Wherei is the £ heading now.

[HampshireRich]

Thanks sunman and cereza - so am I right in thinking we are seriously in debt to the Chinese at the moment? If so that's a tad worrying. Perhaps communism does work after all

[Stevie-C]

Thanks sunman and cereza - so am I right in thinking we are seriously in debt to the Chinese at the moment? If so that's a tad worrying. Perhaps communism does work after all

Learn the lingo and you will be fine

我正在学习中文，这是非常好的，太好了, 谢谢您

[Gary/Gaynor]

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.

Gilts could be the next bubble The only reason you would buy that stuff up at such a ridiculous low level is if you happen to think Deflation is on the horizon and if it is then Mr King will print money faster than you can whistle Dixie.
The credit agencies also gave sub prime mortgages a triple AAA rating so As I have said and I will be amazed if Osbourne does achieve his aim it will not even pay for the interest over 4 years. Its another nonsense its not a plan its just kicking the can further down the road.

Gary

[HampshireRich]

Thanks sunman and cereza - so am I right in thinking we are seriously in debt to the Chinese at the moment? If so that's a tad worrying. Perhaps communism does work after all

Learn the lingo and you will be fine

我正在学习中文，这是非常好的，太好了, 谢谢您

哪種類型的中文，但杰拉德- C的

[Stevie-C]

Thanks sunman and cereza - so am I right in thinking we are seriously in debt to the Chinese at the moment? If so that's a tad worrying. Perhaps communism does work after all

Learn the lingo and you will be fine

我正在学习中文，这是非常好的，太好了, 谢谢您

哪種類型的中文，但杰拉德- C的

Didn't understand the last bit but regarding the first bit, here is a little explanation:
viewtopic.php?f=27&t=19730

I have moved it to a more appropriate area before we get a row

[HampshireRich]

So - the UK economy is rising faster than the experts predicted - 0.8% in the last quarter rather than 0.4% prediction.

At this particular time (11:55am 25th October) the pound has risen against the Euro by 1.29cents to 1.1388euros to the pound and also up by 1.65 cents against the dollar.

(Source - BBC website)

Anyone fancy a guess as to where sterling will be at the end of the week - better than this or less than this? You've as much chance as anyone so have a go because there seems to be no sense to it!

My guess - over 1.15euros to the pound.

[cereza]

Thanks sunman and cereza - so am I right in thinking we are seriously in debt to the Chinese at the moment? If so that's a tad worrying. Perhaps communism does work after all

We are seriously in debt to many people throughout the world but particularly China ,Oil producing countries and other emerging market countries because they are the ones who have the money to lend - money which they've got from the consumers of the western countries such as us. It's like a big merry go round.
The present Chinesnese government is not a true communist regime. They have adapted to combine Capitalism with their own brand of Communism. In one way it could be said that their conversion to partial Capitalism has been the saviour of the western world but then we are getting into a very deep philosophical discussion

[cereza]

Gilts could be the next bubble The only reason you would buy that stuff up at such a ridiculous low level is if you happen to think Deflation is on the horizon and if it is then Mr King will print money faster than you can whistle Dixie.
The credit agencies also gave sub prime mortgages a triple AAA rating so As I have said and I will be amazed if Osbourne does achieve his aim it will not even pay for the interest over 4 years. Its another nonsense its not a plan its just kicking the can further down the road.

Gary

Disagree Gary - inflation will be the big problem. The recent auction of inflation linked Treasuries in the States were sold at negative levels meaning that the buyers fully expect inflation over the next 5 years. This action is based on the enormous amount of money already pumped into the US economy by QE1 and now the prospect of QE2.
The so called "Gilt bubble" is due to uncertainty over the future of Stock Markets - investors are happy to buy into the relative stability of bonds rather than buy stocks - this caution has also caused buying in gold and other coomdities. The strange thing is that stock markets have also increased but in extemely thin volume which indicates a lack of buyers but an even bigger lack of sellers. Everyone is scared of a double dip in the western economies and so they buy bonds and commodities but if the economies continue to grow albeit slowly you will see large scale buying return to the stock markets.
As for the UK - yes the credit agencies got it wrong before but they are still accepted as good judges and the triple A rating is very important. As for the possibility of the BOE printing more money - this will have receded following the good figures issued today and this is why Sterling is having a good day

[Gary/Gaynor]

Gilts could be the next bubble The only reason you would buy that stuff up at such a ridiculous low level is if you happen to think Deflation is on the horizon and if it is then Mr King will print money faster than you can whistle Dixie.
The credit agencies also gave sub prime mortgages a triple AAA rating so As I have said and I will be amazed if Osbourne does achieve his aim it will not even pay for the interest over 4 years. Its another nonsense its not a plan its just kicking the can further down the road.

