Economics.

[noseall]

Or is it the old case of:
weak pound - bad for Britain;
strong pound - bad for Britain.

Just substitute the words "weak pound" and "strong pound" for Brexit. Easily summed up in a nutshell.

 

[Doggit]

Sorry EFL, yes, it was bouncing around the $1.40ish level, but what I was trying to show, was that it's not a straight relationship between a fall in the pound, and a corresponding rise in inflation.

And I agree that the world is being run for pure speculation, hence we've got into the recent financial mess. Add in the bank scandals, and people like Phillip Green, and there's an argument for an honesty and probity law, whereby if you intentionaly set out to deceive customers to raise your profits, then you would be liable for jail time.

The car industry brings in componants from abroad, assembles the cars, and then ships them out, so rather than bring in raw materials and build from scratch to maximise profits, we are having to import stuff before we can export anything. Obviously, both France and Germany are in the Euro, but Germany exports, and is strong, and France is hampered by their strong labour laws, but they are still more productive than we are. We are run by people in government that are not fit to do their jobs, and very few chancelors are any good at economics, so only tinker around the edges, but we need a radical change in the next 5 years, or were heading for real problems.

If we'd joined the Euro, we would have been in the same boat as some of the weaker EU countries, because we have no real manufacturing base to bring in revenue. And as the recent devaluation in the value of the pound boosted imports, that shows that being in the Euro would have put enourmous constraints on us. If Greece went back to the Drachma, they could devalue it, and that would massively boost their tourism, but as you've spotted, that would increase inflation. The truth of our economic system, is that it's an illusion, and can never work properly. It will always lurch from one crisis to another, because it's always based on continual growth rather than stability. We have too many old people taking up resources, and then need more young workers to support their pensiosn etc. But that means that we have to increase housing and infrastructure to support them, which then means we need more workers, and doctors from abroad, and that causes other issues.

The Germans work hard, and don't buy things on credit. The French believe they can just work 30 hours a week, and get paid for 50. The Greeks think it's okay to fiddle their taxes, and obviously think there's a magic money tree that will always pay out what they want. The eastern eurpoeans will sleep in every room in the house, but the Brits feel they can have a seperate living room, and a room for every child, so we need bigger houses, but have less land. So how do you harmonise all those different attitudes; you can't, and Brussles idea that they can then harmonise tax rates in an attempt to make the Eurozone work, is just putting off the day when they Euro fails, and then the EU follows.

Does the fact that since then the pound has frequently fallen below but never risen above that value mean that Britain would have been better off joining?

So to definitely answer your question, No, having had to just devalue to get our exports going again, if we'd joined the Euro at 1.45, we'd have crashed out a long time ago.

Or is it the old case of:
weak pound - bad for Britain;
strong pound - bad for Britain.

Well spotted, you are now on your way to being an economist. And it's all down to the fact we are run by politicans, not by busniessmen.

 

[SirGalahad]

Well spotted, you are now on your way to being an economist. And it's all down to the fact we are run by politicans, not by busniessmen.

These politicians are funded by big business - who are the party donors?

http://www.cityam.com/264987/party-donors-biggest-names-bank-rolling-conservative

So you would want the government run by businessmen. Lets put the head of BAE in charge of Defence spending.

 

[chris1982]

Gerorge Soros actually made the pound fall some time back, by just betting against it, and that caused the markets to react, and it became a self fulfilling prophecy.

Soros speculated against the pound when it was fixed against other European currencies. He exploited the fact that it is impossible to have three things at once: constant inflation, employment or GDP, and exchange rates.
To keep an exchange rate at a peg, a central bank needs to constantly intervene in the markets and buy or sell foreign currency in exchange for own currency, regardless of what that does to your own economy.
What Soros did was essentially to call a big British bluff, that the BoE would keep intervening to maintain the fixed exchange rate although it would mean wrecking the British economy. When the BoE eventially gave up the peg to prevent a UK recession, the pound plunged and Soros made a big gain.

That is why it is so important either to let the exchange rates move freely up and down, or to give up domestic currencies and adopt a common currency.

 

[SirGalahad]

As I have asked before but I don't think there was a satisfactory answer. Perhaps you economic geniuses can do so now.

Had Britain joined the euro at its inception when the rate would have been set at, I believe, at 1 pound to 1.45 euros. Is that correct?

