# Speculating about what happens if EuroZone goes pear shaped...



## MovingtoSpain (May 6, 2009)

I just wondered if anyone has any sense of what the practicalities could be if a country/countries cannot be bailed out as Ireland has been. People have talked about a kind of Other Euro (a friend last night said it'd be the Basuro... ) but do any economists out there have an inkling of what that would mean...

Are we talking inflation, crashes etc - or might a devaluation in certain countries actually bring benefits in terms of investment, companies relocating to take advantage of cheaper labour etc? Obviously there are huge human and social issues here and mammoth speculation, but as expats/people with connections in different countries, not to mention links to different economies, what might it mean?

Clueless of Catalunya


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## Pesky Wesky (May 10, 2009)

I have a client who's a lawyer and is head of the legal dept. in a bank. He keeps talking about Argentina ie when the banks didn't give the clients their money...


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## jojo (Sep 20, 2007)

I've heard, (altho its a different scenario everyday) that Spain is too big to be bailed out, especially as Italy and Portugal may need help too! I've also heard that the euro is all but finished and its simply a matter now of sifting thru the wreckage and possibly bringing in two euros and having two financial systems - a "good" euro and a "not so good" euro??????? Hhhhmmm???? I've also just heard on the news this morning that Spain is to lose its credit rating. How will that effect anyone, well it may bring the euro is it is down a little more????

But quite frankly, none of it can be predicted and the futures, financial markets are not helping by trying IMO! So who knows???? All I'm interested in is how far my sterling will go when I exchange it into euros


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## mrypg9 (Apr 26, 2008)

I suggest you go online and read last week's issue of 'The economist' which deals with this.
People have been predicting the demise of the euro since its inception almost ten years ago. In most cases this is wishful thinking.
One should stop and consider the PRACTICAL implications of a member state leaving the eurozone:

1)it took three years of concerted work to prepare for the euro; coins/notes have to be printed and circulated, tills, cash machines etc. adjusted, bank deposits adjusted and so on, bills of credit recalculated. 
No state could leave the euro overnight;
2) as soon as a member state indicated it would leave the eurozone, depositors/bond holders would withdraw their holdings for fear of devaluation and deposit them in a 'strong' member state , most likely Germany;
3) holdings of the departing state's bonds and other deposits would immediately suffer a severe devaluation. In most cases this would have a severe knock-on effect on the UK and other states whose banks and Treasuries hold these deposit;.
4) most member states of the EU including the UK have an interest in the eurozone holding up. The EU is our major trading partner. A member state that left the eurozone would intend to devalue...this would have a profound impact on trade balances in Europe;
5) then there is the political aspect: most countries of the EU whether in or outside the eurozone have political reasons for holding the eurozone and the EU together. It should not be forgotten that the euro (teuro) was introduced into Germany in the face of huge public hostility. The German Government at that time ignored public opinion as it is doing now and will do in the future.Too much is at stake. The world is coalescing into a few major trading blocs -NAFTA, the Pacific zone and the EU, currently the largest.

I'm not saying that the currently unthinkable won't happen..of course it can and does. Britain left the gold standard in 1927 or whenever, the Berlin Wall fell in 1989.. Who knows what may happen in our fast-changing world? I also would agree there are many advantages for countries like Spain and ROI to leave and devalue - but the disadvantages currently outweigh these.
The UK is fortunate in that sterling devaluation has played a role in keeping the economy buoyant in these difficult times.
But leaving the eurozone isn't a simple operation, like changing your socks, as some people seem to think. 
I would hazard a guess that in ten years time there will be posts on this forum under a thread title 'is the Eurozone breaking up?'.


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## Stravinsky (Aug 12, 2007)

Agreed Mary
I'm suprised they havent started to make a film about it yet


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## mrypg9 (Apr 26, 2008)

Pesky Wesky said:


> I have a client who's a lawyer and is head of the legal dept. in a bank. He keeps talking about Argentina ie when the banks didn't give the clients their money...


but were bailed out and the economy is now on an upward course.
Naomi Klein has written an interesting book about the origins of this crisis,'The Shock Doctrine', which lay in the application of neo-con economic policies.
Plus ca change....


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## mrypg9 (Apr 26, 2008)

Pesky Wesky said:


> I have a client who's a lawyer and is head of the legal dept. in a bank. He keeps talking about Argentina ie when the banks didn't give the clients their money...


but were bailed out by the internation financial community led by the U.S. which stood to lose big-time and the economy is now on an upward course.
Naomi Klein has written an interesting book about the origins of this crisis,'The Shock Doctrine', which lay in the application of neo-con economic policies.
Plus ca change....


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## Pesky Wesky (May 10, 2009)

mrypg9 said:


> but were bailed out and the economy is now on an upward course.
> Naomi Klein has written an interesting book about the origins of this crisis,'The Shock Doctrine', which lay in the application of neo-con economic policies.
> Plus ca change....


But how many years down the line?? How many years of suffering did it take for Argentina and its people to start looking up instead of down ?


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## Calas felices (Nov 29, 2007)

*Finacial crisis*

At the moment I think anyone would be hard pressed to a). say what influences there are on the market and b). what could happen in the future. It would seem that the latest drop in the Pound is due to profit taking (although it is doing well against the dollar) but yesterday's rise seems to be as a result of the news from Moody's.

_The euro has fallen against key currencies after a credit rating agency said it may downgrade Spain's debt.
Moody's put Spain's rating on review - citing concerns about its mounting debt and its funding needs for next year.
Spain has been under financial market scrutiny since the Irish Republic was forced to take an aid package of 85bn euros (£72bn; $113bn) last month.
The news pushed the euro down by 0.5% against the dollar to to $1.3312, while it also fell 0.2% against the pound, with one euro worth 0.8462 pence.
On Tuesday, the Spanish government had to offer investors higher returns in its auction of government debt.
The yield on its 12-month bonds rose to 3.45%, up from 2.37% in a similar auction last month. _

I think the crunch will come when Germany decides it is no longer going to prop up the failing Eurozone countries and unfortunately that seems to include Spain along with Ireland, Portugal and Belgium. Then it likes like a two tier currency is the only option. I can't see the Eurozone letting any of them 'leave' as they have had too much money pumped into them over the years by the EU and one day there is a hope that there may be a return. Unfortunately there appears to be little honesty - after all Ireland was saying for months there wasn't a crisis and suddenly decides to accept money. Spain is saying they are different to all the others but I noticed the other day that Zapatero said that things were difficult. Wow, they must really be bad then. Anyone like to suggest that the Spanish are being honest and truthful over their debt mountain???


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## nigele2 (Dec 25, 2009)

One solution (and possible the plan?) is a fed Europe where the industry and money is concentrated in the north. If we think how people migrated during the industrial revolution in Britain we could see a similar pattern in Europe.

Spain only needs a strong independent economy within its frontiers while the concept of Spain remains important. If everything is centralised the problem goes away. Spain just becomes a poor region of Europe. 

A parallel is the USA. There are rich states and poor states. There are highly populated areas near resources, and sparsely populated areas where the young except migration.


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## Sonrisa (Sep 2, 2010)

Well Spain is to big to be bailed out, aint happening, so there is no otherr choice than the bear the bad times and put up with whatever measures the goverment and Europe comes up in 2011.

