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MV 'GBP' abandon ship?

MV 'GBP' abandon ship?

Old May 15th 2010, 7:35 pm
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Default MV 'GBP' abandon ship?

A friend is about to change 75k sterling to kiwi $s. He says he would do it at $1.90. He seems quite an astute chap and he believes that the pound is all but dead and that we should all take what we can get if we need our pounds out of the UK.

He is british and thinks that the UK is sooooooooooooo stuffed long term and is inextricably tied in to the euro melt down. He reckons the banking debacle of the past few years is a walk in the park compared to what is now happening....countries going to the wall. All very depressing stuff in the short and apparently long term.

He heard that by 2014 the debt of the UK will be 70% of the GDP. Can that be true? He thinks the pound will soon be like Zimbabwe $. This is all very sad for me (and for many of you with money they need in NZ) as we have a bit of sterling and the question is do we jump now?

I must say I have been thinking 'it can't get worse' .... quite a few times over the last few months and look at it now, just about to tip into parity territory.
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Old May 15th 2010, 8:25 pm
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Default Re: MV 'GBP' abandon ship?

Originally Posted by Genesis
A friend is about to change 75k sterling to kiwi $s. He says he would do it at $1.90. He seems quite an astute chap and he believes that the pound is all but dead and that we should all take what we can get if we need our pounds out of the UK.

He is british and thinks that the UK is sooooooooooooo stuffed long term and is inextricably tied in to the euro melt down. He reckons the banking debacle of the past few years is a walk in the park compared to what is now happening....countries going to the wall. All very depressing stuff in the short and apparently long term.

He heard that by 2014 the debt of the UK will be 70% of the GDP. Can that be true? He thinks the pound will soon be like Zimbabwe $. This is all very sad for me (and for many of you with money they need in NZ) as we have a bit of sterling and the question is do we jump now?

I must say I have been thinking 'it can't get worse' .... quite a few times over the last few months and look at it now, just about to tip into parity territory.
thats very worrying, I was hoping for some sort of recovery in the next year or so..going on past trends that what goes up must come down.

lets hope your friend is wrong for all our sakes!
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Old May 15th 2010, 8:41 pm
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Default Re: MV 'GBP' abandon ship?

Originally Posted by dave77
thats very worrying, I was hoping for some sort of recovery in the next year or so..going on past trends that what goes up must come down.

lets hope your friend is wrong for all our sakes!
I am trying to find out what a country's GDP should be..it appears in europe around 35% seems to be the mark..seems very high to me but what do I know. You look at Oz and they reckon they will be debt free in 2-3 years. What a power house that country is..no wonder they call it God's Zone!!!! The kiwi will be looking at another factor to make it EVEN stronger soon when Alan Bollard hikes the OCR. Meanwhile the UK is not looking to raise the OCR until 2011 apparently. Knowing my luck I'll buy a lump of kiwis and THEN see the GBP make a tidy recovery. It all seems to be down to damage limitation now.

Last edited by Genesis; May 15th 2010 at 8:43 pm.
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Old May 15th 2010, 9:04 pm
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Default Re: MV 'GBP' abandon ship?

A recent paper from HiFX suggests several things:

1) Clients moving to NZ should phone them right now to discuss options
2) The stop of 2.00 will be exceeded soon
3) It would not be unreasonable to expect a rate of only 1.77 in the near future.

And we thought 2.12 was bad I'm glad we took the risk and got our money out anyway
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Old May 15th 2010, 9:07 pm
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Default Re: MV 'GBP' abandon ship?

I'm not sure how the currency will head, but debt a 70% of GDP may be high but its not extraordinary, especially in a recession. Japan's debt is way in excess of this, and as wiki list below shows that kind of figure is what Germany, France and Canada already have.

http://en.wikipedia.org/wiki/List_of...by_public_debt

In the long term (and stripping out cyclical variations in the economic cycle)debt is going to increase in a a number of western countries; we're living longer and therefore the number of dependent people compared to those working increases, meaning government expenditure will have to increase.

In the meantime governments are restricted in how much money they can raise to pay for it; any government seeking to increase taxes will be committing electoral suicide.

The aussies are getting away with it to a certain extent due to the mining boom in their country (as evidenced by Rudd's mining tax in last weeks budget).
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Old May 16th 2010, 12:28 am
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Default Re: MV 'GBP' abandon ship?

I´ve been and still am, in various currencies and have learned that the last thing you do when things are looking bad for your investment because of an overall bout of bad news,is to get rid of it. Instead, sit tight.
Perhaps some of you may recall reading the opinion of currency "experts" a year or so ago who said the US$ was finished; that the Chinese were moving into Euros and that´s where they recommended the average person to put their cash, as that was to be the currency of the future. What happened ????

