The cost of living

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Woodchopper
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Re: The cost of living

Post by Woodchopper » Fri Sep 23, 2022 3:18 pm

Meanwhile, the pound crashing to the dollar and euro is going to increase prices of imported goods.

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Re: The cost of living

Post by EACLucifer » Fri Sep 23, 2022 3:22 pm

Woodchopper wrote:
Fri Sep 23, 2022 3:18 pm
Meanwhile, the pound crashing to the dollar and euro is going to increase prices of imported goods.
In 2007 - under Labour - British average household income was slightly higher than American. Since then, it's fallen to something like two thirds of American. Dogmatic austerity, recklessness, self-sabotage, and prioritising the wealth of the rich over everyone else has impoverished everyone.

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Re: The cost of living

Post by plodder » Sat Sep 24, 2022 2:28 pm

Woodchopper wrote:
Fri Sep 23, 2022 3:18 pm
Meanwhile, the pound crashing to the dollar and euro is going to increase prices of imported goods.
Also presumably makes uk borrowing more expensive?

Is the slump just the money markets saying “yes you can borrow, but only on these new more expensive terms”

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Re: The cost of living

Post by Woodchopper » Sun Sep 25, 2022 9:56 am

plodder wrote:
Sat Sep 24, 2022 2:28 pm
Woodchopper wrote:
Fri Sep 23, 2022 3:18 pm
Meanwhile, the pound crashing to the dollar and euro is going to increase prices of imported goods.
Also presumably makes uk borrowing more expensive?

Is the slump just the money markets saying “yes you can borrow, but only on these new more expensive terms”
Yes, as UK bonds are sold in pounds sterling a foreign purchaser carries the exchange rate risk. Though as far as I remember most UK government debt is sold to domestic purchasers.

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Re: The cost of living

Post by plodder » Sun Sep 25, 2022 10:16 am

I was thinking more about the interest rate we pay for our borrowing. We’re now a higher risk so the market adjusts so we pay a higher rate. It looks like the pound had a quick slide and is now settled in it’s new less valuable position.

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Re: The cost of living

Post by dyqik » Sun Sep 25, 2022 12:06 pm

plodder wrote:
Sun Sep 25, 2022 10:16 am
I was thinking more about the interest rate we pay for our borrowing. We’re now a higher risk so the market adjusts so we pay a higher rate. It looks like the pound had a quick slide and is now settled in it’s new less valuable position.
My instinctive guess is it'll be hard to judge that until next week, as much of the trading action takes places while the European and North American stock markets are open (e.g. selling stocks to buy gilts or vice versa, which needs a currency exchange), and what politicians say in the weekend papers and TV interviews will matter.

Certainly the charts in my currency converter app on my phone don't have any data after Wall Street closed on Friday.

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Re: The cost of living

Post by plodder » Sun Sep 25, 2022 1:33 pm

dyqik wrote:
Sun Sep 25, 2022 12:06 pm
plodder wrote:
Sun Sep 25, 2022 10:16 am
I was thinking more about the interest rate we pay for our borrowing. We’re now a higher risk so the market adjusts so we pay a higher rate. It looks like the pound had a quick slide and is now settled in it’s new less valuable position.
My instinctive guess is it'll be hard to judge that until next week, as much of the trading action takes places while the European and North American stock markets are open (e.g. selling stocks to buy gilts or vice versa, which needs a currency exchange), and what politicians say in the weekend papers and TV interviews will matter.

Certainly the charts in my currency converter app on my phone don't have any data after Wall Street closed on Friday.
Fair enough, this stuff tends to react pretty quickly though. Like everyone else, I don't really understand it, I just think in terms of whether things are a bigger or smaller risk than they were, and then that affects the price.

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Re: The cost of living

Post by dyqik » Sun Sep 25, 2022 1:56 pm

plodder wrote:
Sun Sep 25, 2022 1:33 pm
dyqik wrote:
Sun Sep 25, 2022 12:06 pm
plodder wrote:
Sun Sep 25, 2022 10:16 am
I was thinking more about the interest rate we pay for our borrowing. We’re now a higher risk so the market adjusts so we pay a higher rate. It looks like the pound had a quick slide and is now settled in it’s new less valuable position.
My instinctive guess is it'll be hard to judge that until next week, as much of the trading action takes places while the European and North American stock markets are open (e.g. selling stocks to buy gilts or vice versa, which needs a currency exchange), and what politicians say in the weekend papers and TV interviews will matter.

Certainly the charts in my currency converter app on my phone don't have any data after Wall Street closed on Friday.
Fair enough, this stuff tends to react pretty quickly though. Like everyone else, I don't really understand it, I just think in terms of whether things are a bigger or smaller risk than they were, and then that affects the price.
Certainly almost all of the reaction is immediate, but whether there's a bounce back, or a longer decline, depends on the politicians and central banks reactions to the immediate drop.