The boom couldn't last forever, there are only so many houses one country can sell by the beach and now its time to wake up and smell the coffee and realise that our belts are going to be pretty tight for the next couple of years. 
I think Spain and some other European countries should get back to actually Making things and exporting them, like the good old days. If the unemployement is high, then the spaniards should do what we always had to do: emmigrate. THis is no news. We have a long history of having to look for opportunities outside our country when jobs were scarce and coming back when the work market picks up. 

It is subreal to compare the Eurozone with the States. It is also subreal to belive what the credit agencies are telling us as they may as well have their very own political interests. It is subreal to compare Argentina with Spain, despite of everything, our banks aren't in a bad shape.


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## Pesky Wesky (May 10, 2009)

Dizzie Izzie said:


> It is subreal to compare Argentina with Spain, despite of everything, our banks aren't in a bad shape.


Maybe, but it's a banker that's saying it!!!!!!!!!!!

The idea that _*Spain is different*_, is quite frankly, wearing thin in some sectors.


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## mrypg9 (Apr 26, 2008)

Calas felices said:


> At the moment I think anyone would be hard pressed to a). say what influences there are on the market and b). what could happen in the future. It would seem that the latest drop in the Pound is due to profit taking (although it is doing well against the dollar) but yesterday's rise seems to be as a result of the news from Moody's.
> 
> _The euro has fallen against key currencies after a credit rating agency said it may downgrade Spain's debt.
> Moody's put Spain's rating on review - citing concerns about its mounting debt and its funding needs for next year.
> ...


The reason the pound dropped was because a member of the MPC of the Bank of England - not Andrew Sentance this time! -stated that more QE might be needed because of the unemployment figures.
I don't get what you mean when you speak of 'Germany deciding it is no longer going to prop up the failing eurozone countries'. This is too vague. What makes you think this will happen? On the contrary, Merkel has been the main mover in the propping up and the setting up of the new 'rescue' mechanism, which includes structured default.
We cannot ignore the fact that German banks, like most other banks in Europe, are heavily exposed to Spanish, Irish etc. debt. Germany cannot afford to let the eurozone break up.
And we talk of bail-outs as if the money were a gift - it's a LOAN. The UK stands to make billions from the money we've loaned to ROI. We borrow at just over 3 percent and lend to ROI at nearly six percent.
We cannot discuss these issues without paying attention to facts.
And we should be adult enough to accept that whatever German - or British - public opinion may think, Governments rarely if ever take note of it.
There are good reasons for this -one that most people aren't informed enough to hold a sensible opinion to influence those who are and secondly, events move so fast that Governments often have few choices of action and are forced into measures we neither approve of nor understand.


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## UKMarbella2009 (Sep 24, 2009)

Spain's housing market still has a ticking time bomb. The Bank of Spain is ordering the the banks to shed their repossesed property stock. Next year is going to see a lot of property flood onto the market at even more knockdown prices

In the development I live in they have been giving away properties. However, it seems to be just the bank employees that are getting the excellant deals.

"Fiscal austerity and labour reform will get it’s first full-year trials in 2011, the deficit is expected to fall from 10% to 7%. Residential construction is expected to take longer to fix, with banks holding around 200,000 newly built homes, as part of a 60 Billion Euro debt-for-asset swap with developers. Many of these properties are likely to be dumped on the market in 2011."

There is more on the moody's downgrade here (no adverts just pure information) :

FinanceSpain


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## gus-lopez (Jan 4, 2010)

What you have to remember is that Spains debt , as a % of gross domestic product is less than the UK's. All of this is being driven by the gamblers that are known as the 'financial markets' looking to make a profit , as always, from trading on someone else's problems. 
Once they've done with spain , portugal, greece, italy, ireland , etc; Who will they turn on next ? They're not to be trusted & never should be in the position to do damage like this whilst profiting at the same time. THEY created this situation along with governments that thought the money would never run out & should be held to task for it. 
When the banks had to be bailed out it should have been quite simple for any one with an ounce of commonsense to say " here's the money , BUT there will be no redundancies amongst the general staff,only amongst the gamblers that got us into this, no bonuses & anyone who doesn't like it & leaves will not be employed in any position in this country whatsoever & will leave with their passport & the clothes they stand up in along with their families , mum & dad, aunts ,uncles ,old uncle tom cobleigh & all . " They should then have gone for the non.doms; not paying tax & said " you work here ,you pay tax here, end of story . If you don't like it see above, here's your passport , adios." Then taxed all the dole claimants. Any Mp gets paid his salary, that's it, just like everyone else who has to pay to travel to work , they pay for themselves. No allowances, no 2nd homes, no government cars , travel to work & if it's too far to go home then pay for your own lodgings .

Mary, 2) as soon as a member state indicated it would leave the eurozone, depositors/bond holders would withdraw their holdings for fear of devaluation and deposit them in a 'strong' member state , most likely Germany;

Simple way round that if you're going to leave is to state that there will be no withdrawals allowed at the same time or slightly before , you announce you are leaving.
I personally agree that all the countries have a vested interest in the euro surviving & the sooner they realise that that it's there own financial markets doing the damage to each other & that one day they'll be on the receiving end , the better.


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## mrypg9 (Apr 26, 2008)

Dizzie Izzie said:


> Well Spain is to big to be bailed out, aint happening, so there is no otherr choice than the bear the bad times and put up with whatever measures the goverment and Europe comes up in 2011.
> 
> The boom couldn't last forever, there are only so many houses one country can sell by the beach and now its time to wake up and smell the coffee and realise that our belts are going to be pretty tight for the next couple of years.
> I think Spain and some other European countries should get back to actually Making things and exporting them, like the good old days. If the unemployement is high, then the spaniards should do what we always had to do: emmigrate. THis is no news. We have a long history of having to look for opportunities outside our country when jobs were scarce and coming back when the work market picks up.
> ...


In essence, you are right. Spain's woes can be traced back to its ill-conceived plan to make it the Florida of Europe. The construction bubble brought short-lived prosperity for some, true, but speculative bubbles of this kind always burst. The result is millions unemployed, bank repossessions and unsightly unfinished -and finished - housing estates and apartment blocks some of which wouldn't look out of place on a London council estate and which have ruined some stretches of the Costas.
Contrary to what I have read elsewhere, Spain has not on the whole attracted high-net-worth-individuals. (HNWIs) Most immigrants from Northern Europe are in the median and lower-median wealth bracket...you only have to think of the tens of thousands who can't afford mortgages or are unemployed to realise that. Likewise the kind of people who post looking for work here - very few highly paid progfessionals among them. Truly wealthy people go elsewhere to find the sun: Antigua, the Seychelles, the Caynman Islands and so on. The wealthier middle classes choose Tuscany, the Dordogne or Provence.
Immigrant spending power may have brought 'wealth' to small communities -hence the free giving out of permits to build without the necessary Junta sanction - but in overall terms, it amounts to a small amount of GDP. I'm certainly no millionaire but compared to many, I would estimate that we posters here are fortunate.
It's going to be hard for Spain to put its economy on a stable footing as it has too rigid labour laws and no tradition of venture capital, amongst other things. But you are right, there is no comparison between Spain and Argentina. Argentina's crisis came from a rigid and zealous application of Friedmanite neo-con economic policies which impoverished the people and brought the country to the edge of bankruptcy. The USA engineered the bail-out because it had much at stake in the Argentine economy.
Spain's deficit is not alarming by the standards of OECD countries, neither is its public debt anywhere near that of say Italy...or the US of A.
Tough times ahead: yes. Disaster: no.