Gary

Disagree Gary - inflation will be the big problem. The recent auction of inflation linked Treasuries in the States were sold at negative levels meaning that the buyers fully expect inflation over the next 5 years. This action is based on the enormous amount of money already pumped into the US economy by QE1 and now the prospect of QE2.
The so called "Gilt bubble" is due to uncertainty over the future of Stock Markets - investors are happy to buy into the relative stability of bonds rather than buy stocks - this caution has also caused buying in gold and other coomdities. The strange thing is that stock markets have also increased but in extemely thin volume which indicates a lack of buyers but an even bigger lack of sellers. Everyone is scared of a double dip in the western economies and so they buy bonds and commodities but if the economies continue to grow albeit slowly you will see large scale buying return to the stock markets.
As for the UK - yes the credit agencies got it wrong before but they are still accepted as good judges and the triple A rating is very important. As for the possibility of the BOE printing more money - this will have receded following the good figures issued today and this is why Sterling is having a good day

Cereza, glad to see a good set of figures for GDP and I also agree that Inflation is much more of a problem at the moment than deflation. Still for the life of me cannot understand why you would buy bonds at such a low level of interest. Maybe thats why I look after computer rooms and leave the high finance to the better half

Gary

[cereza]

So - the UK economy is rising faster than the experts predicted - 0.8% in the last quarter rather than 0.4% prediction.

At this particular time (11:55am 25th October) the pound has risen against the Euro by 1.29cents to 1.1388euros to the pound and also up by 1.65 cents against the dollar.

(Source - BBC website)

Anyone fancy a guess as to where sterling will be at the end of the week - better than this or less than this? You've as much chance as anyone so have a go because there seems to be no sense to it!

My guess - over 1.15euros to the pound.

As I said before the Forex markets are very volatile right now because they are awaiting news on the next bout of QE (if any) and any data will affect the individual currency especially when it does not conform to the expected figures. Todays UK figures showed a 3rd quarter increase of 0-8% as opposed to expectation by so called experts of 0-4%. This seemingly small difference is hugely important and immediately caused Sterling to go up against both the US$ and the Euro. The other boost was the reported possibility of the UK tax man receiving billions from money in Swiss bank accounts!
Further data will come out this week from the USA and this will determine the next price movement if any.
The Euro has had a run of good news but no more is in the immediate pipeline so I would expect Sterling to stay about 1-14 for this week maybe getting overdone up to 1-15. As for £ vs $ this depends on the US data. My feeling is that the BOE and the Fed in the USA will not want to put as much QE into the economy as is expected because the economies are slowly improving - if so the stock markets may fall and the US Dollar will stengthen mainly at the expense of the Euro - longer term pound could also increase towards the 1-20 against the Euro.

[cereza]

Cereza, glad to see a good set of figures for GDP and I also agree that Inflation is much more of a problem at the moment than deflation. Still for the life of me cannot understand why you would buy bonds at such a low level of interest. Maybe thats why I look after computer rooms and leave the high finance to the better half

Gary

The amount of money lying around the world looking for a home is enormous. The money has been put into commodities especially gold but these are limited markets. Stocks are viewed as too hairy at the moment and a lot of confidence in stock markets was badly damaged by the Flash Crash in the Dow in May this year. So what is left for this enormous amount of money? - Bonds - whether issued by countries or corporations. Apart from their relative safety the current bond markets are also enormous and therefore are the only markets capable of accomodating the enormous buying. The interest rate may be historically low but where can you get any better right now?

As for the individual like me or you the same theory applies in principle. If you are not happy with the low interest rates now on offer then you can take a risk on the stock market if you have the balls. Even in the bond market you can get a better interest rate by buying bonds from say Greece or one of the other PIGIS but the higher rate only reflects the extra risk you are taking. The Greek finance minister said today that things are going well with their plan but PIMCO ( the biggest trader of bonds in the world) has countered this by saying they anticipate a Greek default within the next 3 years!! So if you invest in Greek bonds now to get the better rate you are risking losing ALL of you investment if they do default. Makes a paltry 2 % look a bit better doesn't it?

[Gary/Gaynor]

Was back in the UK yesterday in Bury St Edmunds and it amazes me how everything seems so much cheaper B&B 50 quid, pub meal plus a beer 8 quid. Holland must be the most expensive country in the EU Will be in Berlin next week and once again its much cheaper..... So a little fall in the Euro should be pretty painless

Gary

HR maybe you should pack in selling second hand car insurance and play the markets

[bruce]

Gary when I was in Holland in August it made me wonder how anyone can afford to buy anything, shoes, clothes etc were almost double the price in the UK.
My cousin is coming over next month to do her Christmas shopping!

[HampshireRich]

HR maybe you should pack in selling second hand car insurance and play the markets

Tried that once - Haberdashery stall in Blackburn market - didn't work out

[jamielyon4]

HR maybe you should pack in selling second hand car insurance and play the markets

Tried that once - Haberdashery stall in Blackburn market - didn't work out

oh dearry dearry dearry me.....velly velly good value!!