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Re: The cost of living

Post by Grumble » Sun Sep 25, 2022 6:46 pm

The pound falling against the dollar, presumably makes oil more expensive - isn’t it sold in dollars? Probably gas too.
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Re: The cost of living

Post by EACLucifer » Sun Sep 25, 2022 6:51 pm

Grumble wrote:
Sun Sep 25, 2022 6:46 pm
The pound falling against the dollar, presumably makes oil more expensive - isn’t it sold in dollars? Probably gas too.
Yep. Pretty much wiping out any fall in the cost of petrol due to the fall in oil prices.

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Re: The cost of living

Post by plodder » Sun Sep 25, 2022 9:37 pm

dyqik wrote:
Sun Sep 25, 2022 1:56 pm
plodder wrote:
Sun Sep 25, 2022 1:33 pm
dyqik wrote:
Sun Sep 25, 2022 12:06 pm


My instinctive guess is it'll be hard to judge that until next week, as much of the trading action takes places while the European and North American stock markets are open (e.g. selling stocks to buy gilts or vice versa, which needs a currency exchange), and what politicians say in the weekend papers and TV interviews will matter.

Certainly the charts in my currency converter app on my phone don't have any data after Wall Street closed on Friday.
Fair enough, this stuff tends to react pretty quickly though. Like everyone else, I don't really understand it, I just think in terms of whether things are a bigger or smaller risk than they were, and then that affects the price.
Certainly almost all of the reaction is immediate, but whether there's a bounce back, or a longer decline, depends on the politicians and central banks reactions to the immediate drop.
Ah, seems to still have a little way to go in the down department.

https://www.theguardian.com/business/20 ... r-bond-tax

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Re: The cost of living

Post by plodder » Sun Sep 25, 2022 9:42 pm

lol, Paul Krugman calls the fall in sterling pricing in the "moron risk premium" which I can understand at least

https://twitter.com/paulkrugman/status/ ... 5290628096

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Re: The cost of living

Post by dyqik » Sun Sep 25, 2022 10:09 pm

plodder wrote:
Sun Sep 25, 2022 9:37 pm
dyqik wrote:
Sun Sep 25, 2022 1:56 pm
plodder wrote:
Sun Sep 25, 2022 1:33 pm


Fair enough, this stuff tends to react pretty quickly though. Like everyone else, I don't really understand it, I just think in terms of whether things are a bigger or smaller risk than they were, and then that affects the price.
Certainly almost all of the reaction is immediate, but whether there's a bounce back, or a longer decline, depends on the politicians and central banks reactions to the immediate drop.
Ah, seems to still have a little way to go in the down department.

https://www.theguardian.com/business/20 ... r-bond-tax
Some of that will the Asian markets catching up to Friday's fall, but it does mean that nothing happened over the weekend to reassure them.

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Re: The cost of living

Post by Woodchopper » Mon Sep 26, 2022 5:47 am

plodder wrote:
Sun Sep 25, 2022 9:37 pm
dyqik wrote:
Sun Sep 25, 2022 1:56 pm
plodder wrote:
Sun Sep 25, 2022 1:33 pm


Fair enough, this stuff tends to react pretty quickly though. Like everyone else, I don't really understand it, I just think in terms of whether things are a bigger or smaller risk than they were, and then that affects the price.
Certainly almost all of the reaction is immediate, but whether there's a bounce back, or a longer decline, depends on the politicians and central banks reactions to the immediate drop.
Ah, seems to still have a little way to go in the down department.

https://www.theguardian.com/business/20 ... r-bond-tax
Yes, it dropped further when the markets opened this morning.

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Re: The cost of living

Post by plodder » Mon Sep 26, 2022 9:15 am

Parity with the dollar would be a thing ☹️

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Re: The cost of living

Post by Brightonian » Mon Sep 26, 2022 9:33 am

plodder wrote:
Mon Sep 26, 2022 9:15 am
Parity with the dollar would be a thing ☹️
Presume there's been a flight to safety regarding much of this year's dollar rise, though very symbolic. It's parity with the euro that worries me: it was €1.09 earlier this morning (now €1.11), because I'm now living in Ireland and France but still being paid in pounds ☹️.

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Re: The cost of living

Post by plodder » Mon Sep 26, 2022 9:58 am

I do very much hope that inflation isn’t being used as a deliberate tool to devalue the huge debts we’ll run up by cutting tax and subsidising increased energy costs.

I suppose the tw.t who said that would be a good idea in his book probably never thought anyone would be mad enough to make him chancellor.

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Re: The cost of living

Post by Woodchopper » Mon Sep 26, 2022 11:30 am

plodder wrote:
Mon Sep 26, 2022 9:58 am
I do very much hope that inflation isn’t being used as a deliberate tool to devalue the huge debts we’ll run up by cutting tax and subsidising increased energy costs.

