Is UK entering Japan's nightmare, too ?

UK pound sags to record lows on house price crash

London: The pound fell to a record low of 90 pence (Dh5.06) per euro after an industry report showed house prices extended declines in December as the recession battered Britain's economy.

The pound also dropped against the Swiss franc and the yen as traders bet the Bank of England will reduce its key interest rate by at least a quarter-percentage point to 1.75 per cent on January 8. The UK currency slid last week after the US Senate's rejection of a $14 billion rescue plan for automakers sent stocks tumbling as demand for riskier assets evaporated. Gulf News: Latest UAE news, Dubai news, Business, travel news, Dubai Gold rate, prayer time, cinema

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I think ..... UK is increasingly looking like South Korea of Asia, which suffer from declining its own currency. Value of South Korean WON per JPY is about halved from the previous year, but their exports have not been lifted up.

UK Stg Pound dropped by some 40% from last year, and Where the UK export is heading for?

About two years ago dear Mr. Brown (himself) put forth a major revision for the legal protection and promotion of creative [censored] artists work and other [censored] effeminate [censored] , in the hopes of shifting 7% of British income into the [censored] creative [censored] [censored] [censored] industries. As i'm sure most of you will appreciate, this has backfired horribly (when was the last time you bought British entertainment that wasn't GTA).

This was also followed with an overhaul of the university grant system (at least in Scotland) which saw not a few [censored] art degrees added where there weren't any, and a major shift in the non-imported student intake towards such [censored] activities.

The retention is something like 40%, and i'm sorry to say that this is mostly funded by government handouts and non-secured loans. We were already in debt by investing in a. a luxury industry and b. a non-competitive one that needed legislative isolation. The fact that, honestly, every other industry of any kind has atrophied to irrelevance doesn't help at all.

Sadly, Scotland was already heading towards the bad ole days of the immediately pre-union economy anyway, as major (justified) commercial investments in population centers (specifically Glasgow) and a few changes to the public transport system meant that already struggling satellites and commuter towns, with nothing to offer but franchises, the odd Abbey and borderline competent public transport, started collapsing.

A stark example of this are the neighbouring towns of Paisley and Renfrew, which with the opening of a single major shopping complex in the southwest of Glasgow near imploded, not helped by a major overhaul of the traffic system at the same time which made it very unpleasant to try and get anywhere near the worthwhile vendors. I understand the situation is being duplicated on the north east side of Glasgow, but without snafus in the road network. Housing crisis and all, there are now on both high streets massive(srsly, the three+ year vacated littlewoods is something like 30,000 square meters over two floors) boarded commercial facilities that will probably never see habitation again.

These two affect me personally, but there is pretty much a ceaseless tirade of ill advised or then-realistic optimism(Eurofighter contracts, Chinook & Merlin snafu, Mishandled nuclear fuel leaks, National databases/information leaks , NHS exhaustion etc etc etc), which is combining to something quite horrible, and to be frank will be made worse by people who realise it, cut and run(like me <.<).

Pretty much the only thing I see that could possibly save the UK as the UK, is intervention starting at Divine for preference and working down.

Another thought being seriously considered (as it always does when Scotland gets the raw deal out of anything) is wholesale separation, although it would probably be England that starts the proceedings this time round :|

Interest rates hit all-time low



The Bank of England has cut interest rates to 1.5%, the lowest level in its 315-year history, as it continues efforts to aid an economic recovery.
BBC NEWS | Business | Interest rates hit all-time low

The interest rates of Japan & USA are already ZERO/near ZERO.
Welcome to the ZERO % Club.

Yen Gains to Record Versus Pound on Concern Bank Losses to Rise

Yen Gains to Record Versus Pound on Concern Bank Losses to Rise

UK Stg has been declining against JPY.., as far as I know, marking historic low.

The British pound fell to a six-year low versus the dollar after the U.K. government said it would spend an extra 100 billion pounds ($142 billion) to support the nation's banks, a second lifeline in three months, and increase its stake in Royal Bank of Scotland Group Plc. The Australian and New Zealand dollars slumped against the yen as financial stocks led a decline in Asian shares.
Bloomberg - Are you a robot?

I suggest UK to join Euro. Otherwise, UK will fall into the hands of IMF.

I've been 2 years saving money to go to study Japanese y Japan.

When I started my "chronic saving program" one could buy 170 yens with an euro. Now one can only buy 120 yens with an euro.

So, my savings have become almost 30% lower JUST LIKE THAT!

So much effort for... having to do more effort. But I'll never give up.

I agree, it was time the UK switched to Euro. That currency has a much stronger economic back.
The West Lothian Question being raised, Im of the opinion that separation would work especially well if the EU could federalize at the same time. That would be some major economic and disciplinary win for all of us.

Derfel said:

I agree, it was time the UK switched to Euro. That currency has a much stronger economic back.

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Gordon Brown cannot do it now because he needs to have the power to print money. Spain and Greece's bonds ratings have gone down, which makes it difficult for them to raise money on the cheap.

