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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

#311

Post by drumhead »

fmajid wrote: post #288
drumhead wrote: post #249

At this point the falling pound is a one way bet. The Bank of England has been incredibly slow in dealing with inflationary issues in the UK, raising interest rates by only .25 percent when inflation was rocketing. The pounds been falling for a few months and they've made no effort to prop it up. The dollar is extremely strong, but the bank has been sleeping on the job a bit as well. They're going to have to raise ra…

The pound has fallen against almost every currency, not just the dollar. It's almost as if you can't run Reagan-style deficit spending when you don't control the world's reserve currency.

A large part of the deficit is due to the Energy cost relief program, something the government had to do. The BoE knew this but chose not to raise rates to compensate, so either they're happy with the situation or they're dithering.

Re: British pound hits record low against the dollar

#312

Post by 0xffff2 »

pjc50 wrote: post #299
justinator wrote: post #293

Earlier quoted context omitted.

> Most people in the UK are on fixed rate mortgages, most of which are 2-3 year fixes. You (UK) keeps using that word (fixed). I don't think it means what you think it means. Also, I'm really sorry you're in this position. One of these days we'll figure out something better than Capitalism.

That is literally how they are marketed, and the rate is fixed for N years.

It's a seemingly rare case where the US terminology makes more sense than the rest of the world. In the US, a "fixed" mortgage is a fixed rate for the entire term of the loan (usually 30 years). Anything else is called an ARM (adjustable rate mortgage), even if it has a fixed component (e.g. a 5-year ARM has a fixed rate for 5 years and then becomes adjustable for the remainder of the term).

As I understand it, what the US considers a fixed rate mortgage simply doesn't exist in most countries, so it makes some amount of sense that the term "fixed" gets used for the next closest thing.

Re: British pound hits record low against the dollar

#313

Post by disgruntledphd2 »

rossdavidh wrote: post #287
SilasX wrote: post #244

Earlier quoted context omitted.

Are we looking at the same chart? I see it go way up at the end to a level that only matches a few previous, short-lived spikes

Yes, but at the moment it's still within the range of the previous 5 years, which is not a long time period. If it continues spiking at the same rate for weeks longer, then yes it will be unusual. But the fact that you don't have to go back very far to see multiple examples of spikes of this size or greater, means that as of this point it isn't yet that unusual. If it keeps going for weeks at this rate, then it is a…

Hmmm, I wonder what could have caused such volatility 5 or 6 years ago?

I think that the last five years have been bad for sterling, and the last five days are a big part of that.

Re: British pound hits record low against the dollar

#314

Post by disgruntledphd2 »

rich_sasha wrote: post #113
wsc981 wrote: post #98

Earlier quoted context omitted.

Yes, Germany benefitted hugely from southern European countries joining the Euro as it made it much easier for Germany to export goods to southern Europe. At the same time it was made much easier (at lower interest rates) for southern European countries to borrow money from northern European countries and other markets, as creditors would feel more secure that they'd get their money back. Creditors would assume the n…

This narrative is kind of correct, but it irks me when people somehow blame northern Europe for southern Europe's debt. No one forced them to overborrow, especially since it mostly happened in times prosperity. Generally speaking, access to cheap debt is seen as a uniformly good thing.

The really low interest rates set by the ECB for the benefit of Germany/Northern Europe pre financial crisis absolutely poured fuel on the bubble fires of the PIIGS.

Re: British pound hits record low against the dollar

#315

Post by ploppyploppy »

LatteLazy wrote: post #255
nivenkos wrote: post #235

Earlier quoted context omitted.

The UK is in much better shape than Hungary, Poland, Germany and Italy...

Despite paying a 25% premium on energy because of our falling currency vs the euro used in those countries? Despite relying on them being willing to sell us energy, as non-single-market countries have no guarantee of access?

The Euro is doing worse against the Dollar. WTF are you talking about?

Re: British pound hits record low against the dollar

#316

Post by ploppyploppy »

peanuty1 wrote: post #75
xerxesaa wrote: post #40

Earlier quoted context omitted.

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

Many ppl in Scotland and Ireland view it as a gateway to independence they've long sought after.

Actually no they don't, that's a misrepresentation of a minority viewpoint.

Re: British pound hits record low against the dollar

#317

Post by LatteLazy »

ploppyploppy wrote: post #315
LatteLazy wrote: post #255

Earlier quoted context omitted.

Despite paying a 25% premium on energy because of our falling currency vs the euro used in those countries? Despite relying on them being willing to sell us energy, as non-single-market countries have no guarantee of access?

The Euro is doing worse against the Dollar. WTF are you talking about?

The pound is down against the euro. So no, it's not doing worse against the dollar unless you look at the absolute value which is pretty dumb...

Re: British pound hits record low against the dollar

#318

Post by kergonath »

alexisread wrote: post #150
kergonath wrote: post #69

Earlier quoted context omitted.

She was not kidding when she said she was Thatcher v.2. Exactly what the UK did not need.

Thatcher implemented a windfall tax, LT is not even that. UK residents are paying twice for their energy consumption as a result. Nose was in the trough 3 days into her premiership when the top treasury official got fired, to make way for these tax cuts. Guess the Conservatives figure they are going to lose the next election...

> Thatcher implemented a windfall tax, LT is not even that.

You’re right. She’s a parody of Thatcher. Thatcher at least had a long-term strategy (London becoming the economic centre of Europe, even if it means hell for the rest of the country). She’s Thatcher with all the greed and none of the vision.

Re: British pound hits record low against the dollar

#319

Post by colinmhayes »

darawk wrote: post #31
throw123123123 wrote: post #26

Earlier quoted context omitted.

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.

That tweet was 2 days ago and the pound has barely moved against the dollar since then. It lost a few cents, but that's hardly a crisis.

Re: British pound hits record low against the dollar

#320

Post by ben30 »

denton-scratch wrote: post #268
mcv wrote: post #233

Earlier quoted context omitted.

So it's not the pound plummeting, but the dollar recovering.

No, it's the pound plummeting. Basically, nobody thinks that Kwarteng's extreme tax changes make any sense. Not even in his own party, apart from a tiny gang of nutters. He's planning an enormous increase in government debt, so he can give money to people who already have too much. His tax-cut plans are inflationary. Meanwhile, the Bank Of England has a mandate to keep inflation within a window that it's already move…

‘Kwarteng's moves will tend to heat the economy up, interest rate rises will try to cool it down’

100% this, it’s utter madness. I had the same thought this morning, both acting in opposing directions.

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