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[roblin]

anyone else get the feeling that someone in power has said "do something about the situation" to BoT and that BoT is just fumbling in the dark afraid of getting fired.

[topfield]

sonicdragon, on 2007-03-27 14:34:44, said:

Dr. Naam, on 2007-03-27 14:19:22, said:

"The Sterling Area was a good example of that. As the UK's economic problems mounted, it became inevitable that the pegs would have to go. unofficial markets in currencies began, and money changers prospered. There were no behemoth hedge funds to jump on board in those days, so the process took longer, but in the end the result was the same."

OOPS Dragon! i think you forgot George Soros. in fact it was George and his Quantum fund who gave Sterling the coup de grâce down in summer 1992 and made a killing.

quote:

Soros' Quantum Fund, then and now managed by Stanley Druckenmiller, stepped into this crisis environment to bet against the Italian lire and then the British pound. Indeed, the British position seemed so untenable, Soros "coached" Druckenmiller to leverage an enormous bet of $10 billion. Even as the British government announced a 2% rate hike, Soros kept selling sterling.

By evening of that day, the British were forced to rescind the rate increase and withdraw the pound from the ERM altogether. Sterling immediately plunged relative to the mark, and Soros' hedge fund walked away with more than $1 billion in profits. As the financial writer Adam Smith would later say, "It was the coup of a generation."

p.s. i made a killing too by shorting GBP. not based on speculating but solely to protect my GBP-investment which at that time amounted to more than 25% of my total holdings.

No, I didn't forget. It's just not relevent to the dismantling of the Sterling Area - it happened in 1972.

It does, however, reinforce what I said about pegged exchange rates.

Correct the Sterling Area about which I have not even thought for 20 years and George Soros are different matters.
My recollection was that it was a wonderful institution . It opened the monetary prison doors for us  in the UK where a fifty pound annual allowance was our only escape to monetary and even personal freedom.

We could not afford to visit the Americas nor most of Continental Europe but most of Asia, Africa  and Australasia was open to us. Even in Europe the Scandinavian countries were open to us as they were included in the Sterling Area.

Remember in the early 60's the man fined his lwhole ife savings for "arranging" a wedding gift to his daughter in Israel ? By the late 60's the same man could send what he liked to his daughter as long as a East Jerusalem bank was used !!
Since no info forthcoming on Singapore's role in the sterling area first mentioned by sonic I will try to find a book on the history of the Area.
In the meanwhile I paste an interesting article on the area which was considered a part of the British Financial Empire ..something that had not even occured to me at the time !
................................................................................
......................................................................
The dream of Britain as a global power also included the ‘invisible empire’ of the Sterling Area, to which Britain chose to play the banker. This was despite the fact that her reserves of gold and dollars were well known in Whitehall to be far too scanty for this role. By the end of 1947, the American dollar loan had already been largely spent, but the gulf still remained between the cost of Britain’s self-inflicted global commitments and her inadequate earnings from exports. Without another huge dollar handout, Britain would have to give up all her global strategic commitments, as well as her role as the banker to the Sterling Area, and accept that she was now only a second-class power.
................................................................................
.........................................................................

[topfield]

Dr. Naam, on 2007-03-27 14:19:22, said:

"The Sterling Area was a good example of that. As the UK's economic problems mounted, it became inevitable that the pegs would have to go. unofficial markets in currencies began, and money changers prospered. There were no behemoth hedge funds to jump on board in those days, so the process took longer, but in the end the result was the same."

OOPS Dragon! i think you forgot George Soros. in fact it was George and his Quantum fund who gave Sterling the coup de grâce down in summer 1992 and made a killing.

quote:

Soros' Quantum Fund, then and now managed by Stanley Druckenmiller, stepped into this crisis environment to bet against the Italian lire and then the British pound. Indeed, the British position seemed so untenable, Soros "coached" Druckenmiller to leverage an enormous bet of $10 billion. Even as the British government announced a 2% rate hike, Soros kept selling sterling.

