GBP has risen to 1.63 but remains at 53.xx against the Baht.
Pete 
GBP vs THB
The greenback has broken the 33 barrier and is now at 32.89. Sorry to those on a USD pension for the bad news to read with your coffee this morning. I would prepare for it to go to 31 within this year, or perhaps as low as 30.
GBP has risen to 1.63 but remains at 53.xx against the Baht. Pete
GBP has risen to 1.63 but remains at 53.xx against the Baht.
Pete Governments are instituted among Men, deriving their just powers from the consent of the governed. Source
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cookmanchef
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Some very enlightened comments on here so I'd be interested to know your thoughts about the £200bln QE that has occurred in the UK.
It has been sold to us as a necessary 'boost to the economy' but is this true or is it just a method of rebuilding the banks balance sheets, (allowing big bonuses again)? The banks cannot fail to make huge profits at the moment as they are obtaining it at 0%, giving savers bugger all and charging borrowers 5/6% upwards, wish I had that business model.
Consider this method as an alternative 'boost to the economy'. 29 million taxpayers in the UK receive a tax rebate of around £7,000 each, maybe £300 per month for 2 years.
It has been sold to us as a necessary 'boost to the economy' but is this true or is it just a method of rebuilding the banks balance sheets, (allowing big bonuses again)? The banks cannot fail to make huge profits at the moment as they are obtaining it at 0%, giving savers bugger all and charging borrowers 5/6% upwards, wish I had that business model.
Consider this method as an alternative 'boost to the economy'. 29 million taxpayers in the UK receive a tax rebate of around £7,000 each, maybe £300 per month for 2 years.
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Khundon1975
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Korkenzieher
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@cookmanchef:
The way I understand QE is this - the BOE has effectively monetised gilts.
In practice this means that they have increased the amount of money in circulation by creating real value (cash) to represent the bonds (IOU's) that would otherwise be circulating. There are several reasons for this, but the main one is a Keynsian concept called the 'Velocity of Money'.
Simplified, if I borrow a million from the bank, the most likely thing I will do with it is put it in the bank (maybe a different one). Capital adequacy requirements for the bank mean that they have to keep a certain amount of it, but can lend out the rest as though it was new money. Say they have to keep 10% (CA %ages typically were between 8% and 11% after the Basel Accord). So they can lend out 90,000 to someone else. That is the Keynsian Multiplier Effect - suddenly, there is an apparent 90% more money in the marketplace.
The same happens when the BOE redeems Gilts, or monetises them. However, if it happens in 1 year, the effect is less than if it happens today. That is the Velocity effect.
Even if I don't put it in a bank, but spend it, that money then has already performed some economic function. But it is now available to spend or invest for someone else - it doesn't disappear. Same effect basically, but rotating through private hands (whether rapidly or slowly).
Because the banks had to rebuild capital, they were lending out very slowly, so even if the multiplier effect was the same, the pace of money flow slowed dramatically - no credit!
One way out of this, is simply to make more money available - QE.
That is OK, and non-inflationary, so long as the pace of money flow doesn't accelerate. And that is the fear - acceleration caused by easy money leading to inflation, leading to a higher bill to service the debt.
At this time, in effect, the BOE (or rather the Debt Management Office) is retiring older, higher rate debt for lower rate debt. So actually, the government wins. But it only wins because the cost of supporting that larger debt is much lower interest payments - 10% yield on 1M is 100,000. But if your coupon is 3.5% say, you can support 3 times as much debt on the same money. Just like the mortage market, if that helps!
How this all balances out is really the big question. In reality, a lot of the government debt is assumed liability rather than payouts. If those liabilities are significantly reduced - such as by selling off Northern Rock at a profit- hey presto! problem gone. However, if the government keeps those debts on book, the taxpayer picks up the bill. It isn't yet, necessarily a disaster. But if things go wrong, it could be.
Personally, I think Euroland has much bigger problems than the UK, because of the nature of the IOU's the ECB has had to sign to bail out Spain, Eire etc. However a lot of it is still in the mixer. But if commercial real-estate losses have to be realised, then outbuild countries are the ones with the biggest piles of toxc debt, and most of that is Euroland peripheral states - not the UK.
The way I understand QE is this - the BOE has effectively monetised gilts.
