abcde_98

Weak British Pound Could Boost U.K. Economy

Everyone, let's
1. stay on topic ... i'd like to think Seekingalpha's msg forums are better than weeding through many spam--ish and negative/zero-'added'-... posts on Yahoo
2. have (somewhat) balanced commentary... try to see the positive and negative side of authors' comments. I'm not perfect at this especially with ECB's rather weak (imo) rationale to not reduce rates

Criticism is good, no offence taken, appreciate feedback as it can present other considerations for analysis

Weak British Pound Could Boost U.K. Economy

Nice segmentation of some considerations. Two cross-border items:

1. Europeans flocking to holiday in UK. Agree there will be an increase, but not so "sky high" due to : 1) UK land / features 2) UK climate/seasons 3) European customs. "Holidays" may be short trips. Can you see Europeans spend their holiday month of August switch from the culinary delights and beach/sun coasts of Spain/France/Italy/Gre... to deep fried Mars bars, beaches in the Lake District of England, or concrete architecture of Manchester, for an entire month?

2. UK residents vacationing and owning homes/condos in Euro-zone areas such as Spain/France. Firstly, vacations would be very expensive with GBP-EUR at par, so expect a reduction. Secondly, and perhaps much bigger: UK residents with mortgages on Euro-zone homes/condos they bought in the past few years ... the mortgage amount and payments would be in Euro's, but the GBP has declined 50%+, to make those mortgage payments will cost the UK citizen say 25-50% more of their 'spare" cash. I doubt very few individuals put a hedge on the GBP-EUR rate. Furthermore, there could be negative equity in some properties since house/condo prices have been falling in some areas, and perhaps will fall beyond the mortgage amount. What will these UK owners do in such situation? It's likely that many have done nothing so far since, the exchange rate decline was initially gradual and then accelerated with perhaps people thinking rates may "revert to the mean", and then there is the emotional / lifestyle aspect which is hard to give up. How significant is this ownership (eg. number or % of Britons)? What is the approx average magnitude per property? I've got to think this will have meaningful, direct and indirect, effect on Euro-zone economies.

Hawkish Comments From ECB Send Euro Higher

Follow up comment, with manufacturing sector in Euro-zone contracting, again, and more than expected.

Is the ECB still concerned about inflation? ECB is losing credibility. If there was another vehicle/large enough market to store value, then thew Euro would get hit quite hard by investors.

ECB needs modify its rules and stance on rates, and listen to sector / industry groups, rather than playing politics through interest rates.




On Dec 13 02:56 PM abcde_98 wrote:

> I don't think it is rhetoric, but a couple of the reasons Weber gives
> are silly
> (1) economy expected to pick up next year, so if we reduce now, we
> will have to raise again (likely) promptly. Well ECB, get off your
> arses, it's not a vacation/old boys club to meet monthly having expensive
> dinners/drinks.
> (2) we've never taken rates below 2% previously ....well, things
> change, we are in a unique economic situation, somewhat unprecedented
> (or at least something not seen for 75 years)
> (3) not enough information is available .... decisions need to be
> made on imperfect, incomplete information ... by the time you wait
> for the information, things have already become worse... the ECB
> is very fortunate that the EU is not one country because there would
> surely be some sort of banding together by the citizens and taking
> their issues to a single governement
> (4) avoiding negative real interest rates. is such situation expected
> to last for a long time or temporary? and what is so bad with such
> a situation, for a temprary period?
>
> Likely it's ECB politics, seeing that the USD was more of the currency
> that investors ran to for a safe haven. Well, ECB, several of your
> member countries had complained about significantly lower export
> sales b/c of high Euro, and look at the auto and other industries
> in your countries. Perhaps the reason is with a weak Euro that their
> jobs/prestige/life status is diminished and even further perhaps
> the EU could break up some time down the road.... the economies of
> the member countries are quite divergent.
>
> Maybe the EU needs to see more and more workers unemployed, or maybe
> cut the work week to 4 days or 30 hours, then the statistics will
> say there are fewer unemployed. There's only so long that the socialistic,
> very high taxation, ageing demographic countries can survive and
> create GDP growth.
>
> For the EU to survive, it needs to bring in more countries with younger
> populations, good GDP growth to make up / provide for the older /
> mature economies.
> hmmm, on that point, forget that alleged $50bn scam by Madoff, perhaps
> the EU is the worlds biggest scam!

Hawkish Comments From ECB Send Euro Higher

I don't think it is rhetoric, but a couple of the reasons Weber gives are silly
(1) economy expected to pick up next year, so if we reduce now, we will have to raise again (likely) promptly. Well ECB, get off your arses, it's not a vacation/old boys club to meet monthly having expensive dinners/drinks.
(2) we've never taken rates below 2% previously ....well, things change, we are in a unique economic situation, somewhat unprecedented (or at least something not seen for 75 years)
(3) not enough information is available .... decisions need to be made on imperfect, incomplete information ... by the time you wait for the information, things have already become worse... the ECB is very fortunate that the EU is not one country because there would surely be some sort of banding together by the citizens and taking their issues to a single governement
(4) avoiding negative real interest rates. is such situation expected to last for a long time or temporary? and what is so bad with such a situation, for a temprary period?

Likely it's ECB politics, seeing that the USD was more of the currency that investors ran to for a safe haven. Well, ECB, several of your member countries had complained about significantly lower export sales b/c of high Euro, and look at the auto and other industries in your countries. Perhaps the reason is with a weak Euro that their jobs/prestige/life status is diminished and even further perhaps the EU could break up some time down the road.... the economies of the member countries are quite divergent.

Maybe the EU needs to see more and more workers unemployed, or maybe cut the work week to 4 days or 30 hours, then the statistics will say there are fewer unemployed. There's only so long that the socialistic, very high taxation, ageing demographic countries can survive and create GDP growth.

For the EU to survive, it needs to bring in more countries with younger populations, good GDP growth to make up / provide for the older / mature economies.
hmmm, on that point, forget that alleged $50bn scam by Madoff, perhaps the EU is the worlds biggest scam!