Osborne Fears 'Collapse' of Pound.

[The Kernel]

So what would be the best thing for us Brits to do with our savings? I quit the equity markets a while back, but it seems as if holding in cash is not necessarily a great option either.

Buy US Treasury Bonds.

Jesus. I hope you're joking.

Isn't gold the last refuge for people too uncertain to invest in anything else?

I'm being ironic, but no that's not a joke at all. Despite the financial meltdown in the US economy, the dollar has been strengthening to unheard of levels recently against the Euro, Pound and pretty much every other currency. Part of the reason is the decline of energy prices, but that doesn't come close to explaining all of it.

And gold is an EXTREMELY volatile investment, much more so than currency trading.

[Big Phil]

Perhaps it would be helpful if an economist, someone who actually knows something about financial markets (instead of self-taught amateurs ), could offer their take what's happening to the British pound and what to do about it. Are there any on the board other than Master of Ossus?

Just where the hell do you think we are right now? Do you honestly think that economist have the first clue about where the world economy is heading? This is completely uncharted territory and although you might be able to hear some interesting theories, it would be like trying to model the effects of climate change accurately. In other words, there are a million possible things that could happen and nobody has a clue what the end result is going to be.

Economics is a fine "science" for telling you why something is happening or has happened, but it isn't going to predict the future. Don't believe me? Then maybe you can explain why 85% of mutual funds underperform the indexes despite being helmed by economics experts from first rate schools like Harvard and Yale?

Arguing that because we don't know where the economy is heading, any random idiot on the street's opinion is just as valid, is silly. Should we also begin listening to celebrities, priests, or random idiots on the street to get possible solutions for climate change?

[The Kernel]

Arguing that because we don't know where the economy is heading, any random idiot on the street's opinion is just as valid, is silly. Should we also begin listening to celebrities, priests, or random idiots on the street to get possible solutions for climate change?

Did you hear what I just said? 85% of the countries TOP ECONOMISTS can't equal the performance of an index fund. What do you think that tells you about the predictive capability of the field of economics?

Your analogy is backwards. It should be that just because someone has a degree in a field does not automatically give that field of study predictive qualities.

[Sturmfalke]

So what would be the best thing for us Brits to do with our savings? I quit the equity markets a while back, but it seems as if holding in cash is not necessarily a great option either.

If the pound continues to decrease in value, it may result in a higher inflation rate as imports become more expensive. So, if you really are afraid of a further rapid devaluation of the GBP, buying inflation-indexed bonds would be a possible way to preserve your money. If I recall correctly they are also issued by the government.

If a collapse of the GBP is what you are afraid of, I don't know what investment would be advisable. Maybe a commodity ETF?

[Admiral Valdemar]

I always loved how the economists predicting inventory reports in oil were just under 50% accurate over the two years I've followed them on.

I've got a plan that could save Wall Street a lot of money. It involves a lot of termination of service letters, and a single silver dollar.

[DaveJB]

It seems that Brown genuinely believes he can fix the economy before the next election. If he didn't, he'd just call one now, let Labour take a kicking and hope that things go completely to hell under the Tories, giving Labour a chance at the following election. If the economy does go into total collapse in 2009 or 2010 however, it will mean the total obliteration of the Labour party at the next election - and unless Clegg can get the LibDems into action and pick up some of the seats Labour would haemorrhage in such a case, the likely result would be a totally obscene Tory majority, and we'd have the National Government all over again.

[aerius]

Buy US Treasury Bonds.

Jesus. I hope you're joking.

Isn't gold the last refuge for people too uncertain to invest in anything else?

The short version goes like this. The US is fucked, but most of the world is fucked worse. Also, if US Treasury Bonds go worthless, it's pretty much guns & ammo time with a barter based economy, at least on the local level.

[Big Phil]

Arguing that because we don't know where the economy is heading, any random idiot on the street's opinion is just as valid, is silly. Should we also begin listening to celebrities, priests, or random idiots on the street to get possible solutions for climate change?

Did you hear what I just said? 85% of the countries TOP ECONOMISTS can't equal the performance of an index fund. What do you think that tells you about the predictive capability of the field of economics?

Your analogy is backwards. It should be that just because someone has a degree in a field does not automatically give that field of study predictive qualities.

I think you misunderstood what I was saying. I don't argue that most economists and financial experts blew the recession prediction, or that they suck at predicting future results. I'm simply arguing that they are still in a better position to understand the causes of and make recommendations about how to deal with the declining GBP than laypeople. When the shuttle Columbia disintegrated a few years back, we didn't throw NASA out and bring in amateurs to fix the shuttle program. The people responsible for the fuckup identified the fuckup and took steps to try and prevent it from happening again. What's so different about the economic situation that all of a sudden the opinions of amateurs are as good as those of educated experts?