In practice this means that they have increased the amount of money in circulation by creating real value (cash) to represent the bonds (IOU's) that would otherwise be circulating. There are several reasons for this, but the main one is a Keynsian concept called the 'Velocity of Money'.
Simplified, if I borrow a million from the bank, the most likely thing I will do with it is put it in the bank (maybe a different one). Capital adequacy requirements for the bank mean that they have to keep a certain amount of it, but can lend out the rest as though it was new money. Say they have to keep 10% (CA %ages typically were between 8% and 11% after the Basel Accord). So they can lend out 90,000 to someone else. That is the Keynsian Multiplier Effect - suddenly, there is an apparent 90% more money in the marketplace.
The same happens when the BOE redeems Gilts, or monetises them. However, if it happens in 1 year, the effect is less than if it happens today. That is the Velocity effect.
Even if I don't put it in a bank, but spend it, that money then has already performed some economic function. But it is now available to spend or invest for someone else - it doesn't disappear. Same effect basically, but rotating through private hands (whether rapidly or slowly).
Because the banks had to rebuild capital, they were lending out very slowly, so even if the multiplier effect was the same, the pace of money flow slowed dramatically - no credit!
One way out of this, is simply to make more money available - QE.
That is OK, and non-inflationary, so long as the pace of money flow doesn't accelerate. And that is the fear - acceleration caused by easy money leading to inflation, leading to a higher bill to service the debt.
At this time, in effect, the BOE (or rather the Debt Management Office) is retiring older, higher rate debt for lower rate debt. So actually, the government wins. But it only wins because the cost of supporting that larger debt is much lower interest payments - 10% yield on 1M is 100,000. But if your coupon is 3.5% say, you can support 3 times as much debt on the same money. Just like the mortage market, if that helps!
How this all balances out is really the big question. In reality, a lot of the government debt is assumed liability rather than payouts. If those liabilities are significantly reduced - such as by selling off Northern Rock at a profit- hey presto! problem gone. However, if the government keeps those debts on book, the taxpayer picks up the bill. It isn't yet, necessarily a disaster. But if things go wrong, it could be.
Personally, I think Euroland has much bigger problems than the UK, because of the nature of the IOU's the ECB has had to sign to bail out Spain, Eire etc. However a lot of it is still in the mixer. But if commercial real-estate losses have to be realised, then outbuild countries are the ones with the biggest piles of toxc debt, and most of that is Euroland peripheral states - not the UK.
Had enough of the trolls. Going to sleep. I may be some time....
Good Lord, I could read that 10 times and not fully understand it. 
I've got arrowheads and bison, anyone want to trade for flint and women?
Pete
I've got arrowheads and bison, anyone want to trade for flint and women?
Pete Governments are instituted among Men, deriving their just powers from the consent of the governed. Source
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redzonerocker
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money
prcscct wrote:Good Lord, I could read that 10 times and not fully understand it.
korkie does make a relevant point with this paragraph though;
Personally, I think Euroland has much bigger problems than the UK, because of the nature of the IOU's the ECB has had to sign to bail out Spain, Eire etc. However a lot of it is still in the mixer. But if commercial real-estate losses have to be realised, then outbuild countries are the ones with the biggest piles of toxc debt, and most of that is Euroland peripheral states - not the UK.
Remember, no one can make you feel inferior without your consent.
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cookmanchef
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What you say about QE sounds about right to me, but the main point I was making is that when the government issues these gilt bonds the BOE purchases most of them and then practically forces the commercial banks to buy them.
This means that the taxpayers money given to banks that we were told would free up loans to business is being used to buy up government bonds. This strengthens the banks balance sheet and then allows them to make huge profits passing this money on to the slaves, sorry customers, in the name of boosting the economy!
Basically it is bankers, (BOE), giving bankers, (high street0, our money to play with and make a fortune from and claim they're doing it for the good of the economy. I contend that the economy would have received a bigger boost by giving the money to those who deserve it most, taxpayers!
I take the point about Japan and people not spending their bonus. Interest rate for savers are so bad I don't believe many would have put money there, maybe a lot would have paid down their debt, if so I believe this would be a good thing in the long run, but then governments have no interest in the long run do they?
This means that the taxpayers money given to banks that we were told would free up loans to business is being used to buy up government bonds. This strengthens the banks balance sheet and then allows them to make huge profits passing this money on to the slaves, sorry customers, in the name of boosting the economy!
