UK Downgraded from LOL to LMAO

[elvizzzzzzz]

To any Scots under 40, my condolences and best wishes for your future.
I doubt you will get another chance in your lifetime.

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[protokol]

Here we go again...

http://www.reuters.com/article/us-britain-eu-s-p-idUSKCN0ZD2EM

Ratings agency Standard & Poor's stripped Britain of its last remaining top-notch credit rating on Monday, slashing it by two notches from AAA and warning more downgrades could follow after Britons voted to leave the European Union last week.

S&P said it was the first time it had chopped an AAA-rated sovereign credit rating by two notches in one go.

Some of the people in charge need to man up, invoke Article 50, and start giving some thought on some solid trading strategies. Markets hate uncertainty, and if this shit goes on for much longer then we could see a full-blown economic crisis IMHO. I didn't vote for Brexit, but now it's happened we need to move on quickly.

[protokol]

Sterling/dollar currently at 1.33, I think we could see some further drops in the coming days or next week.

After S&Ps downgrade, Moody's still rates UK at Aa1 (as it was when the OP was written), now with "negative outlook"

We shall see, Britain. Personally, I'm pessimistic about all this...

[anthonydar]

It's game over for the Pound Sterling.

Huge budget deficits, pyramid scheme housing market, mounting inflation, massive real unemployment, suppressed interest rates, financial repression.....

What said above can be applied to any major world economy. So there is no worry if everybody else is the same.

[The Sceptical Chymist]

Bitcoin is never going to replace the £.

Yes, and PC word processors would never replace typewriters, and email would never replace letters, digital cameras would never make film obsolete, online video would never kill off high-street video rental. Yes, very good that we have all those long-standing things still with us...

Erm...all of those things are with us.  I just wrote someone a letter the other day, with a fountain pen no less.  And I'm not joking.

[STT]

£ is backed by the requirement of a 2tn gdp nation with many people paying taxes in that currency, thats quite alot of demand.    Bitcoin is not replaceable for sterling in that way, its possible they issue too much sterling and dilute their demand.   2bn a year of tax is paid by foreigners who never enter the UK, due to the amount of trading done and many companies and commodities are nothing to do with EU just reliant on the UK legal system and other factors centred in London, etc

Ratings agency Standard & Poor's stripped Britain of its last remaining top-notch credit rating on Monday, slashing it by two notches from AAA and warning more downgrades could follow after Britons voted to leave the European Union last week.

S&P said it was the first time it had chopped an AAA-rated sovereign credit rating by two notches in one go.

The ratings agencies are partly political I think.  Paid by the main issuers of debt, their allegiance is to those bringing the most business and that will be USA and EU in future I think.   Especially the EU which is taking over the fiscal failures of its minor nations and issuing new debt via the ECB I think

S&P downgraded USA at one point and their CEO left abruptly afterwards, I presume it was no coincidence.    Either UK has a deficit it must reduce and run a surplus but has failed to do so, true before and after leaving EU.   Its not yet clear for either argument if leaving will make worse or better that ongoing situation  


EU downgraded

http://www.reuters.com/article/usa-bonds-eu-idUSL1N19M1S8

[groll]

It's game over for the Pound Sterling.

Huge budget deficits, pyramid scheme housing market, mounting inflation, massive real unemployment, suppressed interest rates, financial repression.....

http://www.telegraph.co.uk/news/politics/georgeosborne/9889605/George-Osborne-no-let-up-in-plan-to-cut-deficit-after-AAA-downgrade.html

Moody's said it had acted to downgrade Britain for the first time because of “continuing weakness in the UK's medium-term growth outlook”, the risk that the Government will fail to hit its targets for reducing the deficit and the UK's “high and rising debt burden”.

No government has the balls or the incentive to make the reforms necessary for a recovery. Their only plan is to stick with QE. To keep the plates spinning for just a little bit longer they'll keep the Bank of England pumping ever more worthless pounds into the economy.

http://www.telegraph.co.uk/finance/economics/9886554/QE-may-need-to-be-raised-by-175bn-says-BoEs-David-Miles.html

QE may need to be raised by £175bn, says BoE's David Miles
The Bank of England has a case for restarting its asset purchase programme, and may need to increase it by up to £175bn if the economy is running substantially below capacity, a senior policymaker has said.

Raising QE by £175bn would mean the Bankrupt of England controlling more than 40% of the entire government debt market. Any small bump in interest rates and the whole sorry mess will go straight down the toilet.

Be prepared! Dump your pounds and start stocking up on food, gold and bitcoins. I dread to think what the country would look like with petrol at £5 a litre.

