My problem with S&P is that they are 1) for the rest of the world hey are far too $ biassed, 2) accident prone, 3) very good at allowing leaks and 4) pushing opinion and preliminary actions in the economic world instead of letting events happen. At least two of those countries are far more solvent than most other countries in the entire world and to push them over the brink on the word of credit watch experts is an abomination of all forms of economic standards.
Here it comes. From the FT: "Standard and Poor’s has warned Germany and the five other triple A members of the eurozone that they risk having their top-notch ratings downgraded as a result of deepening economic and political turmoil in the single currency bloc. The US ratings agency is poised to announce later on Monday that it is putting Germany, France, the Netherlands, Austria, Finland, and Luxembourg on “creditwatch negative”, meaning there is a one-in-two chance of a downgrade within 90 days. It warned all six governments that their ratings could be lowered to AA+ if the creditwatch review failed to convince its experts. Markets have been braced for a potential downgrade of France but few expected Germany’s top rating to be called into question. With regard to Germany, S&P said it was worried about “the potential impact (...) of what we view as deepening political, financial, and monetary problems with the European economic and monetary union.” Standard and Poor’s has warned Germany and the five other triple A members of the eurozone that they risk having their top-notch ratings downgraded as a result of deepening economic and political turmoil in the single currency bloc." How this critical news was leaked, we have no idea.
Ken, inspiring. I'll dash of to the bank after lunch, tell them I am defaulting and they should not bother opening tomorrow when I expect there will me many others doing the same. Since I owe nothing to friends I'll satisfy myself with that.
Ian, can I have an e-mail for people who would rather NOT know, which what our insurance agent told me this morning as we were putting our children in school...
So. Is the answer to the original question that started all this............Dunno mate?
And if everybody owes money to everybody else and we all decided over a good claret that we would cancel our individual debts to each other, to whom would the balance, if any, be owed?
Hi all,
If you would like a free daily morning email update on GBP/EUR then please drop me an email ian.cragg@torfx.com
Frederic Mischkin, just to get the right one. Quite right about the links though, as I notice as somebody usually paid in $. Comment on Spitzer was just because of the peculiarity of context.
Careful with Lanchester, it is tongue in cheek to a greater extent and has some fundamental mistakes like confusing JD Morgan and Morgan Stanley. Pinch of salt. Wieder, Widermer and Spitzer is the other but do not know it other than reviews - it is USA and reaction to the 2008 bubble bursting as I understand it. Cindy Spitzer has mostly written about sex and mental illness before so I wonder what her role was in this book? Mischkin is good to read, several of his books explain the economics of money - which is what we need to understand today.
Which banks has its private drones for its private war? Spying goes on anyway, irrespective of wars impending or not. Try my profession, we're always being accused and no doubt a few anthros are recruited from time to time.
Did you see the little report on the US Drone being shot down in Iran/Afghan border? Keyensian War ...never underestimate the resolve of a psychopathic banker.
Forever, given that several thousand percents of the money in the world is non-existent in the first place and that in the second money is actually totally useless. Have you tried eating the stuff? For one thing, you never know who has touched it, ugh, ugh, ugh! Seriously though, think that Sterling paper bears the motto "I promise to pay the bear on demand the sum of X pounds" which is a notion that extends back to when Roman soldiers were paid libres (pounds) of salt for their employment which they had to sell off to get some sestertii to buy anything. So let's think about it, it ain't gold because 10 pounds of gold would see most of right for a lifetime and no longer salt, so let us take it that it is a totally abstract notion and there the various paper denominations of Sterling tell us exactly what nonsense the stuff is. But then worse, most of it in the world is actually 'fictional' because it is not tangible so we could not actually eat the disgusting stuff and in reality we are living on air. Air is free, sum ergo let's just get rid of the foul muck and trade good whiskies instead. My Laphroaig against your MacCallan for instance, at least a few of us would be happy unlike people now who are scared stiff of their money being worth nothing when they wake up one day next week.
I know it's not fashionable for us Brits to like the Euro but I do. It makes commerce easier and beats queuing to change money to and fro (and paying the commission) every time we pass a frontier. I do think that perhaps in the rush to develop the Eurozone they'd have done better to wait and see whether countries like Greece would make good partners but it grieves me to see Cameron criticising from outside the system.
As others have said it's futures traders and the like who get to decide whether we can trust one currency or another and I do honestly wonder whther a strong united Europe doesn't interfere too much with US and Chinese plans for (Bond villain voice) "World domination". Let's not forget that the deregulation of the banks in the 1980s and the computerisation of the stock exchanges led trades away from a human dimension and into the realms of fantasy league profits for the few. Michael Douglas' "Greed is good" speech anyone?
