Why hasn't the UK £ Sunk?

[Dirk Diggler]

Re: Why hasn't the UK £ Sunk?

http://www.moneymorning.com.au/20091...h-economy.html
It appears i am NOT the only one baffled on this?
Mike

Everyone knows that $HIT F£OATS!

[c1ue]

Re: Why hasn't the UK £ Sunk?

1992 was a different world. The pound was fixed at an artificially high rate by the British Government. The attack simply moved it to a sustainable price. But in 1992 the British economy though in recession was not unhealthy. Debt levels were a fraction of what they are today and the government was basically solvent.

I'm not sure what you're trying to say.

Are you trying to say that because the pound was fixed, that the correction was not going to occur?

That the British government was healthier then compared to now is irrelevant; it was how the UK was considered vs. the rest of the world then that is different now.

Now for all the problems the UK is having, there are plenty of others with similar problems including the US and the PIIGS.

The initial 30% drop in the pound vs. dollar and the recovery of the pound to a mere 20% drop vs. the dollar can be traced to pre- and post- subprime MBS discoveries in European banks as well as onset of recessions in the PIIGS.

Thus while qualitatively the UK may be worse off than most, quantitatively it won't matter until the issue is pushed either by an attack on the currency or some other extraneous force.

I don't like this explanation either, but I simply cannot find another rationale.