121–130 of 277 posts
Ah those poor boomers! Paying 15% interest on their £40,000 mortgage. These millennials don't know how easy they have it, paying 3% on their £200,000 mortgage.
Ah those poor boomers! Paying 15% interest on their £40,000 mortgage. These millennials don't know how easy they have it, paying 3% on their £200,000 mortgage.
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> If you build a house on rotten stilts, and some neighborhood kid comes and kicks one of them, it's not the kid's fault when the house collapses. It's at least partially the kid's fault. Don't go kicking stilts under houses.
Fault and responsibility are two entirely different concepts. The kids doing the kicking might be at fault for bringing the house down, but the kids are not responsible for the house being in such a sorry state that kids kicking it's stilts can lead it to collapse.
What I would like to see is what led to the pound being so badly mispriced in the first place. Did they just price it at whatever was the prevailing price? And was that why the Bank of England ended up with such small reserves? Presumably they could have priced it lower and bought up Deutschmarks to bring down the price of pounds and build up reserves to start with when they decided to fix it. There is also the quest…
Ultimately the problem was that the correct price for the GBP/DM rate in 1989 wasn't the same as the correct price in 1992 - the divergence was largely because rates of inflation differed markedly between the UK and Germany and didn't converge.
Also on your point re what the Germans could have done - they would have needed to cut rates to alleviate pressure. Instead they raised rates to head off inflation in Germany (this was in the context of German reunification which had led to a dramatic increase in government spending in Germany which has inflationary effects).
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If I build a house on stilts strong enough to withstand kicks but somebody comes along with a giant sledgehammer to break the stilts, they will be at least somewhat to blame.
No one is running around and destroying healthy financial entities. Rotting posts will break eventually, a little effort can just change the timing.
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The Eurozone is fatally flawed because they share a currency but have no transfer payments between rich and poor members. So you have countries like Germany that are effectively subsidized by poorer countries. It's been a great setup for 20 years if you've been in the German capital class, not so great for anyone else.
>So you have countries like Germany that are effectively subsidized by poorer countries. Could you explain this comment further, or have links to stories that go in depth on how that works? Not saying you are wrong, but I don't understand how germany, which is an economic powerhouse and exports a lot of goods, are being subsidized by poorer countries.
There are some transfer mechanisms from rich to poor Eurozone countries, but they're nothing anywhere close to the scale of e.g. the US federal government.
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Except that Soros did not hurt UK economy. Just bruised some egos at the Bank of England by showing their stupid mistakes.
Huh? He gained billions of dollars (pounds, Deutschmarks, whatever), the UK government lost billions. That clearly hurt their economy. Letting the currency float was better in the long term, and his actions made that happen, but I'd like to think there were other ways. And I doubt helping the UK was his goal; I can think of billions of other more likely reasons. Many people would say he stole this money from the gove…
Thus everyone in the market who was right about the "proper" position of GBP (Soros was just one of them, the largest but not the majority) won a bunch of money, and everyone who was wrong but still chose to bet more and more billions instead of accepting the reality - namely, UK government - lost billions. They could have chosen not to attempt to artificially prop up the exchange rate with these major transactions, and float the currency earlier, when it had to be floated. Heck, floating the currency a single day earlier wouldn't have any meaningful drawbacks but would have avoided much of the losses.
It's not that the money was taken from the government, but rather the government wasted a huge amount of taxpayer's money betting on the false assumption (wishful thinking for domestic political reasons) that the pound doesn't have to be floated. Such bluffs are punished by the market, with the people calling the bluff getting the money (and people falsely calling a bluff losing their money if they turn out to be wrong).
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Exactly. Yes, there were many members of the UK that became effectively less wealthy when the pound was devalued, but there were many members of other European nations that effectively became more wealthy. Why are we valuing one over the other.
some win, some lose. it's life
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The majority of EU budget consists of programs such as the common agricultural policy, ERDF and other infrastructure funding which are de facto transfer payments to improve and sustain poorer areas.
Correct me if I’m wrong but isn’t majority of agricultural funding going to France, Germany etc, the wealthy members?
However, France and Germany contribute significantly more than they receive, and poorer regions receive significantly more than they contribute, so that's effectively a transfer mechanism.
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The Eurozone is fatally flawed because they share a currency but have no transfer payments between rich and poor members. So you have countries like Germany that are effectively subsidized by poorer countries. It's been a great setup for 20 years if you've been in the German capital class, not so great for anyone else.
>So you have countries like Germany that are effectively subsidized by poorer countries. Could you explain this comment further, or have links to stories that go in depth on how that works? Not saying you are wrong, but I don't understand how germany, which is an economic powerhouse and exports a lot of goods, are being subsidized by poorer countries.
There are other factors at play, of course, and I think that a complete analysis would defy any simplistic explanation. Compare to the US dollar: does New York benefit from a common currency at the expense of Louisiana?