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Amazing really……

The pound has slumped to an all-time low against the dollar after Chancellor Kwasi Kwarteng hinted at more tax cuts to come after after last week’s Budget.

Sterling tumbled almost 5pc to as low as $1.0327 in overnight trading, taking it below its 1985 low to the weakest since decimalisation in 1971.

It clawed back some ground to about $1.05, but the sharp decline has fuelled fears it could slump to parity by the end of the year. The euro also hit a fresh 20-year low amid recession and energy security fears.

If both currencies go down against the dollar maybe it’s not in fact both currencies going down but the dollar going up? Ah, yes, it is.

36 thoughts on “Amazing really……”

  1. ‘Gold is money – everything else is credit’ – James Pierpoint Morgan.
    At the beginning of Sept gold cost £47,000/kg. As I write it is £49,394/kg and rising. So a big chunk of my wealth has ‘appreciated’ about 4% in a matter of days. Or…you could accept that J P Morgan was right and that the unit of measurement has collapsed a bit.
    If you don’t have cast iron faith and trust (and that’s where the word ‘credit’ comes from) in the ability of politicians to apply the principles of sound money and not to debauch our fiat money currency for short term political gains – then my strong advice is to own some money. Real money.

  2. “ If both currencies go down against the dollar maybe it’s not in fact both currencies going down but the dollar going up? “

    Except that the pound has gone down against both the dollar and the euro.

  3. And also the euro has gone down against the dollar. GBP has fallen more – which is why it has also fallen against EUR. So, to gain the full effect, we’ve got some portion because $ has risen, some because £ has fallen. See?

  4. Sterling has gone down against every other currency in the world – from the Albanian lek to the Zambian kwacha – according to the Telegraph. Any more thoughts, Tim?

  5. The pound is fucked, but otoh idk what else Chancellor Howard from the Halifax could realistically do.

    Short term, we’re boxed into a corner on energy prices. There’s no short term alternative to Russian fuels in Europe, other than poverty and pain, and although we played a key role in provoking the current crisis, ending it is not within our gift*. Even if the British government had a mind to deescalate the proxy war on Russia, which they don’t, the Germans would need to agree to switch on NordStream 2. Russia would demand a high political price for this, and at the moment we’re determined to kill Russians and regime change their country, so no agreement is possible.

    So, we could either watch the country fall apart with £6,000 electricity bills people can’t afford to pay, immediate mass unemployment, social unrest on a scale we haven’t seen since the poll tax, etc. Or, slap a bandage on our self-inflicted economic shotgun wounds and hope to buy enough time to stabilise the patient and maybe even keep Labour out at the next election.

    Tax rises, as any fule kno, are always a bad idea, particularly when the economy is reeling. Tax cuts are urgently necessary, thanks to the last 12 years of useless Blue Labour government.

    We can quibble with the dosage of Howard’s prescriptions, but his course of treatment is the only game in town unless we want to be dragged much further down the road to serfdom.

    *Russia may also be learning the hard way, as humans are wont to do, that while it’s easy to start a war, it’s much harder to stop one already in progress even when you’re handily running up enemy casualties, US Army in Vietnam style. There’s a very real danger now that we’ll either hear air raid sirens by Christmas, or the conflict in Ukraine will simply be frozen for a while before both NATO and Russia go for a nuclear encore.

    War, children, is just a shot away, but peace requires the agreement of people you may not like.

  6. Rowdy. Because the Fed is raising interest rates by 75 basis points at time. The Bank of England isn’t. A wider and wider discrepancy in base rates makes the USD look more attractive to investors.

  7. Steve

    You are grossly underestimating the threat that Russia poses.

    Putinism resembles islamo-fascism, but with nukes. Putinists see the West as decadent and oppressive, Moscow as the Third Rome, and Russians as God’s chosen people. So, as the contemporary Russian philosopher Alexandr Dugin advocates, Putinism must aim for an illiberal totalitarian Russian Empire to control the Eurasian continent from Dublin to Vladivostok in order to challenge America and the West.