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## mrypg9 (Apr 26, 2008)

And let us not forget, this is Spain's second downgrade. The sky didn't fall in last January.
Incidentally, Moodys is one of the agencies that graded the sub-prime packages as sound.
It's amazing that these people should have such power over us all. 
I agree with almost everything you write, Gus, just not so sure that capital controls can be effectively imposed in these days when money can be moved at the touch of a computer key.


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## gus-lopez (Jan 4, 2010)

UKMarbella2009 said:


> Spain's housing market still has a ticking time bomb. The Bank of Spain is ordering the the banks to shed their repossesed property stock. Next year is going to see a lot of property flood onto the market at even more knockdown prices
> 
> In the development I live in they have been giving away properties. However, it seems to be just the bank employees that are getting the excellant deals.
> 
> ...


It's funny how the bank employess come out winning in all of this , isn't it ?
A man I'd done loads of work for had his place up for sale & couldn't sell, even reduced to 250k & at that price it was cheap. He eventually handed in the keys & the bank manager reluctantly accepted them & on the monday morning was in the notaries buying it for himself! :rofl:


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## gus-lopez (Jan 4, 2010)

mrypg9 said:


> And let us not forget, this is Spain's second downgrade. The sky didn't fall in last January.
> Incidentally, Moodys is one of the agencies that graded the sub-prime packages as sound.
> It's amazing that these people should have such power over us all.
> I agree with almost everything you write, Gus, just not so sure that capital controls can be effectively imposed in these days when money can be moved at the touch of a computer key.


Yes, that's the other point I'd forgotten . Moodys, S&p , rating aaa all the sub-prime rubbish & now having the gall to downgrade countries ratings. It defies belief . They've lost all, or any credibility they ever had.


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## jojo (Sep 20, 2007)

oooooopppps, those of you who noticed the deliberate mistake - it was me  (got carried away with some spam)! Sorry! Those of you who dont know what I'm talking about - dont worry about it LOL

Jo xxx  Again, Sorry!!


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## mrypg9 (Apr 26, 2008)

Stravinsky said:


> Agreed Mary
> I'm suprised they havent started to make a film about it yet


I could play the role of Angela Merkel....our physical appearance isn't that dissimilar (alas) although I take up a little - just a little - less space and have slightly better, more stylish hair.
Plus I speak German.


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## UKMarbella2009 (Sep 24, 2009)

jojo said:


> oooooopppps, those of you who noticed the deliberate mistake - it was me  (got carried away with some spam)! Sorry! Those of you who dont know what I'm talking about - dont worry about it LOL
> 
> Jo xxx  Again, Sorry!!



Being new to the forum - Can anyone let me know what happens when you get locked out of a thread ?

It's happened a couple of times before where I can't read the thread at all - even though I've recieved 'upadate' emails.

On the main page it says the thread has 'moved' but I can never find the new location


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## mrypg9 (Apr 26, 2008)

jojo said:


> oooooopppps, those of you who noticed the deliberate mistake - it was me  (got carried away with some spam)! Sorry! Those of you who dont know what I'm talking about - dont worry about it LOL
> 
> Jo xxx  Again, Sorry!!


Thanks, Jo


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## jojo (Sep 20, 2007)

UKMarbella2009 said:


> Being new to the forum - Can anyone let me know what happens when you get locked out of a thread ?
> 
> It's happened a couple of times before where I can't read the thread at all - even though I've recieved 'upadate' emails.
> 
> On the main page it says the thread has 'moved' but I can never find the new location


The only time anyone gets locked out of a thread is when its closed or moved to the bin or moderation area! Apart from that you can generally still click on the thread title even if it says its moved!

right! Lets talk finance again, its interesting! :focus:

Jo xxx


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## UKMarbella2009 (Sep 24, 2009)

*M&G Fixed Interest Report*

Recieved a report this morning that has a bit on the Eurozone :


Eurozone sovereign debt crisis to persist

In Europe, sovereign creditworthiness will continue to dominate the headlines next year. Everyone is familiar with the trouble that peripheral eurozone nations have found themselves in. First Greece, then Ireland and more recently Portugal and Spain have seen their government bonds come under pressure. Should we see further volatility in peripheral bond markets, or if there is any notion that Spain is in financial difficulty (Spain will need to refinance €30bn of government debt in early 2011), we fully expect the authorities to expand the funds available in
the European Financial Stability Facility (EFSF).

M&G Report


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## mrypg9 (Apr 26, 2008)

UKMarbella2009 said:


> Recieved a report this morning that has a bit on the Eurozone :
> 
> 
> Eurozone sovereign debt crisis to persist
> ...




Quelle surprise...
And who played the leading role in setting up the EFSF? Es war die Merkel....


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## littleredrooster (Aug 3, 2008)

Spain teetering on the brink ?

New Statesman - Spanish credit rating downgrade warning increases Eurozone debt worries


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## mrypg9 (Apr 26, 2008)

littleredrooster said:


> Spain teetering on the brink ?
> 
> New Statesman - Spanish credit rating downgrade warning increases Eurozone debt worries



I doubt it.
We've been here before....many times.
And on the brink of..what?
The last sale of bonds by the Spanish Treasury was well subscribed. True, yields were high and the spread over Germany's bonds is fairly substantial.
I note that the forthcoming sale is for medium-term repayment schedules. A lot can change in ten years, let alone fifteen.


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## Stravinsky (Aug 12, 2007)

mrypg9 said:


> I could play the role of Angela Merkel....our physical appearance isn't that dissimilar (alas) although I take up a little - just a little - less space and have slightly better, more stylish hair.
> Plus I speak German.


I could do Sarkozy  Mainly for his wife really, plus I could do things that would really p!ss the French off


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## Pesky Wesky (May 10, 2009)

Stravinsky said:


> I could do Sarkozy  Mainly for his wife really, plus I could do things that would really p!ss the French off


Hehehe!


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## goodlime (Jan 11, 2011)

Savings into gold and silver bullion. If you did that 4 years ago you would have double your initial investment in fiat money.

Precious metals are the go-to safe haven in economic turmoil such as we are seeing right now.


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## mrypg9 (Apr 26, 2008)

goodlime said:


> Savings into gold and silver bullion. If you did that 4 years ago you would have double your initial investment in fiat money.
> 
> Precious metals are the go-to safe haven in economic turmoil such as we are seeing right now.


True. But not very practical advice for the smaller investor with a typical capital of under £250k.


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## goodlime (Jan 11, 2011)

mrypg9 said:


> True. But not very practical advice for the smaller investor with a typical capital of under £250k.


I did it with 80% of my meager nest egg and I'm laughing right now. I'm certainly not playing with anything close to that, not even 10% of that figure. Not much else would have provided those returns in the past 4 years.

As fiat currencies continue to be eroded by the lunatic policies of the central banks, I see precious metals continuing to be used as a safe haven for cash. This will only serve to drive values higher. Even some mainstream analysts are now talking of $5000-10000 an ounce gold in the next couple of years. The US dollar and the euro are in such dire straits right now, it seems quite feasable.

I only wish I'd listened to those people who were putting their money into gold and silver 10 years ago, when you could pick up an ounce of the yellow stuff for around $250. I would be looking at a near 600% return right now if I had!


