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  1. #11
    Volatire Volatire is offline
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    Quote Originally Posted by silverharp View Post
    The only problem Voltaire is Irish debt , what if the Irish gov. has to borrow at 5% or 7%? The current bubble is bond prices they go south rates go up and Irish governments are happy to tax everyone to hell to keep the foreign banks in the green
    Not really.

    Debt/gdp is what matters. This is already trending down even before the benefits of the latest move in EURGBP have been felt.

    It's gdp growth which leads us out of the woods.
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  2. #12
    Nudavongs Nudavongs is offline
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    For the record, the OP makes some very good points. However, I think the use of the term "hedge fund" detracts from it.

    What is a Hedge Fund | Hedge Fund Definition
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  3. #13
    Analyzer Analyzer is offline
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    Quote Originally Posted by Volatire View Post
    Not really.

    Debt/gdp is what matters. This is already trending down even before the benefits of the latest move in EURGBP have been felt.

    It's gdp growth which leads us out of the woods.
    GDP - Grossly Distorted Picture.

    In Ireland, GDP consists of an accumulation of accounting tricks made by mncs, who book as much profit in Irish subsidiaries, and brass plate offices, as possible so as to avail of low corporate tax rates.

    In other words in Ireland, GDP is nonsense. The money gets repatriated. When then is an investment surge of setting up such subsidiaries, the economy moves upward. But once that stops the money simply flows in and then out.

    GDP growth in Ireland leads people astray, if taken seriously.
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  4. #14
    edwin edwin is offline

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    As a matter of interest Analyser, can you tell us how the current performance of the economy measures against your forecasts of the last few years? I'm pretty sure you've predicted doom ar every hand's turn.
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  5. #15
    Boy M5 Boy M5 is offline
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    Quote Originally Posted by Volatire View Post
    Not really.

    Debt/gdp is what matters. This is already trending down even before the benefits of the latest move in EURGBP have been felt.

    It's gdp growth which leads us out of the woods.
    But GDP growth is optical due to transfer pricing.
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  6. #16
    Boy M5 Boy M5 is offline
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    Quote Originally Posted by Nudavongs View Post
    For the record, the OP makes some very good points. However, I think the use of the term "hedge fund" detracts from it.

    What is a Hedge Fund | Hedge Fund Definition
    I agree but it is shorthand bit like Celtic Tiger now referring to the Bubble years under McCreevy & Cowen rather than the real years of economic growth.

    Besides not all hedge funds are properly hedged.
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  7. #17
    Boy M5 Boy M5 is offline
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    Actually this is a very good thread lots of interesting posts.
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  8. #18
    SAT SAT is offline
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    Quote Originally Posted by Volatire View Post
    Ireland is a hedge fund leveraged on EURGBP.

    At 69½ pence, the euro has fallen against sterling to a level last in September 2007. This is significant, because Northern Rock collapsed in September 2007, signalling the beginning of the banking and sovereign debt crises. At one point, the euro almost reached parity with sterling. The reversal shows that the UK has dealt with these problems, while the EZ still struggles to do so.

    There are several reasons for the strength of sterling against the euro

    • strong UK GDP performance vs EZ
    • failure of the EZ to deal with the Greek crisis
    • ECB QE program is ongoing, when BOE's has ceased
    • prospect of higher interest rates in the UK




    As seen from the chart, Ireland's GDP growth has matched the UK's and Germany's in recent years. However, Ireland is uniquely placed in the EZ to benefit from weaker EURGBP.

    Volatire would like to make some predictions:

    • Irish growth will be by far the strongest in the EZ in coming years
    • Irish growth will exceed UK growth
    • This growth will happen without excessive buildup of credit
    • Since this looks more like the 1990's than the 2000's, pundits will begin to talk about Celtic Tiger II.


    Two further remarks of a political nature:

    • none of this has anything to do with government policy, as the Irish government has no control whatsoever over EURGBP.
    • whoever wins the next general election stands to reap a large dividend
    There have been currency wars going on for years now with all the major currencies seeking a trading advantage through competitive devaluation. The fall of the euro is symptomatic of this strategy rather than any particular inherent weakness. The introduction of QE has been a recent major contributor to the relative fall in value of the euro.

    One can assume other currencies such as the British sterling will begin to hit back when they believe it is in their interests to do so. The point being, the situation is too fluid to make any logical predictions.
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  9. #19
    johnnypockets johnnypockets is offline

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    Quote Originally Posted by SAT View Post
    There have been currency wars going on for years now with all the major currencies seeking a trading advantage through competitive devaluation. The fall of the euro is symptomatic of this strategy rather than any particular inherent weakness. The introduction of QE has been a recent major contributor to the relative fall in value of the euro.

    One can assume other currencies such as the British sterling will begin to hit back when they believe it is in their interests to do so.
    The fed are making noises now too so that could see things change a bit. Never bet against the Fed
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  10. #20
    SAT SAT is offline
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    Quote Originally Posted by Volatire View Post
    Not really.

    Debt/gdp is what matters. This is already trending down even before the benefits of the latest move in EURGBP have been felt.

    It's gdp growth which leads us out of the woods.
    Irish GDP is pretty meaningless. We need inflation to lead us out of the woods.
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