    Putinism also draws on previous pan-Russian thinkers. Putin has read Lev Gumilyov’s bizarre theories of Russians as a “super-ethnos” with the “passionarity” to expand and dominate other ethnicities and states. Another such ideologist is Ivan Ilyin – a White Russian religious fascist. Putin ordered Ilyin’s posthumous repatriation, having his remains moved from Switzerland to the Donskoy Monastery in Moscow.

    It’s a fantasy that Russia – a country with a declining population and an economy the size of Italy’s – could achieve such dominance. That said, Putin is in the same league as Stalin and Hitler, and he needs to be defeated in Ukraine and contained – whatever the cost.

  8. Theo – Putinism must aim for an illiberal totalitarian Russian Empire to control the Eurasian continent from Dublin to Vladivostok in order to challenge America and the West.

    Crikey, sounds serious. Bad luck for the Irish, I suppose. But they always wanted to be more stunningly multicultural, so they’ll get used to it.

    It’s a fantasy that Russia – a country with a declining population and an economy the size of Italy’s – could achieve such dominance. That said, Putin is in the same league as Stalin and Hitler

    Well, which is it? Can’t realistically be both at the same time, can it?

    It’s a fantasy that Yappy, the aggressive Yorkshire Terrier, could beat up the big dogs. That said, Yappy is in the same league as Cujo and that husky from The Thing (1982)

    and he needs to be defeated in Ukraine and contained – whatever the cost.

    Even if the cost is your standard of living, future financial security, and possibly your life? This sounds courageous, Minister. But count me out.

  9. Steve

    On gas, Russia represents 3% of the world’s supply. Unfortunately for Europe in March 2022, that percentage was much higher and pricing was at the margin. That need to make up the 3% from other sources is swiftly underway and, as you can see on the exchanges, the price is rapidly falling away.

    As for the rest. Putin has been flagging his intentions for years. He might claim to have been provoked, but he always wanted to be. Whatever. We are were we are and – now – cannot allow him to win.

  10. Recusant – On gas, Russia represents 3% of the world’s supply.

    But we don’t live in “the world”, we live in specific geographical areas of the world, subject to local supply arrangements. So the 3% figure isn’t immediately relevant, but 40% is. That’s the percentage of gas the EU formerly sourced from Russia.

    That need to make up the 3% from other sources is swiftly underway

    Talking about the problem is swiftly underway, solutions probably won’t arrive before 2030. (Price caps are not a solution)

    and, as you can see on the exchanges, the price is rapidly falling away.

    We’re seeing high levels of volatility in the market but prices aren’t going back to affordable anytime soon.

    Putin has been flagging his intentions for years.

    True. He’s been banging on about NATO expansion since before 2008. We responded by expanding NATO, announcing that Ukraine and Georgia would join the nuclear-tipped alliance (why?). Remember when Hitler gave us 14 years notice prior to invading Poland? Me either.

    We are were we are and – now – cannot allow him to win.

    Sure we can. We can, and must, accept all manner of unpleasant things, because we’re broke and have no good options left.

    If it helps soothe the sting, we can think of it the way we do immigration – something that just happens regardless of what British people want or the British government claims it wants.

  11. Six grand and some power cuts is a small price to pay to get rid of the Greens. (And the reds, the yellows, the magentas…)

  12. Philip – Instead, the Tories – having successfully knifed Boris and destroying our economic future through the unholy trinity of disastrous Covid, Net Zero and Ukraine policies – are now planning on simply handing over the country to Labour:

    “An ex-minister in Boris Johnson’s government told Sky News that the letters which could trigger a confidence have already been sent to 1922 Committee chair Sir Graham Brady.

    “Liz is f*****. She is taking on markets and the Bank of England,” the MP told the broadcaster, saying she and Treasury ministers were “playing A-level economics with people’s lives”.

  13. But count me out.

    Already have, Steve. Your hysterical defeatism to protect your thirty pieces of silver makes you very unreliable.

  14. “Sterling tumbled almost 5pc to as low as $1.0327 in overnight trading, taking it below its 1985 low to the weakest since decimalisation in 1971.”

    How have we been doing overall since 1971? And the 1980s were boom times compared to the 1970s, yes? The weird last couple of years notwithstanding, we’ve been doing pretty well. It’s almost as if the wild adventures of Sterling are not the prime indicator.

