5 ms·

It's amusing how the weakened pound is being hailed in the media as the End Times, and yet the weakened pound is the reason British stocks (minus financials) ar

It's amusing how the weakened pound is being hailed in the media as the End Times, and yet the weakened pound is the reason British stocks (minus financials) are actually doing fine -- it's very good for export industries. If Greece could have just let their currency depreciate, they'd be in a far better spot than they are now, plausibly even competitive. But it was the tyranny of the Euro, driven by Germany that kept its currency strong.

radicaldreamer 10y ago
That's fine until you realize long term, that common market won't be around for the UK to export to -- at least nowhere near as open and free as it is today.
- bpodgursky 10y ago
  I'm certainly not arguing that leaving the EU is good for the economy net. But what the newspapers (or at least the headlines I see) are focused on is IMO the absolute least-bad fallout.
- disordinary 10y ago
  Good for the countries of the Commonwealth who, despite being part of the same organisation and historical empire, and even all having the same head of state (the Queen), have been locked out of trade deals with the UK because of the EU. What's the bet the UK falls back onto the "empire" that it has so long ignored.
  - gcurt2 10y ago
    Most commonwealth member states don't have the queen as their head of state. Only 16 of the 53. With the exception of Australia, NZ, Papua New Guinea and Canada these 16 are almost all small (in many case island) countries. You can very be sure that Pakistan, India, South Africa and Nigeria along with 33 other countries don't regard Queen Elizabeth II as their head of state.
    - disordinary 10y ago
      I should have said Commonwealth Realm then.
- dingaling 10y ago
  > that common market won't be around for the UK to export to Yet somehow the UK still manages to sell just over 50% of its exports outside the EU. Under WTO rules the EU cannot apply any tariffs to the UK that are more punitive that those applied to any other non-EU country.
  - gonvaled 10y ago
    Which is considerably worse than what they have today.
colechristensen 10y ago
What about citizen's buying power? What about foreign investment? What about the increased costs of doing business with the soon-to-be separate EU? What's happening is complicated. It's not all bad, but there are lots of things to worry about.
branchless 10y ago
The drop is priced in also. Ftse steady with a falling gbp is a drop.
cinquemb 10y ago
>It's amusing how the weakened pound is being hailed in the media as the End Times Agree, but I kind of think its just media companies on behalf of their owners just trying to drum up support to recover their positions of paper wealth[0] :P [0] https://www.bloomberg.com/news/articles/2016-06-24/world-s-400-richest-people-lose-127-billion-on-brexit-chart https://www.bloomberg.com/news/articles/2016-06-24/world-s-4...
yummyfajitas 10y ago
The best way to understand the media is through the lens of tribalism. Greece, for ideological reasons I can't understand (maybe the extremely socialistic/non-market economy?), is viewed as being part of their tribe. So when people push Greece around or refuse to lend them money, it's bad. When Greece displays independence, it's good. In contrast, British #leave folks are viewed as a bunch of racist nationalists. These are definitively NOT part of the same tribe as the media. For the media the most important thing is that whatever happens confirms their narrative. Since in this case it's a weakened British pound, that must of course be evidence that those evil people from a different tribe just did something horrible. http://www.bloomberg.com/view/articles/2016-06-24/-citizens-of-the-world-nice-thought-but http://www.bloomberg.com/view/articles/2016-06-24/-citizens-... Reality is more complicated. UKX just took a 3-5% dive, roughly the same as SPY. IAS (European index) took an 8% dive. Does this mean that Britain is screwed? (Personally, I'm buying a bunch of UKX when markets open. I think all the apocalyptic projections by Remain supporters are bunk, and I'm happy to buy UKX at a 5% discount. A bit more bearish on Europe, though)
- yequalsx 10y ago
  There is a huge difference between the UK both in terms of relative bargaining power and in terms of currency control. The reaction towards Greece by some is that they dug a hole and should suffer (and they have suffered a lot). Others view Greece as a willing victim of German and French banks pumping money into Greece in the form of cheap money. Whatever ones perspective is on Greece one thing is clear. It's not all like the situation with the UK. Leave in the UK has the most xenophobic constituency. The corresponding movement in Greece was not about xenophobia. It was about the ECB.
  - yummyfajitas 10y ago
    I don't dispute there are big differences - among other things, the UK is well governed and can survive on their own. Greece, in contrast, cannot. But yes, the media does portray Leave supporters as racist. That's the ultimate indication the media thinks of them as the outgroup (and weak evidence of actual racism).
  - 10y ago
mrb 10y ago
"it's very good for export industries" Unfortunately, the UK has the world's second largest trade deficit (their imports are 192 billion USD more than their exports)¹ therefore the GBP devaluation hurts them a lot more on imports than it helps them on exports. ¹ http://atlas.media.mit.edu/en/profile/country/gbr/ http://atlas.media.mit.edu/en/profile/country/gbr/
- random_upvoter 10y ago
  Well isn't that exactly a problem that might be remedied by a weaker pound?
  - gonvaled 10y ago
    Sure, in no time. It tool 40 years of painful integration to build the current net of trust, but thanks to finally freeing itself from the EU, the following will happen in no time: - negotiate exit, in extremely good terms for the UK. Who cares what the EU's interests are, the ones from the UK will of course prevail - negotiate trade deals with commercial areas all around the world. It took a good decade to negotiate the despised TTIP, which is now dead in the water, but the UK can do much better - navigate finantial turmoils, ups and downs in the pound, and still be able to secure investment in UK soil - and thanks to that massive investment, it will pass from the second biggest trade deficit to a trade surplus - all while losing the license to operate the biggest EUR nominated finantial center, and fighting a desintegrating country Piece of cake! So easy, that the prime minister who has led you to this paradise has decided to step down not willing to be bothered to sort out the mess. Well done!
  - mrb 10y ago
    No! It's like saying a vendor who loses money on an item (because the sale price is less than the manufacturing cost) might remedy the problem by reducing both the price and the cost by 10% each. It won't help. If the pound loses 10% of its value, the UK would be able to export 10% more (so 47.2 billion USD more) to its trading partners (at the same real cost to them.) However it would cause its imports to cost an extra 66.3 billion USD. And 47.2 - 66.3 = -19.1 meaning the UK would lose (increase its trade deficit by) 19.1 billion USD per year.
ohthehugemanate 10y ago
Unfortunately their economy is mostly imports. Even more importantly, they just shed every trade deal they have with the market responsible for 44% of their exports. On the up side, the weakened currency will make it easier for the government to shore up all the EU subsidy programs that will pull out before Lisbon is even invoked.