There will be panic selling of pounds in the monetary market today. Its best not to keep the pounds in your bank accounts and convert it to dollars. THis crisis will play a major factor on a sudden change of monetary movement in the market. Will dollars go up or down or will bitcoins value will go up or down. Its hard to determine but lets just be prepared so prepare for the worst.

[davis196]

It's game over for the Pound Sterling.

Huge budget deficits, pyramid scheme housing market, mounting inflation, massive real unemployment, suppressed interest rates, financial repression.....

http://www.telegraph.co.uk/news/politics/georgeosborne/9889605/George-Osborne-no-let-up-in-plan-to-cut-deficit-after-AAA-downgrade.html

Moody's said it had acted to downgrade Britain for the first time because of “continuing weakness in the UK's medium-term growth outlook”, the risk that the Government will fail to hit its targets for reducing the deficit and the UK's “high and rising debt burden”.

No government has the balls or the incentive to make the reforms necessary for a recovery. Their only plan is to stick with QE. To keep the plates spinning for just a little bit longer they'll keep the Bank of England pumping ever more worthless pounds into the economy.

http://www.telegraph.co.uk/finance/economics/9886554/QE-may-need-to-be-raised-by-175bn-says-BoEs-David-Miles.html

QE may need to be raised by £175bn, says BoE's David Miles
The Bank of England has a case for restarting its asset purchase programme, and may need to increase it by up to £175bn if the economy is running substantially below capacity, a senior policymaker has said.

Raising QE by £175bn would mean the Bankrupt of England controlling more than 40% of the entire government debt market. Any small bump in interest rates and the whole sorry mess will go straight down the toilet.

Be prepared! Dump your pounds and start stocking up on food, gold and bitcoins. I dread to think what the country would look like with petrol at £5 a litre.

I think that the british pound is too expensive.If it gets cheaper, the british export should rise.

Anyway the unsecurity around brexit will cause damage over the UK economy.

[molecular]

Bitcoin is never going to replace the £.

Yes, and PC word processors would never replace typewriters, and email would never replace letters, digital cameras would never make film obsolete, online video would never kill off high-street video rental. Yes, very good that we have all those long-standing things still with us...

Erm...all of those things are with us.  I just wrote someone a letter the other day, with a fountain pen no less.  And I'm not joking.

Yes, those things are still with us. But if you tell someone that you used one of them, you have to ascertain you're not joking because using those things has come to be viewed as slightly ridiculous and a bit backwards. Nostalgia.

So maybe at some point in the future we will remember the good old times and (pretend to) pay something with good old paper money?

[protokol]

GBP/USD now at 1.30 

Luckily what little wealth I have is in bitcoin...

[protokol]

£ is backed by the requirement of a 2tn gdp nation with many people paying taxes in that currency, thats quite alot of demand.    Bitcoin is not replaceable for sterling in that way, its possible they issue too much sterling and dilute their demand.   2bn a year of tax is paid by foreigners who never enter the UK, due to the amount of trading done and many companies and commodities are nothing to do with EU just reliant on the UK legal system and other factors centred in London, etc

Ratings agency Standard & Poor's stripped Britain of its last remaining top-notch credit rating on Monday, slashing it by two notches from AAA and warning more downgrades could follow after Britons voted to leave the European Union last week.

S&P said it was the first time it had chopped an AAA-rated sovereign credit rating by two notches in one go.

The ratings agencies are partly political I think.  Paid by the main issuers of debt, their allegiance is to those bringing the most business and that will be USA and EU in future I think.   Especially the EU which is taking over the fiscal failures of its minor nations and issuing new debt via the ECB I think

S&P downgraded USA at one point and their CEO left abruptly afterwards, I presume it was no coincidence.    Either UK has a deficit it must reduce and run a surplus but has failed to do so, true before and after leaving EU.   Its not yet clear for either argument if leaving will make worse or better that ongoing situation  


EU downgraded

http://www.reuters.com/article/usa-bonds-eu-idUSL1N19M1S8

You make some good points. However I don't think that bitcoin is going to replace any sovereign currency any time soon, I'm just commenting on the weakening of the pound and subsequently the UK economy.

I think many companies will move their operations offshore in the coming months, and the £2tn gdp will drop. Especially financial companies, London may cease to be such a strong financial hub IMO.

Regarding the politicised nature of the ratings agencies, yes they have their ulterior motives, but after the circus of 2008 they are under a lot more scrutiny.

I'm saying it now, I think this could be really bad.

[kik1977]

Bitcoin has flaws... in your world the price of Bitcoin would keep inflating until only one currency remained (BTC), nobody would spend any money for fear of its value growing the following week! Why buy a car this week if its cheaper next week?

Your argument has flaws as well.

