Brexit

[Witton Park]

I read all the doom stories about the Euro. I'm not a financial expert, just an armchair political commentator. But it seems to me, if you look at the currency levels, the £ sterling is roughly where it has always been against the Euro for the last decade.

So the markets seem to view the £ and the Euro about the same in terms of risk, otherwise if one was deemed higher risk, it would show a gradual decline against the other over the period.

Let's face it, our debt is still rising. Sure the rate of increase has slowed, and you can dress it up optimistically at these lower rates of increase by reflecting our debt as a % of GDP which makes it look like it is reducing, but that's just spin.

If the world economy is entering a downturn, as looks likely, that debt could start climbing again in the next year or two, especially as our likely Governments seem addicted to spending, and the public seem inclined to agree.

What is more at risk is the nature of the EU. Politics across the continent is moving away from the centre. For differing reasons perhaps EU nationals are getting increasingly frustrated and whilst it may not directly be with the EU, it is almost certainly to do with the centrist politics of the last 20 years.

People want decisions made closer to them, closer to their vote.

[Oracle]

Spot on,

The principle of subsidiarity, that is decisions made at the lowest level is enshrined in such as Lisbon treaty. It has always been completely ignored by the empire builders in Brusseland Berlin to whom the answer to all problems is " more Europe". One example: Gordon brown who I have little time for, did fairly argue the case that contributor economies to EU such as ours should decide where in the U.K. our own EU development funding is spent, because we know our country better, and democratically elected politicians should decide whete it is spent. Not a bit of it. Gnomes in Brussels who I suspect could even never place middlesborougb on a map decide it. Whilst stealing a pound for every two we give them. The final insult is the blue flag hanging over where they spent our own money!

On currency accept two things. First that the euro is in effect an average, that works for nobody. What it does do is give Germany the benefit of an artificially low exchange rate, hence export success. Also that the currency flows into the city of London create artificial demand for Sterling. So the pound trades above where it should, the two conspiring to give the UK a hindrance in non services sectors. The currencies should never have been merged.


Your final point is quite correct. All of the debt building is going against a backdrop of a healthy bullish economy. That has ground to a halt, indeed serious recession looms.

I blame rightly Gordon brown for our present excessive spending. First in overspending illusory tax receipts from an artificial property bubble. That's why he turned a blind eye to the obvious catastrophe coming, which he helped to create but never had to pay for. When the bubble burst, the spending was ingrained at artificial levels,

Second I blame Brown alone for the ludicrous policy of tax credits, which is much of our present problem. He thought it would cost 2 billion, lied to Blair saying 500 million,( we know from biographies) the reality is it costs 25 - 30 billion a year, that labour spent , but never had to pay, they were kicked out before the true cost became apparent.Add interest and that is much of our debt. Personally I resent paying for single parent shirkers, doing pitifully few hours for a full time wage. Single parent is an oxymoron. Now I have to pay instead of the second parent. It has of course proved impossible to dismantle despite the manifesto mandate to do so.

You are right: in the coming recession it will all get much worse. In addition, None of the parties are factoring in the true cost of pensions which dwarves the notional public debt. None of them have the balls to stand up to excessive public sector pensions to bring them back in line with private, not least because MPs are the worst offenders. So we have the ridiculous state that some are given such an excess quantity of public pounds, they overstep fund limits and want to retire, putting even more pressure on NHS.

I read all the doom stories about the Euro. I'm not a financial expert, just an armchair political commentator. But it seems to me, if you look at the currency levels, the £ sterling is roughly where it has always been against the Euro for the last decade.

So the markets seem to view the £ and the Euro about the same in terms of risk, otherwise if one was deemed higher risk, it would show a gradual decline against the other over the period.

Let's face it, our debt is still rising. Sure the rate of increase has slowed, and you can dress it up optimistically at these lower rates of increase by reflecting our debt as a % of GDP which makes it look like it is reducing, but that's just spin.

If the world economy is entering a downturn, as looks likely, that debt could start climbing again in the next year or two, especially as our likely Governments seem addicted to spending, and the public seem inclined to agree.

What is more at risk is the nature of the EU. Politics across the continent is moving away from the centre. For differing reasons perhaps EU nationals are getting increasingly frustrated and whilst it may not directly be with the EU, it is almost certainly to do with the centrist politics of the last 20 years.

People want decisions made closer to them, closer to their vote.

[Oracle]

Anyway, I am done here. I thought people might be actually interested in the desparate state of the macroeconomics of the EU and the disaster of historic currency unions, proved again by the euro. The social deprivation it causes, that all remainers knowingly or unkowingly support. Also The imminent collapse of Italian bond markets, with them their banks, and possibly some of ours.

It seems people prefer the Brussels PR. Or they think that EU is necessary to buy a bianchi bike or holiday in Italy! Most I suspect have no idea what target 2 even means,showing a flood of money to Germany (and out of italy) but they argue the toss anyway.

Leg seems to be healing, so out to the hills.

Meanwhile I am buying gold. And putting it in places corbyn won't get it!

[Derby Tup]

Leg seems to be healing, so out to the hills.