Basically it is bankers, (BOE), giving bankers, (high street0, our money to play with and make a fortune from and claim they're doing it for the good of the economy. I contend that the economy would have received a bigger boost by giving the money to those who deserve it most, taxpayers!
I take the point about Japan and people not spending their bonus. Interest rate for savers are so bad I don't believe many would have put money there, maybe a lot would have paid down their debt, if so I believe this would be a good thing in the long run, but then governments have no interest in the long run do they?
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Korkenzieher
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@ CMC
Basically yes. And the only reason that it can do that, is because as lender of last resort the government has the entire wealth of the country at its disposal - ie, the entire tax base is considered to be the government's bank balance to do with as it will. In relatively well managed economies, that is seen as a good thing. For badly managed, take a look at Greece. Their debt to GDP ratio trippled overnight when a new bunch got hold of the books, in effect supporting the idea that Greece had been fraudulent in its reporting requirement to the EU in the run-up to joining the Euro. Because it is in the Euro, Greece cannot devalue and inflate its deficit away as it might have done once before (alongside Italy).
The fly in the ointment for the UK is that in spite of having the flexibility to devalue (which it has effectively done), that isn't translating (yet) into the export (or at least balance of payments) boost that it should, and that is being laid firmly at the door of de-industrialisation. That is, not enough product to sell, to make the difference.
Whereas the DMO issues triple A gilts, which are easily sold (mainly to pension funds), and / or the BOE monetises them to get cash into the economy; in Euroland, the ECB doesn't have Sovereign Spanish, Greek or Irish debt to purchase on the same scale, so instead it has farmed out cash to regional banks to buy corporate debt instead, which during a recession *has* to be seen as being a riskier proposition. Especially if your corporate debt happens to be Greek!
Basically yes. And the only reason that it can do that, is because as lender of last resort the government has the entire wealth of the country at its disposal - ie, the entire tax base is considered to be the government's bank balance to do with as it will. In relatively well managed economies, that is seen as a good thing. For badly managed, take a look at Greece. Their debt to GDP ratio trippled overnight when a new bunch got hold of the books, in effect supporting the idea that Greece had been fraudulent in its reporting requirement to the EU in the run-up to joining the Euro. Because it is in the Euro, Greece cannot devalue and inflate its deficit away as it might have done once before (alongside Italy).
The fly in the ointment for the UK is that in spite of having the flexibility to devalue (which it has effectively done), that isn't translating (yet) into the export (or at least balance of payments) boost that it should, and that is being laid firmly at the door of de-industrialisation. That is, not enough product to sell, to make the difference.
Whereas the DMO issues triple A gilts, which are easily sold (mainly to pension funds), and / or the BOE monetises them to get cash into the economy; in Euroland, the ECB doesn't have Sovereign Spanish, Greek or Irish debt to purchase on the same scale, so instead it has farmed out cash to regional banks to buy corporate debt instead, which during a recession *has* to be seen as being a riskier proposition. Especially if your corporate debt happens
to be Greek!Had enough of the trolls. Going to sleep. I may be some time....
I get no pleasure in saying the Pound is probably going to drop below 50 to the ฿ by the end of the month. Sadly many may have to redo their retirement accounting if moving here. Local inflation is still running 4% + here as well and 6%+ wouldn't surprise me later on as it's been there before several times. Thailand is not a cheap place anymore.
Us Yanks will also hit about 30 in due course.
I don't think Immigration here will have to do many regulation and qualification adjustments for retirement visas if their goal is to limit and decrease the number of extensions. The economy seems to be taking care of that nicely.
Pete
Us Yanks will also hit about 30 in due course.
I don't think Immigration here will have to do many regulation and qualification adjustments for retirement visas if their goal is to limit and decrease the number of extensions. The economy seems to be taking care of that nicely.
Pete Governments are instituted among Men, deriving their just powers from the consent of the governed. Source
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Khundon1975
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I would like to do some "Quantitative easing" to Mr Brown, with a pineapple and some brute force. 
Looking at this another way, younger expats who are salaried in Baht and can cope with inflation as well as establish a regular savings routine here could very well be sitting prime if moving back home. That is if the currency trends continue.
Imagine that, a reverse expat better off financially going home. Pete
Imagine that, a reverse expat better off financially going home.
Pete Governments are instituted among Men, deriving their just powers from the consent of the governed. Source