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## mrypg9 (Apr 26, 2008)

goodlime said:


> I did it with 80% of my meager nest egg and I'm laughing right now. I'm certainly not playing with anything close to that, not even 10% of that figure. Not much else would have provided those returns in the past 4 years.
> 
> As fiat currencies continue to be eroded by the lunatic policies of the central banks, I see precious metals continuing to be used as a safe haven for cash. This will only serve to drive values higher. Even some mainstream analysts are now talking of $5000-10000 an ounce gold in the next couple of years. The US dollar and the euro are in such dire straits right now, it seems quite feasable.
> 
> I only wish I'd listened to those people who were putting their money into gold and silver 10 years ago, when you could pick up an ounce of the yellow stuff for around $250. I would be looking at a near 600% return right now if I had!


Portugal's yield 7%, close to intervention level...
Spain's Treasury auction tomorrow...


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## jojo (Sep 20, 2007)

Mary, whats happening to the pound its dropping??????????

Jo xxx


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## mrypg9 (Apr 26, 2008)

jojo said:


> Mary, whats happening to the pound its dropping??????????
> 
> Jo xxx


Poor balance of trade figures, imports exceeding exports (bad sign for recovery), fears of BoE resorting to more QE instead of raising interest rates to slow rising inflation....
I sent my dil more sterling yesterday but today sent urgent message telling her to hold it and not change until we see what happens with Spain's bond sale today.


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## Alcalaina (Aug 6, 2010)

mrypg9 said:


> Poor balance of trade figures, imports exceeding exports (bad sign for recovery), fears of BoE resorting to more QE instead of raising interest rates to slow rising inflation....
> I sent my dil more sterling yesterday but today sent urgent message telling her to hold it and not change until we see what happens with Spain's bond sale today.


I changed mine yesterday  and got 1.185! Down to 1.165 now. That's paid for our trip to Seville!


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## mrypg9 (Apr 26, 2008)

Alcalaina said:


> I changed mine yesterday  and got 1.185! Down to 1.165 now. That's paid for our trip to Seville!


Yes, I got that rate last week - or rather dil did. She can hang on to the dosh I sent pro tem.
The Coalition's foolish economic strategy depends on boosting exports, cutting the welfare bill, creating jobs in the private sector and keeping inflation down.....none of which seems likely to happen.
What have we got: imports exceeding exports, a rise in unemployment and therefore extra pressure on welfare spending, a private sector that admits it can't create the jobs to take up the slack and inflation eating into people's savings.
The fact that the situation isn't as dire as it could be is imo thanks to Alistair Darling..
When in years to come the history of the crisis is written I think he will be seen in a very positive way.
I do believe that the expansion of the public sector under Brown was a mistake - you can't have a public sector that eats up more than the private sector produces in tax revenues - but I do believe that Darling's plan would have worked better than that of this lot in Government now.
I predict the result in Old and Sad will give the Lib Dems a deserved thumping. A panel of voters on Newsnight yesterday seemed totally unconcerned about Woolas' dirty tricks but very concerned about the LibDems cynical abandonment of pledges.
I was very pleased to have been able to tell Lyn Featherstone M.P. just what I thought of her lot when I had the chance to get to the microphone during a Q and A session at a seminar I attended recently.
I've made a lot of speeches in my time but never had as much applause as I did for that one....


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## Brrrian (Dec 28, 2010)

Watching the yields on the bond auctions is not indicative of anything.

The ECB is buying the bonds of bankrupt Eurozone countries so the market is not setting these rates. It is QE. Technically it is not printing money, but effectively it is.

No country is too big to be bailed out, so long as its debt is denominated in the currency of its own central bank and that central bank is willing to buy its bonds. Spain could have 100 Trillion in debt and the ECB, if it chose to, could buy 100T of bonds at the touch of a button. The "cost" of increasing the money supply in this way is that everyoe else´s euros are devalued. But as Japan, UK, US & Eurozone are all playing the same game, the currencies are not seen in the headlines to devalue. They are being devalued relative to gold, food, energy and water. Result is cost of living is going to become a severe problem for a lot of people.

One thing that does annoy me, is how Gordon Brown mainly and also plenty of other European leaders have managed to get the public to believe the banks created this problem.

The banks have to obey the laws, which are set by govts, and the regulations of so called independent central banks which are run by government selected cronies.

If the govt/central bank sets a historically mega-low interest rate, backs a fiat paper currency, and passes laws allowing banks to hold low reserves, then a series of debt fuelled bubbles will result. Regardless of country, regardless of bank. The reason the govts did this is because THEY wanted to sell bonds with very low interest rates to live beyond their means. To fund social programs without the economy having the means to pay for it in taxes. And to give the illusion of wealth to the voting public over the last 10+ yrs - allowing people to buy luxuries from remortgages and buy to let investments rather than their own savigs generated by performing useful services in the economy.

These policies failed drastically in Japan, then were brought mainstream by Clinton/Greenspan in the US and quickly adopted by Blair & Brown then much of the rest of Europe.

Now the banks are being told to lend money to business and homeowners in order to solve this problem, which is crazy. The idea of a business is to make money, not spend other people´s money. If your business can´t make money, then you´re the last person who should get a loan, especially from a taxpayer propped bank.

Tough love is the solution, interest rates need to rise, and anyone who loaned money to a bankrupt entity needs to lose it thru default. It´s just a shame that the govt has taken on debts in the citizens´names and pushed waste now pay later on a population with very little understanding of how fiat currencies work.


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## Mr.Blueskies (Feb 24, 2009)

Sonrisa said:


> Well Spain is to big to be bailed out, aint happening, so there is no otherr choice than the bear the bad times and put up with whatever measures the goverment and Europe comes up in 2011.
> 
> The boom couldn't last forever, there are only so many houses one country can sell by the beach and now its time to wake up and smell the coffee and realise that our belts are going to be pretty tight for the next couple of years.
> I think Spain and some other European countries should get back to actually Making things and exporting them, like the good old days. If the unemployement is high, then the spaniards should do what we always had to do: emmigrate. THis is no news. We have a long history of having to look for opportunities outside our country when jobs were scarce and coming back when the work market picks up.
> ...


 But emmigrate to where Sonrisa ? There are no jobs anywhere now unless they are prepared to go to Australia. It is getting to the stage that if people STILL have a few quid, they would be safer to just put it in a tin box and next hide it up the chimney.


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## nigele2 (Dec 25, 2009)

Mr.Blueskies said:


> There are no jobs anywhere now unless they are prepared to go to Australia.


On 29th Dec I sat next to a spaniard on my flight London - Madrid who was an electrician/construction worker with 10 years experience (no formal qualifications). He arrived in London in September. Four days later he got a office cleaning job. He walked the streets and asked at the construction sites. He got a call the next week. He was given a few tests, showed some skill, and continued until Christmas. He returns this month to continue. He has very basic english, aged about 30, with no hope in Madrid.

My step daughter is about to have her airhostess conrtract cancelled after 2 years. She has in the last two weeks responded to five airlines outside Spain (European) who are recruiting. One airline is in Sweden where one of her friends has found work after drawing a blank in Spain.

Just two/three examples that shows why young spaniards will go abroard and many will have success.

One thing that I find a little frustrating is the thought that 20% unemployment is double 10% unemployment. There will always be people unemployed in a healthy economy. Let us say the base is 4% (in the US it is generally accepted as 6%).

Thus Spain is 16% over base and the UK 5% over base. Thus it is 3 times greater in Spain. 

To say there are no jobs is an extreme exaggeration.

The problem for Spain is that the best youngsters (both qualified and those with enthusiasm) will go and many will never return.


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## Brrrian (Dec 28, 2010)

Certainly unemployment in UK and Spain is high, and times are difficult for people out of work in certain areas and certain industries. I think that the figures exaggerate the difference between the rates of unemployment between UK & Spain. In Spain a lot of people are working cash in hand, and a lot of people are working full time but on paper are on part time contracts due to the ridiculous obligations an employer has to a full time employee.