Does the fact that since then the pound has frequently fallen below but never risen above that value mean that Britain would have been better off joining?

Or is it the old case of:
weak pound - bad for Britain;
strong pound - bad for Britain.

You need to understand that even though you see headline data like FX rates, inflation the link between growth, gdp and these indicators is not linear and neither positive or negative correlations.

For example a high oil price can be seen on the face of it detrimental to the UK as it pushes up costs but then if we have a large sector benefiting from higher oil prices this will temper the effect. The UK exchange rate could rocket up and yet not effect our exports as much because we tend to have price inelastic exports (ie even if the price changes by a percentage the quantity demanded as a percentage changes less)

 

[SirGalahad]

Soros speculated against the pound when it was fixed against other European currencies. He exploited the fact that it is impossible to have three things at once: constant inflation, employment or GDP, and exchange rates.
To keep an exchange rate at a peg, a central bank needs to constantly intervene in the markets and buy or sell foreign currency in exchange for own currency, regardless of what that does to your own economy.
What Soros did was essentially to call a big British bluff, that the BoE would keep intervening to maintain the fixed exchange rate although it would mean wrecking the British economy. When the BoE eventially gave up the peg to prevent a UK recession, the pound plunged and Soros made a big gain.

That is why it is so important either to let the exchange rates move freely up and down, or to give up domestic currencies and adopt a common currency.

The exchange can act as a buffer for an economy. Its just when hot money and speculators cause short term problems that needs to be controlled.

 

[Doggit]

You make a very good point Kankerot, but I'd hope that we could find some ethical businessmen, or at least some politicians that understand business. I don't think you should be allowed into politics until you've worked for a proper company for 10 years, and had a management position for at least 2 years. Cameron went straight into politics from university (as do a lot of them) and although his father was a good businessman, I don't think he was. Ed balls who came up with the novel idea of increasing fuel bills so that they didn't increase even further (duh!!!!!!!!!!) never had a proper job in his life.

 

[JohnD]

Gerorge Soros actually made the pound fall some time back

more accurately, George Soros observed that the pound was being supported by the government at an unsustainable exchange rate.

he profited by the folly of government policy.

Rather as you might see somebody selling copper pipe at a penny a piece, you might fill your warehouse with it, knowing that the price would in time correct.

Interestingly, the government had the same information he did, and more, but continued in their folly.

The difficult thing is being able to gauge when the price correction will come. Markets can continue being irrational longer than you can stay solvent.

 

[Doggit]

That is why it is so important either to let the exchange rates move freely up and down, or to give up domestic currencies and adopt a common currency.

But that's a contradiction; more like a "we'll do both because neither is right. The Greeks and the Italians are in the shyte because of the fixed currency problem, so they are already proof that the latter scenario doesn't work; as is the fact the we had to crash out of the fixed rate mechanism to resetablish ourselves. Currencies have to float to handle the differences in the way that each country operates. We give benefits to everyone regardless, but the Germans only give it out if you've paid into the system. If you have only one currency, then you have to harmonise all these little discrepancies as well.

 

[JohnD]

These politicians are funded by big business - who are the party donors?

We have one of the finest democracies money can buy. No wonder the rich and powerful are funding a relentless campaign to smear Corbyn. They're terrified of him.

Buying the votes. What they paid:

1. Arron Banks — £8,106, 375
Multi-millionaire Banks was a co-founder of pro-Brexit group Leave.EU and gave over a million pounds to the UK Independence Party while it was led by his friend Nigel Farage. He was the chief executive (CEO) of Southern Rock Insurance Company in 2014 and claims to control interest in a South African diamond mine.

2. Peter Hargreaves — £3,200,000
Hargreaves, who is now retired having founded the Hargreaves Lansdown financial services company donated £3.2 million to the Leave.EU group

3. Jeremy Hosking — £1,691,296
Hosking made his millions through investment and private equity and is currently a shareholder in Premier League football club Crystal Palace. His net worth is estimated to be £330 million.

4. Lord Edmiston — £1,000,000
Robert Norman Edmiston became a millionaire through his company IM Group, an importer of cars.

5. Crispin Odey — £873,288.15
Odey is a London-based hedge fund manager who played a major role in funding the Brexit campaign. He voted for Brexit but warned his clients just a few months later to prepare for a recession and higher inflation in wake of the shock Leave vote.

