The Great Sterling collapse is coming....

odlum

Well-known member
Joined
May 29, 2007
Messages
4,119
Europe's banks brace for UK debt crisis
UniCredit has alerted investors in a client note that Britain is at serious risk of a bond market and sterling debacle and faces even more intractable budget woes than Greece.

By Ambrose Evans-Pritchard, International Business Editor
Published: 8:20PM GMT 11 Mar 2010

No turning back: Sterling is going to fall further over coming months, warns Unicredit
The Italian-German group, Europe's second largest bank, said Britain's tax structure will make it hard to raise fresh revenue quickly enough to restore confidence in UK public finances.

"I am becoming convinced that Great Britain is the next country that is going to be pummelled by investors," said Kornelius Purps, Unicredit 's fixed income director and a leading analyst in Germany.

"Britain's AAA-rating is highly at risk. The budget deficit is huge at 13pc of GDP and investors are not happy. The outgoing government is inactive due to the election. There will have to be absolute cuts in public salaries or pay, but nobody is talking about that," he told The Daily Telegraph.

"Sterling is going to fall further over coming months. I am not expecting a crash of the gilts market but we may see a further rise in spreads of 30 to 50 basis points."

Europe's banks brace for UK debt crisis - Telegraph
The hens are coming home to roost....

<Mod - do not post large chunks of copyright material - a brief extract and link is the way to go>
 
Last edited by a moderator:


kerrynorth

Well-known member
Joined
Oct 5, 2005
Messages
1,525
If and when Sterling hits parity who among us here will volunteer to turn the last of the lights in Ireland?
 

Supermanpolitician

Well-known member
Joined
May 8, 2007
Messages
1,030
Euro is also over valued. Both GBP and Eur will drop vs USD. This is a good thing for Euro and GBP exports to the US.
 

rockofcashel

Well-known member
Joined
Jan 23, 2005
Messages
7,998
Website
www.sinnfein.ie
Euro is also over valued. Both GBP and Eur will drop vs USD. This is a good thing for Euro and GBP exports to the US.
Are you basing the statement that the Euro is over valued on European currency concerns, or Irish export concerns ?

Irish exporters may wish for a lower value Euro, but we are but a tiny cog in the overall European economy. The real Euro economies i.e. Germany, may not think the Euro is over valued

There is a big difference between what we want and what other Eurozone countries want you know
 

toughbutfair

Well-known member
Joined
May 28, 2009
Messages
9,946
Any movements have some pros cons. I haven't bought any clothes or gadgets in Ireland in years. A drop in sterling will mean when I do my next round of shopping (about twice a year) I'll do it next time I'm there and get them cheaper.
 

rockofcashel

Well-known member
Joined
Jan 23, 2005
Messages
7,998
Website
www.sinnfein.ie
Any movements have some pros cons.[b I haven't bought any clothes or gadgets in Ireland in years [/b]. A drop in sterling will mean when I do my next round of shopping (about twice a year) I'll do it next time I'm there and get them cheaper.
And yet blame the woes of the Irish economy on over inflated public sector pay... Ahhh the innocence
 

toughbutfair

Well-known member
Joined
May 28, 2009
Messages
9,946
And yet blame the woes of the Irish economy on over inflated public sector pay... Ahhh the innocence
I paid about 40k income tax last year so I don't apologies for shopping around for the best deals. It is the EU and all that!!!!!!!!
 

needle_too

Well-known member
Joined
Aug 7, 2007
Messages
918
If and when Sterling hits parity who among us here will volunteer to turn the last of the lights in Ireland?
+1

If you think the Irish economy is bad now, keep hoping your biggest trading partner collapses and ~€20Bn of exports fall in value.
 

Supermanpolitician

Well-known member
Joined
May 8, 2007
Messages
1,030
Are you basing the statement that the Euro is over valued on European currency concerns, or Irish export concerns ?

Irish exporters may wish for a lower value Euro, but we are but a tiny cog in the overall European economy. The real Euro economies i.e. Germany, may not think the Euro is over valued

There is a big difference between what we want and what other Eurozone countries want you know
Fair point and Ireland does export a proprtionally huge amount of GDP to non eurozone countries in comparison to similar countries, eg Finland.

But both Germany and GB have huge trade relations with the US. Yes they will lose buying power, as will we, buy they could be offset by an increase in exports.

Ireland would benefit more than most, but I take your point about the double edged sword.
 
T

The_Big_Fellow

Euro is also over valued. Both GBP and Eur will drop vs USD. This is a good thing for Euro and GBP exports to the US.
Sterling has dropped by about 25% over the last two years, yet it has had little impact on their exports.

I hope the Euro devalues further against the dollar, but a falling sterling will significantly damage the Tourism, agricultural and SME exporting sector.

Another worrying thing is that Britain are hoping to export their way out of recession, we are hoping to export out way out of a technical depression, and all of Europe is exporting to sustain growth. Everyone is planning to export their way to growth.
 