All (and I do mean "ALL") the young people I know in Spain who want to work, are working. The same is not true in the UK. The biggest victims of the unemployment in both countries are those who are not young who cannot find work despite trying very hard.


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## jojo (Sep 20, 2007)

the pound seems to have plummeted since yesterday 


Jo xxx


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## Pesky Wesky (May 10, 2009)

jojo said:


> the pound seems to have plummeted since yesterday
> 
> 
> Jo xxx


Sorry, but


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## mrypg9 (Apr 26, 2008)

Brrrian said:


> Watching the yields on the bond auctions is not indicative of anything.
> 
> The ECB is buying the bonds of bankrupt Eurozone countries so the market is not setting these rates. It is QE. Technically it is not printing money, but effectively it is.
> 
> ...



But what you have written has very little relation to the real world.
You seem to be criticising the neo-con policies which lead to the current crisis then advocating them as a way out of it. I've noticed that this is the default position of some neo-con apologists here and in the U.S. 
Greenspan has of course recanted and presumably burnt his copy of 'Atlas Shrugged'.
The impact on the global economy of central banks printing 'monkey money' would be catastrophic. The U.S. Treasury could wipe out its debts if it went down this path. How would China react to such a devaluation of its massive dollar holdings?
AS for regulation.,..cast your mind back to the eighties and the Thatcher 'Big Bang' which made a bonfire of regulations. I'd be interested to know what specific regulations you are referring to when you mention those set by Governments and their cronies.
The crisis was sparked by the U.S. banks' policies of backing and funding loans which could never be repaid on collateral which decreased in value. These so-called toxic loans were parcelled up tucked away in neat little in bundles and sold on and on. Debt cannot be passed around indefinitely.
Japan's slow recovery is down to an economic policy somewhat similar to that of the curent UK Government.
If any Government had done what you advocate the result would have been a global meltdown. Fact. And to what purpose when other solutions are available?
Why see massive unemployment with concommitant social unrest, home repossessions, cash machines running dry, industry grinding to a halt....
There are alternatives which most Governments world-wide are putting into practice in one form or another.
As for viable businesses not needing loans...I wonder if you have run a business?
Most businesses run on credit for very sound reasons. Investing in new plant or staff to fund future expansion or merely to cover a temporary cashflow problem if a major customer is tardy in paying. Your proposal would close down viable businesses, put millions more on the dole and severely cut tax revenue to the Excheque, further exarcerbating economic decline.
The kind of solution you propose sounds faintly plausible on paper but can not and will not be adopted by responsible politicians who have to deal with real events in the real world as they happen and who hold the wellbeing of millions in their hands.
These prescriptions for a blue-skies economic future where Governments will never borrow -just a thought but how will essential national services be funded? - 
businesses will operate purely by virtue of current profitability,lines of credit will be terminated to homeowners and so on...fortunately will never be put into practice.
We should all be grateful for that.
Now....which eighteenth century economist wrote that it is the duty of the state *to support illiquid but not insolvent banks*?
THere is of course a big difference between those two terms.
Real life events often make nonsense of the economic dogma of both left and right ideologues as the collapse of Communism and LehmannBros. both demonstrate.


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## Brrrian (Dec 28, 2010)

"You seem to be criticising the neo-con policies which lead to the current crisis then advocating them as a way out of it"

Eh? not quite.

The policy that led to the crisis was too much credit at low interest rates. And I am saying that credit tightening must follow.

Increasing the debt of already bankrupt businesses and govts will make the problem bigger, not solve it.

The problem is already here and there is no easy way out. The pain is going to have to come. Govt spending does not support the economy, there are plenty of failed communist states that have proven that beyond doubt. You can either stop the easy credit now and have some pain. Or you can keep it going and have MORE pain later.

Politicians are in it for the short term, so invariably they go for the lie now and more pain later option. Blair and Brown are not going to be hard up in the coming years.


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## mrypg9 (Apr 26, 2008)

Brrrian said:


> "You seem to be criticising the neo-con policies which lead to the current crisis then advocating them as a way out of it"
> 
> Eh? not quite.
> 
> ...


Neither are Lawson, Thatcher or any of the other politicians who presided over crisis.
I don't disagree with your last post which however failed to address the points I raised in my response to your original post.
I agree that bankrupt businesses should not be propped up by further lending. Who would? But as I pointed out, there is a world of difference between an illiquid business and a bankrupt one -whether it be a cakeshop, repair service or a bank. A business with a temporary cash-flow problem does not indicate potential failure.
No Government is 'bankrupt' especially the UK Government which borrows at just over 3% and lends at a higher rate...note the example of our loan to Ireland at over 5%. Governments which cannot meet their obligations restructure...simple as that, as did Russia, Mexico, Argentina...
Of course investors take a haircut, as the current saying goes but risk is the essence of venture capitalism. Capitalism has a history of boom and bust....the reasons for which are inherent in the system. We survive.
Now you qualify your earlier comments by referring to 'easy' credit....no-one would disagree with your views on that. But lending to a viable business is not to be compared with handing out sub-prime mortgages, is it.....
I doubt if David Cameron and George O. would concur with your proposal to tighten credit. It's already being tightened and they know that lack of funding to the SME sector of the economy will smash a giant hole through their strategy. How can cash-strapped VIABLE enterprises create jobs to take up the slack from the fall-out from the private sector - a central plank of the Coalition's economic policy -if they are unable to get lines of credit to enable them to do so?
Consider the case of Sheffield Forgemasters.....
Which brings me to my penultimate point: Government spending CAN and often DOES support an economy. The huge amount of U.S. Government spending on the military budget demonstrates that, to give just one example of many. Many UK firms of all sizes rely on Government contracts.
Yes, there has to be a balance. But demand-side measures aka Keynesianism can play a vital role in pump- priming an economy when private enterprise alone can not do so. I believe that the measures taken by Darling brought the UK out of recession. The too-soon too-deep cuts are slowing down that growth. Inflation is rising, balance of trade figures showing a surplus of imports over exports and the unemployment figures are adding to welfare expenditure. These are facts. You can check the figures.
Finally....if the medicine you prescribe would cure the world's economic ills, why has no Government anywhere in the world taken it?


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## Brrrian (Dec 28, 2010)

"The impact on the global economy of central banks printing 'monkey money' would be catastrophic. The U.S. Treasury could wipe out its debts if it went down this path. How would China react to such a devaluation of its massive dollar holdings?"

"would be"?!?! This is not something I am "advocating" in my post, it is already happening. We had QE1 & QE2 and QE3 is about to happen. A new stock market bubble is with us, and the housing bubble is off its peak but still way high compared to rents and incomes on a historical basis.

Any country can wipe out its debts if those debts are denominated in their own currency. As to what would China do if its dollar holdings were devalued. Keep up, chinese currency hit an alltime high yesterday, this is happening now. Chinese don't care if their dollars are devalued, they will get more dollars.

China has a trade surplus with the US. This means it has more dollars than it can get rid of. So it then lends some of those dollars back to the US and uses others to buy cheap natural resources from South America and Africa. As the dollar devalues, the Chinese trade surplus increases in dollar terms, so China gets more dollars. China gets industrialised and builds infrastructure and a middle class and imports raw materials. So they are already up on the deal. Any residual value to their surplus dollar holdings is a bonus but not the aim of the game.