I can´t remember now where to find the report that I read a year or so ago that explained that a few years back, when the US$ reached US$1=1 Pound the US government got a team together of their country´s top experts in foreign currencies. They asked them to forecast how they thought the US$ would move against various countries over 3 years and found that they were all completely wrong. Their conclusion was that it´s impossible to reasonably forecast how a currency will move in the future.

As far as the Pound goes, it was generally accepted that the moment the elections were over, the Pound would have to drop simply because of the uncertainty as to how the economy would be handled. As you will have seen, it has done exactly that. So if you had been thinking of getting rid of Pounds, that would have been the time, not now. I would suggest that if you have Pounds right now and don´t need them, that you don´t touch them. If you need cash in another courrency right now then you have no choice but to sell your Pounds.
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Old May 16th 2010, 1:23 am
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Default Re: MV 'GBP' abandon ship?

Originally Posted by dfjordan
I´ve been and still am, in various currencies and have learned that the last thing you do when things are looking bad for your investment because of an overall bout of bad news,is to get rid of it. Instead, sit tight.
Perhaps some of you may recall reading the opinion of currency "experts" a year or so ago who said the US$ was finished; that the Chinese were moving into Euros and that´s where they recommended the average person to put their cash, as that was to be the currency of the future. What happened ????

I can´t remember now where to find the report that I read a year or so ago that explained that a few years back, when the US$ reached US$1=1 Pound the US government got a team together of their country´s top experts in foreign currencies. They asked them to forecast how they thought the US$ would move against various countries over 3 years and found that they were all completely wrong. Their conclusion was that it´s impossible to reasonably forecast how a currency will move in the future.

As far as the Pound goes, it was generally accepted that the moment the elections were over, the Pound would have to drop simply because of the uncertainty as to how the economy would be handled. As you will have seen, it has done exactly that. So if you had been thinking of getting rid of Pounds, that would have been the time, not now. I would suggest that if you have Pounds right now and don´t need them, that you don´t touch them. If you need cash in another courrency right now then you have no choice but to sell your Pounds.
You sound like a well informed person (unlike me!!). I am pleased that you have put your contrst to my gloomy, shite picture. I guess i was being devil's advocate to a degree. My Mrs says hang on but all I hear is endless depressive talk of how good 2 for one will look in 3 months time. I so hope you are right. And as you say no one can predict ought....its all in the lap of the God's. Thanks for your uptempo missive.
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Old May 16th 2010, 4:03 am
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Default Re: MV 'GBP' abandon ship?

Hi guys. This is something I've had my eye on for some time now. When Elaine and I got here in August '08 we got over 2.8 to the pound. Now it's hovering around 2.05. The UK's current National Debt expressed as a percentage of its GDP (which is basically the value of everything it makes or sells) is already over 60% so if it's only going to go up to 70 in the next 4 years I'm not too worried.

We still have a house in the UK, my pension is still there, and I have a bunch of shares in Standard Life, who had my endowment policy until that became not worth holding on to.

Talk of 1.7 dollars to the pound is, I devoutly hope, nothing more than scaremongering of the worst order. It'd better be or we are basically screwed long term. We're gonna hold tight for a bit yet. After all, don't forget that no matter what it is, house, pension, savings, shares, whatever, you haven't actually lost a penny UNTIL YOU SELL THEM.

Keep smiling and lets hope the Dave 'n' Nick show turns out to be the success it needs to be.
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Old May 16th 2010, 5:59 am
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Default Re: MV 'GBP' abandon ship?

It was suggested to me by some one who knows far more about ecconimics than
i do that Germany may pull out of the Euro if it continues to go the way it is.
Could that happen, and what effect would it have on the rest of the EU?
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Old May 16th 2010, 6:32 am
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Default Re: MV 'GBP' abandon ship?

Originally Posted by steved44
Talk of 1.7 dollars to the pound is, I devoutly hope, nothing more than scaremongering of the worst order. It'd better be or we are basically screwed long term.
..I'm waiting for my late Mum's house to sell, and will then be using the proceeds to upsize here.
As much as I want a better rate of exchange, I'm afraid that just my desire for a hike in rates is unlikely to affect world currency markets.
So, sad as it is, I think your devout hope is just as ineffective.
Head in the sand, or bite the bullet. The choice is not a nice one.
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Old May 16th 2010, 9:43 am
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Default Re: MV 'GBP' abandon ship?

