How low will the British Pound drop by year end?

[Cael]

A few weeks ago the Director of the Bank of England, Mervyn King has announced, in conjunction with a slashing of the base lending rate to 0.5 %, a government supplied increase in the money supply of some £75 billion, to improve liquidity in the British economy. The multiplier is expected to be in excess of 10, given a cash injection of around £750 billion. Do you think there will be further cash injections this year and how low is the British Pound likely to drop against the euro by the end of the year?

[Eorna]

It really is very hard to tell. I think that sterling is pretty much finished, it has so little going for it. Jim Rodgers who is considered one of the greatest investors of all times, has advised people to get out of sterling, saying Jim Rogers: 'Sell any sterling you might have. It's finished' - Business News, Business - The Independent It is going to become the Saxon Peseta.

The British economy is valued at about 1 trillion pounds a year, that is some ammount of stimulus they are putting in , if that multipled effect takes hold. I doubt there will be further state cash injections this year, but they might do something like Geithner is doing, selling toxic assets to investors, whilst providing a state guarantee. A bargain basement sale to raise cash, reward investors, and all on the U.S. taxpayers back. I think that Gordon could copy that. When the American public sees the weight that they will have to bare for a generation from this scam, they will go crazy.

[Cael]

Well that might be a bit extreme, but the British government seems to have now opted for a policy of depreciation of the Pound against the Euro to boost exports into the Eurozone (which accounts for 60% of British exports). The policy seems simple enough – shift the aggregate demand curve (Consumption + Investment + Government Spending) upwards, and thus, increase GNP in the direction of its Full Employment level, where the Pound could start to increase in value again. However, given public sentiment, it’s unclear that demand for consumer durables will see any short term increase, therefore we are unlikely to see the investment component increase either. What the massive injection of liquidity into the system is more likely to create is cost-push inflation, where prices increase without any increase in production or employment. Such a stagflation scenario would surely lead to a continuing depreciation of the Pound against the Euro, unless we get some very serious upsets in the Eurozone (barring Chigago School dominated Ireland. Spain is looking poorly also, due to a housing bubble caused mostly by British and Irish speculators.)

[X-ray]

We are finished if we do not get our economy in set with other euro currencies. We need similar tax rates and everything else that goes with that. Sterling even as is will hold us down. We can forget exporting to UK.

[Eorna]

I think that is what the would like to be the situation, but I think that they are facing in to a long severe recession, that may be a depression. Finance made up over 20% of their economy, it is collapsing, their housing market is collaspsing, their manufacturing industry, whats left is collaspsing, their agricultural sector is tiny, and has been abused for years. Scotlands oil and gas reserves are in terminal decline, the country has nothing going for it.

As a society England has been hammered by Multi-culturalisim and Nu labour politics, it is has been hollowed out, its muslim minority are increasinly radicalised, increasing numbers of them will become actively hostile to the state, further fraying the social fabric.

As for a major upset in the Eurozone, that is very possible, the 26, Greece, and numerous East European states have very precarious finances.

[Cael]

The two pillars of the British economy were the property market and the financial services industry. Both of these have been shattered. I cant put my hands on last years figures for the value of exports in financial services from the UK, anyone got them?

[Cael]

I think that is what the would like to be the situation, but I think that they are facing in to a long severe recession, that may be a depression. Finance made up over 20% of their economy, it is collapsing, their housing market is collaspsing, their manufacturing industry, whats left is collaspsing, their agricultural sector is tiny, and has been abused for years. Scotlands oil and gas reserves are in terminal decline, the country has nothing going for it.

As a society England has been hammered by Multi-culturalisim and Nu labour politics, it is has been hollowed out, its muslim minority are increasinly radicalised, increasing numbers of them will become actively hostile to the state, further fraying the social fabric.

As for a major upset in the Eurozone, that is very possible, the 26, Greece, and numerous East European states have very precarious finances.

Do you know the value of financial services exports last year? Im just wondering what their balance of trade situation with the Eurozone actually is right now?

[Eorna]

I have heard of 20% for the Finance sector. The Chartered Institute of Purchasing and Supply (Cips) put out a survey whose findings are consistent with an annual rate of production decline of 12 per cent and employment contraction of around 30,000 jobs per month. That is a massive decline.

Exports Aren't Helping British Economy - BusinessWeek

[Cael]

Sadly, the Eurozone also has a decline in manufacturing of 12% on January figures, but, thank God, Germany and France didnt get caught up in the property lunacy to the extent the Anglophone world did, so despite our sins here in Ireland, there's still hope for us.

That said, Im not really crying about it personally. I was in Wales for Christmas, at that lovely point where the Pound dropped below the Euro - I was ordering double Jack Danials with ice everywhere I went and it was costing me about three euro fifty.

[Keith-M]

For the sake of this country let's hope it can revert to a more realistic rate against th Euro or we can just turn places like Dundalk into a themepark.

The shopping exodus has probably done more to copperfasten the border than 50 years of Ian Paisley.