I am a complete ignorant regarding economy but one thing I was quite certain about was that when you print a lot of money, then your currency devaluates. So why given that the US have printed huge amounts of dollars in the last couple of years, the dollar is winning both against the Sterling and the Euro? Is it just that war in Ukraine have made investors ignore the huge inflation in the dollar? Maybe after the midte…
British pound hits record low against the dollar
171–180 of 379 posts
Re: British pound hits record low against the dollar
#172Earlier quoted context omitted.
I'm no economist, but intentionally cutting themselves out of a massive common market probably isn't helping much.
> intentionally cutting themselves out of a massive common market probably isn't helping much. My understanding is that they never intended to leave the common market but to gain a trade deal that would leave market access substantially the same. However, the EU wouldn’t let them keep access in the divorce if for no reason other than as a cautionary tale for other member states. So, it turned ugly and there they are.
I won't get into a discussion about who is to blame for the breakdown in negotiations, as those discussions tend to get ugly fast.
Re: British pound hits record low against the dollar
#173Maybe the economic ramifications of Brexit were not fully thought out before everyone decided to vote for it.
Re: British pound hits record low against the dollar
#174Earlier quoted context omitted.
I'm no economist, but intentionally cutting themselves out of a massive common market probably isn't helping much.
> intentionally cutting themselves out of a massive common market probably isn't helping much. My understanding is that they never intended to leave the common market but to gain a trade deal that would leave market access substantially the same. However, the EU wouldn’t let them keep access in the divorce if for no reason other than as a cautionary tale for other member states. So, it turned ugly and there they are.
> However, the EU wouldn’t let them keep access in the divorce if for no reason other than as a cautionary tale for other member states.
How would you propose that this access would work, given that the UK refused to accept EU regulation?
Re: British pound hits record low against the dollar
#175Earlier quoted context omitted.
I want to have my cake and eat it, too! From my outsider’s perspective, the EU’s justification is far stronger than a “cautionary tale”: a Union means a Union. No other country or state structure in the world allows its constituent members to carve out only the bits that they themselves like; that would subvert the entire point of the Union.
> No other country or state structure in the world allows its constituent members to carve out only the bits that they themselves like The EU more or less does exactly that with Norway, a non-EU country with common market access and freedom of movement etc. That was the model I recall being promoted for a UK/EU relationship. They never intended to leave the common market or eschew all regulatory commonality.
That is how some people advertised it to yes voters, but from the start May's and then Johnson's government were clear that they would not accept freedom of movement or the jurisdiction of the ECJ (both of which Norway has). And even if the EU was willing to do another Switzerland (unlikely), that _still_ has to accept freedom of movement and, well, something that, while not the ECJ, could easily be mistaken for it in a dark alley.
Re: British pound hits record low against the dollar
#176Earlier quoted context omitted.
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.
So almost 10% drop relative to the Euro in addition to both of them falling against the dollar. I wonder what's behind that particular weakness for the pound.
Re: British pound hits record low against the dollar
#177Earlier quoted context omitted.
I'm no economist, but intentionally cutting themselves out of a massive common market probably isn't helping much.
> intentionally cutting themselves out of a massive common market probably isn't helping much. My understanding is that they never intended to leave the common market but to gain a trade deal that would leave market access substantially the same. However, the EU wouldn’t let them keep access in the divorce if for no reason other than as a cautionary tale for other member states. So, it turned ugly and there they are.
My understanding from the news during the negotations was that something similar to common market access under substantially similar terms was on the table from the EU, as were several variations of it. But these were all rejected, because they were viewed by some _in the UK_ as "too soft, soft Brexit, Brexit in name only". Enough politicans and, how shall we say, "influencers", wanted a "hard Brexit", and that meant something bold, symbolic and rejecting things too similar to what had been in place before (including much that was on the table from the EU).
Many little things were on the table from the EU as well, regardless of the main deal, that were seemingly rejected by the UK for no convincing reason.
The ability for performing artists such as musicians, DJs, etc to do tours of Europe as they did before, for example, was on the table from the EU, but the UK turned it away, because of course we would not want EU citizen artists able to do the same reciprocally. So that wiped out a large part of those UK artists' businesses and lifestyles for no obvious reason.
The Erasmus program, also, which allowed students to travel on exchange programs through many of the countries, swapping with their counterpants coming to the UK.
