Gordon's Gamble...

[Canada Bob]

To dilute this 'head2head' banter, although I applaud both of you, your knowledge of the subject matter and appreciate your differing view points, can we all join in?

The more the merrier in my book, my only intention is to fire a warning shot across the bows of folks who think what's going on aint a big deal. I know that by raising my concerns it can easily be seen as fear mongering, but the facts are that people are losing their jobs and their homes in record numbers, and it aint slowing down as some might think, it's getting worse by the day.

How bad do you think it feels for the families that are seeing their homes repossessed, around 200 families a day are going through that, few if any of them responsible for their own plight.

Things are bad here in Ireland, not sure if you guys heard about the 100,000 folks who took to the streets last week end in Dublin ? Northern Ireland is just as bad if not worse, and according to the link below it seems as though Scotland is starring into the abyss too...

No "soft landing" here

As far as predicting the unemployment rate by the end of this year, I think your 3.3 Million is a bit on the high side, gawd help the UK is that's where it's at. Don't forget that there's already 7.3 Million folks who don't turn out for work every day, someone has to put money into their hands, chances are the State is already carrying them, but how much can you load onto a ship before you sink it ?

As for the ? surviving these events, well I've got rid of what I held in sterling, even though the Bank did everything they could to dissuade me, seemed a bit odd that they could even care about me moving to Euro's !

My bet against the ? is partly based on Gordon's Gamble of printing money, how can that do anything but drive the value of the ? down ? That's not the only thing going against sterling, how can it stand alone against the Euro or the $, both backed up by massive and more diversified economies.

As you say, Ireland's glad they got rid of the Punt, the ONLY difference between Ireland and Iceland is one letter and the Euro. Whether we like it or not the UK would have been better off if we had adopted the Euro, not that I was ever a fan of it, I still reckon up in shillings, sigh.

I honestly think that the ? is dead on its feet, in my opinion it's about to be "counted out", but when it comes to counting my money I'd prefer to do it myself rather than let Gordon do it for me. Just a matter of time before the Market starts to bet against the ? then we'll see a slump, just when we don't need one, everything we import {much of it food} will start to rocket in price, the money in your pocket will buy less, while the food in your stomach costs more.

I have a bad feeling about folks waking up one day to be told "the ? in your pocket is no more" remember who warned you if/when that happens. I'll not be lead by the nose either, if what concerns me runs contrary to what Meddlesome Mendelson or Galloping Gordon wants me to think, or say, then too bl**dy bad for them, I'll float me own boat thanks...

[Canada Bob]

I've spent some time looking at "The Banking Act" {Thanks for the link Don}, it's a lengthy document indeed but you don't need to get too far into it before you find the following...

Special resolution objectives

Objective 1 is to protect and enhance the stability of the financial systems of the United Kingdom.

Objective 2 is to protect and enhance public confidence in the stability of the banking systems of the United Kingdom.

Objective 3 is to protect depositors.

Objective 4 is to protect public funds.

Doesn't this alone give Gordon and his minions all the authority they'd need to dump sterling ? That statement about protecting the financial stability of the UK is one thing, but the comment about "enhancing" the stability of financial systems and to enhance public confidence, seems a bit suspicious to me.

What could they possibly do the "enhance" confidence and stability ? nothing they are doing right now seems to be working !

I wonder if they dumped sterling and took on the Euro if that would "protect depositors" and "public funds" ?

There's so much "flexibility" in the wording of this Act, after reading {what's available to us} you could drive a coach and horses all the way to Brussles without anyone even knowing they'd been taken for a ride.

I'm more certain than ever now that if Plan A {printing money} don't work, Plan B will be to dump sterling.

Edited February 25, 2009 by Canada Bob

[Heilandee]

Maist interesting read on here in a long time,well done to both for constructive discussion with respect for differing opinions,(some politicians could learn a bit from u's both) i'm sure there's plenty relevant points on both sides but i'll stay in Caley D's corner as the consequence of Bob being totally accurate would stop me sleeping.Anyways,eh'll split my vast fortune evenly between RBS shares,Euro's,and a few quid stuffed in a mattress.The vast majority of my disposable will still get blown on a weekend on beer,the bookies and fitba and i'll probly just waste the rest.

