The EU: In, out, shake it all about.... (200 Viewers)

[skybluetony176]

Me burying my head in the sand?

You just haven't got a clue. Or you are hoping that everyone else hasn't got a clue? I work for an American company. I own American shares. It has always been a volatile exchange rate. In 2009 it went as low as $1.36. Not much above where it is now. But in 2008 it was $2.03 and 2007 was $2.10 So it lost over 1/3 in two years. This was caused by the ones that were supposedly backing the remain side.

And you say that I am unaware on how quickly it has dropped below $1.50 It hasn't been $1.50 or above since last year. As I have constantly said it was already in decline before the vote. The vote didn't help. But the drop hasn't been as dramatic as you would like everyone to believe. And it is only 6c lower than in 2009.

Here's the thing astute. If you're right I'll say few and breath a sigh of relief. However if I'm right and in six months I'm still right you'll still be in denial. It's a trait that's becoming more and more obvious in certain sections of those who voted out and you clearly fit that bill. As grendull once said to you is your posters name supposed to be ironic?

 

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[wingy]

I work for a small independent British manufacturer who exports outside of the EU, specifically the Gulf states and here's the problem. As a country we no longer process raw materials in components. We buy it all in. Just today one of the major components that we have to buy in from outside the UK because it's simply not processed and manufactured in the UK anymore so has to imported went up 5%. We're expecting other raw materials to follow suit so it really is going to be swings and roundabouts. Only in the meantime as consumers everything from food to fuel is going to go up so from where I'm sitting the export thing is going to be offset by the cost of importing, so no gain and then it's going to cost me more to get to work, feed my family and probably heat and light my house this winter.

It's ok
Dave,Nige and Boris are the new Union leaders, desperate for us all to get a rise,get a little inflation going,then finally Interest rates can jump and take those extras off us again.
I thought the States were a tad out of step last year raising their rate when no one else would

 

[Astute]

Here's the thing astute. If you're right I'll say few and breath a sigh of relief. However if I'm right and in six months I'm still right you'll still be in denial. It's a trait that's becoming more and more obvious in certain sections of those who voted out and you clearly fit that bill. As grendull once said to you is your posters name supposed to be ironic?

It isn't opinions that I showed you. It is cold hard facts. No bullshit from the remain side. No bullshit from the out side.

My name ironic? Strangely enough my views cover all sides. It isn't me that just rants on about one side and puts accusations against the other side. Just like this time I have called them all out. If this was about football you would only be having a go at SISU. You have tunnel vision. You need to look past the end of your nose.

 

[Astute]

It's ok
Dave,Nige and Boris are the new Union leaders, desperate for us all to get a rise,get a little inflation going,then finally Interest rates can jump and take those extras off us again.
I thought the States were a tad out of step last year raising their rate when no one else would

It was the remain side that said if we voted leave inflation would have to go up. Now you are trying to blame the leave side for wanting inflation.

How childish has this got to go just because some didn't get the result they wanted

 

[martcov]

It was the remain side that said if we voted leave inflation would have to go up. Now you are trying to blame the leave side for wanting inflation.

How childish has this got to go just because some didn't get the result they wanted

It is a fact that exporters profit from a weak pound. But.... As Grendel says it will probably be short term. We Import the raw materials or components to make the goods we export- our production costs will go up. If we stop the free movement of labour our wage costs will also go up. If..... it is such a bonus having a weak pound, we could and should have done this before brexit. In which currency do we pay our national debt interest in? The leave side don't want any hear about the down side of brexit- but, it doesn't mean it will all be rosy outside the EU. People hailing it being an historic victory of the little guy are going to be disappointed. The tory party will drift to the right and the labour party is fighting itself. Who is going to help the low paid workers if prices so rise?

 

[Astute]

It is a fact that exporters profit from a weak pound. But.... As Grendel says it will probably be short term. We Import the raw materials or components to make the goods we export- our production costs will go up. If we stop the free movement of labour our wage costs will also go up. If..... it is such a bonus having a weak pound, we could and should have done this before brexit. In which currency do we pay our national debt interest in? The leave side don't want any hear about the down side of brexit- but, it doesn't mean it will all be rosy outside the EU. People hailing it being an historic victory of the little guy are going to be disappointed. The tory party will drift to the right and the labour party is fighting itself. Who is going to help the low paid workers if prices so rise?

The £ isn't weak. It just isn't as strong as the $. And that has been the case for years now.