Good news. Have a good run

[Oracle]

Good news. Have a good run

And you DT! I saw the 5k, well done!

[Wheeze]

Glad you are getting back to the hills.
You have put your position clearly, with lots of supporting information but also robustly. It should not surprise you if people who do not share your views react with equal robustness. Whilst I do not hold with people being insulting, I suspect it is partly because there is no substantive response to what you have said.
I have followed the debate for selfish reasons....I was starting to question my own vote and I wanted to hear the arguments for and against given by people I could understand rather than a more anonymous troll war on a general forum. What I have read throughout this debate has helped me reach the conclusion that I would not have changed my vote. So thanks to all protagonists for their contributions.
But let's keep it civil, eh guys?

[Stagger]

But Gold is not that cheap Oracle?

[Oracle]

But Gold is not that cheap Oracle?

Gold is a defensive, not a speculation play it,holds better than anything else in a collapsing fiat currency or when banks are threatened. Many governments are buying up Gold quietly.

The price of Gold is heavily manipulated but there are limits to how much an empty fort knox could pretend to own in order to sell it to hold the price down! Yes you did read that correctly.

One thing we have not so far mentioned here, is the dominance of the dollar as an exchange currency which is the only reason it holds value. The underlying economoy is a basket case. The increase in budget spending is so fast, the US governemnt debt can never be paid back. China used to be a buyer of US treasuries. It has recent become a seller. And for the first time the treasury bond issues are being barely covered in auctions. Time may come when US cannot refinance its debt except at impossible coupon. The 3 year and 10 year bond maturities have actually reversed, which has only ever happened eg just before 2000 bubble and 2007 bubbles collapsed. The RMB is now an official reserve currency too. Ignore all the mumbo jumbo, but the dollar itself is no longer safe. Nor for obvious reasons is the euro.

The advantage for Joe Bloggs, is Gold still works if governments or banks restrict access to accounts. Governments have also stuffed the use of crypto, by forcing proof of chain of custody on sale to avoid frozen bank accounts under money laundering regs, and curtailing the use of banking to buy or sell it. For obvious reasons, Governments want to do away with cash. On almost every other invesment there is a so called "counter party risk". It is all very well saying "I will swap my italian bond for cash" or "i will draw my money out of a (now bankrupt) bank". Or "cash in my inurance policy". Which as we saw in 2007 doesnt help if the insurer of last resort (AIG) went bust! Even "exchange traded funds" in gold (which the average investor are more likely to use) still have a counterparty risk.

Not with gold yellow and gleaming.. So for me gold is a safe haven. As is the swiss franc. As is farmland, but that is for big investments. A speculation in Gold is better done with Gold Miners - eg POLY.L might become attractive. I should hasten to add this is not advice or a recommendation!. Do not blame me. I am just telling you what I do and why, not advising anyone else to follow....

Anyway. Thats enough.

I thought I would temper the support for EU with some unsavoury facts. It is not nearly the pleasant place it claims to be. I support the idea of population mixing. But that is a vision of equal numbers leaving and coming.
It is not the reality which is one way traffic from the desparate state of much of europe decided by EU policy and euro, to the richer states so all the professionals and young people leave, so the countries are left in even worse state. Whilst the balance of money inflow is to Germany so big other flows barely register. The outflows from such as italy.

Hills to run, on a working leg! Sad place is this!

[noel]

Noel.

With respect, from your comment.I don't think you understand crazy ECB and Euro bank collateral rules, or how EU treasury debt is financed.

You're right.

This is a Eurozone structural issue.

Agreed. My point was it's not an inherent failing of the EU. It's arguably a failing in how they handled a difficult situation.

The bankrupt Italian state and bankrupt Italian banks are intimately entwined and trapped in a doom loop. We really are on a knife edge.

Bankrupt? History will be the judge: Is this the straw that breaks the camel's back, or will the camel struggle through.

Anyway. You're right: it's much better to be out running. See you next time you're injured.

[Oracle]

Noel, one thing to bear in mind: it is not just the junkbonds that support italian banks that are the problem. They never did bail out in 2008. So A big proportion of their loans are "non performing" (read will never be paid back , but we dare not write them off because if we did we would declare insolvency same day!)
So not only the foundation but the walls and contents of the banks are rotten.

Another thing to recognise is how the italian banks and state are trapped in a doom loop.. Because italian banks hold much of the junk treasury bonds, as collateral, they cannot afford the value to sink without becoming insolvent and no longer able to trade under banking rules. It is only the artifcial price of junk, that allows them to carry on trading..
So If they try to sell any to offload risk (as they did some months ago) the price collapses, causing their own capital crisis! So they are trapped into buying more of the junk just to create demand for the junk and stop the price falling over! And when the italian state has to roll over debt, the banks are forced to buy them! Greece proves these bonds are not safe : remember the hair cuts?(and greece occurred when bailouts were still possible and the banks were actually in better shape) , and the ECB still had some fire power left. Greece is also tiny. Small enough to save. All it takes is a rapidly rising bond rate (ie fall in value of bonds) caused by the euro election crisis and the dominos will start to fall over. Italy will have to default.

See you next time you're injured.

I hope not , for obvious reasons. !