EU's achilles heel is its lack of the central political body which governs the entire EU members. If UK adopts the Euro now, it would need to raise taxes and its economy would go down the tube.

Jim Rogers: ﾂ'UK has nothing to sell'

The pound is a currency with no underpinning and should fall against the dollar and the euro, says Jim Rogers, chairman of Rogers Holdings and co-founder of the Quantum Fund with George Soros.

He says his view reflects the UK's dire economic situation: ﾂ"It's simple, the UK has nothing to sell.ﾂ"

Mr Rogers says the two main pillars of support for sterling have been North Sea oil and the strength of the UK financial services sector, in particular, the City of London's role.

But Mr Rogers says just as North Sea oil is running out, so London's standing as a major financial centre is set to suffer.....
Subscribe to read | Financial Times

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This is exactly what I said here before.
UK newspaper said "JaPAIN" earlier last year, but now UK newspaper face "BriPAIN", which may be quite different from JaPAIN.

Astroboy said:

This is exactly what I said here before.

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No, you have not said this "exactly" in your previous posts (I don't recall your previous posts for that matter on this matter). Anyway, you are "banned" now. So, the rest of the members will carry on discussing without resorting to insult-filled posts.

The Bank of England reported yesterday that total personal debt has fallen for the first time since records began in 1993. Personal borrowing – personal loans, credit cards and mortgages – fell by a net £635m in July, leaving the total owed by individuals at £1.457 trillion, roughly equivalent to one year's GDP. Consumer credit fell by £200m. Despite record low interest rates, fears of redundancy and uncertainty about the future seem to have fed a new aversion to debt.
Rush to pay off debts threatens UK's recovery

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Britons are now rushing to repay their mortgages. It is very normal and resonable for the people, facing uncertainty of economy and negative asset values. But ... IF all Britons rush to repay at the same time ..... UK economy will be collapsed as national economy consists of "spending" or "investment".

After the bubble was burst in Japan some 20 years ago, japan's corporations & individuals rushed to repay their mortgages and tries to reduce leverage, and thus J-govenrment continued to spend money by selling J-bonds, resulting in a huge amount of government's debt. Otherwise Japan's economy must have shrink drastically.

Now UK is exactly following Japan's path, but I wonder how UK government will manage to get finance.

The UK's central bank can print money at will, if it chooses to do so (they can opt out of the exchange mechanism). I am not sure of Britons' saving habits are; but, if they are going to purchase the UK gov't IOUs (like the Japanese have been doing with their own), in theory, they should keep the liquidity in place to prevent the sudden economic collapse or turmoil.

JerseyBoy said:

The UK's central bank can print money at will, if it chooses to do so (they can opt out of the exchange mechanism). I am not sure of Britons' saving habits are; but, if they are going to purchase the UK gov't IOUs (like the Japanese have been doing with their own), in theory, they should keep the liquidity in place to prevent the sudden economic collapse or turmoil.

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Foreign ownership of UK government bond surpass 50% (as far as I know)., meaning UK government relies on foreigners (like Japanese or Chinese). IF Yield is not attractive, we are NOT interested in purchasing UK bonds.

This means UK interest rate will go up, resulting in collapse of UK economy as people in UK are already struggling with huge amounnt of debt.

Point is whether UK can afford to follow Japan's path or NOT. If not, future of UK is DARK.

The Bank of England may introduce negative interest rates for the first time in British history this week, economists said
Bank considers new measures to stop lenders hoarding

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UK is going beyond Japan's path.
Even in the midst of Japan's Lost Decade or more, Bank of Japan did not introduce Negative Interest Rate.

I think ... Bank of England is now more desperate because UK Banks are hesitant to lend money in UK despite nearly zero base rate.

Britons/UK corporations are NOT interested in borrowing money because everybody is now rushing to repay their mortgages to the banks.

Now, UK economists are realizing the meaning of Balance Sheet Recession and BriPAIN.

Sweden is already trying negaive interest rates. It is trying to make it hard for banks to hoard money and trying to promote more lending. It'll be interesting to see the results.

The Chinese have a saying, "May you live in interesting times." I think we're living in very interesting times. But I don't think it's a curse, I want to see how it all works out.

Dogen Z said:

Sweden is already trying negaive interest rates. It is trying to make it hard for banks to hoard money and trying to promote more lending. It'll be interesting to see the results.
The Chinese have a saying, "May you live in interesting times." I think we're living in very interesting times. But I don't think it's a curse, I want to see how it all works out.

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So true.

Modern economics does not work out anymore.

But Key is .... Japanese Lesson, always.

European Commission sees galloping UK debt crisis
Britain's public debt will explode to 180pc of GDP within a decade unless future governments take drastic measures to restore fiscal probity, according to a confidential study by the European Commission.

