The consequence thread (Brexit)

[unbeliever]

I guess the (somewhat tautological) reason is that gold is losing its value against other currencies at about the same rate as the pound is also losing its value against other currencies. I'm not sure what point you're trying to make.

 

What could be causing gold to lose value against the Bolivar Fuerte?

 

A lot of central banks make a point of setting interest rates and money supply to match their currency to a bigger one. We went in for the same thing in the '80s and early '90s.

 

In the particular case, the Bolivar Fuerte is not an alternative to the USD as it operates at a fixed exchange rate with the USD set by the state. This changes occasionally, but only when the state changes it. So when you look at fluctuations of the £ against the Bolivar Fuerte, unless you happen across an official revaluation, you're actually just comparing with the USD.

This is more common that you might think, so you can't just pull random currencies our of the air and compare them with the £ as they could well be either directly or indirectly pegged to the USD.

 

I don't actually know what's going on. I was introducing an alternative comparison to that with the USD as the USD has been performing exceptionally well in the last few weeks and that biases the comparison.

It was not my intention that the gold comparison should be substituted, but to point out the the USD comparison is not the only valid comparison and right now is the one which makes Sterling look the worst and exaggerates a real effect.

Edited October 11, 2016 by unbeliever

[NigelFargate]

Not to mention (almost?) every other currency in the world, against which the pound has lost around 17% since June 23rd. I've only checked this for a few random currencies - the US dollar, the Vietnamese dong, the Pakistani rupee and the Venezuelan Bolivar Fuerte (a singularly inappropriately named currency that suffered its own massive collapse back in March/April) - but I'm fairly sure that it applies generally.

 

Or is the argument that it's not the pound that's grown weaker, but every other currency in the world that's grown stronger?

 

Two of the 'random' currencies you mention (the Venezuelan Bolivar and the Vietnamese Dong) are still, I think, pegged against the US dollar, as indeed are many other currencies, so the fall in the value of sterling against these currencies is somewhat less surprising than your post seems to suggest.

[unbeliever]

Two of the 'random' currencies you mention (the Venezuelan Bolivar and the Vietnamese Dong) are still, I think, pegged against the US dollar, as indeed are many other currencies, so the fall in the value of sterling against these currencies is somewhat less surprising than your post seems to suggest.

 

Ah I see we are of one mind.

[L00b]

Interesting that all focus goes onto the USD-pegged exotics, rather than the elephant in the room I first mentioned (the €).

 

Feel free to take an alternative, unpegged and somewhat less exotic reference.

 

What about the Turkish Lira?

 

I mean, so Turkey has, since June 24, suffered an aborted coup, umpteen terrorist attacks and has now taken an active part in the world's most fractious hotpoint, Syria.

 

So what, you ask?

 

Ah.

 

 

Arguing about which currencies are better representative or not is a pointless sideshow/mini-debate. The GBP is tanking, and will continue to tank further for each "hard Brexit" noise that May utters. The markets don't like "hard Brexit". They said it long before the referendum, they've been continuing to say it since, and they'll continue to react to the economic potential of "hard Brexit" for however long it remains on the cards.

 

The GBP tanking is a consequence of the vote and its evolving ramifications since. Nothing more to be said about it, really. Next one.

Edited October 11, 2016 by L00b

[unbeliever]

Interesting that all focus goes onto the USD-pegged exotics, rather than the elephant in the room I first mentioned (the €).

 

Feel free to take an alternative, unpegged and somewhat less exotic reference.

 

What about the Turkish Lira?

 

I mean, so Turkey has, since June 24, suffered an aborted coup, umpteen terrorist attacks and has now taken an active part in the world's most fractious hotpoint, Syria.

 

So what, you ask?

 

Ah.

 

 

Arguing about which currencies are better representative or not is a pointless sideshow/mini-debate. The GBP is tanking, and will continue to tank further for each "hard Brexit" noise that May utters. The markets don't like "hard Brexit". They said it long before the referendum, they've been continuing to say it since, and they'll continue to react to the economic potential of "hard Brexit" for however long it remains on the cards.

 

The GBP tanking is a consequence of the vote and its evolving ramifications since. Nothing more to be said about it, really. Next one.

 

Right the TRY. Sure. You've picked one of the most unstable, random and generally crazy currencies in the world. They're not technically pegging to the dollar any more, I think as of 2005. They still manipulate it like crazy.

The € comparison is valid. The USD comparison is valid. The Gold comparison is valid. The dollar shows the £ tanking. Gold shows it stable (following the initial drop in june). The € is in between.

I'm not saying the £ is not doing well. Just admit that the USD is very strong right now and that exaggerates the effect and we can move on.