[Canada Bob]

Maist interesting read on here in a long time,

Thanks for yer kind words...

well done to both for constructive discussion with respect for differing opinions,(some politicians could learn a bit from u's both)

Aye, I guess your right, it's no an easy task to present your argument as forcefully as you feel for it without upsetting folks with an opposed view.

Although I've tried to inject the odd bit of sardonic humour into the debate I do feel that this is a very serious situation, one that folks need to assess what exposure they might have, and how to best cope with what's to come.

i'm sure there's plenty relevant points on both sides but i'll stay in Caley D's corner as the consequence of Bob being totally accurate would stop me sleeping.

That's as good a reason as any :thumb04:

Anyways, eh'll split my vast fortune evenly between RBS shares,Euro's,and a few quid stuffed in a mattress.

How's that song go ? "two out of three aint bad"...

The vast majority of my disposable will still get blown on a weekend on beer,the bookies and fitba and i'll probly just waste the rest.

I can think of worse things to do

[CaleyD]

The thing is Bob, government could have ditched Sterling whenever they liked anyway and don't need anything that might (or might not) be in this new act to give them the power to do so.

From my quick look through the act it appears as if it largely formalises processes which were taken care of previously in a more informal manner. It also gives government the power to intervene sooner...a power that's only of any use if those utilising it aren't as incompetent as those who might cause the issues in the first place.

Haven't had a chance to read and digest today's reports on RBS yet, but I have to admit that the headlines haven't made for pretty reading.

[Heilandee]

Thats the printing presses warming up! We're doomed

[latviaman]

Thats the printing presses warming up! We're doomed

Too much info to absorb after last night's Great result!!

Got home at 1 am and a bottle (Hennessy) awaited me on the table, so I thought? is this for sorry? / a draw , or has she gone daft at the shops. Hey great result tho!

I have ammended my photo as Mrs L says I look a scruffy man!!!

[Canada Bob]

Thats the printing presses warming up! We're doomed

As Gordon says, "this should speed things up a bit", yea, right, that's all a rudderless ship needs. The only thing this will achieve will be to drive us on the rocks faster.

Dint help Zimbabwe when they tried "quantitative easing", wouldn't you think we could pull something better out of the hat ?

Then there's the ever decreasing interest rates, celebrated by folks with floating mortgages, talk about short sightedness, sure enough they may be saving up to 500 quid a month, but the value of their property is plunging at 1200 quid a month towards negative equity, can't they see that, FFS, gawd help them if they need to remortgage sometime soon...

The end run of this will be {as I've said before}, when the government runs out of ideas and money the folks who have managed to scoop up the "easy money" think Fred the Shred and his ilk, will be the only ones with money, and they won't be lending it out at 0.5%. It's just a matter of time before rates rip right up to 15% or more, who knows where that will end, except in tears...

[latviaman]

Thats the printing presses warming up! We're doomed

As Gordon says, "this should speed things up a bit", yea, right, that's all a rudderless ship needs. The only thing this will achieve will be to drive us on the rocks faster.

Dint help Zimbabwe when they tried "quantitative easing", wouldn't you think we could pull something better out of the hat ?

Then there's the ever decreasing interest rates, celebrated by folks with floating mortgages, talk about short sightedness, sure enough they may be saving up to 500 quid a month, but the value of their property is plunging at 1200 quid a month towards negative equity, can't they see that, FFS, gawd help them if they need to remortgage sometime soon...

The end run of this will be {as I've said before}, when the government runs out of ideas and money the folks who have managed to scoop up the "easy money" think Fred the Shred and his ilk, will be the only ones with money, and they won't be lending it out at 0.5%. It's just a matter of time before rates rip right up to 15% or more, who knows where that will end, except in tears...

Spot on nix ideas and monies running out, nix in pot, and wasn't he an embarrasment at the US congress? cowtowing, is that the wored??/

Obama , at the White House made GB look a *rick,he looked more Preidential cool and looked down at Gb, who struggled to put his old tarnished ploys over

[DAM]

Thats the printing presses warming up! We're doomed

As Gordon says, "this should speed things up a bit", yea, right, that's all a rudderless ship needs. The only thing this will achieve will be to drive us on the rocks faster.

Dint help Zimbabwe when they tried "quantitative easing", wouldn't you think we could pull something better out of the hat ?

