic has the finances of a stable country

[tso310]

Chinese flock to John Lewis

John Lewis says the number of Chinese shoppers in its Oxford Street store in London increased by 73 per cent in

2009 compared with the year before. The Daily Telegraph comments that the weak pound is partly behind the influx of Chinese shoppers, but rising disposable incomes and the burgeoning middle class in China are equally important.

John Lewis's experience has been repeated all over the West End. In the year to November 30, the New West End Company - which oversees trade on Oxford Street, Regent Street and Bond Street - reported a 118 per cent rise in Chinese shoppers.

The Daily Telegraph Business, Date: 08/04/2010, Page: 3

One man's poison is another man's meat, so to speak.

[mommysboy]

I guess the baht/pound thing really is just about economic fundamentals: if the near political anarchy of a coconut republic can't effect the exchange rate then nothing can. But you'd have thought a credit downgrade would have been noticed. Lots of fools rushing in to lose money in Thailand, oh well, doubt they'll lose quite as much as they did in the west, so that's some solace for the tax payer.

[chiang mai]

One stable country has worries over which democratic pro business party will be in power and this causes its currency to drop! Another coconut republic has yet another uprising and its currency goes from strength to strength.

In time old fashion I'm bound to ask, 'What's going on!!'. Whatever the game is it aint cricket that's for sure.

The problem is that the stable country has the finances of a coconut republic and the coconut republic has the finances of a stable country

Such irony, funny but true.

But on other aspects of this subject, it seems that some market commentators are saying today that the risk of a hung UK parliament may already be priced into the Sterling exchange rate and that's a new slant for me, the previous mood had always been that a hung parliament could generate a Sterling crisis and the potential for a run on the Pound but no more it seems! I get the idea that a steady stream of positive news recently, particularly from the ONS (Office of National Statistics), has worked very much in the Pounds favour - remind me, who or what drives/owns the ONS, or am I just being cynical here!

Edited April 14, 2010 by chiang mai

[thaibeachlovers]

While LOS tears itself apart ( in Bangkok and the deep south ) and looks set for greater instability, Britain seems to be edging towards recovery, but the baht remains below 50 to the pound! Just how bad does it have to get before the baht falls?

Not that I'm hoping for more deaths etc, just for a more livable exchange rate.

[LaoPo]

Chinese flock to John Lewis

John Lewis says the number of Chinese shoppers in its Oxford Street store in London increased by 73 per cent in

2009 compared with the year before. The Daily Telegraph comments that the weak pound is partly behind the influx of Chinese shoppers, but rising disposable incomes and the burgeoning middle class in China are equally important.

John Lewis's experience has been repeated all over the West End. In the year to November 30, the New West End Company - which oversees trade on Oxford Street, Regent Street and Bond Street - reported a 118 per cent rise in Chinese shoppers.

The Daily Telegraph Business, Date: 08/04/2010, Page: 3

One man's poison is another man's meat, so to speak.

The question remains: how many Chinese shoppers in 2008 ?

LaoPo