radicaldreamer 10y ago

That's fine until you realize long term, that common market won't be around for the UK to export to -- at least nowhere near as open and free as it is today.

bpodgursky 10y ago
I'm certainly not arguing that leaving the EU is good for the economy net. But what the newspapers (or at least the headlines I see) are focused on is IMO the absolute least-bad fallout.
disordinary 10y ago
Good for the countries of the Commonwealth who, despite being part of the same organisation and historical empire, and even all having the same head of state (the Queen), have been locked out of trade deals with the UK because of the EU. What's the bet the UK falls back onto the "empire" that it has so long ignored.
- gcurt2 10y ago
  Most commonwealth member states don't have the queen as their head of state. Only 16 of the 53. With the exception of Australia, NZ, Papua New Guinea and Canada these 16 are almost all small (in many case island) countries. You can very be sure that Pakistan, India, South Africa and Nigeria along with 33 other countries don't regard Queen Elizabeth II as their head of state.
  - disordinary 10y ago
    I should have said Commonwealth Realm then.
dingaling 10y ago
> that common market won't be around for the UK to export to Yet somehow the UK still manages to sell just over 50% of its exports outside the EU. Under WTO rules the EU cannot apply any tariffs to the UK that are more punitive that those applied to any other non-EU country.
- gonvaled 10y ago
  Which is considerably worse than what they have today.

colechristensen 10y ago

What about citizen's buying power? What about foreign investment? What about the increased costs of doing business with the soon-to-be separate EU? What's happening is complicated. It's not all bad, but there are lots of things to worry about.

branchless 10y ago

The drop is priced in also. Ftse steady with a falling gbp is a drop.

