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British pound hits record low against the dollar

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Re: British pound hits record low against the dollar

#31

Post by darawk »

throw123123123 wrote: post #26
darawk wrote: post #11

https://twitter.com/paulkrugman/status/1573649995290628096 The iron law of Krugman strikes again. I really need to start trading on this.

I have a lot to say about Krugman, specially when he talks about Argentina, but he is not wrong here. It's not a crisis to have a devaluation.

It's not not a crisis either, though. Crisis doesn't really have a formal definition, it's just an extreme devaluation. I agree that what's happened so far is not quite yet a "crisis", but it certainly seems like Krugman was attempting to predict that not-this would happen.

Re: British pound hits record low against the dollar

#32

Post by darawk »

jeffbee wrote: post #23
darawk wrote: post #11

https://twitter.com/paulkrugman/status/1573649995290628096 The iron law of Krugman strikes again. I really need to start trading on this.

That's hilarious, but is it a currency crisis or is it just trading down a bit?

There's no real formal definition of crisis, but being fair to him it's not yet a crisis. It is however a sharp devaluation, and appears to be the opposite of what he was predicting.

Re: British pound hits record low against the dollar

#33

Post by onlyrealcuzzo »

rr808 wrote: post #5

Crazy times it wasn't long ago that a pound bought over $2. The interesting thing this week is that the most fragile and indebted country that the EU has bailed out for 30 years straight (Italy) has elected a govt that doesn't like the EU. Good times ahead.

Greece was more fragile and indebted for sure...

Re: British pound hits record low against the dollar

#34

Post by shawabawa3 »

Amfy wrote: post #13

I wonder why the GBP is going down so much faster than EUR. If this is because of expensive energy imports, they should go down equally fast? Edit: Ahh, tax cuts and concern of larger deficit.

The cause is a direct response to the government announcing their ~budget~ "fiscal event", which is to cut taxes, particularly on the rich, and increase spending

Re: British pound hits record low against the dollar

#35

Post by zarzavat »

throw123123123 wrote: post #26
darawk wrote: post #11

https://twitter.com/paulkrugman/status/1573649995290628096 The iron law of Krugman strikes again. I really need to start trading on this.

I have a lot to say about Krugman, specially when he talks about Argentina, but he is not wrong here. It's not a crisis to have a devaluation.

It is a crisis when you already have an inflation crisis. People already can’t afford to keep warm this winter. Therefore, the government is capping energy bills, if there is a currency devaluation the government has to borrow more to maintain the cap...

Re: British pound hits record low against the dollar

#36

Post by Mountain_Skies »

nanidin wrote: post #29
rr808 wrote: post #5

Crazy times it wasn't long ago that a pound bought over $2. The interesting thing this week is that the most fragile and indebted country that the EU has bailed out for 30 years straight (Italy) has elected a govt that doesn't like the EU. Good times ahead.

Indeed, a great time to vacation in the UK!

Many of my friends who regularly made trips to Europe pre-pandemic have been lured into making their first trips since 2019 due to the strength of the dollar against the Euro. Probably will be many similarly attracted to the UK by the weak Pound. Guess that's good news for the travel industry even if so much else is going wrong.

Re: British pound hits record low against the dollar

#37

Post by pcl »

christophilus wrote: post #17
walrus01 wrote: post #4

Maybe the economic ramifications of Brexit were not fully thought out before everyone decided to vote for it.

The Euro and Yen and almost all currencies are also down significantly vs the dollar, so I don’t think this is a Brexit thing. This is a strong US dollar thing as the world grapples with collateral shortages and a relative dollar shortage. Edit: I highly recommend the podcast “Eurodollar University” on the subject.

In the last 60 days, the GBP has slid from 1.20 EUR to 1.09 EUR, fwiw. It definitely looks like something other than a strong dollar.

Re: British pound hits record low against the dollar

#38

Post by thehumanmeat »

christophilus wrote: post #17
walrus01 wrote: post #4

Maybe the economic ramifications of Brexit were not fully thought out before everyone decided to vote for it.

The Euro and Yen and almost all currencies are also down significantly vs the dollar, so I don’t think this is a Brexit thing. This is a strong US dollar thing as the world grapples with collateral shortages and a relative dollar shortage. Edit: I highly recommend the podcast “Eurodollar University” on the subject.

Wow, finally someone that I find on a web forum also willing to utter the words "dollar shortage" during this time.

Big props to Jeff and Emil for their generous freely available teachings. I further recommend their paid subscription too. It's well worth it.

These times are easy to see coming if you had the right monetary lens on.

Re: British pound hits record low against the dollar

#39

Post by onlyrealcuzzo »

darawk wrote: post #32
jeffbee wrote: post #23

Earlier quoted context omitted.

That's hilarious, but is it a currency crisis or is it just trading down a bit?

There's no real formal definition of crisis, but being fair to him it's not yet a crisis. It is however a sharp devaluation, and appears to be the opposite of what he was predicting.

I don't know how you got that.

He's saying that a devaluation won't kill the country because the debt is denominated in Pounds.

That seems like a strange clarification. If he's predicting the Pound wouldn't decline - he'd say that.

Not say that if it does decline, it won't be a problem...

That implies it's a possibility. It just won't cause a crisis if it happens.

Re: British pound hits record low against the dollar

#40

Post by xerxesaa »

kfarr wrote: post #30

Finally the market is settling in to the reality of Brexit! Looking forward to continued fall of the sterling as the united kingdom loses its unity. Will Northern Ireland or Scotland be first to go?

Somehow it strikes me as mean spirited to look forward benefiting from the troubles of a nation.
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