Look what just hit the fan in England...

[Down Under]

Re: Look what just hit the fan in England...

It makes sense to me that if we're on the road to ruin, the UK and GBP will get there first. How would a large non-dollar "currency event" affect PM?

I think it will cause the gold price to rise in all currencies because:

1. If GBP bites the dust, it will raise awareness that there is a serious problem going on. Iceland biting the dust is one thing, but Great Britain is a much bigger fish, and the consequences bigger.

2. No idea what impact it would have on the USD. In the short term, probably support the USD; long term, USD is in trouble.

[hayekvindicated]

Re: Look what just hit the fan in England...

i happened to talk with an academic economist. i said the problems were foreseeable, and were in fact foreseen by some. [hell, i saw them coming, and i'm an amateur.] he replied that there are always 30 people saying terrible things are about to happen, so you couldn't really criticize those who didn't listen. i strongly disagree with this analysis, but that's what we're dealing with. rational expectations, efficient market theory and the capital asset pricing model are going to die prolonged and painful deaths, and not without a struggle.

I've had the same experience numerous times. I've even had that experience with people that I predicted the whole crash to (back in early 08, I told some friends that all the top banks in the US and Britain were bust).

The mainstream academics and the journalists are of course an entirely special bunch of unwitting fools.

[hayekvindicated]

Re: Look what just hit the fan in England...

Did you guys see this video yet? on drudge.

OUCH.

http://www.youtube.com/watch?v=94lW6Y4tBXs

Did anybody notice the way Brown was sheepishly smiling at the speech (as though it was just irrelevant bunk)? The guy is so self absorbed at being Prime Minster (having dreamed of it for his lifetime) and is so immersed in himself, he's not going to let some piddly economic crisis spoil the fun of finally having got there (after being frustrated for a decade by that smiling slimy Pixie).

[D-Mack]

Re: Look what just hit the fan in England...

I've had the same experience numerous times. I've even had that experience with people that I predicted the whole crash to (back in early 08, I told some friends that all the top banks in the US and Britain were bust).

The mainstream academics and the journalists are of course an entirely special bunch of unwitting fools.

Did anybody notice the way Brown was sheepishly smiling at the speech (as though it was just irrelevant bunk)? The guy is so self absorbed at being Prime Minster (having dreamed of it for his lifetime) and is so immersed in himself, he's not going to let some piddly economic crisis spoil the fun of finally having got there (after being frustrated for a decade by that smiling slimy Pixie).

Well, Brown claimed to have predicted it too

GORDON BROWN'S LOST HIS MARBLES
...
Astonishingly, Mr Brown even claimed to have predicted the current financial crisis 10 years ago.

http://www.dailyexpress.co.uk/posts/view/81966

[Chris]

Re: Look what just hit the fan in England...

Did anybody notice the way Brown was sheepishly smiling at the speech (as though it was just irrelevant bunk)? The guy is so self absorbed at being Prime Minster (having dreamed of it for his lifetime) and is so immersed in himself, he's not going to let some piddly economic crisis spoil the fun of finally having got there (after being frustrated for a decade by that smiling slimy Pixie).

There are not longer any doubts about it - the man, and his party, have to go. They have totally destroyed the economic and social fabric of this country (UK). Even the far-Left are starting to understand the seriousness of what the Labour project has brought upon us all. Of course, all Labour governments end like this, but this time, its going to be much, much worse.

[Chris Coles]

Re: Look what just hit the fan in England...

JK you may be interested in the post-autistic economics network where Steve Keen has written some of his latest articles

From their site, a Brief History

Rajiv, well spotted, many thanks. For those that wish to the full text is here. http://www.paecon.net/HistoryPAE.htm

I very well remember, way back in 1981 while trying to establish UK Research & Development Ltd on the campus of Southampton University and already discovering that funding for what one might describe as 'unconventional' thinking was impossible to find, got myself into conversation with a professor of economics who, when I mentioned that I was interested in his views of the funding difficulties of small hi tech start ups, his answer was totally dismissive. Something to the effect, "We do not bother with such minor matters and only concentrate our thinking at a much higher level". And I do mean dismissive, I think he must have thought I was a complete idiot for even having the temerity to mention what was clearly to him, something totally beneath his dignity.