By evening of that day, the British were forced to rescind the rate increase and withdraw the pound from the ERM altogether. Sterling immediately plunged relative to the mark, and Soros' hedge fund walked away with more than $1 billion in profits. As the financial writer Adam Smith would later say, "It was the coup of a generation."

p.s. i made a killing too by shorting GBP. not based on speculating but solely to protect my GBP-investment which at that time amounted to more than 25% of my total holdings.

.................
Dear Dr Naam,
I am sure you will disagree violently but the blame for the 1992 Black Wednesday debacle was and is still placed firmly and squarely on the shoulders of the Bundesdank.

Had support been forthcoming ...and remember the DM /Sterling peg at 2.90 was what it was all about , the pound would have survived intact. John Major to this very day believes that it was hostilty towards Britain that prevented any help. When the French Franc came under pressure the Bundesbank gladly assisted. The BOE received not a pfennig of help. Indeed frantic calls by John Major were not even answered !

Edited by topfield, 2007-03-27 15:39:53.

[chiang mai]

Well it looks like that's the answer Topfield, the reason the Baht was strengthening was because the Thai banks decided to get in on the onshore/offshore game and sell Baht to make a profit. How ironic and how typical - even though the country's exporters, the banks customers, are starting to feel pain the banks pile in on the other side out of sheer greed and make the pain even worse.

[ovenman]

I notice that the Bloomberg television channel is now listing the "Offshore" and the "Thailand" rates for the baht separately on their continuous currency crawl.  When did they start that?

[sonicdragon]

topfield, on 2007-03-27 15:33:56, said:

Dear Dr Naam,
I am sure you will disagree violently but the blame for the 1992 Black Wednesday debacle was and is still placed firmly and squarely on the shoulders of the Bundesdank.

Had support been forthcoming ...and remember the DM /Sterling peg at 2.90 was what it was all about , the pound would have survived intact. John Major to this very day believes that it was hostilty towards Britain that prevented any help. When the French Franc came under pressure the Bundesbank gladly assisted. The BOE received not a pfennig of help. Indeed frantic calls by John Major were not even answered !

Steady on there ! Maybe John Major does believe it to be the Bundesbank's fault, but then he wouldn't want to take the blame for entering the UK into a flawed system, would he ? It was he, then as chancellor, and Douglas Hurd the Home Secretary who pressured Mrs Thatcher to join, when the UK economy was in a very weak position. Many eminent economists of the time, in parcular Sir Alan Walters, argued strongly against joining partly on the grounds that it would weaken the economy even further.

[chiang mai]

bendix, on 2007-03-27 10:24:55, said:

Toppy . . . you really do get off on this stuff, don't you?

Do you have any other interests?   Try origami.  I hear it's very relaxing.

Maybe you're the one that should try origami given that your major interest seems to be significantly less constructive than Topfield's, posting unhelpful comments about the poster rather than contributing to the posters subject. Or maybe you simply can't contribute in which case you may wish to try to learn.

Edited by chiang mai, 2007-03-27 18:36:46.

[topfield]

sonicdragon, on 2007-03-27 17:49:23, said:

topfield, on 2007-03-27 15:33:56, said:

Dear Dr Naam,
I am sure you will disagree violently but the blame for the 1992 Black Wednesday debacle was and is still placed firmly and squarely on the shoulders of the Bundesdank.

Had support been forthcoming ...and remember the DM /Sterling peg at 2.90 was what it was all about , the pound would have survived intact. John Major to this very day believes that it was hostilty towards Britain that prevented any help. When the French Franc came under pressure the Bundesbank gladly assisted. The BOE received not a pfennig of help. Indeed frantic calls by John Major were not even answered !

Steady on there ! Maybe John Major does believe it to be the Bundesbank's fault, but then he wouldn't want to take the blame for entering the UK into a flawed system, would he ? It was he, then as chancellor, and Douglas Hurd the Home Secretary who pressured Mrs Thatcher to join, when the UK economy was in a very weak position. Many eminent economists of the time, in parcular Sir Alan Walters, argued strongly against joining partly on the grounds that it would weaken the economy even further.