While the US could wipe out its national debt by "printing money", Europeans hae not been so clever. Eurozone countries and UK have issued bonds in their own currencies. But they have also issued significant bonds in other currencies. If the UK were to print their way out of their sterling debt, the pound would fall, making the dollar, yen and euro denominated debt harder to service, especially those bonds which promise a variable redemption value based on inflation. So all the govts have to make sure they don't print money too fast, relative to their money printing competitors.

So what happens if the Eurozone goes pear shaped? well, remove the word if as it's already pear shaped. My guess is that the eurozone will defend its currency regardless of what the voting public think. The non-bankrupt member states may complain about their currency being devalued by supporting the bankrupt states, but they need a customer base and do not want to go thru another currency change. I will give the Euro a 50/50 chance of surviving in Western Europe.

Greece is very worrying, especially for me as my family lives there. It is an economic basket case. The press reports it has just been bailed out, but in fact it received loans, not aid. Next yr its debt will be larger than it is this yr. And it will be larger the year after. The population has become used to getting more from "the system" than they contribute, and are firmly of the opinion that the free ride should continue. I think civil war is not out of the question, and communism is a possibility. I wouldn't be surprised to see heavy economic and military "assistance" from the EU/Nato to try to avert this, and the angry mob will not take kindly to intervention from foreigners.


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## mrypg9 (Apr 26, 2008)

Brrrian said:


> "The impact on the global economy of central banks printing 'monkey money' would be catastrophic. The U.S. Treasury could wipe out its debts if it went down this path. How would China react to such a devaluation of its massive dollar holdings?"
> 
> "would be"?!?! This is not something I am "advocating" in my post, it is already happening. We had QE1 & QE2 and QE3 is about to happen. A new stock market bubble is with us, and the housing bubble is off its peak but still way high compared to rents and incomes on a historical basis.
> 
> ...


I agree with your last paragraph. The right-wing Government that plunged Greece into economic crisis did so with the help of low interest rates brought on by entry into the Eurozone.
But again you are introducing new material and not dealing with my original points.
Your doom and gloom scenario is too pessimistic. As I said, the history of capitalism for the past six hundred years or so has been one of boom and bust, bears and bulls, since Henry the Eighth first introduced QE by debasing the economy.. Yet the system survives.
As will the euro as it is in Germany's interest in the foreseeable future to ensure it does. Since when has any Government paid attention to the public on such matters? Do you think the public of Europe's grasp of economics qualifies them to take such vital decisions? Granted, the economic nous of neo-cons such as Greenspan and his gurus Friedman, Hayek and.....Ayn Rand!!... gives pause for thought...
You rightly point out that many European economies are facing difficult times - no new news there.
But as I have said, your prescription for dealing with these problems is not sound which is why no Government whether of left or right will adopt such measures.


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## mrypg9 (Apr 26, 2008)

Just an afterthought....China's ascendancy demonstrates neatly that the neo-con fantasy of U.S. market domination via globalisation has the seeds of its own downfall.
Germany's plans for a mechanism to deal with default show its determination to prop up the euro. The demise of the euro was predicted before it was launched. 
Globalisation has encouraged the emergence of many different types of capitalism...from the mafia capitalism of Putin's Russia to the state-controlled capitalism of China. 
Some of these models will compete with the West in ways in which we will be no match.
The decline of the West could be said to have begun after 1914.
But I don't think we need to worry too much in our lifetimes.


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## Brrrian (Dec 28, 2010)

the trouble with govt spending for the sake of jobs or supproting the economy is that it removes capital from the economy that would otherise be spent democratically.

If govt spends a million pounds resurfacing perfectly good roads, that is a million pounds of extra borrowing or a million pounds of tax revenue that has been taken off the general public. If the money was in the hands of the general public then it would be spent on something that was necessary or useful rather than producing an unsustainably sized road repairing infrastructure and work force that would get idled eventually anyway. The basis of this is that people spend their own money more effectively than a civil servant thinking "hmm how shall I spend other people's money today"

As for the UK (or Spain) not being bankrupt surely that's a joke. They cannot fund their expenses. They are living off debt. China is not "investing" in bonds at 3% denominated in a currecny that China knows will devalue by more than 3% per yr. China is providing welfare to help keep the UK afloat. Despite this charity, the UK still has to "create money out of thin air on a computer" (for those who would nitpick at the term "printing money").


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## jojo (Sep 20, 2007)

..........er........ so why has the pound fallen???? and will it go back up?

Jo xxx


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## Brrrian (Dec 28, 2010)

jojo said:


> ..........er........ so why has the pound fallen???? and will it go back up?
> 
> Jo xxx


I'm reckoning the pound will continue to fall. But the Euro will fall faster so you might think of it as the pound going up !

In this international race of who can devalue the fastest, having the currency of where you live fall is not necessarily a good thing, as the cost of necessities such as food and energy tends to rise as a currency falls.

In otherwords, if you get 10% more euros for your pounds, but your cost of living goesup 10% then you haven't gained. Try going shopping in Zimbabwe for a good example of this.

An exception to this is if you are waiting to buy property. As reality bites, govt loses ability to fix interest rates and they will return towards (or beyond) the historical norms of 10%. This will kill the property bubble. If this happens to Spain before the UK as I think it will, then anyone with UK savings who wants to buy property in Spain is going to have some fun. Conversely, if you are looking to sell up and go back to UK, there could be a large disappointment ahead.


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## nigele2 (Dec 25, 2009)

Brrrian said:


> ................. China is not "investing" in bonds at 3% denominated in a currecny that China knows will devalue by more than 3% per yr. China is providing welfare to help keep the UK afloat.


Brrrian I think you are over simplifying things. China has good reason to look after China first and its customers second. And if you actually consider that China is investing very small amounts of money in real terms in exchange for influence then you will realise it is not charity - for them the sums add up.

However as you say this focus on the pound/euro rate is again a simplification that hides much.

As for the topic: I believe spain will be rescued whatever it costs - and it will cost spain a great deal. Dare I mention the F word


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## Alcalaina (Aug 6, 2010)

Brrrian said:


> the trouble with govt spending for the sake of jobs or supproting the economy is that it removes capital from the economy that would otherise be spent democratically.
> 
> If govt spends a million pounds resurfacing perfectly good roads, that is a million pounds of extra borrowing or a million pounds of tax revenue that has been taken off the general public. If the money was in the hands of the general public then it would be spent on something that was necessary or useful rather than producing an unsustainably sized road repairing infrastructure and work force that would get idled eventually anyway. The basis of this is that people spend their own money more effectively than a civil servant thinking "hmm how shall I spend other people's money today"


Sorry, I'm having a bit of a problem getting my head round this.

If a government spends £1m on jobs repairing roads, how has that money been taken off the general public? Are the people mending the roads not the general public? Won't they in turn become taxpayers and spend their disposable income helping to regenerate the economy?

Or are you worried that the million pounds will go to big engineering contractors who will take it out of the country?

Where are these perfectly good roads anyway?


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## Brrrian (Dec 28, 2010)

Yes the people mending the roads are the general public. But a million pounds mending the roads is not a wmillion pounds on wages of the people mending the roads. There is equipment, training, materials, profit of any agencies etc. A percentage will stay in the economy and then a percentage of the percentage will go thru the economy again until, it is generally guessed, the money will have circulated resulting in a total spend in the economy of 4 times the initial spend. That's why fans of govt spending might quote that a million pounds of public spending generates 4 million pounds of economic activity.

