10 ms·

Eurozone debt-to-GDP: 92%. This is BEFORE one considers (a) member country debt, (b) troubled bank liabilities which EU must backstop (eg. Deutchebank), and (c

by rrggrr 10y ago

Eurozone debt-to-GDP: 92%. This is BEFORE one considers (a) member country debt, (b) troubled bank liabilities which EU must backstop (eg. Deutchebank), and (c) immense social, security and defense costs which EU nations must incur due to recent global events. By contrast UK debt-to-GDP: 90% and falling, and a US-UK trade deal is likely very soon. I'd rather own Sterling.

tonyedgecombe 10y ago
Before the last election the pound was close to $1.65, after the election it started falling and currently the sentiment is we are heading for a hard brexit. I suspect it has found it's new level.
- simonh 10y ago
  Until that level changes again. Markets are not and never have been perfectly efficient. This is why traders are able to make money - they use information at their disposal that indicates the market value is incorrect to trade against that value. By definition if the market value was always correct that wouldn't be possible. So there is a feedback mechanism from information to market values, but there are many reasons those mechanisms might not work. There might be other more attractive targets for money that would otherwise be used to take advantage of that information. There might be a lack of liquidity preventing funds being deployed at all. There might be short term risks deterring long term bets on accepted trends. Imagine if half the currency traders in the world stopped trading. All of a sudden all of those inputs into currency prices would no longer exist. Would currency prices continue being traded in exactly the same way and weeks or months later be at exactly the same value they would have been before? No, because losing all those inputs into the market would reduce the information flow that drives market value. To look at the opposite case, does the world have the ultimate possible expression of the ideal set of perfect currency traders using perfect information? Probably not, so the market value probably isn't what it would be if there were, i.e. the current market prices probably isn't at it's perfect ideal value.
  - tonyedgecombe 10y ago
    I don't disagree however markets aren't perfectly inefficient either, they do reflect what is going on in the world. I think what I was trying to put across is there probably isn't much news that could come out of brexit that would push them much lower, the worst outcome for the markets is heading towards WTO rules and that looks like what we are going to get.
andyjohnson0 10y ago
> and a US-UK trade deal is likely very soon The earliest that this can happen is 2019, when the UK ceases to be a member of the EU. And since EU rules prohibit members from negotiating their own trade agreements, its probably going to be 2020 or later before a deal is signed.
- gaius 10y ago
  Not true. Article 50 stipulates the maximum negotiating period, not the minimum. T-May could quite legally declare Article 50, negotiate for a day, then join NAFTA the day after...
  - TillE 10y ago
    There are many many thorny issues to be untangled. It's not as simple as saying "we're leaving"; Britain's membership in the EU is a complex thing that's going to take a lot of work to dissolve. The Article 50 negotiations are about those issues, not a future trade deal. If you just walk away, you leave a mountain of chaos that would have to be handled in courts.
    - gaius 10y ago
      Sure, but it takes two to tango. The EU can't force the UK to wait two years because the UK can simply walk away. This is a loophole that the writers of Art 50 didn't consider.
  - andyjohnson0 10y ago
    Theoretically true, but extremely unlikely in practice. As for the UK joining NAFTA: politically impossible.
    - toyg 10y ago
      > for the UK joining NAFTA: politically impossible. Maybe not Nafta, but TTIP could probably be signed the day the UK leaves. Whether that's a good thing for the UK... eh.
misnome 10y ago
Source? Everything I can find says that it is still rising, including several newspaper articles late 2016, but the only data I can find runs up to 2015, including the automatic google-chart: https://www.google.co.uk/publicdata/explore?ds=ds22a34krhq5p_&ctype=l&strail=false&bcs=d&nselm=h&met_y=gd_pc_gdp&scale_y=lin&ind_y=false&rdim=country_group&idim=country:uk:de:el&idim=country_group:eu&ifdim=country_group&tstart=790300800000&tend=1421452800000&hl=en&dl=en&ind=false&icfg https://www.google.co.uk/publicdata/explore?ds=ds22a34krhq5p... Which has UK increasing, and Germany and the EU decreasing. > and a US-UK trade deal is likely very soon. Again, source for this, other than magical wishful-thinking? Considering a) It's still illegal for the UK to make trade deals until it's out of the EU b) "Fast" is entirely based on a statement from Trump. Trump's statements are entirely meaningless because he always says exactly what the person wants to hear, regardless of complexities or whether it's actually achievable (allowing the press to trumpet the statements as fact). Trade deals are never fast because it's never a zero-sum game.
- blibble 10y ago
  it will be all but signed, ready to go on the first day there's very little the EU can do to stop it
  - phatfish 10y ago
    The UK should read the fine print on such a deal very carefully. Trump has no interest in giving anyone except himself a good deal. Of course there may not be much room for negotiation given the UK has been successfully burning bridges with the other EU members. I think they call it "out of the frying pan into the fire".
  - misnome 10y ago
    So; I was going to wait until Monday, but have just read a whole load of statements by Trump that the first day literally means the first day. So where is the UK trade deal?
dragonwriter 10y ago
> a US-UK trade deal is likely very soon. Sure, right after Mexico sends a check for the wall.
pjc50 10y ago
The UK has enough troubled bank liabilities of its own (e.g. RBS) and its own social, security and defense costs. None of which go away on leaving the EU and many of which increase since they can no longer be shared. Debt to GDP does not look falling to me: https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/timeseries/hf6x/pusf https://www.ons.gov.uk/economy/governmentpublicsectorandtaxe...