Then there's the ever decreasing interest rates, celebrated by folks with floating mortgages, talk about short sightedness, sure enough they may be saving up to 500 quid a month, but the value of their property is plunging at 1200 quid a month towards negative equity, can't they see that, FFS, gawd help them if they need to remortgage sometime soon...

The end run of this will be {as I've said before}, when the government runs out of ideas and money the folks who have managed to scoop up the "easy money" think Fred the Shred and his ilk, will be the only ones with money, and they won't be lending it out at 0.5%. It's just a matter of time before rates rip right up to 15% or more, who knows where that will end, except in tears...

Bob, I've enjoyed the discussion between yourself and CaleyD and although I am not quite as well versed in money matters as either of you I must admit, from past experience, that I am on the same wavelength as yourself. I suggest that CaleyD should take your views on board, you could teach him a thing or two. (No disrespect meant to CD).

[starchief]

IMHO...

The time to get out of Sterling was last year. Now I'm not so sure. I think we're nearing the bottom. I believe that the stimulus package will start kicking in at the end of the year, resulting in an upturn in the pound. The Euro is so diverse and bulky that it's probably difficult for it to have the same downturn but it doesn't also have the same recovery potential. The pound was apparently finished at Xmas when it hit almost parity with the Euro (1.02) but now it's around 1.12 and has remained pretty steady for a while. See the last 3 months here:

http://newsvote.bbc.co.uk/1/shared/fds/hi/...three_month.stm

The Euro zone has also announced a rate cut but the value of their economy(s) is difficult to measure. It could (and probably is) in a worse financial state than currently appears but due to the complexity of the places involved and conservative approach of the (largely) German bank, large rate cuts are probably not on the agenda until the brink.

The UK has the advantage of a weak currency and growing unemployment to be a good trading partner, compared with the rest of the European countries. So, the Euro, as it becomes more powerful, becomes less competitive with the pound. The lack (and virtual impossibility) of any real stimulus package also makes the Euro tough to get out of a hole.

I expect the pound to go down further in the short-term, then up by the end of the year, with both the cheapness of the UK and the stimulus packages of both here and the US. Protectionism though could really hurt all our economies - especially the developing economies of Eastern Europe that seemed to think it will help ("we won't buy from you but please buy from us - whaddayamean no? We're screwed then!"). The protectionism mooted by the Eurozone will hurt us particularly (extremely in fact) but I don't think it will happen with the US ruling out that state of affairs from their administration. It really hurts everyone.

The dollar is also likely to recover with their stimulus package. They are the currency of the world meaning that it's a fairly safe bet to survive but they do have even more severe problems than the UK, so long-term the dollar will probably go down again.

I could be absolutely wrong of course. Then again, so could anyone else but my belief is:

- the pound will continue to fall until later in the year, when it will pick up

- The Euro will not be willing and able to take quick and appropriate action and start going down towards the end of the year

- the dollar will begin to become stronger at the end of the year.

So:

- if you've changed currency before now, congratulations!

- if not, you may well be changing at a low rate, losing money in the switchover, then changing back when the pound has recovered - again losing money in switching over.

Long-term...well...that's a different matter. If we knew that we'd all be millionaires.

Quantitative easing:

- Zimbabwe is a poor example - we're not under sanctions, a pariah state, away from the centre stage of the world's financial decisions. It is a risky policy but this is plain scaremongering to compare the UK to Zimbabwe. To those that only follow briefly, we're not actually printing money. There won't be any more in circulation. It's a bit like giving the bank money, so they can feel secure lending their own money to other banks/creditors.

And just to add, my solution would include:

- larger guarantees to banking institutions - costs very little as most of the credit is in fact good. Cheaper than buying shares or whatever, with largely the same effect.

- instead of using shares to buy votes to run a bank, changes in the law to make more effective policing and risk management

- interest rates should not have been cut so severely. It reduces savings, which IMO is more important than mortgages for the country's spending power.

- VAT should not have been cut at all. 15% instead of 17.5% makes so little difference, we would have been better investing that money to stimulate the economy.

