Pound against the euro

[TonyW]

The main reason for not joining the Euro is losing fiscal control of our own country's monetary strategy. ...
Personally I think we shouldnt adopt the Euro, but because I do not trust an entity the size of the EU to micromanage in the interests of every member state, not because I object to the currency per se. In theory our politicians have only the UK to worry about and they havent been doing a very good job of that lately. Scale up and the problems get larger, not smaller.

Wish I had said that as it echoes my thoughts very clearly

Cheers
Tony

 

[Grinding One]

We already have a form of trade---Gold---who needs more then that.When Governments tend to run out of money they print more of it,who is watching the presses??I for one would like to see a stable form of trade,but its just not going to happen...to many variables in the mix.

 

[Digit]

Well perhaps the members here will be able to explain to me, without blaming the government :lol:, why, with Europe, North America, China, etc all officially in recession does the Pound slide against them. If the Government's solutions are as popular with the rest of the world as is claimed should not parity between currencies remain?
In other words why is the Pound seen as weak?
Norway, which is also in recession, is cutting public spending, not increasing it, can both policies be right?
Has staying out of the Euro zone, and maintaining fiscal independence, resulted in the right or wrong choices being made? There would seem to be right and wrong on both sides.

Roy.

 

[Rich]

Whilst the Government has not been watchful, I think the MPC should have advised the treasury in stronger terms than they did, having said that, Gordy encouraged the banks to lend recklessly and folks borrowed FAR beyond their means to repay, you cannot live on debt forever and the day of reckoning has arrived, it will be a bitter pill to swallow but if a hard lesson is learnt at least some good will come of it, I think the chancellor should CUT taxes right now and encourage spending between the peoples of this country, you can't and should not spend what you don't have, it will have to be repaid one day, that day is now.

I don't think the rest of the world has any confidence in the PM's methods and that is why the pound is sliding, but he will NEVER admit his policies are wrong for obvious reasons, he has to go.


Rich.

 

[snapper]

As far as I can see the economic advantages of joining can all be obtained through a fixed exchange rate instead of a floating one, but these arrangements in the past - £ to gold in the 30s, £ to $ after WWII, £ to DM in the ERM, Argentinian ?? to $ in the 90s and so on seem to end up going badly with devaluations or a return to floating rates.

What happens if all of the nations in the euro aren't in synch and (to borrow an engineering term as I don't know the economic one) the internal stresses that would otherwise be relieved by a devaluation can't be? If joining the euro can be done without major trouble in the decades afterward then why did the attempts at a fixed rate ultimately fail after huge costs?

 

[MatthewRedStars]

In other words why is the Pound seen as weak?.

One theory says that now the interest rates are lower here than in the eurozone it makes sense for the money-types to invest in Euros. Hence the sudden weakening of the pound to euro rate.

So many lives messed with by so few!

 

[Digit]

You mentioned engineering terms Snapper and that raised a smile here. The first time I recall the Pound being allowed to 'float' was under 'Sunny Jim's watch, as an engineer I watched the Pound sink from thereon, some 'Float'.
History seems to be repeating itself.

Roy.

 

[BradNaylor]

Whilst the Government has not been watchful, I think the MPC should have advised the treasury in stronger terms than they did, having said that, Gordy encouraged the banks to lend recklessly and folks borrowed FAR beyond their means to repay, you cannot live on debt forever and the day of reckoning has arrived, it will be a bitter pill to swallow but if a hard lesson is learnt at least some good will come of it, I think the chancellor should CUT taxes right now and encourage spending between the peoples of this country, you can't and should not spend what you don't have, it will have to be repaid one day, that day is now.

I don't think the rest of the world has any confidence in the PM's methods and that is why the pound is sliding, but he will NEVER admit his policies are wrong for obvious reasons, he has to go.


Rich.

While agreeing with the general thrust of your argument Rich, there is a paradox in you suggesting that the Government cut taxes and also live within its means.

For the government to pay for the commitments already made to refinance the banking system, as well as cover the inevitable looming rise in unemployment benefits, the government is going to have to either go further into debt, or raise taxes.

The current situation is the enivitable result of the nonsense we have had for the last ten years of a Labour government trying to follow Tory policies.


Dan

 

[StevieB]

Well perhaps the members here will be able to explain to me, without blaming the government , why, with Europe, North America, China, etc all officially in recession does the Pound slide against them

There are two main reasons for the slide of sterling. The first is interest rates - the higher a country's interest rates the better the return you get on their currency as an investment. UK rates are lower than the eurozone and likely to fall further so euros are a more attractive investment for bankers looking for a return.
The second reason is not the fact we are in a recession - as you say everyone is in a similar boat, but rather predictions of how deep the recession will be in individual countries and how long it will therefore last for. Both depth and extent are based on monetary reserves of the country in question, number of unemployed, proportion of jobs likely to be hit in a manufacturing downturn, ability of the public to spend as a consequence of individual consumer debt levels and so on. Unfortunately the UK does rather badly on most of these metrics and so our currency is weaker than we would like.

Politics has to come into the above equation, since politicians set most of the policies that determine the above parameters, either in the short term of one parliament or in the long term over several parliaments. This is the issue I was highlighting above - no matter how bad our politicians may be, they at least nominally, have the UK as their primary interest, they are not trying to bankrupt the country. With an EU wide management structure the interest is primarily to the EU as a whole, not an individual member state. Imagine the outcry if the current recession was as a consequence of EU management and the UK was most deeply affected of EU member states. THe Daily Mail wouldnt have enough pages for all the vitriol :wink:

Steve.

 

[MIGNAL]

Yes they may have the UK as their pimary interest - in theory, that dosn't necessarily imply that they follow the correct policies. It may (probably) also be the case that political parties real interest lies in getting re-elected. Ultimately that should coincide with what is best for the country, as a whole and on a long term basis. The thought of an election that is a mere couple of years away can soon put that theory to the sword. It's all too tempting to be short termist and opportunistic, something that both the major parties have been guilty of.

 

[John. B]

maybe we should join the Yuan as most of the worlds goods come from there.

John. B