by rrggrr 10y ago

tonyedgecombe 10y ago

Before the last election the pound was close to $1.65, after the election it started falling and currently the sentiment is we are heading for a hard brexit. I suspect it has found it's new level.

simonh 10y ago
Until that level changes again. Markets are not and never have been perfectly efficient. This is why traders are able to make money - they use information at their disposal that indicates the market value is incorrect to trade against that value. By definition if the market value was always correct that wouldn't be possible. So there is a feedback mechanism from information to market values, but there are many reasons those mechanisms might not work. There might be other more attractive targets for money that would otherwise be used to take advantage of that information. There might be a lack of liquidity preventing funds being deployed at all. There might be short term risks deterring long term bets on accepted trends. Imagine if half the currency traders in the world stopped trading. All of a sudden all of those inputs into currency prices would no longer exist. Would currency prices continue being traded in exactly the same way and weeks or months later be at exactly the same value they would have been before? No, because losing all those inputs into the market would reduce the information flow that drives market value. To look at the opposite case, does the world have the ultimate possible expression of the ideal set of perfect currency traders using perfect information? Probably not, so the market value probably isn't what it would be if there were, i.e. the current market prices probably isn't at it's perfect ideal value.
- tonyedgecombe 10y ago
  I don't disagree however markets aren't perfectly inefficient either, they do reflect what is going on in the world. I think what I was trying to put across is there probably isn't much news that could come out of brexit that would push them much lower, the worst outcome for the markets is heading towards WTO rules and that looks like what we are going to get.

andyjohnson0 10y ago

> and a US-UK trade deal is likely very soon The earliest that this can happen is 2019, when the UK ceases to be a member of the EU. And since EU rules prohibit members from negotiating their own trade agreements, its probably going to be 2020 or later before a deal is signed.

gaius 10y ago
Not true. Article 50 stipulates the maximum negotiating period, not the minimum. T-May could quite legally declare Article 50, negotiate for a day, then join NAFTA the day after...
- TillE 10y ago
  There are many many thorny issues to be untangled. It's not as simple as saying "we're leaving"; Britain's membership in the EU is a complex thing that's going to take a lot of work to dissolve. The Article 50 negotiations are about those issues, not a future trade deal. If you just walk away, you leave a mountain of chaos that would have to be handled in courts.
  - gaius 10y ago
    Sure, but it takes two to tango. The EU can't force the UK to wait two years because the UK can simply walk away. This is a loophole that the writers of Art 50 didn't consider.
- andyjohnson0 10y ago
  Theoretically true, but extremely unlikely in practice. As for the UK joining NAFTA: politically impossible.
  - toyg 10y ago
    > for the UK joining NAFTA: politically impossible. Maybe not Nafta, but TTIP could probably be signed the day the UK leaves. Whether that's a good thing for the UK... eh.

misnome 10y ago

Source? Everything I can find says that it is still rising, including several newspaper articles late 2016, but the only data I can find runs up to 2015, including the automatic google-chart: https://www.google.co.uk/publicdata/explore?ds=ds22a34krhq5p_&ctype=l&strail=false&bcs=d&nselm=h&met_y=gd_pc_gdp&scale_y=lin&ind_y=false&rdim=country_group&idim=country:uk:de:el&idim=country_group:eu&ifdim=country_group&tstart=790300800000&tend=1421452800000&hl=en&dl=en&ind=false&icfg https://www.google.co.uk/publicdata/explore?ds=ds22a34krhq5p... Which has UK increasing, and Germany and the EU decreasing. > and a US-UK trade deal is likely very soon. Again, source for this, other than magical wishful-thinking? Considering a) It's still illegal for the UK to make trade deals until it's out of the EU b) "Fast" is entirely based on a statement from Trump. Trump's statements are entirely meaningless because he always says exactly what the person wants to hear, regardless of complexities or whether it's actually achievable (allowing the press to trumpet the statements as fact). Trade deals are never fast because it's never a zero-sum game.

blibble 10y ago
it will be all but signed, ready to go on the first day there's very little the EU can do to stop it
- phatfish 10y ago
  The UK should read the fine print on such a deal very carefully. Trump has no interest in giving anyone except himself a good deal. Of course there may not be much room for negotiation given the UK has been successfully burning bridges with the other EU members. I think they call it "out of the frying pan into the fire".
- misnome 10y ago
  So; I was going to wait until Monday, but have just read a whole load of statements by Trump that the first day literally means the first day. So where is the UK trade deal?

dragonwriter 10y ago

> a US-UK trade deal is likely very soon. Sure, right after Mexico sends a check for the wall.

pjc50 10y ago

The UK has enough troubled bank liabilities of its own (e.g. RBS) and its own social, security and defense costs. None of which go away on leaving the EU and many of which increase since they can no longer be shared. Debt to GDP does not look falling to me: https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/timeseries/hf6x/pusf https://www.ons.gov.uk/economy/governmentpublicsectorandtaxe...