OK EVEN IF I accept your argument it was not the Bundesbank to blame for refusing to help Britain out in her need, the weak financial position of the UK was ,if my memory serves me right,  not ever mentioned as the cause....Economists believe it was that the rate pegged  at 2.90 to the DM was too high.
Had 2.60 been chosen for the ERM then many believe the fiasco would not have occured . Had 2.50 have been chosen most believe it would never have happened. In order for us to join the ERM a precursor to the Euro a rate HAD to be chosen  under the rules.

Edited by topfield, 2007-03-27 18:19:12.

[sonicdragon]

From what I recall, labour and the lib-dems did their best to highlight the weak economy as a major factor. But they were themselves in disarray at the time, so maybe they didn't make the most of it ? Certainly the conservatives economic management was discredited, but to blame it all on the level of the pound in the ERM doesn't make any sense. Yes, you are right that there was a lot of debate about the best rate for the pound to enter the ERM, and at 2.60 the consequences would have been different, but there are so many other variables to consider - for instance a pound fixed 10% weaker would have added to the already significant inflationary pressures (which, I might add, were in large part caused by the tories fooling with artificially low interest in the 80's to try to manage the currency).  Also, we should remember that, after exiting the ERM the UK experienced singificantly better economic performance than the ERM-block and the exchange rate rallied to 3.20 to the DM.

[soundman]

chiang mai, on 2007-03-27 18:16:38, said:

bendix, on 2007-03-27 10:24:55, said:

Toppy . . . you really do get off on this stuff, don't you?

Do you have any other interests? Try origami. I hear it's very relaxing.

Maybe you're the one that should try origami given that your major interest seems to be significantly less constructive than Topfield's, posting unhelpful comments about the poster rather than contributing to the posters subject. Or maybe you simply can't contribute in which case you may wish to try to learn.

There are some instances when a bit of light banter in a posted topic is, how shall i say, - uplifting...

This is one of them...

Mr Bendix has plenty of useful info. on a wide range of topics. You don't have to be serious all the time, do you??


Soundman.

[sonicdragon]

Nothing wrong with a bit of light banter IMHO - economics can get far too serious. After all, it is the "dismal science"

[topfield]

sonicdragon, on 2007-03-27 20:04:25, said:

Nothing wrong with a bit of light banter IMHO - economics can get far too serious. After all, it is the "dismal science"

I humbly disagree ..the above  posting was shere nastiness and vilification as chiangmai noted.

Was this recent posting of his more informative.....it is  indeed humerous  ?
"I'd also advise all pastry investors to go short on Bakewell Tarts, and long on Apple Strudel"

His dry humour resulted in this last week from a member called the Skipper :

...and maybe you (Bendix) should stop wasting bandwidth and stick to posting when you have somthing worthwhile to contribute. Agreed?

Another of his  personalised postings last week :

My concern is about the baht. It's about wondering what on earth poor old Topfield is going to do with himself when this all blows over.

Why personalise ?

[sonicdragon]

Yes, you are right. I reviewed the posts in question, and I agree there is no need for that. I wasn't paying enough attention (since there weren't directed at me). It is I who should be humble.

[sonicdragon]

But continuing on the subject of the ERM, I didn't find it surprising, or out of place, for Germany to support France - they were politically very close - being the backbone of the EU, you might even say. For the Franc to exit the ERM in a similar fashion to the pound must have been unthinkable. I'm sure no such thinking prevailed when Major and Lamont asked for help - and why should it ? The UK was hardly fully committed to europe at the time.

[gummy]

I know you guys must think the ERM etc is interesting to talk about, but as I am a very old fart who has not lived in Europe for 20 years, and yes it may be me loosing my memory, but could any of you enlighten me as to which one of the EU countries adopted the Thai baht as it's currency which is what this topic is about ?