[J]

Holy shit. This week it did fall like crazy. Will someone more knowledgeable explain to me what this means in the wider context of the EU free zone? The pressure for inflation in the UK must be enormous.

It means trouble in the long run, in the short to medium term it means you'll have good opportunities for UK shopping sprees.

The slightly longer version: The EU countries are going to have a lot of increasingly hostile disgreements over monetary policy, what's good for Germany isn't going to sit well with Spain or Italy, and so on and so forth. Many of the countries have conflicting economic needs, and as the global economy worsens some of those countries will start getting deperate as the current European Central Bank policy is unfavourable towards them and puts them at risk of going the way of Iceland. It's entirely possible that some may "break" the Euro and revert to using their own currency so they have control over their own monetary & economic policies; it may enable them to survive or it may kill them faster, no one knows. If enough countries do this the Euro dies.

So, best case: the Eurozone all keep the Euro and follow ECB policy, this results in some countries such as Spain, Portugal, Greece, & Ireland suffering undue hardship while others such as Germany have a relatively easy time. The Euro declines in value but not as fast as the Pound or USD.

Worst case, enough key countries "break" the Euro and it gets out of hand. The Euro dies and it's every country for itself.

My guess, and it's only a guess since my Magic 8 Ball is pretty flakey these days: The Eurozone manages to hold together, barely, but some countries end up on life support. A few countries may "break" the Euro, but I don't think it'll spread. In either case, the Euro goes down at a rate somewhere between the Pound and USD.

[The Kernel]

I think you misunderstood what I was saying. I don't argue that most economists and financial experts blew the recession prediction, or that they suck at predicting future results. I'm simply arguing that they are still in a better position to understand the causes of and make recommendations about how to deal with the declining GBP than laypeople. When the shuttle Columbia disintegrated a few years back, we didn't throw NASA out and bring in amateurs to fix the shuttle program. The people responsible for the fuckup identified the fuckup and took steps to try and prevent it from happening again. What's so different about the economic situation that all of a sudden the opinions of amateurs are as good as those of educated experts?

If the scientists who investigated the Columbia disaster had a 15% success rate in their analysis historically would you believe them?

[Big Phil]

If the scientists who investigated the Columbia disaster had a 15% success rate in their analysis historically would you believe them?

You keep offering this false dilemma. Beating the stock market does not equate to understanding the causes of and suggesting ways to deal with a recession or declining monetary units.

[Samuel]

I think you misunderstood what I was saying. I don't argue that most economists and financial experts blew the recession prediction, or that they suck at predicting future results. I'm simply arguing that they are still in a better position to understand the causes of and make recommendations about how to deal with the declining GBP than laypeople. When the shuttle Columbia disintegrated a few years back, we didn't throw NASA out and bring in amateurs to fix the shuttle program. The people responsible for the fuckup identified the fuckup and took steps to try and prevent it from happening again. What's so different about the economic situation that all of a sudden the opinions of amateurs are as good as those of educated experts?

If the scientists who investigated the Columbia disaster had a 15% success rate in their analysis historically would you believe them?

Given the fact it is better than random or a guess of an ameuter, yes I would. The shuttle has how many differant parts again?

[aerius]

I think you misunderstood what I was saying. I don't argue that most economists and financial experts blew the recession prediction, or that they suck at predicting future results. I'm simply arguing that they are still in a better position to understand the causes of and make recommendations about how to deal with the declining GBP than laypeople. When the shuttle Columbia disintegrated a few years back, we didn't throw NASA out and bring in amateurs to fix the shuttle program. The people responsible for the fuckup identified the fuckup and took steps to try and prevent it from happening again. What's so different about the economic situation that all of a sudden the opinions of amateurs are as good as those of educated experts?

If the scientists who investigated the Columbia disaster had a 15% success rate in their analysis historically would you believe them?

Actually I'd say it's far worse than that. It's more like the scientists knowingly overrode the engineers when they pointed out a design defect, which then blew up the shuttle. Then they take a big gob of money and claim to have fixed the problem, but they didn't, they just put some shiny stickers on the shuttle and said it was good and spent the rest on hookers & blow. The shuttle blows up again. And again. It's more like how many shuttles are we going to let the idiots blow up before we kick their asses out of there and get some competant people in to fix things.

The economists and "financial experts" have been wrong again and again, their predictions were wrong, their models don't work, and all the fixes they've proposed & carried out have failed. Why should we listen to them and trust them to fix things when all they've managed to accomplish to date is failure? If identifying the problems in the economy and fixing them was a test, these guys would've scored a big fat zero.