The pound is suffering through being too closely linked to the dollar at a time when people in both Britain and America were ridiculously over-extended. If Cameron chooses to lay the blame for Britain's current economic straits on the problems of the Eurozone maybe he should remind himself whose predecessor pushed people into home ownership and the subsequent borrowing overload that has so destabilised world banks that now they are reluctant to lend to anyone whether business or private. Here's an excerpt from a post I put on a blog in around 2006, two years or more before the onset of the crisis:
Banks cannot afford to let house prices go back down: the people most likely to default on their payments are single first-time buyers with low equity. If these places (studio flats, ex-garages, broom closets and the like) are repossessed at a time of price slump the bank finds itself with negative equity, so prices for first-time property tend to be kept up to artificial levels or face the consequences. The question is now that we are at point of the low-start, tracker, 40-year 3x joint-salary mortgage, how the hell can lenders lend more? . . . God help the British economy if millions of people a year can't find a way to "release their equity" i.e. borrow more money, to pay for a holiday, kitchen, conservatory, new car . . .
Sorry wandering way off subject: I'd have to say I beg to differ about the cost of living in France too. I teach ELF and although I'm well-placed in the company and have a decent salary for the industry it buys me a lot more in France than it would in the UK. Even with the favourable rate of exchange I have a better standard of living here, not least of all because we finished paying the mortgage off years ago (see above).
Right, break over: back to lesson planning . . .
may I steal that glossery?
Gold bullion, Whiskey (some scotch whiskey) a pot still and a larder full of root vegtables.
But seriously, unless you are investing you still need to pay your bills and buy your food in the local currency so its only a six month bet on either side. When the Euro crashes (or if it crashes) IMHO, it take about 5 minutes before the whole financial system tumbles and afterwards nobody knows how the world would re-adjust. Most short-term moving trades (purchases or sales that move financial indexes up or down) are robot algorithems executed in miliseconds which base thier buying/selling trades on previous trades executed a mili-second before. Few corporate traders with real-time information and minions of staff can follow these trades, no human can follow them. Its a coin-toss in the short term.
On the long-term, do you believe there is enough future wealth in the PIIGS (Portugal, Ireland, Italy, Greece and Spain) to pay back 1) the original debt, 2) the interest on the orginal debt plus the 3) the interest costs plus capital debt borrowed to finance current payments on the original debt? (Or trying to use less jargon, 'can the PIIGS continue to use cash-advances to pay thier credit-card bills and for how long?') French Banks, more than most Banks in the world invested heavily in the PIIGS. They did this because 1) bankers are arrogant and 2) they believed thwey had insured against any risk of loss with derivatives and credit-default-swaps, that promised to pay in the event of a default. The people who 'promised to pay the banks are called "counter-parties" and the counter-parties cannot pay, never had the ability to pay and are already insolvent. Therefore, Merkosey and the Mario brothers and all the players in this game PRETEND they are solvent to instill confidence in the system and to keep borrowing against the credit-card cash advance. So how long do you think this will continue?
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Right Finn, Switzerland is a member of Schengen but not in the EU to our delight because of how often we go back and forth to visit my in-laws. British press is venomous on Schengen anyway but as you said rightly, it is another discussion altogether.
Uh-huh-huh!
No! Really?
There are always rumours. Did you know that Elvis is actually alive and well and chairing the ECB, by the way?
The €uro in danger? Hmmmm! There are very strong rumours , hints and allegations among Dublin's chattering classes and cognoscenti that the Irish Government are already ( secretly ) printing Punts! Some secret eh?
Christa excellent and quite correct. Mind you the last one is contentious as well as a tad 'vulgar' because it implies the person/institution is quite useless. I might suggest we consider 'big time crooks heading for a fall' instead. Add Sterling and dollars as - bits of paper that may soon be worthless, and Swiss Frs might be compared with David's Pacific island reasonably well!
Malt, well if the value goes down the proof does not and the indulgence itself and pleasure thereof remain somewhere between the same and greater.
Quite apart from the financial aspects of the crumbling euro etc there will be other effects that may be quite considerable to the expat community. Schengen looks like it's on the way out for a start and that may mean difficulties on moving people, goods and money. This morning's explanation that the falling markets are making the proposed public sector pensions even as now proposed unaffordable will lead to further strife in the UK and elsewhere. Health cover may well be reduced for expats, the majority of whom are none too young. We have a plot of land on an island in the Pacific and it's looking more attractive o build a house there daily- and it's above tsunami level but it is in a typhoon and earthquake zone! The end of the world is nigh............