But...

If that million pounds was spent by the people who's money it is ie the general public, they will take more care to spend it in a way that has benefit and is value for money. It will still recycle for a total economic activity of 4 million or whatever the figure is, but a useful job will have been done, instead of this theoretical perfectly good road being mended.


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## xicoalc (Apr 20, 2010)

So then,... for someone who doesnt really study currency like me, who can give best advice?... i need to change a reasonable sum of pounds to euros soon... about 10-15k... so... now while its a little better, or wait a little longer? answers on a post card please!


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## Alcalaina (Aug 6, 2010)

Brrrian said:


> Yes the people mending the roads are the general public. But a million pounds mending the roads is not a wmillion pounds on wages of the people mending the roads. There is equipment, training, materials, profit of any agencies etc. A percentage will stay in the economy and then a percentage of the percentage will go thru the economy again until, it is generally guessed, the money will have circulated resulting in a total spend in the economy of 4 times the initial spend. That's why fans of govt spending might quote that a million pounds of public spending generates 4 million pounds of economic activity.
> 
> But...
> 
> If that million pounds was spent by the people who's money it is ie the general public, they will take more care to spend it in a way that has benefit and is value for money. It will still recycle for a total economic activity of 4 million or whatever the figure is, but a useful job will have been done, instead of this theoretical perfectly good road being mended.



So, you're saying that instead investing in of public expenditure, the government should cut taxes and let those people who still have jobs spend the extra money on whatever they decide is best for them. How do you know they won't spend it on holidays in Florida or Chinese imports? Wouldn't that take the money out of the economy? And what do the unemployed road-menders live on in the meantime?

Jo's going to tell me off in a minute ...:focus:


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## mrypg9 (Apr 26, 2008)

Brrrian said:


> the trouble with govt spending for the sake of jobs or supproting the economy is that it removes capital from the economy that would otherise be spent democratically.
> 
> If govt spends a million pounds resurfacing perfectly good roads, that is a million pounds of extra borrowing or a million pounds of tax revenue that has been taken off the general public. If the money was in the hands of the general public then it would be spent on something that was necessary or useful rather than producing an unsustainably sized road repairing infrastructure and work force that would get idled eventually anyway. The basis of this is that people spend their own money more effectively than a civil servant thinking "hmm how shall I spend other people's money today"
> 
> As for the UK (or Spain) not being bankrupt surely that's a joke. They cannot fund their expenses. They are living off debt. China is not "investing" in bonds at 3% denominated in a currecny that China knows will devalue by more than 3% per yr. China is providing welfare to help keep the UK afloat. Despite this charity, the UK still has to "create money out of thin air on a computer" (for those who would nitpick at the term "printing money").


Governments are elected by democratic vote. So public spending has a mandate.
I have never seen a road resurfaced 'unnecessarily'. I have seen many in the UK in dire need of repair.
Couold you explain IN DETAIL how the money would be 'put in the hands of the general public'? How would it be decided what projects would be deemed 'necessary' or 'useful'?
Civil servants do not decide how to spend public money. They act on instructions from Ministers of democratically-elected governments.
Yes the UK is living off debt. But it is not bankrupt and pays its way. It will continue to do so. By your definition anyone in debt is bankrupt...that must therefore include anyone with a mortgage. 
So....please deal with the serious points I made earlier. I'd like to hear your response.
Banging on about China is in this context irrelevant.
And I'm interested to know if you have ever owned and run -not just managed - a business?


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## mrypg9 (Apr 26, 2008)

steve_in_spain said:


> So then,... for someone who doesnt really study currency like me, who can give best advice?... i need to change a reasonable sum of pounds to euros soon... about 10-15k... so... now while its a little better, or wait a little longer? answers on a post card please!


Hold on. The stats for the UK economy aren't promising and Spain and Portugasl weathered their bond sales without a bailout or a fall in the euro.
The euro is strengthening and the 3 weakening so hold on for a while. That's what I'm doing anyway.


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## xicoalc (Apr 20, 2010)

mrypg9 said:


> Hold on. The stats for the UK economy aren't promising and Spain and Portugasl weathered their bond sales without a bailout or a fall in the euro.
> The euro is strengthening and the 3 weakening so hold on for a while. That's what I'm doing anyway.


You know what mary, im gonna do just what you said... if it goes up and i get more than 1.20 i will buy you a coffee... if it drops mucho you can buy me a cofee machne? sound like a deal?


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## mrypg9 (Apr 26, 2008)

Brrrian said:


> Yes the people mending the roads are the general public. But a million pounds mending the roads is not a wmillion pounds on wages of the people mending the roads. There is equipment, training, materials, profit of any agencies etc. A percentage will stay in the economy and then a percentage of the percentage will go thru the economy again until, it is generally guessed, the money will have circulated resulting in a total spend in the economy of 4 times the initial spend. That's why fans of govt spending might quote that a million pounds of public spending generates 4 million pounds of economic activity.
> 
> But...
> 
> If that million pounds was spent by the people who's money it is ie the general public, they will take more care to spend it in a way that has benefit and is value for money. It will still recycle for a total economic activity of 4 million or whatever the figure is, but a useful job will have been done, instead of this theoretical perfectly good road being mended.


I'm glad you're not in charge of the UK's finances   Your suggestion that the 'general public' will spend their money in a way that 'has benefit' and 'is value for money' is meaningless. What makes you think the general public will take more care over how it spends its money?
That's not economics, not even politics...it's pure fantasy.
Who is to decide what has 'value' and what gives 'benefit'? These are purely subjective concepts.
What if the money is spent on imports? White goods from Italy, cars from Germany, anything from China? What if it's hoarded away in savings? What if it's invested in foreign bonds....Chinese bonds even?
Your first paragraph doesn't make sense. I have never heard any 'fan of spending public money' (an odd term, that) claim that every one pound spent generates fourfold revenue. Where did you hear that bizarre claim?
Finally: could you tell us how, without government control of spending, we would afford roads, the police, the armed forces, all the infrastructure needed for private business to thrive?
You worry too much about China. Take a look at a country nearer to home, Germany for example.


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## mrypg9 (Apr 26, 2008)

steve_in_spain said:


> You know what mary, im gonna do just what you said... if it goes up and i get more than 1.20 i will buy you a coffee... if it drops mucho you can buy me a cofee machne? sound like a deal?


Ah Steve.....we're gonna go shopping together one fine day, sweetcheeks
Remember??
Speaking of coffee, did you ever treat yourself to that coffee machine???


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## mrypg9 (Apr 26, 2008)

Brrrian said:


> will
> An exception to this is if you are waiting to buy property. As reality bites, govt loses ability to fix interest rates .


Most European Governments do NOT fix interest rates. The BoE and Central Banks have performed that function in Europe for years.


_I'm reckoning the pound will continue to fall. But the Euro will fall faster so you might think of it as the pound going up (quote)_
Could I ask on what evidence you base that forecast? Currently the opposite is happening.


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## mrypg9 (Apr 26, 2008)

£ now up....slightly. 1.19/£1
I'm still holding on...


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## goodlime (Jan 11, 2011)

Mr.Blueskies said:


> It is getting to the stage that if people STILL have a few quid, they would be safer to just put it in a tin box and next hide it up the chimney.


So long as you convert the quids into something non-fiat like gold or silver. There is a reason the best of the world's currencies used to be back in some tangeable commodity of intrinsic value.