[The Kernel]

If the scientists who investigated the Columbia disaster had a 15% success rate in their analysis historically would you believe them?

You keep offering this false dilemma. Beating the stock market does not equate to understanding the causes of and suggesting ways to deal with a recession or declining monetary units.

Why the fuck not?

The stock market is a prediction market of the future performance of companies and industries. Why shouldn't these financial geniuses be able to beat simple market weighted investing if we are expected to believe that they can analyze cause and effect on the scale you suggest?

Given the fact it is better than random or a guess of an ameuter, yes I would. The shuttle has how many differant parts again?

Except it's not better, that's the whole point.

[K. A. Pital]

What's so different about the economic situation that all of a sudden the opinions of amateurs are as good as those of educated experts?

Because economics is a rather lousy science which deals with such a thing as "human society", and it's especially lousy when the number of factors in an economic prediction rises to a great number, which is the case with any modern industrial economy. Considering "renowned economists" offer "50% correct" predictions, or basically coinflip predictions, it's safe to say that if a coinflip "prediction" is tossed out at a serious level by "renowned" talking heads, an amateur can flip the coin likewise.

And no, education in economics does not mean you suddenly get a better grip on every economic factor that pushes the economy around, or get a better understanding of society. On the contrary, it may lead to false impression that all factors can be moved down to several (supply, demand, monetary mass volume, etc.) and others can be ignored. The end situation will be a dangerous focus on a few indicators and a total neglect of others, which can instead be trailed by 'amateurish' people.

Isn't that basically what happened? Everyone got so fucking happy about capitalization and profits that they forgot about some underlying indicators, and only a few people even cared about those (N. Roubini comes to mind as a person who actually tracked the unfolding crisis during it's inception and incubation phase via neglect indicators).

[Big Orange]

I doubt the Conservative Party will go back in power so easily, since they've indefinitely alienated Scotland, Wales, and Northern England with Maggie Thatcher's boneheaded policies of flushing the mines and manufacturing industries down the crapper. Mothballing mines that cost more to run than to exploit made sense, but many of them were permanently sealed off and flooded which was really quite insane, especially when British coal is of higher quality than imported coal and growing in importance as a resource after the Tories then New Labor squandered the natural gas and oil reserves.

And with Gordon Brown's silly economic policies at the moment and the rich/poor divide increasing within the first three years of the New Labor government, then that demonstrates they are really Tories wearing red. The racist BNP have gotten more popular in recent years due to them being surprisingly leftwing in economic thinking.

[The Guid]

The thing is the Tories don't NEED to be liked in the urban North of England, or Scotland, or Wales. All they need is to win the south and London soundly. They'll always do well in the countryside and if they can mix their messages enough so that they don't scare people off with their anti-outsider campaigns too much and assure people they won't lose their public services whilst telling them that they will get more money in their wallets then they can win it.

[Admiral Valdemar]

And no, education in economics does not mean you suddenly get a better grip on every economic factor that pushes the economy around, or get a better understanding of society. On the contrary, it may lead to false impression that all factors can be moved down to several (supply, demand, monetary mass volume, etc.) and others can be ignored. The end situation will be a dangerous focus on a few indicators and a total neglect of others, which can instead be trailed by 'amateurish' people.

That is exactly what happened. You'll notice that we're brushing up against physical world limits that are not factored into economic calculations. The assumption that energy will always be there, and only labour and money need be accounted for (and in some cases, only the latter) means economics is a piss poor description of the real-world in anything but abundant periods of resources. As I've talked about before, you could have the money from venture capital to dig the tar sands in Canada should you wish. It's just the laws of thermodynamics will get you. Physics trumps economics every time.

Even major businessmen aren't all that special. If you have one hundred people tossing coins long enough, sooner or later, one will get several heads in a row. We have seen many supposedly pro economists/businessmen make some truly godawful decisions and lose everything, meanwhile, a retard with a gimmick of an idea becomes a billionaire overnight because the sheeple like his random idea.

If there was a definite science to "success" (that is, making money, which is what we're all to believe is what classes you as successful), then do you really think everyone wouldn't just take that course and become an instant millionaire? Don't see it happening.

[Count Chocula]

A bit OT, but to bring up a point made earlier, gold is generally more stable than currencies, with a fairly predictable rate of supply based on mining activity. This is one reason, along with an atavistic desire to hold something bright, shiny and valuable, that gold prices tend generally to rise and supply generally to diminish during economic crises.

[Big Phil]

If the scientists who investigated the Columbia disaster had a 15% success rate in their analysis historically would you believe them?

You keep offering this false dilemma. Beating the stock market does not equate to understanding the causes of and suggesting ways to deal with a recession or declining monetary units.

