(June 24, 2016 at 3:46 pm)Rhythm Wrote: It has no direction to go but up, frankly..but that won't make that money reappear. It's gone. As is the standing the UK previously enjoyed on the world stage. Seems to me you might not have realized that the pound was pushed to those levels - with the EU behind you, what's the recovery plan now..past the bailout that's already been offered? It's been made abundantly clear that the things mentioned before the vote will not be materializing in reality.
It went much further down in 2011 when I first moved to Germany. It was effectively parity between the pound and the euro, which was very expensive for me at the time having just moved there.
It can go down much more. It's not about money appearing or disappearing, it's about how much others think that it's worth. Say you had a business and you needed to make deliveries. I could offer to sell you a car. You might think that it is worth £3,000 because you know that you can get a year's use out of it. You could then use it do your business and make money with it. Now if I point out that the timing chain has already started coming loose and has irrevocably damaged the engine and it only has a week more use out of it, then you're not going to offer so much for the car. How much you decide to offer is up to you, but it will be far less based on what you can earn in a week.
If the financial markets decide that the future economic prosperity of the UK is bleak now that it is no longer in the EU and cannot sell its exports, then there will be less interest in buying its currency, its shares or its bonds. This is important because the UK has a deficit. This isn't a debt but a deficit. It's like having a monthly payment on your credit card bill of £1,000 a month and you only earn £900. You will then need to borrow more money to meet that deficit and get further into debt. But if people see you as higher risk because you now earn less money each month because your costs have gone up compared to everyone else, then they'll only lend to you at higher interest which means next month your deficit increases and you need to find even more money. So each month you become poorer even faster without a chance to catch up.
This is the future of the UK now that it has decided to leave the EU.