- let house prices fall. Sure if you're wanting to trade up, it'll hurt. If you're staying where you are, then no real effect (ok, you're paying over the odds for your house but you always knew that was the risk and what can you do anyway) BUT

- if you're looking to buy it becomes more affordable (with the credit guarantee outlined above)

- if you're looking to sell then it should also be easier due to the above reason

Oh, and just one more thing

I suggest that CaleyD should take your views on board, you could teach him a thing or two. (No disrespect meant to CD).

is a ridiculous comment. I don't know CaleyD but just because he takes a different view is no need to be patronising. There are plenty of economists that agree with his views, as there are with Canada Bobs. I doubt even Canada Bob believes anything is a certainty. One big natural or man-made disaster and everything could change.

[Canada Bob]

Bob, I've enjoyed the discussion between yourself and CaleyD and although I am not quite as well versed in money matters as either of you I must admit, from past experience, that I am on the same wavelength as yourself. I suggest that CaleyD should take your views on board, you could teach him a thing or two. (No disrespect meant to CD).

I doubt that Don will be offended, the important thing is, we can't take the helm to steer the ship away from the rocks, yet those who think they know what's going on {the gobshyte Politicians, and their Powerful Puppets, like Meddlesome Mandelson}, gamble with the countries future.

Believe me, that's all it is, they are throwing "our money" into the Bankers pockets, and they'll make sure they keep it for their own survival, it's "everyman for himself now" the Banks have figured that out.

There'll be some tears and knashing of teeth before this situation gets sorted out, think YEARS, probably many years before stability returns, and by them my guess is a Million people will loose their homes, and Millions more will be begging for work, mind you, those who don't know what a clock card looks like won't see any change in their lifestyle, nothing for them to worry about, for the most part we've already paid for a roof over their heads and an income for life no matter what happens, so nowt for them to worry about, they could come out of this better than many of us !

If we can't steer the ship then it's time now to look for a life boat so that we can make sure that our women and children will survive it. If you don't have a plan yer knackered, you'll go down with the ship.

All it needs right now is one more heavy wave, I don't have a crystal ball so I can't tell you what will cause the wave, nor can anyone else, could be war in the Middle East, but we are in such a precarious situation that one more "disaster" and the ship will go down like a stone, long as it take the r soles with it that works for me.

My main concern is that folks think that low interest rates are here to stay, if ever there was a Fools Gold this is it.

How can it benefit mortgage holders to be paying 3-500 quid a month less when the asset that their mortgage is attached to is going down by up to 2,000 quid a month !!! What does it take to wake these fekkers up FFS!!!

My advise is get rid of any debts you have, soon as you can, if you can't get the mortgage paid off then get the rate locked in at anything under 5%, most folks can cope with 5% but few could weather the storm that 15% to 30% mortgage rates would throw at them.

It's just a matter of time before hyper inflation replaces deflation, and everything that Gormless Gordon is doing right now is bringing that day nearer...

[starchief]

I actually agree with most things there, although (and not a popular position), I'd probably defend Brown a bit more for his actions in the crisis. I disagree with the way the economy was run before that (which is why I'm staggered that the next election will be Labour v Tory - such similar economic policies). Crap analogy but the bolt he's putting on the door after the horse has bolted is double padlocked (the analogy kind of falls down if you take it any further but it's the best one I can think of - told you it was crap!)

My advise is get rid of any debts you have, soon as you can, if you can't get the mortgage paid off then get the rate locked in at anything under 5%, most folks can cope with 5% but few could weather the storm that 15% to 30% mortgage rates would throw at them.

100% correct. Especially if Conservative get in. The money has to be recouped somehow and the Tories aren't going to be taxing the wealthy.

Both the USD and GBP will be rocky for some time to come, which is why I don't think now's a good time to change ship. My advice would have been, last year, switch to dollars (?1=$2), now (well, a little later than now), switch to sterling ($2=?1.40), later in the year, switch to Euros (?1.40-E1.75).

After that? Well, I'm a federalist (power at the most local level) and an internationalist, so I'm all for a complete revamp of international currency. But, failing that, the Euro will probably be the most steady, with money to be made getting it right on the USD and GBP. Although, of course, it really is a fools game to predict.

If you're a Europhobe, then keep all your money in Sterling as that will help the pound survive.

And it's probably worth mentioning that in the early 1980s the pound went much lower, even ending up at $1.0463 February 1985. The mode average must be somewhere around the $1.60/1.70 mark.

And war in the Middle East would certainly be a disaster for me!

