British £ and Barclays in BIG trouble!

[Mega]

The British £ is riding high V the Euro right now, if your a limey like me i say NOW would be a good time to put your Pounds into Euros and sit tight.

Chances are in the coming weeks & months the £ will follow its mate the $ into a death dive!

Today Barclays bank shares were suspeneded for a time after losing 9% of their value!

Cheers
Mike

[DemonD]

Re: British £ and Barclays in BIG trouble!

Mega, the Euro is probably the most overvalued currency in the world right now. Not that the pound is all that great, I'm just saying that it's probably not much worse than the euro.

Here is a wild guess: the only reason the euro is so damn high right now is solely investor sentiment, everyone *thinks* the euro is all that and a bag of chips, you've got supermodels wanting to be paid in euros, etc. Eventually the euro m3 fundamentals will catch up.

[The Outback Oracle]

Re: British £ and Barclays in BIG trouble!

Just as an observation from the Antipodes, from one who can't understand why the heck the Aus dollar is holding up, the pound appears doomed. The poms are running a huge CAD a bit like Aus and the US (aren't they?) and propped up by the recycling of Petro dollars. In addition, the source of much of the magic potion that cured their ills in the first place (North Sea Oil) is starting to flow in something of a slower magic river.
By contrast although the Euro has huge problems as a result of trying to fit too many diverse economies under one roof, ageing populations, and all the other things that are wrong, they have a balanced trade account.
If I'm wrong someone please educate me and then I'll know why the A$ is parity with it's Canadian counterpart, where theyt consistently run trade surpluses against our CAD which is some 6% of GDP!!!!!
Cheers

[DemonD]

Re: British £ and Barclays in BIG trouble!

Outback: I bet the A$ is going up solely because of demand from people looking to diversify out of the US$. If china decides they want to take some of their 1.4t in US reserves and buy say I don't know 100b in Australian dollars, that would probably keep the price propped up. Also china has been propping up all currencies it exports to by devaluing their own currency, so that is also probably a motivation there. Since that is your business, you might have a notion about that to begin with. If China used more fair currency controls, the A$ along with the US$ and many other currencies would be going way down compared to the yuan. That's just a guess, btw, and as you noted before the yuan has risen, this is DESPITE the price controls and unfair subsidies they give their exporters.
I'm also going to guess the australian government isn't as insanely fiscally unsound as the US.

I agree with your assessment of the pound and euro (hell i just said it), don't know enough about A$ or NZ$ to speak on them. Loonie may continue to rise as they are a resource exporter and are running big budget surpluses right now.

[GRG55]

Re: British £ and Barclays in BIG trouble!

Just as an observation from the Antipodes, from one who can't understand why the heck the Aus dollar is holding up, the pound appears doomed. The poms are running a huge CAD a bit like Aus and the US (aren't they?) and propped up by the recycling of Petro dollars. In addition, the source of much of the magic potion that cured their ills in the first place (North Sea Oil) is starting to flow in something of a slower magic river.
By contrast although the Euro has huge problems as a result of trying to fit too many diverse economies under one roof, ageing populations, and all the other things that are wrong, they have a balanced trade account.
If I'm wrong someone please educate me and then I'll know why the A$ is parity with it's Canadian counterpart, where theyt consistently run trade surpluses against our CAD which is some 6% of GDP!!!!!
Cheers

The Outback Oracle is correct. Assuming that the British Pound and the Euro are just a couple of "European" currencies is oversimplisitic.

As long as the Bundesbank (with its history-sourced hyperinflation fears) retains substantial influence over the ECB, and the Eurozone continues to run a favourable account balance, I believe it should be a preferred currency over the Pound. OO's observation that the Pound's days as a "petro-currency" are ending is important (I believe increasing petroleum exports, primarily from the NW Shelf, is one reason the Aussie $ continues to be strong - for now).