Germany and France want out of the Euro as it clearly is not working. The Greek economy is the tip of the iceberg with Portugal and Spain following suit. This is very worrying as Spain's economy is huge compared to Greece.
UK economy defecit is currently 11.8% of GDP (Greece is 13%) but it's how you can sell off your debt. Currently the UK can, but what has it left to sell??? All the gold has gone, north sea gas, major manufacturing, telecoms, electricity production, etc etc.
Whats left to tease an investor?

I honestly believe it will be a very long time, 10 years plus, before the UK is in a position of strength again.

I was asked earlier this week to do an interview to put a positive spin on the best of what England has to offer. Needless to say, I declined the interview as I thought it very hypocritical seeing as I left.
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Old May 16th 2010, 3:52 pm
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Default Re: MV 'GBP' abandon ship?

Genesis, you seem to want to convince yourself about the pound. Of course things are bad at the moment. We've just had a change of Government in the UK and big problems with Greece and more with other country in the EU.

And, the thing is nobody knows, and nobody can give accurate predictions of what will happen in the future. What you can do is ask yourself who is saying what, why are they saying that and whether they have anything to gain by saying that? It's all guess work. But, what is certain is that nothing stands still, and things do change. Britain is not in the Euro zone and won't be as long as the Tories are in. That's a good thing. Also, the Euro doesn't look too good at the moment and I think the NZ dollar has some ties to the Euro, so that may send the kiwi dollar down. But, remember, when in doubt do nowt.
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Old May 16th 2010, 9:14 pm
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Default Re: MV 'GBP' abandon ship?

Originally Posted by whitesand
Genesis, you seem to want to convince yourself about the pound. Of course things are bad at the moment. We've just had a change of Government in the UK and big problems with Greece and more with other country in the EU.

And, the thing is nobody knows, and nobody can give accurate predictions of what will happen in the future. What you can do is ask yourself who is saying what, why are they saying that and whether they have anything to gain by saying that? It's all guess work. But, what is certain is that nothing stands still, and things do change. Britain is not in the Euro zone and won't be as long as the Tories are in. That's a good thing. Also, the Euro doesn't look too good at the moment and I think the NZ dollar has some ties to the Euro, so that may send the kiwi dollar down. But, remember, when in doubt do nowt.
Yet again more sage words. I guess I am trying to get a wee bit of a debate going and to see what others think. There appear to be 2 trains of thought. Those that say stick fast and hang on and others that want to abandon ship.

One day I am happy to stick with what Kate really wants to do and hang on in there then we hear more bad news about europe et al and I get spooked.. a bit like a mad little (old) pony who gets scared a the slightest noise. You know what they do with mad old ponies don't you???

Let's see what the rates do this week. I like clever chaps comment you ain't lost OUGHT until you sell 'em.
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Old May 16th 2010, 11:54 pm
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Default Re: MV 'GBP' abandon ship?

I'm SO glad we moved our GBP over a couple of months ago, even though we only got 2.10 at the time I think.

Did a quick quote on HIFX the other day and for the same amount we transfered it was not quoting us 2.021!!!!

We ended up just getting sick of the worry and wanted out, was happy to get over 2 for 1 so at least not we are earning $125 per month interest after tax in NZ opposed to about 7 quid back in the UK.
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Old May 17th 2010, 12:36 am
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Default Re: MV 'GBP' abandon ship?

Originally Posted by AndyR
I'm SO glad we moved our GBP over a couple of months ago, even though we only got 2.10 at the time I think.

Did a quick quote on HIFX the other day and for the same amount we transfered it was not quoting us 2.021!!!!

We ended up just getting sick of the worry and wanted out, was happy to get over 2 for 1 so at least not we are earning $125 per month interest after tax in NZ opposed to about 7 quid back in the UK.
Unfortunately these inequities of interest rates etc , end up correcting themselves as inflation is what usually causes those rates to rise; ie you get more interest than in a low inflation country end up having to pay more for what you buy. If you get say 5%pa interest, the borrower will pay say 8% which he has to cover in his costs which means his prices go up. If you get 1% then maybe the borrower will pay 4% and so on . Oz for example has an overvalued currency at the moment for reasons we all know, but is the govt celebrating?- No, as for example thanks to the overheating, Oz also has a nasty problem with inflation which once started is very difficult to stop. You may have read what has happened to house prices. For those with Pounds who don´t need them at present, perhaps you may want to consider investing those Pounds in companies in the London stock exchange. If I remember correctly, approx 75% of the major Uk quoted companies, don´t actually do much of their biz in the UK, it´s all from their subsidiaries outside, and as a result of the falling pound, their earnings coming from abroad end up giving more pounds than before which is why the market has not performed in the same way that the Pound has. That way, you have the possibility of recovering some or perhaps all of your exchange loss by way of an increase in your share value.
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