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UK put on credit warning

UK put on credit warning

Old Feb 14th 2012, 4:36 am
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Default UK put on credit warning

Anyone know if exchange rates have dropped? could be a good time to send money home?

http://news.uk.msn.com/uk/britain-ge...rating-warning
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Old Feb 14th 2012, 4:38 am
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Default Re: UK put on credit warning

5.77 AED to 1.00 GBP as of this morning - no real change for the past couple of weeks.

http://www.xe.com/currencycharts/?fr...to=AED&view=1Y

Last edited by Mogs; Feb 14th 2012 at 4:46 am.
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Old Feb 14th 2012, 9:37 am
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Default Re: UK put on credit warning

They are, I think, scared of Greece leaving the Euro. If they do it may throw troubles into Spain, Italy and Portugal who all had there rating cut just now. These three countries would also be fighting a losing battle to stay within the Euro.

The fear is that if the Euro implodes the UK will suffer due to trade concerns with the EU. It is regarded a 30% chance of getting the rate cut in 18 months.

May start driving money into the dollar, away from the Euro again, which will help when sending money home!
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Old Feb 14th 2012, 12:23 pm
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Default Re: UK put on credit warning

The credibility of the ratings agencies is now several degrees beloow zero. They are useless - go back and look at how they said the bundled-up dodgy mortgages ("sub-prime" as they became known) were AAA-rated.......

The Euro cannot survive - the trouble is, the Eurocrats have started to believe that Greece is the only problem... oh really? Kick them out then and everything will be fine.......
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Old Feb 14th 2012, 1:08 pm
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Default Re: UK put on credit warning

The Dean - this is more your field than mine, but any ideas as to what the financial cost would be of dismantling the Euro? Surely the cost of that is a deterrent bearing in mind so many countries are effectively broke already.



Kittycat1 - rates haven't moved today either. GBP 1 - AED 5.7779
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Old Feb 15th 2012, 6:11 am
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Default Re: UK put on credit warning

Originally Posted by Meow View Post
The Dean - this is more your field than mine, but any ideas as to what the financial cost would be of dismantling the Euro? Surely the cost of that is a deterrent bearing in mind so many countries are effectively broke already.
UBS has a strong point of view...

http://bruxelles.blogs.liberation.fr...20l%27euro.pdf
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Old Feb 15th 2012, 6:22 am
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Default Re: UK put on credit warning

Originally Posted by typical View Post
Thanks for sharing that.......... I notice it was written five months ago, but if anything a break-up seems even more likely now than it did then.

The best line in that is the final one (p 17):

The only way to hedge against a Euro break-up scenario is to own no Euro
assets at all.


Quite.

Last edited by The Dean; Feb 15th 2012 at 6:25 am. Reason: .
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Old Feb 15th 2012, 7:10 am
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Default Re: UK put on credit warning

Originally Posted by The Dean View Post
Thanks for sharing that.......... I notice it was written five months ago, but if anything a break-up seems even more likely now than it did then.

The best line in that is the final one (p 17):

The only way to hedge against a Euro break-up scenario is to own no Euro
assets at all.


Quite.
I posted this one at the time. I do love this report. Civil war, maybe not ... civil unrest absolutely. It will be all across Europe by the end of the year.

As for the UK - anyone who thought we were not inline for a downgrade was/is naive. Probably why it didn't affect the exchange rate.

When Europe sorts out the mess, we are next in line in the bond markets.
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Old Feb 15th 2012, 7:42 am
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Default Re: UK put on credit warning

Originally Posted by Millhouse View Post
As for the UK - anyone who thought we were not inline for a downgrade was/is naive.
I disagree - the UK is put on a negative watch

There's a marked difference between entire downgrade, negative watch, and negative outlook. Negative outlook means a 30% chance of a downgrade (1 in 3), negative watch means a 50% chance of a downgrade.

The real question is how will the chancellor try to get out of the mess - spend or cut (deep cutting is bad and wrong on so many levels i wont start !!)
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Old Feb 15th 2012, 7:45 am
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Default Re: UK put on credit warning

Originally Posted by UKCityGent View Post
I disagree - the UK is put on a negative watch

There's a marked difference between entire downgrade, negative watch, and negative outlook. Negative outlook means a 30% chance of a downgrade (1 in 3), negative watch means a 50% chance of a downgrade.

The real question is how will the chancellor try to get out of the mess - spend or cut (deep cutting is bad and wrong on so many levels i wont start !!)
do you disagree that the UK is next to be chased in the bond markets? Given our massive debt overhang, sluggish economy and the collapse of one of our largest trading partners (EU block).?
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Old Feb 15th 2012, 8:27 am
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Default Re: UK put on credit warning

Originally Posted by Millhouse View Post
do you disagree that the UK is next to be chased in the bond markets? Given our massive debt overhang, sluggish economy and the collapse of one of our largest trading partners (EU block).?
the 6mth-5yr yield curve is flat and has been for a while, CDS have been tight range and the 10yr spread widens to 98bp. The main things that can really push this would be the soveign funds and hedge funds if the bond breaches their risk limits - however you will have the demand eaten by the insurance companies especially during a correction. Just my tuppence
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Old Feb 15th 2012, 3:56 pm
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Default Re: UK put on credit warning

Originally Posted by Millhouse View Post
do you disagree that the UK is next to be chased in the bond markets? Given our massive debt overhang, sluggish economy and the collapse of one of our largest trading partners (EU block).?
Yes I disagree................ when the US got downgraded last August, the market started buying US Treasuries....... Austrian bonds have been popular lately............ there's no longer a direct link in any of these markets..........
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Old Feb 17th 2012, 4:19 am
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Default Re: UK put on credit warning

So how does that happen exactly? Has no. 9 received a giant envelope from Experian?
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Old Feb 17th 2012, 4:27 am
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Default Re: UK put on credit warning

Originally Posted by wilsonc View Post
They are, I think, scared of Greece leaving the Euro. If they do it may throw troubles into Spain, Italy and Portugal who all had there rating cut just now. These three countries would also be fighting a losing battle to stay within the Euro.

The fear is that if the Euro implodes the UK will suffer due to trade concerns with the EU. It is regarded a 30% chance of getting the rate cut in 18 months.

May start driving money into the dollar, away from the Euro again, which will help when sending money home!
I thought the Dirham was tied up with/similar to the Dollar. If the Dollar (therefore Dirham) is strong and the Euro (therefore Pound) weak then surely this is a bad time to send money home as the exchange rate Dirham to Pound will go up?

Last edited by Victor Meldrew; Feb 17th 2012 at 4:28 am. Reason: Additional info
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Old Feb 17th 2012, 4:54 am
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Default Re: UK put on credit warning

Originally Posted by Victor Meldrew View Post
I thought the Dirham was tied up with/similar to the Dollar. If the Dollar (therefore Dirham) is strong and the Euro (therefore Pound) weak then surely this is a bad time to send money home as the exchange rate Dirham to Pound will go up?
Weak currencies are cheap to buy. When the GBP/AED is, say, 5.75, it's a better time to send money to the UK than when the rate is, say, 6.50. The rate is calculated by multiplying the GBP/USD by the (pegged) USD/AED.
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