Debt anywhere near 180pc of GDP today would test the UK Gilt market to destruction. While Japan is still able to fund an even higher level of debt without paying exorbitant rates, it is does not depend on foreigners to cover the bond auctions.

http://www.telegraph.co.uk/finance/...Commission-sees-galloping-UK-debt-crisis.html

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That's why I said ..... UK is exactly following Japan's path and entering so-called "BriPAIN".

But maybe ... even following Japan's path is not Easy, I think.

Britain 'facing immediate risk of full-blown financial crisis'
Britain 'facing immediate risk of full-blown financial crisis'

Britain faces a 'clear and present danger' of a full-blown fiscal crisis, a City report warned yesterday. Analysts at investment bank Nomura cautioned that the public finances are 'plunging deeply into the red in a spectacular and frightening way', leaving the UK far more vulnerable than the United States. They said international markets could refuse to buy Government debt, warning the 'possibility of failed auctions is not trivial'.

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UK newspapers, typically FT/The Economist, were good at bashing Japanese financial risk for the past 10 years, telling J-Government's debts (Not National Debts) are reaching 200% GDP!!!, and they said Japan is struggling the worst recession for 2 decades, while UK is entering a new area of capitalism.

However, J-government bonds are always/easily sold in Japan as J-financial companies are willing to purchase as low risk assets, and resulting in the lowest interest rate in the world. No worry about unsold-bond....

Thus, I wish to hear opinion of Tokyo-based "Professional" correspondents of FT/The Economist/whatsoever WHY such a debt-laden Japan is still going all right, while UK, a world financial leader, need to face unsold-bond risk ??? UK was the most advanced financial country in the world, wasn't it?

In the meanwhile, I am personally interested in UK-bonds as far as they issue Samurai Bonds in JPY. Can they do ????

By the way, Japan has not been doing "all right." at all, as it has not been out of the woods yet (my hunch is it has set up a permanent camp right in the woods). All of G7 countries are basically passing the debt bucket to the next generation.

I like GBP. I can make good money in the forex by playing GBP JPN trade. Several hundred dollars worth of earning in a matter of less than 15 to 60 minutes by trading the amount worth around $2000 to $4000.

Gordon Brown has warned it would be "suicidal" to abandon measures aimed at stimulating the economy in the wake of figures showing Britain was in its worst recession for at least 50 years.
http://www.telegraph.co.uk/news/new...be-suicidal-to-abandon-economic-stimulus.html

Despite a huge amount of government's economic stimulus package, the stimulus does not work out in UK. This means government debt per GDP continues to grow. Unfortunately .... UK faces more difficult situation than Japan experienced some 10 years ago.

Commercial-property blues - Lenders' dilemma

But there is a bigger spectre stalking the commercial-property market, and one with dire consequences for the rest of the economy. A giant overhang of loans, many of them in the hands of two bailed-out British banks, needs refinancing—£35 billion next year alone, and up to £120 billion more by 2013. Few of the usual equity investors, such as real-estate investment trusts and private-equity funds, will come in at today's prices, given how little is on offer and how hard it is to get credit. So the banks are hanging on, able to do so only because low interest rates mean their funding cost is low. Meanwhile, other parts of the economy, especially cash-strapped firms, are being starved of the loans they need. Next year, things could get worse.

Commercial-property values in central London have fallen by as much as 50% since the financial crisis hit.

According to HSBC, a bank, some 85% of the bank debt extended since the start of 2004 and secured against commercial property in Britain has breached loan covenants (requiring a loan-to-value ratio of 75% or less) or debt-service requirements. On another measure, £40 billion is in negative equity—ie, the property is worth less than the outstanding loan.

Banks in this situation face a stark choice: foreclose on the loan and trigger a fire sale, or hang on in the hope that the market will improve. Most are hanging on, as the chart shows: outstanding property loans to British entities have stuck above £250 billion since the end of 2008.

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Lenders' dilemma

1. Global financial crisis followed by collapse of Lehman Bros
2. Global house price crash
3. Borrowers face negative equity problem
4. Lenders face toxic assets problem
5. Lenders' relutance to lend money to ordinary businesses
6. Shrinking economy
7. Cooling property buyers' mind
8. Commercial property price crash
9. Lenders face MORE toxic asset problem .... return to 5.

Exactly following Japan's nightmare.

UK economy faces decade of 'painful readjustment'
The UK economy faces a decade of "painful readjustment" as it refocuses from debt-led consumer spending to increased exports, a study has warned....
BBC News - UK economy faces decade of 'painful readjustment'

This is so-called 'Lost Decade', isn't it? as BBC often told 'Japan's Lost Decade'.
But I wonder What 'export' means.

Mortgage agreements 'halved in January'

The housing market was not too bright in early 2010, surveys say
The January downturn in the property market has been underlined by the latest figures from the Council of Mortgage Lenders (CML).
BBC News - Mortgage agreements 'halved in January'

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IF UK does not want to follow Japan's path, UK government must increase public spending as private spending on house is sharply declining. Increasing government debts ? Never mind as the result will remain unchanged.