I think both of those suffered from ideology, because in virtually every speech by Theresa May that I heard with regard to the negotiations when she was PM, one of the most up-front and prominent sentences seemed to be in the prelude over and over: "Freedom of movement will end". It sounded more important than anything else. She has also been the architect of the "hostile environment" too, which is frankly legislated evil and still ruining lives. She was reportedly upset at the Brexit vote initially, but saw immigration control and removal of the UK from the European Court of Human Rights as a silver lining, so everything bolsters my view that it was a major motivation for her.
The famous "oven ready deal" which Boris Johnson said he would get through if he was elected in 2019, won him an election, and then he got it signed and ratified, and then within about 6 months he was already publically committing to breaching the terms. One wonders if the UK gov't ever intended to honour the terms or if it was a bait and switch at the time it was signed.
It's because of how that was done (and still is being) that the UK's access to the Horizon science & technology Europe-wide collaborative R&D funding pool has not been renewed. That too, is something the EU had kept on the table, if the deal treaty was honoued.
That one's a particular shame because the UK was a net beneficiary and had many top quality R&D groups depending on that funding. The UK gov't says it has its own R&D funding pool to replace it, but nobody believes it will really roll out matching anywhere near the previous level, nor with the previous quality of international collaboration.
Re: British pound hits record low against the dollar
#178Earlier quoted context omitted.
But competitive simply means your products sell for less. The question was how does selling for less and buying for more benefit you?
You don't sell for less, since you sell in foreign currency. So you get the same amount of foreign currency (price in USD remains the same), but you need less converted to your internal currency to pay your labor. But then you can invest that extra profit in decreasing your foreign currency price, thus becoming more competitive. You can google for longer explanations of why a weak currency is excellent for exporters,…
When a country's currency appreciates in relation to foreign currencies, foreign goods become cheaper in the domestic market and there is overall downward pressure on domestic prices. In contrast, the prices of domestic goods paid by foreigners go up, which tends to decrease foreign demand for domestic products.
A depreciation of the home currency has the opposite effects.
It contradicts directly your claim that exports don't get cheaper. You're saying exports remain the same (because they don't get any cheaper), and that the only change is an increase of corporate profits at the expense of wages.
[1] https://en.wikipedia.org/wiki/Currency_appreciation_and_depr...
Re: British pound hits record low against the dollar
#179Earlier quoted context omitted.
What you are saying is the policy of the new prime minister. When it was announced, the pound lost 40% of its value as a result of that. Her policies are the result of an ideological adherence to Reaganomics trickle down economics instead of any pragmatic economic policy. I live here and your proposed hyper capitalistic haven sounds like a nightmare. You even preempted any possible failure this type of policy can hav…
You are experiencing the rot of failing economy in real time. The only solution is useful, productive enterprise - this is how functional, successful societies operate. There could be other paths there, but the most sure bet is to unshackle capital and let it invest freely.
I guess the question is, is there any event or outcome that would disprove that this is the best way forward?
Re: British pound hits record low against the dollar
#180Earlier quoted context omitted.
I want to have my cake and eat it, too! From my outsider’s perspective, the EU’s justification is far stronger than a “cautionary tale”: a Union means a Union. No other country or state structure in the world allows its constituent members to carve out only the bits that they themselves like; that would subvert the entire point of the Union.
> No other country or state structure in the world allows its constituent members to carve out only the bits that they themselves like The EU more or less does exactly that with Norway, a non-EU country with common market access and freedom of movement etc. That was the model I recall being promoted for a UK/EU relationship. They never intended to leave the common market or eschew all regulatory commonality.
And the EU did offer the UK various flavours of "a non-EU country with common market access and freedom of movement etc.", according to the news in the UK at the time.
Those were all turned down by the UK government. What you're describing was called by many a "soft Brexit".
As you may recall, there were many voices demanding a "hard Brexit" instead. In the end, the hard-Brexiters won by political strategy. I don't think they were even in the majority.
So I don't think it can be said correctly that "they never intended to leave the common market". The UK wanted some trade benefits of the common market, but they also wanted something they could sell politically as a "hard Brexit". That meant a lot of things had to be seen to be changed, and also it required "freedom of movement will end" - that is, the UK in the end insisted that it be nothing like the Norway or Switzerland models.