So after spending days on here saying about the £ collapsing against the $ you now say that you agree that it will most probably be a short term thing. And people have been called uneducated for saying so.

You say that if it is a bonus having a weak pound it should have been done before the brexit vote 1, They didn't think that we would vote out. 2, It has been going down for years.

Who has said everything will be rosy after leaving the EU? Nobody of any standing that is for sure. Yes leave and remain both have their share of idiots. But if you look at those of us that are knowledgeable about international finances and policies not one will have said either leaving or remaining will be easy and best for our futures unless they make lots of money being in the EU. The EU needs to change to survive. But Juncker wants it to be a federal state. If he got removed I would be looking at remaining. But he has made his position very strong.

Yes wages have been held down for years now and even drastically reduced in some areas and trades. A good thing you may say. But what about the people working for a pittance so they have to claim benefits while working full time to survive? And who has said that all immigration will stop? Yes nobody. We would be able to choose what skills we need. We could bring more in from commonwealth countries. And if we ever had a shortage of unskilled workers....which would be unlikely....we would easily be able to fill these positions.

 

[armybike]

The £ isn't weak. It just isn't as strong as the $.

You've posted some gems in the past, but this is an absolute corker!

 

[skybluetony176]

You are so in denial. The pound is down against literally every currency in the world. That's not a show of strength of the dollar it's a show of weakness of the pound. The reason it's lost so much against the dollar is because the dollar is the major trading currency around the world. Some market's are exclusively dealt in dollars such as oil and metals. This means we are in a weak bargaining position for everything coming into the country. Including raw materials and components for manufacturing.

If having a weak currency was such a bonus every government around the world would have encourage it. The fact they do the exact opposite tells you everything that you want to know.

Go and read up on Regan going out of his way to push up the value of the dollar to boost the US economy back in the 80's and causing a backlash around the world to the point where an international summit was called on it and the result of that was America reigned it in under pressure from the rest of the world. That was a strong dollar. It's the polar opposite of what we're experiencing right now with the pound and that's what you're burying your head in the sand over.

Here. Try reading this http://www.bbc.co.uk/news/business-36727177

 

[Astute]

Martcov is a heck of a lot more knowledgeable than you are. He knows the difference between a weak currency and a currency adjusting that will rebound. Those of us that do have a clue about what is going on said there would be an adjustment. We said it before the vote. We were supposed to have a share and currency catastrophe. Most shares bounced straight back. It is mainly those already weak still suffering. Like banks and house builders.


So you are now an expert. Would you like to explain to us why the dollar has been strengthening against the pound for years now. Are you going to blame it on a vote that has just happened?

Once there is a plan in place everything will stabilise. Money people don't like uncertainty. After the vote I said gold would go up. It has. And when the uncertainty is over gold will drop again.

 

[CCFC Germany]

Companies already withdrawing billions from the UK plus realty estate fonds being forced to sell property, as they can't sell out those pulling their money. I'm petty sure this will be explained here in a sense way, too.

 

[Kingokings204]

It is a fact that exporters profit from a weak pound. But.... As Grendel says it will probably be short term. We Import the raw materials or components to make the goods we export- our production costs will go up. If we stop the free movement of labour our wage costs will also go up. If..... it is such a bonus having a weak pound, we could and should have done this before brexit. In which currency do we pay our national debt interest in? The leave side don't want any hear about the down side of brexit- but, it doesn't mean it will all be rosy outside the EU. People hailing it being an historic victory of the little guy are going to be disappointed. The tory party will drift to the right and the labour party is fighting itself. Who is going to help the low paid workers if prices so rise?

You just said low paid workers wages would rise. And they would. I think we both agree. Obviously remain bosses wouldn't want that as it cuts in to their millions of profit of course. It's the rich v poor as it usual is.

As for the pound, astute is spot on, it's just market uncertainty people don't know what is going to happen so it's not a load of business just up and leaving and whatever else I've heard on here. The pound has fallen and it is a good thing short term but over time once things have been decided and decisions are made the pound will rise again and hopefully with a bit more realism as the pound was massively higher than it should of been due to government making the pound higher but all that does is create a false boom where people spend a lot more money and then realize they don't have it and then you get a similar crash to the one before.

