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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

#321

Post by theironhammer »

helij wrote: post #167
blitzar wrote: post #165

Earlier quoted context omitted.

I lived in London for some years and wouldn’t choose to go to the UK as a tourist in the summer. There is a reason everyone in the UK goes to Europe in summer - it is much nicer.

I live in London and would choose to go to the UK as a tourist at pretty much any time of the year. Plenty to see and do. London weather gets bad rep but I find it pretty good. Rarely goes below zero degrees Celsius and is rarely so hot that you struggle. I actually prefer London weather to central/south European one for example. More consistent, pleasant all year round. This is all personal though...

I would agree. Perhaps if it got more sunny days, but temps wise it's not at all.

When I was in Paris a local informed me that Paris gets more rain than London. I suspect though London rain is more spread out throughout the year.

Re: British pound hits record low against the dollar

#322

Post by lottin »

plasticchris wrote: post #301
lottin wrote: post #184

Earlier quoted context omitted.

So how does a cheap currency benefit Germany according to this theory? Another thing is that if production costs go down (although you don't say why they're going down, it seems a random assumption on your part), then competition among exporters will drive the price of exports down. I mean, this is Economics 101.

So, this only works if a large part of the cost is labor (this is the model china used in the last few decades) in which case the cost of production definitely goes down. I'm no expert in Germany's economy, maybe they have more materials / energy cost that they need to pay for in their home currency?

Your analysis is incorrect. Markup is a function of market power. If market power remains the same, an increase in markup cannot last for long. Competition will drive prices down until markup goes back to its previous level. Therefore the end result is a fall in the price of exports. Whereas for importers the opposite is true, imports become more expensive for local purchasers. This is what is meant by "selling cheap and buying expensive", which is exactly what happens when a currency depreciates.

Re: British pound hits record low against the dollar

#323

Post by pjc50 »

nxm wrote: post #161
kmeisthax wrote: post #97

Earlier quoted context omitted.

The EU did not want them keeping access because the UK also wanted to write their own rules. This meant that if the UK decided to lower standards to, say, pursue a US or China trade deal, but the EU let them keep their market access, then they would just be able to smuggle goods into the EU single market. Pretty much every sticking point of the UK/EU negotiations boiled down this. And the stated reasoning was an "I'm…

What you label “I’m me” I say is an individual country’s ability to self determination which every sovereign state should have. Globalist elitists have been getting richer and richer and it was time for a change

Compared to dropping the value of the pound while allowing hedge funds to insider trade against it? The only people doing better out of Brexit are a small number of disaster capitalists. It's ridiculous how people will let the guy from Eton present himself as "not elite".

Re: British pound hits record low against the dollar

#324

Post by theironhammer »

ctrlmeta wrote: post #213
ndsipa_pomu wrote: post #203

Not really surprising that there's a lack of confidence in the untested combination of reducing tax (for high earners) and increasing borrowing. At first glance, that would seem to be a recipe for high inflation.

It does seem like a recipe for high inflation. But I want to understand why they chose this combination? Why play such a big gamble? There has to be some logic behind making this choice. But what is it? Were there other safer alternatives that they could have gone with? What could be the reasons for choosing this combination over those safer alternatives?

Ideology. Truss is a fanatic. An Ayn Randian Zealot. That's why. She co-wrote a manifesto Britannia Unchained. Her Chancellor was a co-writer.

Re: British pound hits record low against the dollar

#325

Post by candybar »

darawk wrote: post #43
onlyrealcuzzo wrote: post #39

Earlier quoted context omitted.

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.

He says it most clearly right here: https://twitter.com/paulkrugman/status/1573656086716071937 "The moron risk premium has now been priced in". That is, he believes the currency depreciation is substantially over. He is also saying the thing you're reading him as saying too though.

GBP/USD hasn't moved substantially in either direction since Krugman's tweets.

Re: British pound hits record low against the dollar

#326

Post by bestouff »

0xffff2 wrote: post #312
pjc50 wrote: post #299

Earlier quoted context omitted.

