Wherei is the £ heading now.

[laserblazer]

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[EMM]

Now under E1.14 as the Euro continues to strengthen against the £ and $.

If the BOE indicates more quantative easing then E1.12 is being suggested by some commentators.

[Gary/Gaynor]

Oh well

Every cloud has a silver lining my beloved Euro is making a comeback Back in Bury St Edmunds next week to spend some British Lira

Gary

[EMM]

Good for those in the Eurozone visiting the UK for the Portuguese tourism and property markets not so.

As one door opens another slams in your face.

[HampshireRich]

Oh well

Every cloud has a silver lining my beloved Euro is making a comeback Back in Bury St Edmunds next week to spend some British Lira

Gary

Perhaps you'll have enough spondookas to buy Pompey

[Gary/Gaynor]

Oh well

Every cloud has a silver lining my beloved Euro is making a comeback Back in Bury St Edmunds next week to spend some British Lira

Gary

Perhaps you'll have enough spondookas to buy Pompey

Its like having a monkey on your back

Go forth and multiply HR (if your off for the christmas week please pop down I can spend some spondookas on a few real ales next to a cosy roaring fire)

Hope you lose today you old scummer.

Gary

[HampshireRich]

Oh well

Every cloud has a silver lining my beloved Euro is making a comeback Back in Bury St Edmunds next week to spend some British Lira

Gary

Perhaps you'll have enough spondookas to buy Pompey

Its like having a monkey on your back

Go forth and multiply HR (if your off for the christmas week please pop down I can spend some spondookas on a few real ales next to a cosy roaring fire)

Hope you lose today you old scummer.

Gary

Aw bad luck Gary - we won - but it looks like you can keep your money - Pompey will survive and your white fiver is safe for another year.

[Gary/Gaynor]

From The Telegraph :-
Pound forecast to tumble on 'insane' spending cuts

Christmas may come early for me

UK PLC is going down the toilet fast and that nonsense about saving 81 billion pounds over 4 years does not even scratch the surface. Total debts and this is offical (which is also a nonsense) will exceed 1.2 trillion pounds by 2015. Think about this in September of this year UK PLC borrowed 16.2 billion pounds. Mind you I have a good idea why dont we sell all of our forests then maybe we can start on the beaches... Ive said this before there will be riots in the streets ..

Good news though is Pompey are out administration and won once again

Gary

[EMM]

There is no doubt about the UK debt situation but hasn't all gone very quiet on the Euro front.

What is the combined debt value of France, Spain , Portugal, Ireland. Greece etc. How long can Germany be relied on to keep the Eurozone economy in a decent state.
Activity is already slowing down in Holland and Belgium.

[sunman]

people are just waking up to the fact that the already low base interest rate in UK ain't gonna go anywhere fast nor in the foreseeable future, any bounce in the economy, interest rates or property market is now nowhere on the radar

unless you're Chinese, Russian or the like and want to buy a house in the fancier parts of london there's no need for anyone to hold or demand £'s except for us Brits so the slide will go on

the good news is.............erm...............erm

[Gary/Gaynor]

There is no doubt about the UK debt situation but hasn't all gone very quiet on the Euro front.

What is the combined debt value of France, Spain , Portugal, Ireland. Greece etc. How long can Germany be relied on to keep the Eurozone economy in a decent state.
Activity is already slowing down in Holland and Belgium.

Dont know about what Europe owes EMM but I do know this. The interest payment for last month (UK) was 2.3 billion which is about 28 billion for this year . Multiply that by 4 years and it makes around 112 billion so all those cuts dont even cover this about 32 billion short and thats if they are lucky. Once we reach 1.2 trillion the interest payments will be approx 6 billion a month and that is assuming interest rates stay at todays level. So lets say they go to 2% which is historically low then maybe it would be 12 billion a month The defence budget is 36 billion a year (3 months interest payments). We are basically bankrupt along with many others in the western world.

Gary

[HampshireRich]

As we know from recent events, the major banks have blown it. So a question to all - who does the UK government owe money to? - and the same for the Eurozone. Anyone know?

[sunman]

As we know from recent events, the major banks have blown it. So a question to all - who does the UK government owe money to? - and the same for the Eurozone. Anyone know?

countries issue Bonds, Gilts in the UK,to raise cash, the level of interest they have to pay on the Bonds is determined by the perceived ability of that country to repay that debt.

each country adds up what money they receive in tax, works out what they need to spend, education, health, defence, etc etc and hopefully they balance, in UK case they now owe billions so like any household in financial trouble they need to up their income, eg. increase tax and reduce their outgoings, eg. fire 500,000 public employees; if you just go on borrowing money people will start to stop lending to you, hence Portugal's, Ireland's and Greece's difficulties in getting recent Bond issues away, they're having to pay (relatively) high levels of interest

currently the biggest global buyers of Government Bonds are the Chinese, they buy government debt with the money they make in their massive trade surpluses, but any investor can buy them through Sovereign Bond Funds on offer everywhere. Banks and other Financial instutions worldwide buy Bonds, Pimco in the US is the biggest Bond investment management company.

You can play the Bond game on a domestic level, when you're next in the pub look around and assess who you'd be happy to lend £100 to, then decide what interest you'd ask for on a case by case basis, thats exactly how the global debt market works.

[cereza]

The interest rates paid by UK plc for its debt have no relationship to the BOE rate. Gilts ( the method of UK government borrowing) are governed by the open market ie what rates does the international market demand for lending to the UK. Following the announcement of George Osbornes cuts last week the interest rate for gilts has dropped because the market believes that the cuts will work. The interest rate for Gilts is now below that paid by Germany whereas the rates for the PIGIS are much higher. Furthermore, since Osbornes announcement, the credit agencies have reconfirmed the UKs "AAA" status whereas under under Labour this was in serious danger of being downgraded. The reduction in Gilt interest rates is expected to continue - resulting in much reduced interest payments thus saving the UK billions of pounds.

The forex markets are extremely volatile at the moment mainly due to the prospect of so called "currency wars" - this mainly revolves around pressure on China to allow its currency to be revalued to a realistic level. The US Dollar has come under severe selling pressure and therefore the Euro ( being the only other realistic international currency ) has seen a lot of buying which has been further encouraged by very good German economic data. There is an expectation for the UK and the USA to introduce a second bout of Quantitive Easing (printing money) which is initially seen as weakening those currencies but after the previous announcement of QE the currencies actually went up so it would be no surprise to see the pound and the US dollar recover against the Euro again after this present weakness.

The Euros problems have been swept under the carpet for the moment but they haven't gone away and they will reappear. Basically the USDollar , the Euro and the Pound all have similar problems but at any given time one of the 3 is seen as a safer haven than the other 2 purely on the most recent data but this data is constantly changing. Of the 3 currency areas it is the UK which has taken the strongest steps to sort themselves out and this should soon be reflected by the Pound improving again versus the Euro which happens to be the flavour of the moment.

Sure there are risks in Osbornes cuts but if he gets it right then the UK will come out of this bad period in great shape for the future. To have done nothing or to have follwed Labours ideas would have rsulted in an even bigger mess than they left us in.

[papajock]

A clear and succinct resume of the current situation. I thank you for that, Cereza.