Will the pound disappear? - Page 2
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Thread: Will the pound disappear?

  1. #11
    Quote Originally Posted by ;
    I wouldn't mind having few pounds of my own disappear...
    You and I both!

  2. #12
    The currency of the gurgler?

    Will believe it when I see it.

  3. #13
    This is a fascinating read and I'd say that the pound is not going away anytime soon - maybe not if the memory of the very first effort to convert to the euro is fresh still . George Soros is currently thinking maybe he'll get a opportunity to do it.
    http://74.125.95.132/search?q=cache:...=clnkcd=1gl=usSep 16, 2007
    Fifteen years ago today, British politics changed forever. The Tories, who had won four successive elections, were thrown into the 30s from the polls and except for the blip during the 2000 fuel crisis stayed trapped .

    John Major outside No 10 after the Dark Wednesday crisis
    Dark Wednesday, the day that bible has been forced from the Exchange Rate Mechanism, twisted the old parameters of party politics out of recognition. Until then, at the impressionistic way that the parties are viewed by people today, the Tories were seen as uncaring but competent, Labour as cuddly but inept. 16 September 1992 altered that equation . From this date, the Tories stopped to be. For the next 15 years, they were seen as uncaring and incompetent. The worst of this, since I have written in today's Sunday Telegraph, is I can not shake off the suspicion that the entire business http://www.telegraph.co.uk/opinion/m.../16/do1610.xml.
    Much of the political fall-out was, of course, merited. John Major had recognized himself entirely with ERM membership: really, he had called in his speech in 1979 for it. Throughout the 23 months of registration, he kept insisting that leaving are the devaluer's choice, the inflationary option. In reality, leaving the machine was the start of the prosperity that Britain has appreciated since: inflation, interest rates and unemployment dropped and Britain started the longest period of constant growth in its history. Voters drew on the clear decision that the Major government had been ready to inflict a recession around the country instead of own up to some mistake.
    Inevitably, the collapse of the government's central policy prompted recriminations. The Euro-sceptics despised John Major for having been wrong; they were resented by him for having been right. The Conservatives dropped their two assets overnight: their reputation for economic competence and their motto.
    What's possibly unfair is that the Conservatives should have got the sole blame for the tragedy. The Tories, after all, had held out for anybody else against ERM membership. It is often forgotten that almost everyone had been pushing the government to combine the TUC, the CBI, most of Fleet Street and, most importantly, the two parties. And if the Lib-Dems and Labour thought we'd joined in circumstances, they didn't say at the moment.
    Here, as an example, is Neil Kinnock writing in 1990: The ERM gives the stability which enables us to attain economic growth and a rise in living standards.
    This is your self-important Chris Huhne, today the Lib-Dem environment spokesman, in 1991: Britain's belated membership of the ERM has proved to be a greater success than almost anyone anticipated. We've found, 11 years later most of our European partners, who fixed exchange rates make sense.
    The idea that we combined at the wrong rate, which unexpectedly came into vogue after the event, is in any case demonstrably false. The concept that 3 DM into the pound has been too high a rate is difficult to reconcile with it having been too low a rate two years earlier; or, for that matter, together with the pound having recovered this amount. The fact is that there is no permanently right rate.
    The Conservatives were at least quick to consume this lesson: one of William Hague's first acts when he took over from John Major in 1997 was to apologise for the ERM and promise to not repeat the error. Huhnes and not the Kinnocks, who continue to demand that we join a permanent version of the ERM: the euro. However, perversely, Black Wednesday remains a stick instead of the parties which want to experience the entire experience again.
    The humorous thing is that their arguments for abandoning the pound these days are precisely the same as the arguments for linking the ERM from the 1980s. Then, as today, Euro-enthusiasts claimed it would promote company. In fact, more than 100,000 firms went bankrupt during our 23 months of membership. Then, as today, they promised it could create jobs. In reality, unemployment doubled to just under 3 million. Then, as today, they claimed it would bring interest rates. But interest rates were in double figures for most of our time from the machine despite inflation at barely three percent and 1.75 million homes were overtaken by equity. Then, as today, they promised us that it would bring stability. In the event, our trade-weighted exchange rate was stable during membership than before or since.
    If those folks had been employed since the forecasters in the private sector, they would be out of a job. But, since pro-Europeanism is considered in media circles as evidence of respectability, the clots who got it wrong last time have been allowed to trot out the same arguments that were discredited. Will we never learn?

  4. #14

  5. #15
    Must there be a referendum in the united kingdom in case the government decides to give up the pound? anybody knows?