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…

Same in France. So if we agree with the US there's a chance we're right ...

Re: British pound hits record low against the dollar

#327

Post by theironhammer »

denton-scratch wrote: post #279
ctrlmeta wrote: post #213

Earlier quoted context omitted.

It does seem like a recipe for high inflation. But I want to understand why they chose this combination? Why play such a big gamble? There has to be some logic behind making this choice. But what is it? Were there other safer alternatives that they could have gone with? What could be the reasons for choosing this combination over those safer alternatives?

> But I want to understand why they chose this combination? My guess is scorched earth. BoJo is such a disaster that his own party had to remove him - and even that turned out to be a struggle (getting rid of leaders with challenged hair seems to have been a struggle lately on both sides of the pond). He became that unpopular. The crew that have replaced him have no chance of winning the next General Election; Truss…

Bingo! Keir Starmer wanted rid of BoJo because he would be hard to beat in a GE. Truss will be easy to beat but yes the damage she will cause. Was it really worth it? There just really isn't any win for Labour, or the British people.

Re: British pound hits record low against the dollar

#328

Post by theironhammer »

quickthrower2 wrote: post #105

The UK could now consider making stuff, and exporting that stuff. Probably good to do a London based startup too, sell to the US. Get your seniors for the price of a US junior (say $60k/y)

The elites in the UK won't invest in the UK. They'd rather invest in the USA.

Its time for a Land to the Tiller type manifesto.

Re: British pound hits record low against the dollar

#329

Post by kypro »

blibble wrote: post #305
kypro wrote: post #285

Earlier quoted context omitted.

The mistake I made was dramatically underestimating the volatility. I always understood rates could move up, but if they were going to have trended up to 5% in 10 years then that wouldn't be such a big problem because wages would have moved up by then and I would be able to slowly pay down the mortgage to keep repayments the same. Plus I could also afford 5% rates. The issue with fixes is that you pay a premium for f…

> The issue with fixes is that you pay a premium for fixing longer term and you also risk interest rates being lower going forward than you fixed for. this is the essence of the interest rate swap (which is what you're actually buying when you "fix") the person on the other side of the transaction is betting that the rates will rise, and you're betting that they won't > A lot of the fixes also have early repayment ch…

Yes, exactly. Fixed rates are basically insurance policies. When rates are rising rapidly like they are to day longer-term fixes seem obvious, almost free money. But the majority of the time they work against you because you're betting against a market that probably knows more than you as a retail mortgage borrower.

That's not to say fix deals are always bad, it really just depends on circumstances. There's no free lunch here and those suggesting everyone should be taking 10 year fixes (where they're available) are suffering from recency bias. There's now a huge risk that those taking 10 year fixes will be locked into much higher rates should they come down over the next few years, which is very possible.

That's just the UK market though. I believe in the US long-term fix rates make much more sense because you can refinance without incurring fees so if rates do drop you can just refinance.

Re: British pound hits record low against the dollar

#330

Post by candybar »

fulafel wrote: post #138
spaceman_2020 wrote: post #66

Earlier quoted context omitted.

Paul Krugman is probably the most consistently wrong popular economist I can think of.

Do you mean as a columnist/tweeter or in his work as a profesisonal economist in academia, textbooks etc? Judged by peers he's still quite valued eg by this ranking: https://ideas.repec.org/top/top.person.all.html (rank 36/3255) - but of course in academic research you don't necessarily aim to be right as often as possible, it's a search and exploration of ideas and testing what works.

You're being far too charitable here - the idea that Krugman has a history of being wrong has nothing to do with anyone trying to evaluate his track record in an objective manner, but everything to do with those who disagree with his political viewpoints trying to take him down a notch, especially to counter his stellar academic career. This is of course silly - Krugman is obviously highly knowledgeable about economics and his understanding of and ability to explain sophisticated economic phenomena are rivaled by few, but the nature of economy is such that anyone that makes lots of predictions publicly is going to have a long track record of being wrong.
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