I suppose the tw.t who said that would be a good idea in his book probably never thought anyone would be mad enough to make him chancellor.

https://mobile.twitter.com/JolyonMaugha ... 0491026435
The problem with that plan is that, as has happened, the markets will increase the price of lending new money.

Within Britain inflation is though good news for individuals who have high levels of personal debt. If it's a deliberate strategy then it's a piece of class warfare. Those who gain most will be property owners who have high incomes and large mortgages whose real value will be whittled away by inflation, and those who lose most will be people on low incomes who struggle to pay increased costs of food and heating etc.

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Re: The cost of living

Post by plodder » Mon Sep 26, 2022 2:12 pm

Quite.

I’d be grateful if someone could explain to me why “expected BOE statement raises value of the pound” isn’t basically insider trading? Expected by who? There’s been no official press release. Some people get to hear rumours, others don’t?

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Re: The cost of living

Post by El Pollo Diablo » Mon Sep 26, 2022 3:44 pm

I think when you start to think of investment bankers as clucking hens, it all starts to make a bit more sense
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Re: The cost of living

Post by dyqik » Mon Sep 26, 2022 3:45 pm

plodder wrote:
Mon Sep 26, 2022 2:12 pm
Quite.

I’d be grateful if someone could explain to me why “expected BOE statement raises value of the pound” isn’t basically insider trading? Expected by who? There’s been no official press release. Some people get to hear rumours, others don’t?

https://mobile.twitter.com/pkelso/statu ... iness-live
Actual BoE statement seems to have led to the pound falling.

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Re: The cost of living

Post by plodder » Mon Sep 26, 2022 4:11 pm

dyqik wrote:
Mon Sep 26, 2022 3:45 pm
plodder wrote:
Mon Sep 26, 2022 2:12 pm
Quite.

I’d be grateful if someone could explain to me why “expected BOE statement raises value of the pound” isn’t basically insider trading? Expected by who? There’s been no official press release. Some people get to hear rumours, others don’t?

https://mobile.twitter.com/pkelso/statu ... iness-live
Actual BoE statement seems to have led to the pound falling.
Ach I'm thinking about it too much. They're just gambling on what they think other people will do in response to rumours.

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Re: The cost of living

Post by dyqik » Mon Sep 26, 2022 4:25 pm

plodder wrote:
Mon Sep 26, 2022 4:11 pm
dyqik wrote:
Mon Sep 26, 2022 3:45 pm
plodder wrote:
Mon Sep 26, 2022 2:12 pm
Quite.

I’d be grateful if someone could explain to me why “expected BOE statement raises value of the pound” isn’t basically insider trading? Expected by who? There’s been no official press release. Some people get to hear rumours, others don’t?

https://mobile.twitter.com/pkelso/statu ... iness-live
Actual BoE statement seems to have led to the pound falling.
Ach I'm thinking about it too much. They're just gambling on what they think other people will do in response to rumours.
The BoE statement seems to be being interpreted as "This is fine" dog drinking coffee in burning building.jpg.

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Re: The cost of living

Post by plodder » Mon Sep 26, 2022 4:43 pm

There's a gov statement that says "don't worry, we're going to unleash the productivity of the british farming sector in a couple of months" which is like 0.5% of the economy. Surely a bit early to be clutching at straws?

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Re: The cost of living

Post by IvanV » Mon Sep 26, 2022 4:55 pm

plodder wrote:
Mon Sep 26, 2022 9:58 am
I do very much hope that inflation isn’t being used as a deliberate tool to devalue the huge debts we’ll run up by cutting tax and subsidising increased energy costs.

I suppose the tw.t who said that would be a good idea in his book probably never thought anyone would be mad enough to make him chancellor.

https://mobile.twitter.com/JolyonMaugha ... 0491026435
It is a far from novel observation. Governments and economists and financial market know well that governments have a perpetual temptation in the short term to have a bit more inflation than people were expecting, because that has the practical effect of transferring monetary value to the government. It even has a name - "inflation tax". But it is a dangerous game. If the market were merely to suspect that is what you were up to, then they would charge you higher interest. Hence the value of a reputation for fiscal rectitude, and the disadvantage of being Argentina or Greece, when actually you really intend to pay the money back this time. Reputations take time to establish or repair.

The book warns from historical example of the dangers of excessive debt. So Kwarteng, with his PhD from Cambridge in Economic History, doesn't seem to be taking complete notice of the history he discovered in the book he wrote himself.

But the much published Mr Kwarteng is also the co-author of Britannia Unchained, his co-authors including the wonderfully erudite Priti Patel, Dominic Raab, and Liz Truss. They blame Britain's problems on lazy workers. The book was criticised for slipshod research and failing really to understand these issues.

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