Why the fuck not?

The stock market is a prediction market of the future performance of companies and industries. Why shouldn't these financial geniuses be able to beat simple market weighted investing if we are expected to believe that they can analyze cause and effect on the scale you suggest?

Short answer - do they do a better job than laypeople at predicting the market?

Slightly longer answer - I know that at this point financial experts have a well-deserved shitty reputation, but that being said, who else is qualified to offer reasons for the causes of and suggestions for dealing with the recession? I would still maintain that economists are in a better position to understand and make recommendations on the economy than you or I or most other laypeople.

[Darth Wong]

Arguing that because we don't know where the economy is heading, any random idiot on the street's opinion is just as valid, is silly. Should we also begin listening to celebrities, priests, or random idiots on the street to get possible solutions for climate change?

Climate change is far more of a science than economics ever will be. And in the case of economics, we do have some experts who saw this coming. The problem is that the so-called experts who didn't see this coming are still running around dispensing their wisdom as if nothing happened, and for some goddamned reason people are still listening to them!

Look, if you have a field of study where 80% of the people think A, and 20% of the people think B, and it turns out that B was correct, then you have to say "maybe I should stop listening to those 80% who kept insisting on A".

[Big Phil]

Arguing that because we don't know where the economy is heading, any random idiot on the street's opinion is just as valid, is silly. Should we also begin listening to celebrities, priests, or random idiots on the street to get possible solutions for climate change?

Climate change is far more of a science than economics ever will be. And in the case of economics, we do have some experts who saw this coming. The problem is that the so-called experts who didn't see this coming are still running around dispensing their wisdom as if nothing happened, and for some goddamned reason people are still listening to them!

Look, if you have a field of study where 80% of the people think A, and 20% of the people think B, and it turns out that B was correct, then you have to say "maybe I should stop listening to those 80% who kept insisting on A".

I did that (personally) months ago. As I've said before, while I hate to admit it, I listened to Valdemar's predictions about the current recession, did my own research, and made my own plans for it. As a result, my investments are as safe and secure as they can be and our family is living within our means.

I'm not suggesting that you go listen to Glenn Beck for financial advice - I'm simply saying that just because Glenn Beck was, is, and will always be wrong and a douchebag, doesn't mean that Joe the Plumber's (to use an extreme example) advice on the economy is now any better than it was before. And I will still pay more attention to Alan Greenspan (on the economy) than I will to Alan Colmes or Alan, my next door neighbor who's got a "foolproof plan to survive the 2nd Great Depression."

[K. A. Pital]

And I will still pay more attention to Alan Greenspan (on the economy)...

You didn't get the point, did you?

Greenspan miserably failed. He failed multiple times. He claimed that he doesn't have a fucking clue how the crisis relates to his oh-so-awesome policies and that he got "60%" right which is close to a fucking coinflip, and at that stage Joe the fucking Plumber could easily be in the right versus Greenspan.

The solution is not to "pay more attention to Alan Greenspan", but to pay more attention to smart people who correctly predicted the crash, and more than that, during the course of the crash, successfully predicted some of it's future side effects and analyzed past effects. Like, maybe, Nouriel Roubini whom I already mentioned. Not only is he an educated person, but he correctly induced the implications of the Greenspan doctrine and it's explosive end.

The solution is not to listen to people who failed miserably; but to those who were previously a minority and were successful in showing what most "experts" did not grasp at all - the dangerous situation with leverage, the culture of junk credit, the whole "risky toilet paper profit is good and solid business is boring" and "screw the regulators" mentality.

[Admiral Valdemar]

You'd do better to think the exact opposite of what Mr. Greenspan says. He feigns ignorance as to the causes of our current predicament, yet if he is at all intelligent, he knows damn well why we're where we are now.

In my job, the maximum failure rate is 4%, and even that is horribly high, so we avoid it. If four percent of the populace died from every drug, food additive and pesticide out there, we'd have a lot more to worry about.

[Big Orange]

The thing is the Tories don't NEED to be liked in the urban North of England, or Scotland, or Wales. All they need is to win the south and London soundly. They'll always do well in the countryside and if they can mix their messages enough so that they don't scare people off with their anti-outsider campaigns too much and assure people they won't lose their public services whilst telling them that they will get more money in their wallets then they can win it.

I'm voting Liberal Democrat next time, since the Tories and Labor had six decades of fucking up the country, but I'm convinced that the Conservative Party's promise of restoring the economy and adopting the softer aspects of the BNP's policies would get them voted.

And as for the economists, they've been heavily swayed by partisan pseudo intellectuals for the past three decades, so of course you've got otherwise very intelligent people brought on Rand believing in stupid things like economic castles in the sky built on funny money.