[Canada Bob]

I actually agree with most things there, although (and not a popular position), I'd probably defend Brown a bit more for his actions in the crisis. I disagree with the way the economy was run before that (which is why I'm staggered that the next election will be Labour v Tory - such similar economic policies).

It's best not to look at what's going on as a party politics thing, when folks do that they never "think it through" they near always come up with the simple answer, "it's the other guys fault". Either one of them can bugger it up in their own way, but this is a World event, that's the only thing I can agree with Gordon on.

Although I've always been left wing I can't associate myself with anyone in Government right now, nor do I see much hope in the opposition, or anyone in the UK's Third Party, we'd be better served with Fire & Theft...

My advise is get rid of any debts you have, soon as you can,

100% correct. Especially if Conservative get in. The money has to be recouped somehow and the Tories aren't going to be taxing the wealthy.

It'll be like Culloden for those who don't see it coming...

Both the USD and GBP will be rocky for some time to come, which is why I don't think now's a good time to change ship. My advice would have been, last year, switch to dollars (?1=$2), now (well, a little later than now), switch to sterling ($2=?1.40), later in the year, switch to Euros (?1.40-E1.75).

I've backed two horses in this race, the USD and the Euro, I fancy both will finish in the first three, as for ?, well I think they are drawing the screens around it already, so that we don't see the death of it, well not until they drop it on us...

Although, of course, it really is a fools game to predict.

Agreed, the honest man will say he doesn't know, but the most dangerous man of all is the one who tells us "it's all under control" yea, fekkin right it is...

If you're a Europhobe, then keep all your money in Sterling as that will help the pound survive.

Keeping money in sterling now is like piling money onto a dead horse...

And it's probably worth mentioning that in the early 1980s the pound went much lower, even ending up at $1.0463 February 1985. The mode average must be somewhere around the $1.60/1.70 mark.

Yea but, No but, we're sailing in different waters now, there's little if anything we can learn from the past, we really are in unchartered waters...

And war in the Middle East would certainly be a disaster for me!

Well, it's on the menu, but the missing piece of this disasterous jigsaw is probably something we couldn't even dream up, that's why when the final piece drops into place we won't know what hit us... That's why we need to be ready, best we can, for any event.

Edited March 6, 2009 by Canada Bob

[Heilandee]

SO.........

anyone prepared to give a time line or prediction on aprox when intrest rates will start to turn upwards?

[Canada Bob]

SO.........

anyone prepared to give a time line or prediction on aprox when intrest rates will start to turn upwards?

Hmmm, where's me crystal ball when I need it...

I'd say sooner rather than later, the logic being, just a year ago things seemed to be fine, no one would have predicted that interest rates would collapse to record lows, far as I know the Bank of England rate is now lower than it's been since there was a Bank of England. Who would have thought that house prices would collapse as fast as they have done, who would have thought that places like Woolworths, or many other retailers would crash into oblivion, or that every Bank in the UK would become insolvent ! add to that the car industry lay offs, etc etc.

To me all this points to this being a wild ride, things happening fast rather than evolving, the shyte seems to be hurtling towards the fan.

Under more normal circumstances in times like this Banks would have put the interest rate up to 12%by now, lending only to companies and individuals where they could be almost certain of a return. But the Banks have been sidelined now, we don't really have any Banks anymore, we have the Government "controlling" the Banks.

This has driven interest rates down to where they are now, but there's a cost to the Government to do this, well a cost to the taxpayer, debt for the next 50 years is my guess. As more and more people lose their jobs less and less tax is paid, and more and more folks become dependent on "Benefits".

The Government is already in trouble due to lost revenues, not least of these being the 8 Billion quid {to date} drop in income due to the lower rate of VAT, so Gordon is already feeling the pinch, his response to that is to print more money.

The problem there is, since the Gold Standard was abandoned Governments can print as much money as they want, but look what happened in Zimbabwe, South America or Japan, when they ran the printing presses ragged, does anyone know where quantitative easing has worked ? it's not a horse that I want to bet on.

I'd say that this could be the missing piece of the disasterous jigsaw, at least for the UK, and this could well happen this year, the speed of events so far has shocked us all, and it aint over yet.

The Government and others are well aware of the dangers of printing money, they say that they'll know when to throttle back to avoid HYPER INFLATION but I have zero confidence in them, so I'll steer me own course through these waters, and I'd advise others to think for themselves rather than to go down with the ship.

