UK faces run on pound starting 1am BST Friday

Discussion in 'Politics' started by Jason, May 4, 2010.

  1. Jason

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    The story was reported in The Guardian on Sunday, and their report remains one of the most easy to read:

    UK faces run on pound within hours of polling as futures exchange opens early | Business | The Guardian

    The London Futures Exchange will be opening 1am Friday morning because global trading is likely to be frantic.

    Right now lots of senior people are trying to calm the markets by saying it isn't as bad as all that. They have to say it - for anyone senior to say we are looking over the edge of a cliff is not responsible. But the reality is that for the first time ever the London Futures Exchange is going to open at 1am (it is usually 8am) to handle a possible sterling crisis.

    By 1am we will have exit polls (which have been known to be wrong but are usually pretty accurate). We will also have the first real results (though mainly in inner-city areas where there is a massive Labour majority, not great for predictions). The markets will be trading on these predictions. And as the key results come in during the early hours the markets will trade on the growing certainty of the result.

    If we have a true hung parliament the markets are very likely to react very badly indeed. Personally I doubt it will all be in trading early Friday morning - rather the storm will happen in the weeks following as the politicians haggle for a government and try to get a Queen's speech through. In this circumstance Brown and Darling handle the sterling crisis.

    We may have a technical hung parliament where the Conservatives are technically under a majority but are supported by DUP (and by SF not taking up seats). Cameron was campaigning in Northern Ireland today - I think the first time for very many years (or even ever) a leader of the opposition has campaigned in Northern Ireland. We might just calm the markets with this outcome. But it really does seem that Northern Ireland might hold the key for this election. The Northern Ireland results probably won't be in until late Friday afternoon.

    Of course we really need a sensible majority for the Conservatives to make the markets happy and make us happy.

    The key development is that for the first time ever we have the London Futures Exchange open through the night, because for the first time ever we expect the election result to cause immediate sterling instability.

    If we are truly hung in this election the most likely scenario is that we have a sterling crisis, ratings agencies' downgrade and subsequent need for IMF support. Basically we do a Greece.
     
  2. dandelion

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    Im reminded of the millenium bug scare. Remember how the world ended because every computer crashed when the date changed to 2000?

    I must admit though, that there must be some concernt that a conservative block with a bare majority may attempt to ram through all sorts of measures and fail dismally. There has been no buildup to suggest any cuts are coming. They would likely have the support of barely 25% of the population. All in all, bad news.

    I notice even labour are coming round to the idea that people should vote tactically to keep out conservatives.

    Its interesting how views do change during a campaign. When this one started I didnt hold particular views on Brown or Cameron as leaders of a new government. By now this has changed. Brown has come across as a bit of bruiser perhaps, but thats no bad thing in a leader who must make tough decisions. He also has a track knowledge of making the right decisions and demonstrates good knowledge on the economy. Cameron, on the other hand, looks more like a spin merchant every time I see him.

    But apart han that, the overriding issue of this election is to reform the electoral system. This stuff about hung parliaments is the utterest stupidity. There are examples all round the world of bad majority governments and good coalition ones. What we desperately need at a time like this is precisely a coaliton government which can command a big wedge of popular support and present a united front on the economy. The only realistic way we can get this is a hung parliament where lib and lab work together--

    By the way, there was a program discussing electoral reform just recently. They reckoned that due to the perversity of the electoral system, depending where you live one persons vote may be 3000x more important than anothers somewhere else in the country. Your seriously telling me that is fair?
     
    #2 dandelion, May 4, 2010
    Last edited: May 4, 2010
  3. D_Cock_Hudson

    D_Cock_Hudson New Member

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    Don't believe the Tory hype to try to scare you into voting for them. I was very disappointed in Ken Clarke when he raised this a couple of weeks ago.
     
  4. CumSwallower

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    So here we go again- the money grabbers in the futures markets are using the possible election result to make even more money for themselves. If it really were the case that the election result might impact on the markets, it would be more reasonable to close the markets at the end of business on Thursday until Monday when the ACTUAL result iwould be known. However, as the article points out:

    "Euronext Liffe, which runs the gilts futures exchange, said it was the first time technology had allowed the market to open early. A spokesman for Liffe said traders would also be allowed to bet on a collapse in sterling, which the shadow chancellor, George Osborne, has warned is likely if the outcome of the election is a hung parliament.
    Hundreds of millions of pounds could be won or lost during Friday morning as bond traders and foreign exchange dealers attempt to second guess the election."