6. Lord Bamford — £673,000
Lord Bamford is an English businessman and currently the chairman of managing director of JCB

7. Peter Cruddas — £350,000
Cruddas is the founder of online trading company CMC Markets. He was at the centre of a political scandal in 2012 when it emerged that he offered then Prime Minister David Cameron donations in return for access to government policy-making.

8. Michael Freeman — £348,000
Brexit donor Freeman co-founded property developer group Argent in 1981. His estimated net worth is £135 million.

9. Lord Farmer — £300,000
Michael Farmer is a businessman, House of Lords life member, and treasurer of the Conservative Party.

10. Tim Martin — £212,000
JD Wetherspoon boss Tim Martin has not only been one of Brexit's biggest financial backers but one of the business world's most vocal supporters of it.

http://uk.businessinsider.com/twent...gn-2017-5/?r=US&IR=T/#10-tim-martin-212000-12

 

[chris1982]

But that's a contradiction; more like a "we'll do both because neither is right. The Greeks and the Italians are in the shyte because of the fixed currency problem, so they are already proof that the latter scenario doesn't work; as is the fact the we had to crash out of the fixed rate mechanism to resetablish ourselves. Currencies have to float to handle the differences in the way that each country operates. We give benefits to everyone regardless, but the Germans only give it out if you've paid into the system. If you have only one currency, then you have to harmonise all these little discrepancies as well.

I agree, this is one big problem with the Euro, though it stops speculating against individidual currencies.

BUT: What makes you so sure that the pound is not suffering from this problem? For most of the last two decades, interest rates were too high for areas of Wales and Northern England while perhaps even too low for London and the South East.

 

[JohnD]

We give benefits to everyone regardless, but the Germans only give it out if you've paid into the system.

Where did you hear that? UK pays contributions-based jobseekers allowance for a limited time to people who have paid enough National Insurance. Otherwise people may apply for benefits based on need.

What do you think happens in Germany?

 

[IWalkLikeHimaMartian]

and very few chancelors are any good at economics,

Government fiscal policy is not 'economics' driven. It is politically driven.
I will not bother with the rest of your garbled rant because it is so full of holes I would be here all day pulling it to pieces.

e.g."The Germans work hard, and don't buy things on credit. The French believe they can just work 30 hours a week, and get paid for 50. The Greeks think it's okay to fiddle their taxes, and obviously think there's a magic money tree that will always pay out what they want. The eastern eurpoeans will sleep in every room in the house, but the Brits feel they can have a seperate living room, and a room for every child, so we need bigger houses, but have less land. So how do you harmonise all those different attitudes; you can't,"
That is the rest of EU members adequately accounted for.
Why would you want to harmonise the different attitudes?

 

[SirGalahad]

You make a very good point Kankerot, but I'd hope that we could find some ethical businessmen, or at least some politicians that understand business. I don't think you should be allowed into politics until you've worked for a proper company for 10 years, and had a management position for at least 2 years. Cameron went straight into politics from university (as do a lot of them) and although his father was a good businessman, I don't think he was. Ed balls who came up with the novel idea of increasing fuel bills so that they didn't increase even further (duh!!!!!!!!!!) never had a proper job in his life.

Its a shame, I voted for Cameron in 2010 - I had high hopes. But I have voted for Blair in 1997. In fact I have split my vote quite evenly over the years.

Businesses and markets can never ever provide all the goods and services a well functioning economy needs - one that is on or near its production frontier (ie its using it resources in the most effective way).

Who will provide Defence spending? Who will provide non excludable and non rival products? Who will build the railways to smaller towns etc.

The idea that business people are best placed to run Governments is straight out of Trumps campaign. So Business men take risks which can end in bankrupty- so you would advocate a policy that could bankrupt a country?

Look running governments is a complex business but your solution of just getting business men in is naive.

 

[motorbiking]

I thought chris1982's first post answered the question pretty well and without any reference to politicts or brexit.

On the subject of a single currency. Britain benefits as increases and decreases in currency tend to soften sudden changes in the market. Consumer confidence is everything in our economy, decreases in the value of the £ don't immediately impact the consumer. In fact the losers in the weak £ have largely been the Eurozone holiday destinations.

When money is tight, people don't stop going on holiday, they find ways to spend less when they are out there.

The Euro has worked fantastically well for Germany, who's cost base (people) has largely been held down by weaker Eurozone economies.