British Pound Teetering On The Verge Of Euro Collapse

The Business Insider ^ | 12/28/09 | Vincent Fernando

[FromLori]

Weak GDP growth, a soaring government deficit, and lack of credible plans to correct anything has led to growing concerns that the British pound could collapse -- becoming less valuable than a euro.

The U.S. dollar looks like a star in comparison given higher expected GDP growth in the U.S. and more relative credibility in the government's ability to control spending in the longer term.

While the pound/euro currently sits at 1.11, the next stop could be parity.

The Times: Douglas McWilliams, the chief executive of the Centre for Economics and Business Research (cebr), said that the British economy was walking “five yards away from the edge of the cliff” and could be toppled by an “unexpected gust”.

The pound is trading at 1.10 against the euro after hitting a low of 1.02 a year ago. However, currency markets are reflecting the expectation of a win for the Conservatives in next year’s election, raising hopes of tougher action to tackle the deficit. Any signs of Labour closing the gap ahead of the election would result in the pound plunging, according to the cebr.

“If I had to bet, I would bet on the side of parity being broken,” said Mr McWilliams, adding that there was significant downside risk for the euro as a result of the divergent economic performances of countries such as Germany and Greece.

[FromLori]

ping

http://business.timesonline.co.uk/tol/business/economics/article6969090.ece?&EMC-Bltn=HAMHV1F

[ecomcon]

The U.S. dollar looks like a star in comparison given higher expected GDP growth in the U.S. and more relative credibility in the government's ability to control spending in the longer term.

?

Credibility to control spending? What government is he talking about?

[GonzoGOP]

Of course the big question is if this is good for us or bad. Good in that it raises the value of the dollar. Bad in that there will be nobody left to catch us when the dollar collapses. And with Obama - Pelosi - Reid spending many times what the government can pay for that cannot be far in the future.

One good thing that could come out of a complete UK collapse is that it might just wake people here up that it can happen. That might be just enough to throw out Pelosi & Co in 2010 and bring some form of sanity back to US government spending. But that is a very high price to pay for what should have been an obvious lesson.

[wolfman23601]

“The U.S. dollar looks like a star in comparison given higher expected GDP growth in the U.S. and more relative credibility in the government’s ability to control spending in the longer term.”

???

What evidence is there any credibility in the US governments ability to control spending in the longer term? The quadrupling of the debt in one year? The health bill? The promise of another stimulus? Bailouts? Wars?

I realize the UK and Europe are a mess, but this article sounds like the US promises to be a beacon for hope.

[Huskrrrr]

“Credibility to control spending? What government is he talking about?”

I guess Obama’s lip service to the national debt counts as debt control.

[CitizenUSA]

ecomcon, I think he was talking about when we elect conservatives in 2010 and 2012 and turn this country around.

[Lancey Howard]

The U.S. dollar looks like a star in comparison given higher expected GDP growth in the U.S. and more relative credibility in the government's ability to control spending in the longer term.

Wow, considering the US government essentially mirrors the complete control the rats have in Cal-ee-fornia, I would say you'd have to be a complete moron to give the government any "credibility" to "control spending".

Yipes... Dump the dollar NOW!

[2111USMC]

I got a good laugh out of that myself.

[Nervous Tick]

>> Credibility to control spending?

The operative word is “relative”. As in we suck at controlling borrowing and spending... but the Brits suck worse. MUCH worse.

Actually, anyone who thinks the Eurozone economy is fundamentally better than ours is delusional, IMHO.

Again, the operative phrase would be “relatively speaking”.

[Nervous Tick]

>> Dump the dollar NOW!

I’ll send you my mailing address. I prefer big bills but I’ll take whatever you got. :-)

[Travis McGee]

And the dollar is not far behind.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

~~Ludwig Von Mises

[Opinionated Blowhard]

The dollar is relatively stronger because Britain is that much worse than the US, not because the US is doing anything right. This just shows how the entire Western economy is still swirling down the crapper, weighed down by a Socialist welfare state that continues strangle private growth and innovation. It expands in the good times, it expands in the bad times, and all the while the Socialist media claims that it is being “cut”.

I bet half the ignorant US population actually believes that the government shrunk during Reagan or during the “Republican” Congress of the 90s or, worse yet, under Bush’s spending binge.

[Lancey Howard]

...And in exchange, I will gladly take all the gold you have!
(No tungsten accepted.)

[FromLori]

What to you think of this?

http://www.zerohedge.com/article/bankers-and-economists-say-gold-bubble-here%E2%80%99s-why-you-should-ignore-them

[Nervous Tick]

>> I will gladly take all the gold you have!

That would be like pulling teeth. Literally!

I guess I could send you my wedding band but it’s only 11k and I don’t think Mrs. Tick would approve.