It's not that long ago since Gordon told us "I'm going to abolished the economic cycle, no more Boom and Bust", look where we are now FFS. I wouldn't trust Gordon to control a bicycle, let alone an economic cycle.

Gordon thinks that if we feed the Banks enough money, eventually something is bound to come out at the other end"..., yea, my guess is they'll shyte on us...

Edited March 7, 2009 by Canada Bob

[starchief]

For high interest rates, I'd say later rather than sooner (although I guess that's all relative). Probably 2010 (the year we make contact). They will go up before then but they will be balanced I suspect. Look out after the next election. BOOOM!

[Johnboy]

.

It's not that long ago since Gordon told us "I'm going to abolished the economic cycle, no more Boom and Bust", look where we are now FFS....

Come on now Bob.... Credit where credits due....

He's done half of what he set out to .....

He abolished Boom!!

[absent friend]

The mortgage rate averaged 11% for the 25 years up to 1990 and circa 60% of that for the remaining period up to now.

When the mortgage rate was 16% here - 1990 -the French rate was 6% and the German rate 7% .

The problem we had was there were no financial mechanics in place, at that time, to borrow from the above countries for your mortgage.

We now have the option to take advantage of Euro mortgages/ $ mortgages - unless they are all to move up to this ridiculous high rate you refer to - if so it takes the Governments of the countries out of the equation (in the main) as it is a Global happening and not bad management.

If the rate becomes high and we, the taxpayer, are a majority shareholder in that vehicle are we then to enjoy, what was it ?1000 per minute profit? Bring it on!!

I take it from your doom laden stance that you do not see any value in the assets we have bought into and you feel that all bank loans will not be honoured. If that is not the case I fail to see the bigger problem, long term.

Lend ?100000, have ?250000/?350000 repaid to you, the lender, over the term, with a house valued at ?150,000 held as security in case of non payment. Bombard the mortgage holder with Loans/Insurance/ travel plans/ ISA's/ etc - plus , of course, bank charges every time they enter a bank! I would say we bankers are on a winner once the market starts to move.

Non-Secured loans/Credit Cards are a bigger risk with a bigger interest rate reflecting this and it is unfair to assume that all the people or the majority of people will not repay their debt to the bank. If my faith in human nature is correct and the monies are repaid as per their repayment schedule, our holding in the banks is a sure bet and we as a country are on a winner. As I said above - Bring It On!!

.

[starchief]

"house valued at ?150,000 held as security"

I think that's the crux of the problem. When was it valued at that and who's going to buy at those inflated prices.

[absent friend]

"house valued at ?150,000 held as security"

I think that's the crux of the problem. When was it valued at that and who's going to buy at those inflated prices.

This would have been at the time the ?100,000 loan was granted. Let's assume the following scenerios and offer your current value of the property now, if the loan had been taken up at that time.

a) house bought 12 months ago

house bought 2 years ago

c) house bought 5 years ago

D) house bought 10 years ago.

The purchase of the property would take place if the lenders offered the correct terms to first time buyers. It is their presence that triggers off the whole market and unless they are catered for, stagnation occurs. ( I do accept that releasing your current property into the Buy2 Let market has the same effect but not everyone wishes to be this exposed)

.

[absent friend]

The answer is

1 year ?138000

2 years ?151000

5 years ?227000

10 years ?353000

Not bad security for a ?100,000 loan for us bankers. Eh!

.

[Canada Bob]

Looks like the three horses I picked out a month or so ago are cantering on steadily.

House continue to fall...

As for sterling, that's gone down 3% in the last 3-4 weeks, glad I got out at 1.12

and jobs are still going down the drain...

UK job losses...

US job losses...

[Heilandee]

Depends what paper ya read Bob..............

House prices rise

[CaleyD]

Your figures on the Euro are also out.

Currently - 1.101

4 Weeks ago - 1.084 - So price has risen 1.568% since then

3 Weeks ago - 1.113 - so price has dropped 1.078% since then

Although the price is nowhere near what it was when the sterling was at it's strongest against the Euro, the current fluctuations would, IMO, appear to be within normal parameters....suggesting a steadying of the market. And if you look in more depth you can see that Sterling has increased in strength day on day for the last 10 days or so.

Give it another couple of weeks and your 1.12 might not look all that hot.