Britain's overdependence on the London financial centre (The City) as an economic driver after a 25 year global financial asset, and sub-set real estate, boom also makes it vulnerable in my view (Napolean's "nation of shopkeepers" has morphed into a nation of bankers and estate agents). If you spend a bit of time in the UK outside London you'll quickly notice that its agriculture industry is a complete mess, and years of New Labour haven't done much to promote manufacturing or other diversity. Having kept a second residence in London from 2004-06 I came away with the impression that, even by international standards, it's an increasingly crowded, expensive, inefficient and uncompetitive place for business - unless you're a banker or hedge fund manager with annual 100 million Pound bonuses. (If you are unconvinced you might change your mind after just one transit through the nightmarish Heathrow airport)

Since end 2006 my preferred European currency has been the Swiss Franc (replacing the Euro), and my preferred Asian currency has been the Japanese Yen (replacing the Singapore $). I was 6-7 months early moving into both, but the fundamentals are now asserting themselves as the inevitable unwinding of global leveraged speculations is finally underway.

There is a reasonable argument that the US$ has also been a funding currency for speculations, and may see a cyclical bounce in 2008 due to the same dynamic. Would surprise everyone, wouldn't it ;)

[Mega]

Re: British £ and Barclays in BIG trouble!

I watched Factory after factory close and move off to Easten euro-zone. The Euro might wobble but its run by the Germans, whom remember Hyper inflation and what it bought them!

The French will wave their hands, but just draw a sword at them and watch them run! The rest will back the German's once the Spainsh who have been as soft as the Brits & Ireland are bought off to stop their banks falling.

Ireland & Brits will suffer the most, tough shit!

The Euro might fall a bit, but nothing to the "Halo" drop the £ is going to have when all of Labour mad Spending catches up with them (Very soon).

Rather looking forward to it, to be honest.......if the banks don't go bust and i am able to trade back into the £ i should see 30%......plus those house prices that were 3-4 times higher than they should be will come crashing back to earth!

;))
Mega

[GRG55]

Re: British £ and Barclays in BIG trouble!

I watched Factory after factory close and move off to Easten euro-zone. The Euro might wobble but its run by the Germans, whom remember Hyper inflation and what it bought them!

The French will wave their hands, but just draw a sword at them and watch them run! The rest will back the German's once the Spainsh who have been as soft as the Brits & Ireland are bought off to stop their banks falling.

Ireland & Brits will suffer the most, tough shit!

The Euro might fall a bit, but nothing to the "Halo" drop the £ is going to have when all of Labour mad Spending catches up with them (Very soon).

Rather looking forward to it, to be honest.......if the banks don't go bust and i am able to trade back into the £ i should see 30%......plus those house prices that were 3-4 times higher than they should be will come crashing back to earth!

;))
Mega

"For Sale: 5000 French Army rifles. Good condition. Only dropped once"

(apologies to anyone of French origin in the community )

[jk]

Re: British £ and Barclays in BIG trouble!

There is a reasonable argument that the US$ has also been a funding currency for speculations, and may see a cyclical bounce in 2008 due to the same dynamic. Would surprise everyone, wouldn't it ;)

i think, however, that the us$ is in the process of becoming even MORE of a funding currency as u.s. short rates drop. i think that in a crisis sell-off the dollar will rise against everything except the yen and [probably] the swissie, as u.s.-based funds are repatriated. but absent that kind of sharp market move, dollar funding is getting ever cheaper. for now, i'm with you in the yen and sw fr.

[metalman]

Re: British £ and Barclays in BIG trouble!

"For Sale: 5000 French Army rifles. Good condition. Only dropped once"

(apologies to anyone of French origin in the community )

with apologies to monty python...

"Je pet dans votre direction générale!"

[GRG55]

Re: British £ and Barclays in BIG trouble!

i think, however, that the us$ is in the process of becoming even MORE of a funding currency as u.s. short rates drop. i think that in a crisis sell-off the dollar will rise against everything except the yen and [probably] the swissie, as u.s.-based funds are repatriated. but absent that kind of sharp market move, dollar funding is getting ever cheaper. for now, i'm with you in the yen and sw fr.

"...Would surprise everyone, wouldn't it ;)"

I should have clarified that it would surprise everyone BUT this community. EJ's interview with Peter Warburton is only the latest analysis here that touches on this... :cool: