News - Pound buys just $1.37. Influencing your buying decisions?

[HEXUS]

Now you can get just $1.32 at the tourist rate. How much lower can it go?

Read more.

[GoNz0]

i put a lot of buys on hold due to the poor rates

[sleepyhead]

On a more pragmatic note, have you put off holidays abroad because the pound simply isn't going far enough?

Nope, I am still planning on going to Japan this year, even if the pound (sterling) is absolute pants against the Japanese Yen. Right now, the hotel bill has almost doubled due to the fall in the pound. Just means ALOT less spending money.

[kalniel]

Buy British!

[j.o.s.h.1408]

i put a lot of buys on hold due to the poor rates

on hold? might as well not bother. the recession aint going to disappear tomorrow or next week. its here to stay for at least this whole year.

i was in the philippines last december and hardly bought a thing there.

[GheeTsar]

i was in the philippines last december and hardly bought a thing there.

Good grief - I spend three months in the Philippines a few years back and could buy a bottle of gin for 30p! Things must have changed.

I've just come back from a ski trip to France where my £1 only bought €1 - combined with outrageous mountain prices in the first place you have a recipe for staying in/drinking duty-free and not paying the £9 a beer prices in the town!

I'm now going to stay in Blighty for the next year I think!

[handscombmp]

I'm planning on buying most of pc stuff now befores it gets worse.

i bet it will get better now!

[TeePee]

I'm visiting the homeland this year!

[amdavies]

The problem with shifting the majority of your manufacturing base overseas and becoming reliant on a service-based economy is that, when stuff like this happens, you're going to get hammered both ways (as the footballers said to the groupie, allegedly).

The amount of money available to spend is going down (through loss of jobs, lack of credit etc.) and the price of goods is going up (through the weakening Pound). "Buy British" is all well and good except for the fact that we're so reliant on things being imported that there's not much British left to buy. Even in the cases where things are made here, often the parts that go into the items being made are, again, imported from outside.

[CAT-THE-FIFTH]

Unfortunately the public do not seem to support British manufacturing any more or even care that much when it is shifted to other countries!! If such a British institution like HP sauce is now being made in Holland to save a few pennies then what about the rest of British manufacturing??
Are people not proud about buying British anymore??
Look at the French for example they are proud about the things that are made in their country even it costs a bit more.

[TooNice]

I am, not too sure what to do. I was thinking of buying a projector, but prices have gone up sharply. Prices of relatively entry level stuff have gone up by over £100 (25&#37 since just before Christmas.

[arthurleung]

The problem with shifting the majority of your manufacturing base overseas and becoming reliant on a service-based economy is that, when stuff like this happens, you're going to get hammered both ways (as the footballers said to the groupie, allegedly).

The amount of money available to spend is going down (through loss of jobs, lack of credit etc.) and the price of goods is going up (through the weakening Pound). "Buy British" is all well and good except for the fact that we're so reliant on things being imported that there's not much British left to buy. Even in the cases where things are made here, often the parts that go into the items being made are, again, imported from outside.

Thing is Britain don't have the raw material to do manufacturing within the country. So the obvious choice is to move the operation overseas as foreign direct investment and the money earned outside UK is transferred back into UK. Falling pound just mean that UK as a whole can't afford to invest in another country, but for those who already invested, will see a greater return. I think we're going to see university graduates leaving the UK when they CAN'T find a job in ANY sector. Now is the time to invest in new start-ups in the UK.

The amount of money available to spend WAS going down FOR A LONG TIME when you keep drawing on your credit card and get a 100% mortgage. People spent money that they didn't have, that's why UK is in such a mess. At least the Japanese saved money in the bank, they managed to lend money to other countries (!) in the recession to keep afloat. They aren't in a better position in terms of the economy, but they don't have the strain we have, as to pay back those credit cards and mortgages.

If it gets to the point that the UK have no money, no knowledge, no confident and no profit then we're doomed here.

Price doesn't affect me as much since I'm funded by my family in Hong Kong Dollar. Lower Pound means my rent and my tuition fee is a third lower than what it was in the compared to last year. What I see now is the price of computer hardware have been inflated more than the pound falling. I presume that is to keep the profit margin high as people buy less. I remember I used to buy hard drives and laptops at a price lower than USA, Hong Kong and China a year ago (with exchange rate of that time). Now the price is at least 20% higher ex-VAT (with the current exchange rate).

[amdavies]

tl;dr
Britain has/had coal, iron, oil and gas but we decided that they weren't necessary and we sold them off for next to nothing. That's probably the main difference between us and Japan, we actually had the raw materials to hand whereas they've always been reliant on outside sources.
We also had a wealth of nationalized industries that put lots of money in the treasury that were, again, sold off for next to nothing. Have no doubt that we've had the resources to be the island nation that we seem to want to be, only now we've sold them all and we're stuck with being the banking nation when banks aren't trusted and are failing rapidly.

Now, what caused the current financial problems was, to start with, the de-regulation of the banks. This meant that they could lend out much more money than they used to be able to in relation to the deposits they had on hand (Lehman Brothers reportedly went from 10 times deposits to 27 times).
More money being lent out meant that the actual monetary cost of houses rose. Banks were offering five times salary mortgages and, strangely enough, flats and houses rose to five times people's salaries. They weren't even very careful about who they lent to, the expectation was that house prices would continue to rise forever and therefore the debt could always be repaid even if the debtor defaulted.

"Well, people were foolish to spend that amount of money on a home."
Possibly, but they didn't have much choice in the matter. Banks were also quite happy to hand out interest only loans, because of the perceived continual house price rise, which equated to lots of wanna-be house developers getting mortgages on multiple houses in order to rent them out. This meant that not only did the average mortgage go up, due to demand, but also the rents too, to cover the cost of the mortgages. Houses were no longer homes, they were investments and people who just wanted a home were being left behind, they could either attempt to get a mortgage or pay rent at an even higher rate.

When, at last, someone finally stood up and went "hold on, this isn't right" the house of cards fell over. For us, Northern Rock was the pebble that started the slide as it was most exposed to the money markets for capital and these were becoming more and more nervous as the US sub-prime mortage markets continued to melt-down.

If you're bored, read up on Tulip Mania:-
http://en.wikipedia.org/wiki/Tulip_mania
It's much easier to recognize the greed of people when they think they're missing out on easy money with the Tulip Mania example.

Sub-prime mortgage "crisis":-
http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

[CAT-THE-FIFTH]

Thing is Britain don't have the raw material to do manufacturing within the country. So the obvious choice is to move the operation overseas as foreign direct investment and the money earned outside UK is transferred back into UK. Falling pound just mean that UK as a whole can't afford to invest in another country, but for those who already invested, will see a greater return. I think we're going to see university graduates leaving the UK when they CAN'T find a job in ANY sector. Now is the time to invest in new start-ups in the UK.

The amount of money available to spend WAS going down FOR A LONG TIME when you keep drawing on your credit card and get a 100% mortgage. People spent money that they didn't have, that's why UK is in such a mess. At least the Japanese saved money in the bank, they managed to lend money to other countries (!) in the recession to keep afloat. They aren't in a better position in terms of the economy, but they don't have the strain we have, as to pay back those credit cards and mortgages.

If it gets to the point that the UK have no money, no knowledge, no confident and no profit then we're doomed here.

Price doesn't affect me as much since I'm funded by my family in Hong Kong Dollar. Lower Pound means my rent and my tuition fee is a third lower than what it was in the compared to last year. What I see now is the price of computer hardware have been inflated more than the pound falling. I presume that is to keep the profit margin high as people buy less. I remember I used to buy hard drives and laptops at a price lower than USA, Hong Kong and China a year ago (with exchange rate of that time). Now the price is at least 20% higher ex-VAT (with the current exchange rate).

I agree too!! Even a while back me and a couple of firends realised something like this may happen. However we did not realise it would happen so quickly and so severely!! The worse thing that all of us have to suffer because of the financial mismanagemnt of others. Not only are the banks to blame but the greedy people who wanted to live a life outside their means which has caused this!! The people like me who have always lived within their means also have to pay the price!!

[CAT-THE-FIFTH]

tl;dr
Britain has/had coal, iron, oil and gas but we decided that they weren't necessary and we sold them off for next to nothing. That's probably the main difference between us and Japan, we actually had the raw materials to hand whereas they've always been reliant on outside sources.
We also had a wealth of nationalized industries that put lots of money in the treasury that were, again, sold off for next to nothing. Have no doubt that we've had the resources to be the island nation that we seem to want to be, only now we've sold them all and we're stuck with being the banking nation when banks aren't trusted and are failing rapidly.

Now, what caused the current financial problems was, to start with, the de-regulation of the banks. This meant that they could lend out much more money than they used to be able to in relation to the deposits they had on hand (Lehman Brothers reportedly went from 10 times deposits to 27 times).
More money being lent out meant that the actual monetary cost of houses rose. Banks were offering five times salary mortgages and, strangely enough, flats and houses rose to five times people's salaries. They weren't even very careful about who they lent to, the expectation was that house prices would continue to rise forever and therefore the debt could always be repaid even if the debtor defaulted.

"Well, people were foolish to spend that amount of money on a home."
Possibly, but they didn't have much choice in the matter. Banks were also quite happy to hand out interest only loans, because of the perceived continual house price rise, which equated to lots of wanna-be house developers getting mortgages on multiple houses in order to rent them out. This meant that not only did the average mortgage go up, due to demand, but also the rents too, to cover the cost of the mortgages. Houses were no longer homes, they were investments and people who just wanted a home were being left behind, they could either attempt to get a mortgage or pay rent at an even higher rate.

When, at last, someone finally stood up and went "hold on, this isn't right" the house of cards fell over. For us, Northern Rock was the pebble that started the slide as it was most exposed to the money markets for capital and these were becoming more and more nervous as the US sub-prime mortage markets continued to melt-down.

If you're bored, read up on Tulip Mania:-
http://en.wikipedia.org/wiki/Tulip_mania
It's much easier to recognize the greed of people when they think they're missing out on easy money with the Tulip Mania example.

Sub-prime mortgage "crisis":-
http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

Don't blame the banks entirely but mostly blame the pillocks who decided to pay over-inflated prices for homes. I never pay over the odds for anything and a houses is no different. It is only because people were willing to take out large mortgages and even buy a second home when they could not afford them which has caused a fair amount of the problems.

The banks should have limited their loans IMHO but they saw potential profit and hence took the chance. Risk is seen as away to make money(Hedge funds for example) and not a liability anymore so it is not unusual that financial institution are less risk adverse than they used to be. After all if they were right they could make loads of cash. It was a shame that the governments of the world were busy riding the crest of their sucess in the good times without realising what could happen when everything could fall apart. No one seemed to have any contingency plans in case the massive gambit ever failed!!

If people were not willing to pay such high prices then the market would not be in the housing market would not have been in the mess it is today. If people are willing to pay for something then the price is going to go up. Id does not matter if the money is theirs or borrowed. They made the decision and NOT THE BANKS!!

If people cannot afford a mortgage they should rent or lead a more austere lifestyle. Perhaps they should also save more so they can have a large deposit too instead of taking 100% mortgages. This is the way it has been done for many years before.

Cannot people even remember the last housing crash 20 years ago?? I was a kid when it happened but it is a famous example of why you should never pay over the odds for anything.

I hate taking credit and even I use my credit card for reasons of security more than anything else!!

I have no sympathy for people who are stupid enough not to realise how much their mortgage is going to go up after the initial low rate or do not realise that mortage repayments may actually go up if interest rates rise. You should be able to easily afford the full rate of the mortgage plus have additional money on top for increases. If you cannot do this then it is no point having a mortgage. Fair enough if your circumstances change but for many people they could barely afford the mortgage anyway.

If very few people would have taken out these excessive loans then the housing market would have been better for everyone.

People of my generation nowadays have this stupid "live only for today" attitude just because the old fashioned planning ahead is not "cool" !

People need to take responsibilty for their financial decisions in life and stop blaming the banks+ world+ dog for their woes. This blame culture does not help as it disconnects people from the reality and the risks associated with it.

Hence people have no issue taking out massive loans to fund their lifestyle. Why think about the problem of paying it all back when I am having fun today!!?? Life is too short.. blah blah!! Unfortunately for most people we live longer so we NEED to think ahead!!

[Saracen]

Don't blame the banks but blame the pillocks who decided to pay over-inflated prices for homes. I never pay over the odds for anything and a houses is no different. It is only because people were willing to take out large mortgages and even buy a second home when they could not afford them which has caused a fair amount of the problems.

If people were not willing to pay such high prices then the market would not be in the housing market would not have been in the mess it is today.

If people cannot afford a mortgage they should rent or lead a more austere lifestyle. Perhaps they should also save more so they can a deposit too instead of taking 100% mortgages.

Cannot people even remember the last housing crash 20 years ago??

I hate taking credit and even I use my credit card for reasons of security more than anything else!!

I have no sympathy for people who are stupid enough not to realise how much their mortgage is going to go up after the initial low rate or do not realise that mortage repayments may actually go up if interest rates rise.

If very few people would have taken out these excessive loans then the housing market would have been better for everyone.

People of my generation nowadays have this stupid "live only for today" attitude just because the old fashioned planning ahead is not "cool" !

People have to take some responsibility, but the lion's share is with the banks in that. People only took 100% (or more) mortgages because banks offered them. It's not all that long ago that you couldn't get a 100% mortgage, and you'd be lucky to get more than 3x your salary (plus 1/2x any partner's income). And because they weren't available, people couldn't take them out.

Not only have banks made mortgages available on terms that were clearly only sustainable by an ever-increasing housing market, but they aggressively marketed them at consumers, too. And it wasn't just mortgages. I've lost track of the number of entirely unsolicited junk mail letters I've had trying to entice me to take out yet another credit card, but it must be at least half a rain forest's worth. I reckon I've given the local council a landfill headache all on my own with this crap from banks, and from banks I've never had any dealing with at that.

And not content with bombarding people with mail, they are then so keen to get new customers or, better yet, take them away from competitors, that they bribe you with interest-free periods. Oh, and don't even get me going on things like Halifax and Abbey TV adverts.

And then with that muppet Brown forever blowing his trumpet about how good the economy is, how boom and bust has been abolished (by him) and how we've had such a sustained period of growth (with never a hint of worry about the debt that paid for it) it's be a flippin' miracle if large numbers of people hadn't borrowed silly amounts.

And, of course, for most people, a house is a home. Sure, there's investors and speculators and buy-to-let, and so on. But for most people, they're buying a home. And the state of the property market, with apparently never ending house price rises, sent a very clear message to first time buyers that you'd better get on the ladder now, because prices are going up far faster than incomes (which should have been clear proof that it wasn't sustainable forever) and if you don't get on now, you might never again be able to afford to.

And why were prices going up so damn fast? Because banks were bending over backwards to provide the finance to do so. Had those same 3x and 95% LTV criteria remained in place, prices couldn't have gone up as they did, because people couldn't have got the money, so the demand that fed demand-side inflation wouldn't have been there.

Yes, people were a bit stupid to take the loans. But they aren't supposed to be finance experts. The banks that designed the instruments to allow it, and so aggressively marketed it are supposed to be experts, as are the people Brown appointed to run the BofE and the FSA, and if you believe his own CV, so is Brown ...... though I fail to see where he got any finance or economics expertise, being a political historian.

Brown has made two critical miscalculations - firstly, he believed his own self-publicity, and secondly he believed Blair and as a result, was in the killer job for so long that he was still (just about) there when it blew up in his face.

Nice timing by Blair though .... stitching Brown up like a kipper, and then jumping ship just before it ploughed, head first and full tilt, into an economic iceberg.