Why buy a computer today when you know that the same computer will be cheaper in a few months?
Why buy a nice camera today when you know that the same camera will be cheaper in a few months?
Why buy a TV today when you know that the same TV will be cheaper in a few months?
Why buy a smartphone today when you know that the same smartphone will be cheaper in a few months?

Especially in electronics, things get cheaper (and better) pretty soon. It doesn't appear to me that people don't buy them because they will be cheaper (and better) tomorrow.

[mrhelpful]

It's game over for the Pound Sterling.

Huge budget deficits, pyramid scheme housing market, mounting inflation, massive real unemployment, suppressed interest rates, financial repression.....

What said above can be applied to any major world economy. So there is no worry if everybody else is the same.

Its not the same.

If you are aware the countries that are less developed or dont create many import/exports are the ones who get way harder then the known countries of the world.

Its why places like greece, go in a frenzy way harder.

[protokol]

GBP/USD just hit 1.28 

I was seriously thinking about shorting the pound before the Brexit vote, but tbh I was very surprised at the outcome, didn't think it would happen. Kicking myself now, could have made £1000s with just a small deposit with a CFD broker.

[protokol]

UK politics is in turmoil, it's a fucking circus. People resigning left right and centre (no political pun intended), and no plans whatsoever. Chilcot report throwing a spanner in the works...

I predict <1.20 before the end of the month. UK imports way more than it exports, a weakening currency is bad.

Keep your eye on the FTSE 250, not the FTSE 100. And obviously GBP/USD.

[anthonydar]

UK politics is in turmoil, it's a fucking circus. People resigning left right and centre (no political pun intended), and no plans whatsoever. Chilcot report throwing a spanner in the works...

I predict <1.20 before the end of the month. UK imports way more than it exports, a weakening currency is bad.

Keep your eye on the FTSE 250, not the FTSE 100. And obviously GBP/USD.

The Pound price is about 1.3 now. but it will drop below 1.2 by the end of the year. The PEOPLE are destroying Britain.

[STT]

I predict <1.20 before the end of the month. UK imports way more than it exports, a weakening currency is bad.

Keep your eye on the FTSE 250, not the FTSE 100. And obviously GBP/USD.

Uk has a trade deficit and a fiscal deficit but we should find out how much that is in comparison before assuming Euro and Dollar are now far stronger.   EU obviously has problems with the fallout of failing nations and correcting debt and lack of production there.    The point with a floating exchange rate is that it is making the export producers 10% more competitive since currency fell, especially if all their costs are based in UK.    EU and others are now in competition with a cheaper source of labour among a few other factors, Im not stating this as a positive for people of UK but the business itself is far more able to undercut prices of its foreign rivals then previously

FT250  is way more UK based.   Its also possible the index will see rising prices of exporters in demand as they see more orders at their new prices, it definitely shakes things up.    When the Sterling rate to Dollar fell from 2 back in 2008 I remember reading a clothes producer saying they were now rushed off their feet by new demand for UK production, its a very great effect to them when trying to match prices from China, Pakistan and obviously USA and EU.   They were able to win more business, contracts exceeded their ability to produce over that entire year now they had a queue of customers willing to wait for their demand to be met.   With a strong order book, the business was more secure and able to finance itself and even expand with the solid support from its clients orders waiting.
 Just that natural effect meant that as a producer of clothing, their business was better off as they were able to adapt.  I dont know every business will thrive but Im certain some will.   The owner and workers were better off and more people were employed to meet that adjusted demand from global imports to more local production.  

   My point really is that we dont know how things will unfold, I imagine longer term this makes exploring for oil in North sea now more attractive as we again have to pay more for imported production and transportation of oil.  Of course they will struggle to make it as cheaply as the Arab nations can but the balance is never fixed.   We cant know UK is doomed to a negative result on all counts, its just not that simple

[anthonydar]

I predict <1.20 before the end of the month. UK imports way more than it exports, a weakening currency is bad.

Keep your eye on the FTSE 250, not the FTSE 100. And obviously GBP/USD.

FTSE 250 is mainly domestic companies. They will be more affected by the Brexit. The FTSE100 is mainly based outside UK.

[STT]

Some of the FT100 are UK companies but still global rather then domestic obviously to their size that is a bias in the index.  BP for example is not largely a UK company, yes it has big operations in UK but as we know the UK is not a very big oil producer.  BP is mostly a USA or even Russia revenue driven company as they have operated massive oil fields there where as the UK oil is in decline for a decade or more now.   BP is the official supplier of energy to the USA military forces worldwide, also due to a number of mergers its not UK owned in majority

Anyhow cable  has been rising recently due to government changes and some movement forward in the situation.  I'd expect it to be weak overall still so long as we are below 1.34 Im not optimistic overall