    But let’s all panic and run amok.

  15. But let’s all panic and run amok.

    I suspect there’s more than a little bit of the blob noticing that the exchange rate has fallen and choosing to use that as a stick with which to beat the (mildly) tax-cutting tories.

    There’s nothing they fear more than seeing a low tax low interference government (if only!) actually allowing a bit of economic growth to happen.

  16. The Queen (God bless her) could probably remember when £1=$4 on the ‘gold standard’, hence the half-crown (2/6) being ‘half a dollar’.

  17. PJF – Do calm down, old boy. That was more projection than Cinema Paradiso (1988).

    Pro tip: when you’ve convinced yourself you’re living in 1938, you’re the reincarnation of Winston Churchill and anybody who disagrees is a traitor, it’s probably not other people who are hysterical.

    BiW – I suspect there’s more than a little bit of the blob noticing that the exchange rate has fallen and choosing to use that as a stick with which to beat the (mildly) tax-cutting tories

    This is exactly why an “ex-minister in Boris Johnson’s government” (probably somebody whose name rhymes with ‘Gak Zoldsmith’) is boasting to the press about letters of no confidence in Trussy.

    The majority in Westminster actively dislikes normal British people, and has no intention of allowing us to vote our way to different policy outcomes. You can learn all you need to know about British politics by looking at the deluge of lies about fracking.

  18. Steve – much prefer Guest House Paradiso (1999).

    . . . when you’ve convinced yourself you’re living in 1938, you’re the reincarnation of Winston Churchill and anybody who disagrees is a traitor, it’s probably not other people who are hysterical.

    And yet all those are completely made up insults, frankly weakly bizarre ones that sound just a tad hysterical.

    Nevertheless, your constant belittling of the capacity to learn from history is revealing.

  19. PJF – one of the lesser works of the Edmondson/Mayall ouvre, I felt. But at least it wasn’t Drop Dead Fred.

    And yet all those are completely made up insults

    I am not insulting you, you are the one bloviating about 30 pieces of silver and other excitable Colonel Blimp nonsense about a war you don’t understand and are too old to fight in anyway.

    I’m doing you a favour by pointing out your opinions on this subject are wrong and retarded. The hardest part of being a hero is being comfortable with my own greatness (sigh).

    your constant belittling of the capacity to learn from history

    We’ve learned absolutely nothing from history. If we had, it wouldn’t be Current Year and we wouldn’t be reliving a shite version of 1974. QED.

  20. Steve

    “Well, which is it? Can’t realistically be both at the same time, can it?”

    Nutters with unrealistic notions and nuclear weapons can cause an awful lot of trouble and damage.

  21. That said, Putin is in the same league as Stalin and Hitler, and he needs to be defeated in Ukraine and contained – whatever the cost.

    Whatever the cost?

    Please can one of those advocating Putin/Russia defeat at any cost detail the extent to which this cost can be tolerated?

    What percentage of GDP should we be prepared to tolerate losing? 10%? 20%?

    What percentage of our armed forces are we willing to throw into the conflict? 50%?

    How many civilians are we prepared to lose if we start throwing giant mushroom firecrackers at each other? 20M? 40M?

    Personally I’m not entirely sure that stopping Putin taking control of some mostly-Russian-anyway areas of East Urkaine are worth the current hit to our living standards, never mind potentially ending up in a massive military conflict with the associated loss of life, wealth and living standards.

  22. . . . about a war you don’t understand . . .

    Do you feel you understand it, Steve? Just to be clear.

    . . . are too old to fight in anyway.

    Not sure I’d avoid this Russian clown show mobilisation.

    And why is that happening at all, btw?
    We started with ” the Ukrainians just can’t win ™ “,
    went to ” Putin can just send in more divisions anytime © “,
    so what is your heroic insight into this move by the mighty Russians (to whom we should just cave because we’re broke and corrupt and useless and worthless . . . )?

  23. Personally I’m not entirely sure that stopping Putin taking control of some mostly-Russian-anyway areas of East Urkaine are worth the current hit to our living standards . . .

    As I pointed out to one of the down-under commenters, nobody gave much of a shit when Japan invaded China, but it didn’t take long before they were bombing Australia. It’s always less of a hit to living standards if you deal with a threat early.