cinquemb 10y ago

>It's amusing how the weakened pound is being hailed in the media as the End Times Agree, but I kind of think its just media companies on behalf of their owners just trying to drum up support to recover their positions of paper wealth[0] :P [0] https://www.bloomberg.com/news/articles/2016-06-24/world-s-400-richest-people-lose-127-billion-on-brexit-chart https://www.bloomberg.com/news/articles/2016-06-24/world-s-4...

yummyfajitas 10y ago

The best way to understand the media is through the lens of tribalism. Greece, for ideological reasons I can't understand (maybe the extremely socialistic/non-market economy?), is viewed as being part of their tribe. So when people push Greece around or refuse to lend them money, it's bad. When Greece displays independence, it's good. In contrast, British #leave folks are viewed as a bunch of racist nationalists. These are definitively NOT part of the same tribe as the media. For the media the most important thing is that whatever happens confirms their narrative. Since in this case it's a weakened British pound, that must of course be evidence that those evil people from a different tribe just did something horrible. http://www.bloomberg.com/view/articles/2016-06-24/-citizens-of-the-world-nice-thought-but http://www.bloomberg.com/view/articles/2016-06-24/-citizens-... Reality is more complicated. UKX just took a 3-5% dive, roughly the same as SPY. IAS (European index) took an 8% dive. Does this mean that Britain is screwed? (Personally, I'm buying a bunch of UKX when markets open. I think all the apocalyptic projections by Remain supporters are bunk, and I'm happy to buy UKX at a 5% discount. A bit more bearish on Europe, though)

yequalsx 10y ago
There is a huge difference between the UK both in terms of relative bargaining power and in terms of currency control. The reaction towards Greece by some is that they dug a hole and should suffer (and they have suffered a lot). Others view Greece as a willing victim of German and French banks pumping money into Greece in the form of cheap money. Whatever ones perspective is on Greece one thing is clear. It's not all like the situation with the UK. Leave in the UK has the most xenophobic constituency. The corresponding movement in Greece was not about xenophobia. It was about the ECB.
- yummyfajitas 10y ago
  I don't dispute there are big differences - among other things, the UK is well governed and can survive on their own. Greece, in contrast, cannot. But yes, the media does portray Leave supporters as racist. That's the ultimate indication the media thinks of them as the outgroup (and weak evidence of actual racism).
- 10y ago

mrb 10y ago

"it's very good for export industries" Unfortunately, the UK has the world's second largest trade deficit (their imports are 192 billion USD more than their exports)¹ therefore the GBP devaluation hurts them a lot more on imports than it helps them on exports. ¹ http://atlas.media.mit.edu/en/profile/country/gbr/ http://atlas.media.mit.edu/en/profile/country/gbr/

random_upvoter 10y ago
Well isn't that exactly a problem that might be remedied by a weaker pound?
- gonvaled 10y ago
  Sure, in no time. It tool 40 years of painful integration to build the current net of trust, but thanks to finally freeing itself from the EU, the following will happen in no time: - negotiate exit, in extremely good terms for the UK. Who cares what the EU's interests are, the ones from the UK will of course prevail - negotiate trade deals with commercial areas all around the world. It took a good decade to negotiate the despised TTIP, which is now dead in the water, but the UK can do much better - navigate finantial turmoils, ups and downs in the pound, and still be able to secure investment in UK soil - and thanks to that massive investment, it will pass from the second biggest trade deficit to a trade surplus - all while losing the license to operate the biggest EUR nominated finantial center, and fighting a desintegrating country Piece of cake! So easy, that the prime minister who has led you to this paradise has decided to step down not willing to be bothered to sort out the mess. Well done!
- mrb 10y ago
  No! It's like saying a vendor who loses money on an item (because the sale price is less than the manufacturing cost) might remedy the problem by reducing both the price and the cost by 10% each. It won't help. If the pound loses 10% of its value, the UK would be able to export 10% more (so 47.2 billion USD more) to its trading partners (at the same real cost to them.) However it would cause its imports to cost an extra 66.3 billion USD. And 47.2 - 66.3 = -19.1 meaning the UK would lose (increase its trade deficit by) 19.1 billion USD per year.

ohthehugemanate 10y ago

Unfortunately their economy is mostly imports. Even more importantly, they just shed every trade deal they have with the market responsible for 44% of their exports. On the up side, the weakened currency will make it easier for the government to shore up all the EU subsidy programs that will pull out before Lisbon is even invoked.