    So it's not about a hung parliament, it's about giving traders the chance to make more millions gambling (playing games) on their computers at the £'s expense. Indeed they would play the same game if a Conservative or Labour or Liberal overall majority were predicted. If ever there was a case for tighter control and regulation of these people and there gambling habits, this would considerably add to it.

    Why is a hung Parliament such a bad thing? Germany, New Zealand and many other countries function perfectly well with no party having an overall majority, and without talk of their currency collapsing in the light of the election result.
     
  5. Drifterwood

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    Just sit it out. The important positions were taken months and months ago.
     
  6. Jason

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    That comment may even rank as profound.
     
  7. B_crackoff

    B_crackoff New Member

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    I sold the Ftse in wedges @ 5400,5500,5600,5700,& 5800. I'm nicely in the money - the stock market recovery is so bogus.

    The Ftse is now sitting on its 200 MA line. If it goes through it for a couple of days, the drops will continue. Or it will rebound from this point, though I'd just use that as an opportunity to sell again.

    Payouts from BP, the airlines, the insurers, let alone what will happen to commercial property & retail should force it all a lot lower(eventually)

    Buy gold - physical & bullion held in 3rd party vaults. I got in @ $700. Any currency devaluation, which is a certainty anyway unless interest rates are raised or massive spending cuts are implemented to avoid a debt downgrade, will be offset by gold, which always has a universal market.

    FOCUS: Currency Traders Brace For UK Election Result - WSJ.com

    BTW - currency traders are factoring political & economic risk. I would hope that any manufacturer or importer is opening a lot of forward contracts on other currencies, otherwise they pretty much deserve to go tits up; this is all forseeable. It's a clear threat to their business.

    Any Government that doesn't have enough votes to enforce the measures required is going to see sterling devalued.

    We'll see just how much of a strutting, preening peacock Clegg is after the election I guess.
     
  8. B_crackoff

    B_crackoff New Member

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    More than when he was chancellor.:tongue::smile:
     
  9. Drifterwood

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    Weren't we already devalued 25% in the last 18 months? Isn't this enough?

    Not many people seem to have said anything about this.
     
  10. Joll

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    Can't be arsed with anymore drama anyway - ppl just need to keep their heads.
     
  11. B_crackoff

    B_crackoff New Member

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    30 months, & no, it wasn't a devaluation, it was a reflection on the weakness of the domestic economy & debt.

    You must have noticed that even though they were laughably scared of deflation, prices were rising in shops. A, because imports cost more through a weaker currency, & B, because food products like milk, which we produce (price has doubled) now attracted a higher price internationally.

    Whilst the debt downgrade has already been priced in to an extent, there will still be a panic if no clear united vision assures investors that the UK is a safe place to invest - which will lead to far higher interest rates.

    People think that the UK won't riot & strike. I'm pretty certain they will.

    We've had a generation of people who've never known anything other than prosperity, & have an enormous sense of entitlement.

    They're going to be pissed.
     
  12. Jason

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    Right now there is a failure to believe there is a problem. Or if there is a problem it is someone else's problem: the politicians, the bankers, the rich We have had minimal real debate on the economy in this election campaign, because a party that tells the truth would have no chance of a win. Crazy!

    This election is one which can really change the future of every one of usin the UK. Betfair are predicting the following chances:
    Con majority 38%
    Lab majority 2%
    Hung 60%
    (Lib Dem majority scarcely registers).
    In effect the choice at this election is between Con or hung.

    A Con majority gives us a reasonable shot of a decent financial future. A hung parliament almost guarantees catastrophe. Maybe there is a grey area around a parliament which is technically hung, ie Con minority gov.
     
  13. dandelion

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    Just now someone was discussing this (surprise, surprise). They suggested that labour would be likely to try to form a coalition, whereas a conservative party just short of a majority would be likely to try to bluff it out, leading to another election in 6 months.