Cassandra Syndrome

Well-known member
Joined
Aug 23, 2009
Messages
16,885
Yeah Jim Rogers apparently said this a month ago (then apparently denied it, great hedge playing). This is what Quantitative Easing ultimately leads to. The UK economy is still shrinking and lending is still contracting so QE2 needs to be launched. Bye bye Sterling. Bennie boy in the States is running out of time as his April Fool's day prank of running out of the 1.25 Trillion US Dollars of MBS approaches.

Fiat currencies ultimately fail.
 

rockofcashel

Well-known member
Joined
Jan 23, 2005
Messages
7,998
Website
www.sinnfein.ie
Fair point and Ireland does export a proprtionally huge amount of GDP to non eurozone countries in comparison to similar countries, eg Finland.

But both Germany and GB have huge trade relations with the US. Yes they will lose buying power, as will we, buy they could be offset by an increase in exports.

Ireland would benefit more than most, but I take your point about the double edged sword.
We would also have the problem of a falling Euro value increasing import prices of oil and gas on Ireland's balance of trade
 

Supermanpolitician

Well-known member
Joined
May 8, 2007
Messages
1,030
Sterling has dropped by about 25% over the last two years, yet it has had little impact on their exports.

I hope the Euro devalues further against the dollar, but a falling sterling will significantly damage the Tourism, agricultural and SME exporting sector.

Another worrying thing is that Britain are hoping to export their way out of recession, we are hoping to export out way out of a technical depression, and all of Europe is exporting to sustain growth. Everyone is planning to export their way to growth.
All valid points, but if we boil it down it should mean that the euro drops further than sterling. UK exporters are on the pigs back at present towards the euro but struggling vis a vis USD.

If the euro drops more against the USD than sterling does, then that will restore the equilibrium somewhat.

What everybody seems to agree on is that both will drop against the USD, but the debate about how they go against each other is the key.
 

Cassandra Syndrome

Well-known member
Joined
Aug 23, 2009
Messages
16,885
We would also have the problem of a falling Euro value increasing import prices of oil and gas on Ireland's balance of trade
Yep and Food Commodities.
 
T

The_Big_Fellow

Fair point and Ireland does export a proprtionally huge amount of GDP to non eurozone countries in comparison to similar countries, eg Finland.

But both Germany and GB have huge trade relations with the US. Yes they will lose buying power, as will we, buy they could be offset by an increase in exports.

Ireland would benefit more than most, but I take your point about the double edged sword.
Remember that devaluing the currency can also import inflation, while we would love to beat down our debts with inflation. The Germans have a pathological hatred of it. They are not going to like it, but will they able to stop the Euro becoming the new Lira is another matter.
 

rockofcashel

Well-known member
Joined
Jan 23, 2005
Messages
7,998
Website
www.sinnfein.ie
Sterling has dropped by about 25% over the last two years, yet it has had little impact on their exports.

I hope the Euro devalues further against the dollar, but a falling sterling will significantly damage the Tourism, agricultural and SME exporting sector.

Another worrying thing is that Britain are hoping to export their way out of recession, we are hoping to export out way out of a technical depression, and all of Europe is exporting to sustain growth. Everyone is planning to export their way to growth.
We can just swap stuff around to each other.. and hey presto, the depression will disappear.. yeah ?
 
T

The_Big_Fellow

All valid points, but if we boil it down it should mean that the euro drops further than sterling. UK exporters are on the pigs back at present towards the euro but struggling vis a vis USD.

If the euro drops more against the USD than sterling does, then that will restore the equilibrium somewhat.

What everybody seems to agree on is that both will drop against the USD, but the debate about how they go against each other is the key.
True.

All the major currencies have good arguments against them at the moment.
 

Supermanpolitician

Well-known member
Joined
May 8, 2007
Messages
1,030
We would also have the problem of a falling Euro value increasing import prices of oil and gas on Ireland's balance of trade
Yes but on the greater scheme of things we can stand to pay more for oil vs USD if we reap the benefits at the other end.

(I am impressed that this is a thread without Cassanadra's "We're all doomed" hysteria.)

Also if both GBP and Eur drop, the price of oil in USD may drop. Ultimate demand for oil comes in part from Eur and GBP, so even though oil is priced in USD, a weakness in these currencies could contribute (though not soley cause) a drop in price. Any such drop in price would of course be offset by the currency fluctuations...hopefully leaving a minimal net price increase (or in a very unlikely scenario a decrease) when converted back to Euro or GBP.
 

Supermanpolitician

Well-known member
Joined
May 8, 2007
Messages
1,030
We can just swap stuff around to each other.. and hey presto, the depression will disappear.. yeah ?
Hate to break it to you but more trade = more wealth creation. Not a panacea but definitely a help.

Look at how protectionist policies worked (or didn't work) in the past.
 


New Threads

Popular Threads

Most Replies

Top