    But then I expect I’m just trying hard to look like Gary Cooper (super-duper) playing Billy Mitchell.

  24. Bloke in North Dorset

    “ Personally I’m not entirely sure that stopping Putin taking control of some mostly-Russian-anyway areas of East Urkaine ”

    Just because the speak Russian it doesn’t make them Russian. America’s, Canadians, Aussies, Kiwis etc all speak English, but it doesn’t make them English.

  25. Bloke in North Dorset

    I also see that in a vain attempt to meet his cannon fodder, sorry conscription, numbers Putin has offered citizenship to Ed Snowden.

  26. Just because the speak Russian it doesn’t make them Russian.

    And the No Shit award for stating the obvious goes to…
    Maybe lets see what the results of the referendums (referenda?) are.
    Given the way that Kiev has been behaving towards Russian speakers, I can quite easily believe that they would want to become part of/identify as Russia(n).

    As I pointed out to one of the down-under commenters, nobody gave much of a shit when Japan invaded China, but it didn’t take long before they were bombing Australia. It’s always less of a hit to living standards if you deal with a threat early.

    When Putin starts invading a country that We are treaty bound to defend
    Then I would agree about getting involved.
    Until then, it isn’t our business. Solidify the defences of our allies in the area? Sure.
    Provide overt assistance and then brag about it (intelligence, weapons, etc)? Probably a bad idea.

    Hopefully we have some cooler heads somewhere, that can keep this all from escalating into a total clusterfuck.
    I remain hopeful, but sceptical.

  27. Theo – Nutters with unrealistic notions and nuclear weapons can cause an awful lot of trouble and damage.

    Agreed, but Putin is also bad.

    PJF – Do you feel you understand it, Steve? Just to be clear

    Better than most, I reckon. Though that isn’t hard, as MSM coverage of the war and associated issues is the worst I’ve ever seen.

    And why is that happening at all, btw?
    We started with ” the Ukrainians just can’t win ™ “,
    went to ” Putin can just send in more divisions anytime © “,
    so what is your heroic insight into this move by the mighty Russians (to whom we should just cave because we’re broke and corrupt and useless and worthless . . . )

    I’ve been telling you this whole time that Ukraine can’t win because Russia can just send in more divisions if they need to, but you’re comprehension-incapable when it comes to Russia, because the subject inflames your prostate and makes you start ranting about traitors and bombing Australia and generally being a bitter old drama queen.

    so what is your heroic insight into this move by the mighty Russians (to whom we should just cave because we’re broke and corrupt and useless and worthless . . . )?

    Same as always, Pinky. We should stop doing things that harm us and try things that could help us.

    We know that the sanctions don’t “work”, unless we meant to enrich Russia and completely fuck our own future. So, let’s stop doing that while we still have a pot to piss in. But better act fast, because business failures are already starting to domino.

    CD – Please can one of those advocating Putin/Russia defeat at any cost detail the extent to which this cost can be tolerated?

    What percentage of GDP should we be prepared to tolerate losing? 10%? 20%?

    What percentage of our armed forces are we willing to throw into the conflict? 50%?

    How many civilians are we prepared to lose if we start throwing giant mushroom firecrackers at each other? 20M? 40M?

    You will never get an honest answer to this. It’s like the vax cult of 2021 – logic and reason had nothing to do with people’s feelings, so trying to discuss the matter with maskies was a complete waste of time.

  28. CD
    If Putin gets away with annexing much of Ukraine, it will destabilise the international order. Such instability would pose far greater threats to Western security and lifestyles than the Ukraine war has. Every rogue state would conclude that the West was weak and wouldn’t intervene.

    So…Russia would look at annexing all or part of Moldova or even parts of Finland…China would be emboldened to seize Taiwan…North Korea and Iran would become more assertive…the Middle East would become even more unstable…some African states would seize territory from their neighbours…and so on and on.

    Even if Putin is granted some Ukrainian territory in some peace deal, the rest of world must see that Russia has achieved this small gain at unacceptable economic and military cost.

