steviedeluxe

Since they'd then lose half their customers (not to mention the value of all their properties in Mallorca), the answer is probably no. Plus, they still remember the last time currencies were carried about in wheelbarrows, and what followed on from that. From what I can gather, it's actually the German banks who are in greater danger of collapsing - the safest banks (as opposed to economies) are believe it or not in Spain and Italy. Of course if the whole world trading system collapses, nowhere is safe. But there will be international co-operation (ie fixing) before it gets to that stage. I hope...

steviedeluxe

Incidentally I'm a bit worried about Lloyds TSB going under, as they have my bank account (looking at all the news stories currently on the merger with HBOS). I know theoretically the money is guaranteed by the government (and it's not that I hold a great fortune there). However if the money became inaccessible for a week or two things could get very difficult.

bigglesworth

Unfortunately for Germany, they may not have the luxury of choosing between the two. The collapse of the Euro (if it occurs) will be precipitated by the withdrawal of one or more of those countries hurting most from the policies of the Central Bank. And those policies are determined by Germany. Germany has ALWAYS dictated the EU's economic policy, just as France has always determined its diplomatic agenda.
Now that the damage inflicted by crafting a policy for the entire Eurozone based on the needs of German industry is becoming insupportable, Germany really is between a rock and a hard place. If they cut interest rates to devalue the Euro, as needed by Spain Ireland etc, then when the Central Bank starts buying Government and Corporate bonds, there is no way of restricting those purchases in any way. So the ECB (and therefore the Bundesbank as the largest provider of capital to the ECB) will find itself buying up all those lovely off balance sheet debts that Italy (and others) hid in order to fudge their way into the Euro.
If they don't cut interest rates, thus weakening the Euro and allowing Spain et al to export their way out, the Euro will stay strong (or even stronger).
Then the only way for Spain Ireland etc to reduce their deficit would be by cutting spending, and deflating wages. And just imagine what that will do to unemployment. 20%? 25%? Levels that no industrialised democracy could countenance.
The fact that this is shared across Europe does not mean that there is a common solution. Politicians made this mess. And there is in my experience no situation so dire a politician cannot make it worse.

bigglesworth

I am not an expert, but I think that all that would happen is that it would reopen the next day with Gordon's smiling face above the counter.

The thing to watch out for is IMO if they start creating new banks - which is not in itself a bad idea, but could lead to the Government doing all sorts of 'creative" things.

chrismortley

Tony had a few choice jobs lined up,so why can't Gordon ?

chrismortley

You are not an expert, me thinks mabe you are telling porky pies

bigglesworth

More bad press today
http://www.telegraph.co.uk/finance/c...-meltdown.html
European banks are in terrible shape, every bit as bad as UK and US, even worse in some respects as they have a greater spread of risks that look a bit like the perfect storm (remember LTCM).
The problem with currency is that it is not possible to just sell something - Pound Euro or whatever- in isolation. You have to buy something else at the same time. So all those who sold Sterling down are now long of something else - dollars Euros or Yen. Many of them Euros because the story was that European banks were not recklessly exposed to sub prime in the US. But they ARE massively exposed to Eastern Europe. And to South America. And DO in fact have substantial exposure to Sub Prime, and also to self certification etc in the UK.
So it is to some extent a question of which collapses first. Sterling could crash - given the level of debt this moronic government is taking on, would YOU like to finance their bonds at these rates? Inflation next year means interest rates are gong to rise substantially.
But it is, as I have said before, an ugly pig contest. The Eurozone is possibly (excluding personal indebtedness) in even worse shape than the UK.
And to compound the uncertainty it looks increasingly as though what some feared is actually true - Obama and Geithner have less idea than Bush and Paulson what to do.
So there are good reasons for looking for weakness from all of them, Euro Sterling and Dollar. But the Euro is the only one has any possibility of disintegration.

bigglesworth

Well, if you wondered why the deputy Governor of the Bank was trashing the UK economy two days ago, now you have your answer. The inflation numbers are stronger than expected, and the news from the Eurozone worsening by the hour. Without the doom from the Government, sterling might have recovered.
Groundhog Day all over again.
Sterling now 1.1330, exactly where it was before the Government
started bashing again.

Chiclanagir

They won´t be buying the Yen as the Japanese Finance Minister has had to resign for allegingly being drunk.

bigglesworth

Given the problems in the Japanese economy, a large Scotch or two seems wholly appropriate!

Big Mac

Whilst FX 'Experts' are often wrong this article gives a little hope for a continued rally for the pound against the euro.

Over the past few weeks we have begun to see acceleration within the deterioration in the Eurozone economy to more than offset any concern for the UK economy. While data out of the Eurozone has begun to come in generally weaker than expected... data out from the UK, on the whole, has been improving...

In the FX market, the name of the game is relative value. While all economies are suffering from the global financial crisis, those economies that have begun to deal with their problems more quickly, stand to benefit greatly in the long run. While the BoE has been very active in addressing ongoing threats to the local economy by introducing an overly accommodative monetary policy (much like the Fed), the ECB has arguably been behind the ball in coming to terms with the current market environment. This has begun to reflect itself in the cross rate, and we contend, should continue to do so over the longer term with EUR/GBP seen back towards 0.8000 over the coming weeks.

poshnbucks

Just been watching Bloomberg TV closing ramblings and they paint a very gloomy picture for the Eurozone this evening, So things may be on the up for the old Squid against the euro. My brothers boy will be a little miffed re his bonus but hey hes still employed and after all he got a big discount on boarding fees this second half, Yes you can even go into the bursar and wave the cabbage under his nose and he will grab your hand off in these troubled times however it will always be denied. The things people will do to pop down to Dorney lake and skip a few schools.Anyway things are hard for many here in Spain but the old pound has a habit of returning to brighter times...... I hope so we can return to moan about other things.

bigglesworth

Peace in our time!

http://www.telegraph.co.uk/finance/f...U-members.html

bigglesworth

It may not stop there though- Moody's may downgrade Austrian, Italian and Swedish banks.
Nobody realised just how popular this particular ugly pig contest was going to be.

Splatt

Sorry to be a pedant Biggles but I was under the impression that you could do exactly that just as you can with shares. 'Forward' buying or selling a currency at a set price and then closing the deal in the future after the currency has moved (hopefully) in your favour. You then pocket the difference. I thought this was how George Soros caused a run on the pound previously, nearly bankrupting Britain in the process.

That's the trouble with financials since the loss of the gold standard, there are so many hedges, futures and options that the level of exposure is many times greater than the actual supply of money in existence!

Ste.