  6. #16
    Yes, a nation holds a referendum on the issue. Look at what happened with Ireland.

  7. #17
    Now, I'm an American married to a Brit, but what do I know. But I'll still voice my opinion. When the Brits sold Man U , you might not think that they'll stand up to the gov't when it is time to sell off the pound?

  8. #18
    Hi all,

    Below is a piece I submitted a few weeks ago on another site concerning the possibility of the UK joining the eurozone. Some of it might be of a level of attention for this thread...

    There's a little speculation in recent months regarding the UK joining the euro using a lock-in rate of 1.1 or 1.2 EURGBP. I find it difficult to understand how such a rate would be a joyful marriage for the members of the eurozone, as their makers and service providers would find it incredibly tough to compete, with UK firms enjoying advantageous terms. Indeed, just two weeks before, Christine Lagarde, the French Minister of Finance, complained about sterling weakness in the stage when EURGBP was trading circa 0.93.

    Yes, the UK has no qualms about accepting the Bank Rate to using quantitative easing in trying to unlock credit and kick-start the market. Compared to the eurozone, the UK's answer to this crisis has been agile, a benefits of not being part of an currency union. Through its independence, the UK will enjoy a currency, which is of excellent benefit to the market in assisting to rebalance trade flows in the year.

    Furthermore, the UK would be in even worse shape than it's now had it joined the euro in its inception in 1999, since the bubble in credit and housing would have been even more inflated, watching as policy rates have been far lower in the eurozone than the UK over the past ten years.

    When talking about the possibility of the UK joining the euro, one must also consider the current mood of the British people towards the EU and, more specifically, the single currency. The idea of registering up to the euro is a contentious and subject that is unpopular right now, which makes it political suicide to advoe the euro, or even to attempt in opening a discussion.

    This anti-euro sentiment which exists among the UK public is very likely to increase in the coming months, as the worsening recession brings, through elevated levels of repossessions and unemployment, the desire for economic isolationism -- the cries of”British jobs for British workers”and”Buy British” will be audible from the afternoon. I deplore the notion of protectionist economics, as it's ultimately a highly destructive and flawed concept over the long run.

    Consequently, in my opinion, the UK choosing to join the euro over the next seven years is quite unlikely. This leaves us considering the possibility of the UK being forced to join the single currency, through a run on sterling and/or an Icelandic fashion economic implosion. I see these as improbable scenarios for the reasons set out below.

    Firstly, the UK issues its debt in sterling, meaning, as a last resort, they can always print more money to repay maturing debt or subtract the current debt burden to a more manageable amount. This alternative wasn't available to emerging market countries that ran into trouble in the last few decades Argentina, Russia and, more lately, Iceland -- each one of whom had public business debt denominated in a foreign currency.

    On more relevant points, the UK's public sector debt amounts to GDP remain lower than France or Germany, even when we account for the announced increases to borrowing from 2009, such as the promises to the banking industry (contingent liabilities).

    The UK is still the 5th largest manufacturer in the world market, a business which is a far greater contributor to GDP than monetary intermediation. Manufacturing will increasingly benefit from a sterling, because of businesses receiving a welcome comparative advantage over international competitors and imports. The UK is far from being a one-trick pony although the leverage on the balance sheets of consumers and banks remains a real concern, as it will in the US and other countries.

    So far the credit rating agencies haven't come close to even hinting of a downgrade into UK sovereign debt. In reality, towards the end of January, Moody's went so far as praising the”energy” of the UK's market and went on to say that the debt rating of the UK is no poorer than the other nations using triple-A grade. This confidence is further evidenced in the credit markets, where the spreads between gilts and bunds are within averages. There is a far greater divergence between yields on debt and bunds issued by governments of Greece, Spain, Italy, Portugal and Ireland, all of whom are deficit countries.

    In conclusion, I see the odds of sterling joining the eurozone in the next seven decades, either through choice or by necessity, as an improbable proposition.

  9. #19
    Quote Originally Posted by ;
    Now, I Am an American married to a Brit, but what do I know. But I'll still voice my opinion. When the Brits sold Man U, you might not believe they'll resist the gov't when it comes time to sell off the pound?
    Dopey, married to a Brit you'll know there is nothing more antagonistic to a Brit than victory, ergo most Brits hate Man U. Plus most of the support comes from the rest of the planet or parts of the UK where people have 12 fingers and webbed feet.

    Gammasse, great analysis by how.

  10. #20
    Quote Originally Posted by ;
    ....
    Gammasse, fantastic analysis by how.
    Agree, fantastic analysis, gammase. Have a notice of your posts.

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