[L00b]

Right the TRY. Sure. You've picked one of the most unstable, random and generally crazy currencies in the world. They're not technically pegging to the dollar any more, I think as of 2005. They still manipulate it like crazy.

The € comparison is valid. The USD comparison is valid. The Gold comparison is valid. The dollar shows the £ tanking. Gold shows it stable (following the initial drop in june). The € is in between.

I'm not saying the £ is not doing well. Just admit that the USD is very strong right now and that exaggerates the effect and we can move on.

I'm uninterested in how strong or not the USD is (I actually picked the TRY semi-randomly, initially because a sizeable contingent of Brits holiday there year in year out - before remembering this summer's events there). If anything, the current presidential shenanigans in the US should actually be plumbing it rather than strengthening it, just like the approaching referendum plumbed (somewhat) the GBP at the time. But hey-ho. Uninterested.

 

This is the consequences thread (Brexit) , I'm just interested in how strong or not the GBP is. It's resolutely not.

 

No amount of selectivity in the reference material or base, be it the $, the €, the Turkish Lira, gold or oompaloompa rubbles, or of demonstrable skew through pegging or trading activity in this, that or the other reference relative to the others, is going to change that fact.

 

Since no other socio-economic upheaval in the UK can explain the GBP's freefall since June 24 even in part, the GBP's performance is attributable to the June 24 vote, which the freefall tracks chronologically, complete with stair step-like drops for every "hard Brexit" announcement since then. And that performance is currently dismal, by historical standards/norm.

 

You borked it, you own it, so now just cross fingers and it may reverse trend before March next year

 

Next consequence.

 

EDIT: actually, now that I've got you for a minute, do you mind commenting on-

Now, let's have your take on the democratic merit of May continually and deliberately ignoring the nation's elected Parliament about the modalities of Brexit. You know, the debate which a Lincolnshire Tory MP called for, and which was reported as denied by the government this morning. His comment about it was right on the nose, as it happens: Leavers have managed to shrug off the overseas democratic deficit of Brussels, for the domestic democratic deficit of May's government.

I don't mean to put you on the spot, but I've mentioned this issue (the 'mandate' is for Brexit, not for hard Brexit) a few times already, and see that it remains studiously avoided by Leavers.

 

Is that the sort of regained sovereignty which you think Leavers had in mind?

 

A governing system wherein the executive arm can unilaterally decide that the legislative arm is now more consultative than a consultative referendum?

 

There's an ancient turn of phrase for this kind of setup: a banana republic

 

That's another consequence. By the way.

Edited October 11, 2016 by L00b

[El Cid]

Canada seems to have emerged very well out of it.

 

What ever the currencies are doing, most would say that the economy is barely growing, just a positive.

Housing price growth is just keeping the economy afloat, we are paying back some of our debt, so we should not expect too much, much more to pay back.

The debt is rising, but we are paying it back, slowly.

[Litotes]

I'm not saying the £ is not doing well. Just admit that the USD is very strong right now and that exaggerates the effect and we can move on.

 

But why move on? The fact that the $ defines the major impact on our oil prices, and hence transportation costs and heating costs and food import costs and so many other things, to move on is ridiculous.

[unbeliever]

But why move on? The fact that the $ defines the major impact on our oil prices, and hence transportation costs and heating costs and food import costs and so many other things, to move on is ridiculous.

 

Really?

I thought that our trade with the EU was the most important thing to the economy, that's why we had to stay was it not?

And of course it's not like the vast majority of UK trade is internal. Oh wait.

 

I'm trying to get some moderation is all. A big fall in the £ like we've had since the Brexit vote is hardly ideal, but hardly catastrophic either. More recent falls in value against the USD are as much to do with the fluctuations of the $ as the £.

[Flanker7]

Self-contradicting yourself in two consecutive sentences?

 

The people asking for equal funding abide and live by the voters' majority choice. That's democracy in action, right there.

 

Now, let's have your take on the democratic merit of May continually and deliberately ignoring the nation's elected Parliament about the modalities of Brexit. You know, the debate which a Lincolnshire Tory MP called for, and which was reported as denied by the government this morning. His comment about it was right on the nose, as it happens: Leavers have managed to shrug off the overseas democratic deficit of Brussels, for the domestic democratic deficit of May's government. I await Leaver's comments to the effect that, at least, they're our dictators now!

 

I think that your irony app is on the blink.

You also seem to have swallowed a dictionary.

 

Just like Brexit, democracy can mean what you, or anyone else, choose it to mean. But at the moment Brexit is in the hands of the Government and they will decide what it means and then negotiate with their own emphasis on the importance of individual elements. The Remainers knew what they were voting for cos we already had it. The Leavers were sold a pup - suckers.