Yes the pound is low but it's been 2 weeks. Look at the positives of a low pound and then see in time money will be back in and the pound will rise. Markets don't like uncertainty. I personally think in the long run we will be much better off. Remember the eu is a protectionist club looking after multi nationals and rich men. It's keeps prices high for cars and goods which is good for them. When smaller local business can trade and not have eu laws imposed on them products actually become cheaper and food becomes cheaper because you can trade globally and other businesses can be innovative and you create and trading boom. Just like Greece need incidentally. It isn't easy to start with but long term it's much better.

I will say it again the uk won't be the last to leave the EU.

 

[Bruce the Boot]

At this present time , The Government is doing more harm than good , they had no exit strategy,and by not executing article 50 are leaving everybody dangling . A vote of no confidence is needed.

 

[Moff]

You've posted some gems in the past, but this is an absolute corker!

At least he contributes more than snide one liners though. It seems to be your trait.

 

[Moff]

Again. If you look at the data you'll see that over the last 30 years the pounds natural position against the dollar is between 150-160..

Its funny you went back only 30 years Tony, for as you know 31 years ago the pounds position against the dollar was at its worst 1.05, (it was falling to that low level before that) and as you have stated it took an aggressive economic stance from Reagan to get it on the rise again.

 

[armybike]

At least he contributes more than snide one liners though. It seems to be your trait.

Thanks for the critique.

 

[Astute]

Companies already withdrawing billions from the UK plus realty estate fonds being forced to sell property, as they can't sell out those pulling their money. I'm petty sure this will be explained here in a sense way, too.

People want to get into gold so their money is safe. Investing in property like office blocks is quite a high risk investment. So it takes longer to sell these types of properties. So they suspend this type of investment to stop it from crashing in times of uncertainty. We have the Tories that are voting for a new leader. Labour have a leader they don't want that the Tories helped to vote in. And how about article 50?

So yes there is a lot of uncertainty that needs to be sorted out.

 

[skybluetony176]

Its funny you went back only 30 years Tony, for as you know 31 years ago the pounds position against the dollar was at its worst 1.05, (it was falling to that low level before that) and as you have stated it took an aggressive economic stance from Reagan to get it on the rise again.

It's not me who goes back 31 years it's the article I've linked. Try reading it. It clearly points out that last time the pound was this low against the dollar it was because the dollar was strong not that the pound was weak. The complete opposite and what many are in denial about is that right now the pound is down because the pound is weak, not because the dollar is strong. The dollars position on the world stage has remained much the same over the past 2 weeks, it's the pound that has fell not the dollar that has risen and the pound is consistently falling against all currency not just the dollar over the last 2 weeks and is predicted to fall further still.

 

[skybluetony176]

People want to get into gold so their money is safe. Investing in property like office blocks is quite a high risk investment. So it takes longer to sell these types of properties. So they suspend this type of investment to stop it from crashing in times of uncertainty. We have the Tories that are voting for a new leader. Labour have a leader they don't want that the Tories helped to vote in. And how about article 50?

So yes there is a lot of uncertainty that needs to be sorted out.

People get into Gold when all else is failing as it's a safe bet. It's not a good sign.

 

[Astute]

People get into Gold when all else is failing as it's a safe bet. It's not a good sign.

Who said that it was a good sign?

 

[Astute]

It's not me who goes back 31 years it's the article I've linked. Try reading it. It clearly points out that last time the pound was this low against the dollar it was because the dollar was strong not that the pound was weak. The complete opposite and what many are in denial about is that right now the pound is down because the pound is weak, not because the dollar is strong. The dollars position on the world stage has remained much the same over the past 2 weeks, it's the pound that has fell not the dollar that has risen and the pound is consistently falling against all currency not just the dollar over the last 2 weeks and is predicted to fall further still.

You just can't get your head around what is going on. Those voting leave said that it would happen. Cameron hasn't helped things so far. All he has done is added to the uncertainty. Short term pain for long term gain. And the short term pain makes our goods cheaper.

 

[skybluetony176]

You just can't get your head around what is going on. Those voting leave said that it would happen. Cameron hasn't helped things so far. All he has done is added to the uncertainty. Short term pain for long term gain. And the short term pain makes our goods cheaper.