A stack of 20 pound notes stuffed up the chimney will devalue the same as the paper in your wallet when the central banker have the printing presses running. Weimar Republic anyone?

Really the only question now is... which will go first, the Dollar or the Euro?


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## xicoalc (Apr 20, 2010)

mrypg9 said:


> Ah Steve.....we're gonna go shopping together one fine day, sweetcheeks
> Remember??
> Speaking of coffee, did you ever treat yourself to that coffee machine???


WE MUST. I was in Granada the other week, which is a lot closer to you than here. I thought of you as I wondered through El corte ingles. Never got round to buying one... but its on my list of things to buy!

Sweetcheeks...  Me gusta mucho!

You should treat yourself to a bit of class... get up to Benidorm for a weekend..we can meet up.. i´ll buy you a chippy tea and you can show me photos of the Cathedral you live in!

Oh... moving house soon... to the country! With a chimenea so coffee machine will be a must then


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## Brrrian (Dec 28, 2010)

I'm glad you're not in charge of the UK's finances Your suggestion that the 'general public' will spend their money in a way that 'has benefit' and 'is value for money' is meaningless. What makes you think the general public will take more care over how it spends its money?
That's not economics, not even politics...it's pure fantasy.

"If you're spending your own money you want something from it, as opposed to the civil sevrant (yes they do make decisions on what to buy) who is spending it for you. He can waste it on any old crap and it doesn't affect his bottom line.



Who is to decide what has 'value' and what gives 'benefit'? These are purely subjective concepts.

The person who has earned the money, wouldn't you say? rather than paying it in tax and letting a civil servant spend it on a pet project.

What if the money is spent on imports? White goods from Italy, cars from Germany, anything from China? What if it's hoarded away in savings? What if it's invested in foreign bonds....Chinese bonds even? That's the prerogative of the person who earned it, but in the real world, in todays climate, the public are spending money on things like food & bills.

Your first paragraph doesn't make sense. I have never heard any 'fan of spending public money' (an odd term, that) claim that every one pound spent generates fourfold revenue. Where did you hear that bizarre claim?

Alan Johnson a few days ago.

Finally: could you tell us how, without government control of spending, we would afford roads, the police, the armed forces, all the infrastructure needed for private business to thrive?

We couldn't. I am not advocating anarchy or zero govt spending. I am saying that govt spending money to create jobs/stimulate the economy doesnt work. Let me hit you with the opposite extreme. What if 100% of yor earnings went to tax, and govt made all purchases. A civil servant decides what you have for dinner and what kind of car you have, all in the public good and to stimulate the economy. Theoretically that gives you full employment. Good idea?

You worry too much about China. Take a look at a country nearer to home, Germany for example. 

I do not "worry" about China at all but made an observation on their participation and support for the western govt model of living from debt that has gone to extremes in the last 10+ yrs. China has funded western bond sales. It still is to some extent, but to a lesser degree, and the money "printing" is stepping in to take up the slack. My first post on this topic was to make the point that the bond sales are not indicative of portugal or spain being able to keep the money go round going. The ECB have decided to defend the 7% level on govt bonds, and the first sign of rates going over that level, ECB starts buying bonds. The other point of discussion I chipped in on was that Spain is not too big to "bail out" if the ECB decides to do so, as the ECB is able to buy Euro denominated bonds to the value of an unlimited amount.

Do I/have I run a business. Yes. I live off my own 15 yr old 1 man business. I have two other businesses that make a contribution to my finances but wouldn't support me on their own. None of my businesses have ever had any debt apart from whichever monthly or quarterly bills were outstanding at any one time, and whatever tax was due for the particular quarter or year. It's a very sound way to run a business, I recommend it !


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## Brrrian (Dec 28, 2010)

mrypg9 said:


> Hold on. The stats for the UK economy aren't promising and Spain and Portugasl weathered their bond sales without a bailout or a fall in the euro.
> The euro is strengthening and the 3 weakening so hold on for a while. That's what I'm doing anyway.


If you're wanting to convert GBP to EUR and you think the Euro is gong to strengthen then why would you hold on for a while? to get a worse rate? lol !

Spain and Portugal weathered their bond sales - with support from ECB. I would argue that constitutes a bailout. Short term forecasts are very difficult to make. You have confidence on the one hand which in my opinion will weaken for the euro faster than the pound as SHTF with respect to finances of Italy, Spain & Portugal in that order. On the other hand you have the ECB attempting to prop the Euro up. Long term, the UK economy has the lesser challenge, and is making the swiftest progress in tackling deficit, plus has sovereign control over its own currency. SO I would expect the pound to buy 1.5 Euros in time. Could be three months from now, or ECB could prop the Euro successfully for 2 yrs or more.


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## mrypg9 (Apr 26, 2008)

Brrrian said:


> I'm glad you're not in charge of the UK's finances Your suggestion that the 'general public' will spend their money in a way that 'has benefit' and 'is value for money' is meaningless. What makes you think the general public will take more care over how it spends its money?
> That's not economics, not even politics...it's pure fantasy.
> 
> "If you're spending your own money you want something from it, as opposed to the civil sevrant (yes they do make decisions on what to buy) who is spending it for you. He can waste it on any old crap and it doesn't affect his bottom line.
> ...


A one -man business, may I suggest, is rather different from running two businesses with twenty-five full-time employees. We were able to retire some ten years before the usual date so thankyou for your kind recommendation but no thanks, no help needed. You chose not to expand your business by borrowing to invest in future profitability as most larger successful businesses -and countries - do.
I repeat: Government spending to boost the economy does work. I cited the example of the $ billions spent by the U.S. Government on armaments, which goes to private companies. The same goes for the UK and most other countries. 
Government spending in many other areas...roads to take just one example you cited .....boosts local and national companies. In times of crisis governments both left and right resort to demand side measures to 'pump prime'. So you are simply wrong and will remain so unless you provide fact rather than mere repeated assertion in defence of your argument.
Your argument on tax rests on fantastically hypothetical situations that don't exist in the real world. This 100% tax scenario isn't worth refuting.
Let's get down to some basics:
What level of tax would you consider the base line for any government?
what kind of tax - flat or progressive? Give reasons.
How would your 'public voice' actually work in practice? Say the M6 needed repairing, to go back to your example. How woud sufficient revenue be raised from the general public? What if people in the South said 'Sod the M6, we don't use it.'
Let's get down to the nitty-gritty of the real decisions real politicians have to take in the real world, not discuss events that willnever happen and other fantasies.
Oh, and even if Alan Johnson did say that...and I like to see that in print...I do not regard the views of the Shadow Chancellor as the ne plus ultra of economic sense and I'm surprised that you do, since he is apparently unaware of the current level of NI contributions.


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## mrypg9 (Apr 26, 2008)

Brrian, please reply and keep up the debate. I need someone to argue with.


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## xicoalc (Apr 20, 2010)

mrypg9 said:


> Brrian, please reply and keep up the debate. I need someone to argue with.


:clap2:

:cheer2: GO MARY, GO MARY :cheer2:


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## mrypg9 (Apr 26, 2008)

steve_in_spain said:


> :clap2:
> 
> :cheer2: GO MARY, GO MARY :cheer2:


Steve, I need my fix....
I've been meddling with people's livesand arguing the toss for decades....now I've stopped I get the occasional withdawal symptoms...


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## xicoalc (Apr 20, 2010)

mrypg9 said:


> steve, i need my fix....
> I've been meddling with people's livesand arguing the toss for decades....now i've stopped i get the occasional withdawal symptoms...


pmsl!


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