  29. Theophrastus “Nutters with unrealistic notions and nuclear weapons can cause an awful lot of trouble and damage.”

    It’s funny how much that applies to the U.S. and its pack of toothless terriers as well..

  30. I’ve been telling you this whole time that Ukraine can’t win because Russia can just send in more divisions if they need to . . .

    But for some reason they’ve chosen not to do that and instead gone for a destabilising mobilisation with some ranting about nukes. Why not just send in those divisions like you said? Looks like the Russians don’t understand the war as well you (imagine you) do either.

    Same as always, Pinky.

    If you had any brains you’d have answered the question instead of changing the subject. But you have to do that because you have no insight. Events are progressing contrary to your expectations and you’re struggling because the Russian propaganda is becoming too ridiculous even for you to repeat.

  31. Every rogue state would conclude that the West was weak and wouldn’t intervene.

    Are you sure it isn’t weak? The majority of NATO countries have limited size and equipped militaries.
    And our biggest, baddest, fundedest ally got shoved unceremoniously out of Afghanistan.
    We’re behind in hypersonics and recent battle games showed that if we were invaded, we would run out of bullets and ammunition in eight days. The Americans lasted two weeks, but at least they have a large civilian ammunition manufacturing base to start trying to provide bullets.

    So…Russia would look at annexing all or part of Moldova or even parts of Finland…China would be emboldened to seize Taiwan…North Korea and Iran would become more assertive…the Middle East would become even more unstable…some African states would seize territory from their neighbours…and so on and on.

    Parts of Moldova (Transnistria) would in all likelihood welcome it and the rest would probably be open to the idea or amenable to it.
    Finland is quite capable of standing up to Russia on its own if history is anything to go by and if they become part of NATO, then they’ll be up against all of us.
    China is probably going to take Taiwan in the not too distant future no matter what the West does.

    Is it the responsibility of the west to intervene to defend other countries? Especially ones that we have no attachment to or responsibility for.

    You will never get an honest answer to this. It’s like the vax cult of 2021 – logic and reason had nothing to do with people’s feelings, so trying to discuss the matter with maskies was a complete waste of time.

    Even if I don’t, maybe they might actually start to think about the cost that people might actually have to face…
    Or maybe I’m being hopeful.

  32. Are you sure it isn’t weak? The majority of NATO countries have limited size and equipped militaries.

    Building them up now, though. Odd that.

    = And our biggest, baddest, fundedest ally got shoved unceremoniously out of Afghanistan.

    They didn’t get shoved, they quit. Trump laid the quit foundation and Biden fucked it up. I expect they’ll come to bitterly regret it. Next time (and it already looks like there’s going to be one) they should recognise that Afghanistan is a symptom not a cause, and demolish Pakistan.

    We’re behind in hypersonics and recent battle games showed that if we were invaded, we would run out of bullets and ammunition in eight days.

    Invaded by whom, Mars? We don’t need to be informed by games when we have an actual war to look at. Ukraine was invaded by Russia and has held them for seven months, and is now pushing them back. Hypersonics not helping.

    Parts of Moldova (Transnistria) would in all likelihood welcome it and the rest would probably be open to the idea or amenable to it.

    LOL, amenable? They’re already partly occupied by Russia and deeply pissed off about it. If Russia fails in its Ukraine adventure you can be sure Moldova will say goodbye to its Russians.

    Finland is quite capable of standing up to Russia on its own if history is anything to go by . . .

    If you knew your history you’d know that Finland lost to Russia. It’s considerably smaller than it was.

    = China is probably going to take Taiwan in the not too distant future no matter what the West does.

    This assumes China doesn’t collapse first. It’s not in a good state. (has Xi shown his face yet?)

    Is it the responsibility of the west to intervene to defend other countries?

    No. If Russia invaded one of its ex stans there’d be no requirement beyond the usual grumbling. But Ukraine is literally in our direction. It’s far cheaper in every way to have Russia exhaust its aspirations there than somewhere where we have to go all in.

  33. Bloke in North Dorset

    “ Maybe lets see what the results of the referendums (referenda?) are.”

    There is no need to wait for the results of a referendum where soldiers went door to door collecting the votes individually. The only thing that needs to be announced is whether the result was 100% in favour or 101%.

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