Keep telling yourself that. I tried explaining yesterday that I work for a company that manufacture's and exports outside of the EU and we're going to have put prices up because the cost of raw materials that have to come from outside of the UK is going up because the pound has lost so much against the dollar, even one of the major components we buy in the UK is going up because the raw materials they have to import into the UK is going up. We're net importers and alot of what we import is re-exported either in it's original form or as part of something else. If they go up because of the pounds weakness that has to go down the line. We do not mine minerals and ores either anymore or on a scale that can keep up with industry so we have to import those raw materials so anything that contains metals is going to cost more to produce. This week we've seen this at work with nickel, cadmium and copper and components using that material. The cost of material and components go up our prices have to go up offsetting any assumed benefit of a weak pound against the dollar making pound to the dollar export sound attractive but in reality there is unlikely to be much gain if any. There's more to it than that you are trying to portray and are oblivious to. You're cherry picking your information and not seeing what happens behind the scenes.

 

[Astute]

Read this crap you have put. So your items are going to cost more but the exchange rate will make them cheaper you say. Your normal contradictions I see.

 

[skybluetony176]

Read this crap you have put. So your items are going to cost more but the exchange rate will make them cheaper you say. Your normal contradictions I see.

Our production costs are going up because raw material costs are going up due to the extra cost of importing raw materials. Keeping up so far? This means our pounds sterling sale price has to go up to cover rising costs. Still keeping up? Therefore any assumed benefit of being a UK manufacturer who's main business is export (specifically to the Gulf states at the company I work for) because the pound is more attractive on exports is lost because the price we sell our goods for HAS to go up because our build cost is now front-loaded because the cost of importing raw materials to build our goods have gone up due to the weakness of the pound. Simply enough for you? It's very basic economics. If it cost you £1.00 to build something and you sell it for £1.50 if costs suddenly go up to £1.50 you can no longer sell it for £1.50. It's not a good business model, a business only works if it's making profit. If you then put your price up to £2.00 to maintain your £0.50 profit that enables your business to run at a profit any supposed gain of the pound against the dollar on exports are lost.

 

[Grendel]

Our production costs are going up because raw material costs are going up due to the extra cost of importing raw materials. Keeping up so far? This means our pounds sterling sale price has to go up to cover rising costs. Still keeping up? Therefore any assumed benefit of being a UK manufacturer who's main business is export (specifically to the Gulf states at the company I work for) because the pound is more attractive on exports is lost because the price we sell our goods for HAS to go up because our build cost is now front-loaded because the cost of importing raw materials to build our goods have gone up due to the weakness of the pound. Simply enough for you? It's very basic economics. If it cost you £1.00 to build something and you sell it for £1.50 if costs suddenly go up to £1.50 you can no longer sell it for £1.50. It's not a good business model, a business only works if it's making profit. If you then put your price up to £2.00 to maintain your £0.50 profit that enables your business to run at a profit any supposed gain of the pound against the dollar on exports are lost.

Surely your finance department has a base B Plan FX that it basis it's market by market profitability doesn't it?

 

[eastwoodsdustman]

Our production costs are going up because raw material costs are going up due to the extra cost of importing raw materials. Keeping up so far? This means our pounds sterling sale price has to go up to cover rising costs. Still keeping up? Therefore any assumed benefit of being a UK manufacturer who's main business is export (specifically to the Gulf states at the company I work for) because the pound is more attractive on exports is lost because the price we sell our goods for HAS to go up because our build cost is now front-loaded because the cost of importing raw materials to build our goods have gone up due to the weakness of the pound. Simply enough for you? It's very basic economics. If it cost you £1.00 to build something and you sell it for £1.50 if costs suddenly go up to £1.50 you can no longer sell it for £1.50. It's not a good business model, a business only works if it's making profit. If you then put your price up to £2.00 to maintain your £0.50 profit that enables your business to run at a profit any supposed gain of the pound against the dollar on exports are lost.

But if the buyers are getting more £ for their $ then in real terms an increase in their purchase price is nullified by the better (for them) exchange rate isn't it?

 

[skybluetony176]

Surely your finance department has a base B Plan FX that it basis it's market by market profitability doesn't it?

Finance department? I don't work for jaguar cars I work for a small scale family run manufacturer who's main business is design and manufacture of electrical solutions for the power generation and oil and gas industry. With the exception of a handful of small basic units everything we make is bespoke. We're a heavy user of metals in what we make and all that's going up. Specifically one component that uses nickel and cadmium and the most expensive single item we use is largely made of wound copper wire. Although this particular component is manufactured in the UK the raw materials are sourced outside the UK and that raw material we are being warned is going up in price because it will cost more to bring into the UK. The nickel cadmium product we bring in we received notification yesterday that our price list is going up 5% and will go up more if the pound doesn't return to above 140 against the dollar and even if the pound does stay where it is further increases may happen as the full effect hasn't completely made it's way through the supply chain as yet and if it falls further against the dollar more price increases will come for sure.