[sonicdragon]

gummy, on 2007-03-27 21:45:44, said:

I know you guys must think the ERM etc is interesting to talk about, but as I am a very old fart who has not lived in Europe for 20 years, and yes it may be me loosing my memory, but could any of you enlighten me as to which one of the EU countries adopted the Thai baht as it's currency which is what this topic is about ?

This thread was started by topfield, who has engaged in the ERM discussion actively, so I don't think you should really be complaining.  Anyway, the ERM is relevent to the thai baht because very frequently people on this and other forums and in the thai media talk about pegging the thai baht to the US$;  The experience of the UK in the ERM is a perfect example of why countries should not peg their currencies, or rather why there are only very limited circumstances when it will work

[Naam]

"I am sure you will disagree violently but the blame for the 1992 Black Wednesday debacle was and is still placed firmly and squarely on the shoulders of the Bundesdank.

Had support been forthcoming ...and remember the DM /Sterling peg at 2.90 was what it was all about , the pound would have survived intact."

------

i don't disagree violently Topfield but draw your attention to my expression "coup de grâce" which could be interpreted as "final blow" (not a correct translation but an equivalent meaning).

also, the downfall of Sterling did not start in 1972 (parallel with the Dollar) as "Dragon" mentioned but it started much earlier, in fact it started a few years after World War II ended in the early/mid fifties. i still remember some english lessons in school (i was a little boy then) when we were taught the confusing british currency denominations. one pound was twenty shillings, twelve pence made a shilling, there was tuppence, "haypenny", the "fart-thing" (most interesting for little boys)     and we learned that Savile Row tailors did not charge a suit in Pounds but in Guineas, each Guinea equalling twenty-one shillings.

what i remember too is that one Pound was twenty Deutsche Mark. 15 years later in 1968 (i believe) one Pound was only EIGHT Deutsche Mark.

[topfield]

sonicdragon, on 2007-03-27 20:04:25, said:

Nothing wrong with a bit of light banter IMHO - economics can get far too serious. After all, it is the "dismal science"

Yes Bendix can be rather sharp and nasty when he wants to be : ie
"And the Victor Meldrew Award for ThaiVisa's Most Consistently Miserable poster goes to . .. . .

Are you STILL in Thailand, Old Asia Hand? It must be so horrible to be so miserable here all the time. I pity you.

however having reviewed about a thousand of this 42 year old married British ex public school investment banker's two thousand  postings I have come to the conclusion that the man is clearly extremely bright, amusing, well informed and intelligent . An IQ of 150 perhaps ? His postings unlike mine, cover every possible subject under the sun and are well written, amusing and informative.

I would recommend anyone to read  his compendium of postings for both enjoyment and pleasure and suggest even that a collection of his postings over the last two years be published. In paperback form perhaps ?
If only he would tone down his sharp aggressive wit .....but that would perhaps be out of character.

[chiang mai]

soundman, on 2007-03-27 19:47:40, said:

chiang mai, on 2007-03-27 18:16:38, said:

bendix, on 2007-03-27 10:24:55, said:

Toppy . . . you really do get off on this stuff, don't you?

Do you have any other interests? Try origami. I hear it's very relaxing.

Maybe you're the one that should try origami given that your major interest seems to be significantly less constructive than Topfield's, posting unhelpful comments about the poster rather than contributing to the posters subject. Or maybe you simply can't contribute in which case you may wish to try to learn.

There are some instances when a bit of light banter in a posted topic is, how shall i say, - uplifting...

This is one of them...

Mr Bendix has plenty of useful info. on a wide range of topics. You don't have to be serious all the time, do you??


Soundman.

I do agree that a little light banter can be uplifting and I fully support its use during serious debates. But Bendix has a track record of personalized attacks on Topfield even though he refers to posters as cyber entities rather than people. However smart Bendix may be and how useful his knowledge is does not come through to me in this forum. I personally enjoy reading what Topfield has to say in this forum and I acknowledge him as an interested and enthusiastic source of useful information and views. Consequently I find it highly annoying to continually read negative criticism of the poster by the same person without any constructive input to the discussion.

Edited by chiang mai, 2007-03-28 06:47:02.