But turning to the subject in hand, the failure of the auction. I have said for some time now that I believe that the UK will lead the US down into the collapse. The failure of the auction is a very clear signal and follows EJ's remark regarding the markets will rule, not the machinations of the likes of Brown or Geitner. We should expect that there may be a similar failure in the US, perhaps in very short order.

[Chris]

Re: Look what just hit the fan in England...

Question:

Pounds sterling is evidently heading down the toilet bowl, so i'd like to exchange my worthless paper for something tangible (Oil - i'm already overweight gold). If I buy an oil ETF in Sterling which tracks the oil price (in dollars), what happens when/if both the dollar and pound go to currency heaven? When I want to sell that ETF paper for a new medium of exchange will I be able to?

Crystal ball gazers, I await your input with baited breath.

[GRG55]

Re: Look what just hit the fan in England...

I've had the same experience numerous times. I've even had that experience with people that I predicted the whole crash to (back in early 08, I told some friends that all the top banks in the US and Britain were bust).

The mainstream academics and the journalists are of course an entirely special bunch of unwitting fools.

There's an old adage in the corporate world that seems applicable here..."You're never more wrong than when you are right".

[hayekvindicated]

Re: Look what just hit the fan in England...

Question:

Pounds sterling is evidently heading down the toilet bowl, so i'd like to exchange my worthless paper for something tangible (Oil - i'm already overweight gold). If I buy an oil ETF in Sterling which tracks the oil price (in dollars), what happens when/if both the dollar and pound go to currency heaven? When I want to sell that ETF paper for a new medium of exchange will I be able to?

Crystal ball gazers, I await your input with baited breath.

I faced the exact same problem a few weeks ago when I had some more cash lying around.

I thought about piling into commodity ETFs and/or into the oil ETF USO. HOWEVER, I decided not to. Im already PM heavy with a significant amount of gold. I chose to buy even more (even at these prices) - but the difference this time is that I will buy it in India and stick it in a vault there. Basically, this will make my total gold holdings get an even spread between the BV holdings I have and my Indian private holdings.

The reason I chose not to buy commodities through an ETF is that I simply cannot have a brokerage account in the UK. I think the risk of capital and exchange controls in the UK is probably highest in the Western world. The British economy is basically imploding before our very eyes. If the banks continue to lose more money (and they could - RBS has a balance sheet of £2.4 trillion and Barclays £2 trillion), the government will be out of funds and forced to slam the gates by locking capital within the gates to prevent a total collapse of the currency and a complete rout in the international markets.

I tried opening a brokerage account in Canada but couldn't (Canadian brokers won't give services to retail customers based outside Canada). I could open a brokerage account with a US based broker but then I'd have to show that I am not a UK resident (because of FSA regulations). That's a pain in the ass.

Further, by the time this crisis is over, we will see a complete unwinding of the financial system - this means that all the derivatives will end up with counterparty risks and currency/country risks that no one today is really thinking hard about. In the last three decades, financial markets have become complicated beyond belief. What we are witnessing is an UNWINDING of that entire process.

I also think that rapid price rises will cause a political backlash in the US. They will not blink an eyeball before slapping price controls. At that point, your ETF which holds no physical commodity and is just a piece of paper representing futures positions will fail to capitalise on the massive spike in real prices.

Then there is also the risk of capital and asset/exchange controls in the US as well. And this could happen at any time.

So for all those reasons, I chose to buy more gold. The thing with gold though is that you can buy the physical stuff and store it at a place that you feel comfortable with. You don't need to worry about asset controls in the UK or the US because your gold is beyond the reach of those governments.

Whilst I agree with Faber that commodities will outperform gold in the near term, I think a sovereign default or two will send the price of gold through the roof. The crisis we are seeing today is without precedent in history. And I feel totally comfortable holding 95 percent of my liquid assets in physical gold. At least when the SHTF in the US or Europe, you know you've got your own stash you can fall back on. That means I sleep like a log at night - and that's worth its weight in gold (no pun intended ;)).

[cobben]

Re: Look what just hit the fan in England...

"I tried opening a brokerage account in Canada but couldn't (Canadian brokers won't give services to retail customers based outside Canada). "

You could look at opening an account with Saxobank, they're main thing is CFDs & forex, but they do have the actual equities available from most European exchanges, Australia, and have just recently enabled purchase of stocks on the Canadian exchange. They have bank status in Denmark and are covered by the Danish bank deposit guarantee (have never checked the details).