If our raw material costs continue to rise our prices will have to go up so any perceived benefit on exports will be lost.

In the meantime everyone's cost of living goes up also.

Explain the gain?

 

[skybluetony176]

But if the buyers are getting more £ for their $ then in real terms an increase in their purchase price is nullified by the better (for them) exchange rate isn't it?

So there's no gain for exports then is there. Like I'm trying to point out. The big problem is that imports are going to get more expensive and the British manufacturing industry relies heavily on the import of raw materials. If raw materials go up yes fine we can put our prices up but we have to pay more in the first place. That has a negative effect on something called cashflow. If all of a sudden you need to find an extra 5% to purchase the raw materials before you can turn them into something to sell where does that extra money come from? The banks? Hardly know for lending new money since the last recession are they let alone since brexit. Why do you think the BOE is making statements left right and centre, trying to give assurances not only to the market's but also the banks to encourage the banks to keep lending?

 

[eastwoodsdustman]

So there's no gain for exports then is there. Like I'm trying to point out. The big problem is that imports are going to get more expensive and the British manufacturing industry relies heavily on the import of raw materials. If raw materials go up yes fine we can put our prices up but we have to pay more in the first place. That has a negative effect on something called cashflow. If all of a sudden you need to find an extra 5% to purchase the raw materials before you can turn them into something to sell where does that extra money come from? The banks? Hardly know for lending new money since the last recession are they let alone since brexit. Why do you think the BOE is making statements left right and centre, trying to give assurances not only to the market's but also the banks to encourage the banks to keep lending?

There may be no gain for exports but its certainly not as bad as its being painted by the press and indeed by you Tony. Short term there may be a slight effect on the cashflow but within a few weeks/months depending on how the invoices are paid there should be no real difference. BOE are relaxing rules to make it easier for banks to lend to business's so it should help with the short term problem that may exist. Don't panic. The worlds still turning.

 

[dutchman]

BOE are relaxing rules to make it easier for banks to lend to business's so it should help with the short term problem that may exist.

The BoE is making things worse!

 

[skybluetony176]

There may be no gain for exports but its certainly not as bad as its being painted by the press and indeed by you Tony. Short term there may be a slight effect on the cashflow but within a few weeks/months depending on how the invoices are paid there should be no real difference. BOE are relaxing rules to make it easier for banks to lend to business's so it should help with the short term problem that may exist. Don't panic. The worlds still turning.

How do yo know it's a short term problem? This is an unprecedented set of events. It's never happened before. Recovery also takes a lot longer to happen than the crash. Even if the pound is back to where it was pre brexit in a few weeks, months, whatever the ripples will be felt long after same as the full effects of the pound crashing are yet to be felt. The BOE may well have relaxed the rules it still doesn't mean that the banks have to lend, they'll make that decision based on a case by case basis within the rules doesn't mean that they will lend the money. People have short memories and seem to have forgotten that when the banks were bailed out in the last recession they took the bailouts but it didn't transfer into then lending money to keep the economy going as it was supposed to. I haven't forgotten that even if you have.

 

[Grendel]

So there's no gain for exports then is there. Like I'm trying to point out. The big problem is that imports are going to get more expensive and the British manufacturing industry relies heavily on the import of raw materials. If raw materials go up yes fine we can put our prices up but we have to pay more in the first place. That has a negative effect on something called cashflow. If all of a sudden you need to find an extra 5% to purchase the raw materials before you can turn them into something to sell where does that extra money come from? The banks? Hardly know for lending new money since the last recession are they let alone since brexit. Why do you think the BOE is making statements left right and centre, trying to give assurances not only to the market's but also the banks to encourage the banks to keep lending?

In the example you gave you wouldn't lose any money on current exchange levels if the business budget at normal fx rates for this year so there is no need to increase prices. Material cost is offset by currency gain.

 

[armybike]

So between May and Leadsom then.

 

[armybike]

May 199 votes
Leadsom 84
Gove 46

 

[Monners]

So the choice for the wealthy White Anglo Saxon Protestant Tory members in the South East is between two plastic Maggie imitations. This country really is truly fooked. Still at least Gove and Johnson are history.

 

[Kingokings204]

I vote for Andrea leadsom. Fresh face. Brexit supporter.

Speaks very well. She has a real chance.