[backflip]

"Was this recent posting of his more informative.....it is indeed humerous ?
'I'd also advise all pastry investors to go short on Bakewell Tarts, and long on Apple Strudel'"

Yes, it's very funny comment.  Bendix has a sense of humor, something that seems to be sorely missing in most of these forums.

Bendix also speaks to the point directly, calling a spade a spade...rather than a hoe.

[sonicdragon]

Dr. Naam, on 2007-03-27 22:00:39, said:

also, the downfall of Sterling did not start in 1972 (parallel with the Dollar) as "Dragon" mentioned but it started much earlier, in fact it started a few years after World War II ended in the early/mid fifties.

I assume you referring to my post, not topfield's with that ? I didn't say that sterling downfall started in 1972. I said that the Sterling Area was dismantled in 1972. It was just one of many nails in the coffin for sterling.

You are absolutely right that Sterling's downfall began a lot earlier. but it was a lot earlier than you mention though. Several devaluations in the 1930's could be pointed to, but the real blow was the first world war. It actually began as a consequence of almost unchecked expansion of the british empire in the late 19th century. By the early 20th century the writing was on the wall, and the 1st world war almost bankrupted the nation and that's when the downfall really began. Successive devaluations in the 20s and 30s, along with the great depression, coming off and on (and tinkering with) the gold standard, the 2nd world war, bretton woods. the suez crisis, israel, end-of-bretton woods, end of sterling area, oil shock,  79-81 recession, ERM entry/exit, and then the process was (arguably) complete.

Edited by sonicdragon, 2007-03-28 08:23:37.

[bendix]

topfield, on 2007-03-27 23:08:36, said:

however having reviewed about a thousand of this 42 year old married British ex public school investment banker's two thousand  postings I have come to the conclusion that the man is clearly extremely bright, amusing, well informed and intelligent . An IQ of 150 perhaps ? His postings unlike mine, cover every possible subject under the sun and are well written, amusing and informative.

I would recommend anyone to read  his compendium of postings for both enjoyment and pleasure and suggest even that a collection of his postings over the last two years be published. In paperback form perhaps ?
If only he would tone down his sharp aggressive wit .....but that would perhaps be out of character.

Well well well.

This is all very intriguing.  

I'm surprised people see my banter with Toppy as 'personalised' . . perhaps my assessment of his hide's thickness is different to that of more sensitive folks like chiang mai.       I neither know Toppy nor have any strong feelings about him, except an extreme fascination with - and admiration for - his single-minded focus on the Baht / Sterling exchange rate.   I'm genuinely fascinated by it.   No, really, I am.  

Anyway, Topfield . . . it's nice to know you have carefully studied my posts.  However, I would like to clear up a few points.  I'm neither ex-public school, nor an investment banker.   Sadly, I'm from rural working class origins and my days at a squalid comprehensive school in Great Yarmouth were neither happy, nor beneficial.  My alma mater and I parted company on bad terms.  And these days I'm forced to earn my living in a humble little law firm.

Now, back to the subject at hand.  What's happening in the world of foreign exchange today?  More volatility?

[LaoPo]

bendix, on 2007-03-28 03:01:07, said:

Now, back to the subject at hand.  What's happening in the world of foreign exchange today?  More volatility?

Right.

My 'Vista' currency valuta screen says:

US$ - Baht = 31.380  

LaoPo

[Jet Gorgon]

This thread is more entertaining than the joke forum. I'll have to visit more often.
Lots of good economic history here, too, and I thank Dr Naam for the guinea and shilling lesson. The BOE/Bundesbank debate brings back lovely memories of my banker life in London in the early 90s. Thank you all for the contributions.
I would beg a gentle correction in your assumption on Bendix's IQ, Mr Topfield. Based on our calculations, it stands at 163.
Excuse my intrusion, and happy baht day!

Edited by Jet Gorgon, 2007-03-28 09:57:34.

[Naam]

Now, back to the subject at hand. What's happening in the world of foreign exchange today? More volatility?

the skies are falling!