Jim Rogers: the British Pound could collapse within weeks

[sandar]

everytime a government uses keynesiasm it leads toa currency collapse anyone with half an economic brain could see this coming

[toughbutfair]

everytime a government uses keynesiasm it leads toa currency collapse anyone with half an economic brain could see this coming

Collapse is a bit sensationalist though. The dollar went from about 80 cent to 1.60 i.e. halved in value so I don't think the Sterling down about 40% is really "a collapse". It was lower a few months ago.

[sandar]

things are only beginning.......the inital reduction in value was market sentiment, the new downturn is market forces

[Toland]

FYI

Euro against Sterling over last year:

ECB: Euro exchange rates GBP

[Cassandra Syndrome]

What do you define a collapse at?

Here is a graph showing the money supply created by the Feds.

St. Louis Fed: FRED Graph[1][id]=BASE

The UK has ended its 200 Billion Pound QE program and it now needs another. The Eurozone has had a expansion of its money supply as well, although recently this has pulled back.

They are falling against each other.

[toughbutfair]

Here is a graph showing the money supply created by the Feds.

St. Louis Fed: FRED Graph[1][id]=BASE

The UK has ended its 200 Billion Pound QE program and it now needs another. The Eurozone has had a expansion of its money supply as well, although recently this has pulled back.

They are falling against each other.

I will show my ignorance here. How can two currencies collapse against each other, surely if one halves in value against the other, the other doubles?

[Cassandra Syndrome]

I will show my ignorance here. How can two currencies collapse against each other, surely if one halves in value against the other, the other doubles?

The US Dollar Index history graph

Historical Chart of the US Dollar (1973-2009) | Charting Stocks

AnD



Sterling Index Graph



Euro Index Graph



They are all collectively losing their value relatively against each other over time.

Compare these graphs to Gold

[west'sawake]

The US Dollar Index history graph

Historical Chart of the US Dollar (1973-2009) | Charting Stocks

AnD



Sterling Index Graph



Euro Index Graph



They are all collectively losing their value relatively against each other over time.

Compare these graphs to Gold

Very impressive use of graphs Cassandra, it shows, if I am reading it right, that from 2008 on Gold is in effect the new reserve currency, that the three major currencies have fallen in relation to it, more than in relation to each other, the flaw here though is that you are really stating the obvious, this is the way it always is with Gold, is it not, in times of major global uncertainty and global recession? What I would like to see, if possible, is if there is a relative increase in the traded weighting of those currencies that have economies that have sounder fundamentals, no property bubbles, no threat of sovereign default, and resource or value added rich, e.g Norway, Denmark, Switzerland, Australia, New Zealand,some asia pacific nations, etc. Has their stock gone up so to speak? Are the markets buying their currencies?

[Cassandra Syndrome]

From Bloomberg

March 1 (Bloomberg) -- While the eyes of the world focus on Greece’s debt crisis, investors in Edinburgh are busy preparing for the U.K. to be next.

Turcan Connell, which caters to rich families, expects the pound to lose between 20 percent and 30 percent against the dollar once investors turn their sights on Britain as the government sells a record amount of debt. Concern that Greece won’t be able to cut its budget deficit helped send the euro 5 percent lower against the dollar this year.

“Alarm bells were ringing in Greece for a long time and when it happened, it happened very quickly,” Haig Bathgate, head of strategy at Turcan Connell, said at the company’s offices in the Scottish capital. “The U.K. is in a similar predicament. It could be hit very hard.”

Money managers in Edinburgh, where investment decisions have been made on behalf of insurers, pensioners and the wealthy for two centuries, are maneuvering to protect assets from the U.K. economy as it limps out of its worst recession on record.

Greece Now, U.K. Next as Scots Ready for Pound Plunge (Update1) - Bloomberg.com

From UBS

With the economy barely crawling out of recession, a rapid fiscal retrenchment would be treated to a "savage" reaction in foreign exchange markets, according to a new report by strategists at Swiss bank UBS.

Taking too sharp an axe to the deficit - projected to reach £178bn this year - would "endanger tax revenues, Britain's sovereign rating, the recovery of the banking sector and the UK labour market," the strongly-worded report argues.

Pound faces a 'savage' reaction if deficit cut too aggressively, UBS warns - Telegraph

And from the Times

THE pound faces a rough week with uncertainty over the outcome of the general election and concerns over the public finances threatening to trigger a new wave of selling.

A dwindling Conservative poll lead is heightening fears of a hung parliament. Fears over Greek debt, which were undermining the euro, have begun to hit sterling, as concerns have grown that worries over sovereign debt could spread.

George Papandreou, the Greek prime minister, will hold talks with Angela Merkel, the German chancellor, on Friday. Their meeting comes amid a report that a German-led bailout for Greece will involve KfW, the state-owned development bank, buying or guaranteeing Greek government bonds.

However, several leading private German banks have said they will not buy any more Greek debt and yesterday the German finance ministry refused to comment on the plan.

http://business.timesonline.co.uk/to...cle7043834.ece

[Cassandra Syndrome]

Very impressive use of graphs Cassandra, it shows, if I am reading it right, that from 2008 on Gold is in effect the new reserve currency, that the three major currencies have fallen in relation to it, more than in relation to each other, the flaw here though is that you are really stating the obvious, this is the way it always is with Gold, is it not, in times of major global uncertainty and global recession? What I would like to see, if possible, is if there is a relative increase in the traded weighting of those currencies that have economies that have sounder fundamentals, no property bubbles, no threat of sovereign default, and resource or value added rich, e.g Norway, Denmark, Switzerland, Australia, New Zealand,some asia pacific nations, etc. Has their stock gone up so to speak? Are the markets buying their currencies?

Thanks west

The Australian Dollar has gained over the years

Australian Dollar Rate Forecast

THe Yen has dropped



Swiss Franc has gained in the past year



The Canadian Dollar has fallen