    In other words, the conservatives are the party of division, which is absolutely what we do not want now. We need a coalition. Even if they managed a small majority, the party will still tear itself apart in government. Massive cuts need total agreement or a big enough majority to paper over those who refuse to agree. They simply arent going to get it, so better for the country they get clearly defeated.

    I think Id go further. Even if the parties put up a united front, it must be questionable whether the population wil credit anything they say. We have had a total fiasco of MPs behaviour in the last parliament which has affected the reputations of all MPs equally. Now if MPs turn around and say , sorry, we lied all the way through the campaign, well, why should anyone believe anything they say needs to be done. If the conservatives insist on going it alone in such circumstances, boy will people be getting upset. Fat cat rich people telling everyone they have to take cuts? The conservatives just wont be able to do it. There may be some personal satisfaction in seeing the first british government physically destroyed and driven from office by national hatred, but I dont think it will help in the long run.
     
    #13 dandelion, May 5, 2010
    Last edited: May 5, 2010
  14. Jason

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    A Lib-Lab pact is clearly a possibility. But it is soo messy. Does it keep Gordon Brown in Downing Street? Or do the Lib Dems demand a change of Labour leader? How quickly could this be done? And what would the people of the UK think of a situation where within a few days of the election we have an unelected PM (yes I understand we elect MPs not a PM, but after a campaign where the media and parties have focused on the three leaders this would be hard to stomach). Or would Lib Dem really try to force through Clegg as PM? And does anyone really think a Lib-Lab pact would stand up to the buffets of politics? Lab is about to have an internal civil war. And Lib don't actually like Lab.

    A Con minority govt is certainly not ideal. I think support from the Ulster Unionists could be reasonably firm. I think Con could have a sensible discussion with SNP and PC. And for that matter Con could talk with Lib. It may be that Con could get bills through with support from just one of these three groups, which would be much stronger than 100% dependence on one group. There's also a sense that Lab MPs may suffer from low morale and low attendance.

    I suspect we are looking at an endgame where the future of Britain is decided not by voting but by the markets. We are seeing right now what is happening in Greece. Now of course there are differences, but our defecit is as big. If we are stupid enough to vote for the new political party Hung then we are stuffed.
     
  15. dandelion

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    This idea of elected prime ministers is another peculiar recent conservative invention. If they think the prime minister ought to be elected, then they should damn well propose an elected Pm with 4 years term, new
    elections if he resigns, dies, whatever. If the PM is to be the spokesman of whatever group of MPs comes together and forms a majority, which is what he has been for the last few hundred years, then all this stuff about having elections if pm changes is sheerest hypocrisy. Incidentally, what do you reckon that if this had been a national election for PM, Clegg would have won. Thats what the polls all say. Historically, there is precedent for party leaders taking a back seat and not taking the post of PM. Its a matter of who is the best leader of the coalition, if thats what we get.

    I think our best chance comes with the maximum number of liberals to balance up physical presence in the commons (rather than moral authority). So basically, that means fewer cons and fewer lab. If I had my way I would adopt the Scottish model. Either Brown or Cameron as PM, but issues decided case by case by agreement and debate. Sure, MPs could cause chaos in the commons, but they could also behave sensibly. I am not impressed by MPs who behave like spoilt children refusing to share their toys. A party with 1 vote short of a commons majority (or even 1 vote over) has NO right to occupy all the ministerial positions, not when it has the support of only a small minority of the population.

    And you still dont think the sytem needs changing?

    The greeks are rioting because they have been lied to by politicians for decades. Doesnt that suggest to you we might have a problem here? At every election throughout my life the electorate and MPS have moved steadily further apart. MPs lie as a matter of course in order to get elected. People distrust them because although the minority may believe the lies and this is enough people for a party to win, the majority see through this. This cannot go on. The conservatives are playing Canute.

    If we are stupid enough to vote for what brought us to this position then we are stuffed. And it wasnt brown.
     
  16. justasimpleguy

    justasimpleguy Active Member

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    Same old same old. Try and scare the shit out of everyone so they'll vote conservative. This bullshit is older than sin.
     
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