A possibly useful benchmark
Today's drop in the value of the pound (against the USD, specifically) was, as many people have noted, the largest ever recorded. That's true, but doesn't give a real sense of how unprecedented it is: today's drop - from day's end to day's end - was bigger than the second and third largest drops put together. If you count from yesterday's peak at the start of counting to today's nadir (ie 24-hr high to low), the Leave drop is larger than the second, third, and fourth largest currency crashes in UK history put together.
(For reference, drops two to four are the "Winter of Discontent" in 1978, the UK's ignominious exit from the ERM in 1992, and the 2008 financial crisis, in that order.)
Except that according to Krugman none of that is even remotely true. Which makes me wonder where the BBC (and others reporting the same) got their figures from, given how far off they look to be. (The BBC gives the ERM crash as 4.3%, Krugman says "about a quarter". That's a big difference!)
Correction to the correction: Krugman turns out to be comparing yesterday's single-day change with the longer-term effects of other catastrophes. The original stands. Thanks to![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
ewx for pointing this out.
(For reference, drops two to four are the "Winter of Discontent" in 1978, the UK's ignominious exit from the ERM in 1992, and the 2008 financial crisis, in that order.)
Correction to the correction: Krugman turns out to be comparing yesterday's single-day change with the longer-term effects of other catastrophes. The original stands. Thanks to
ewx for pointing this out.
no subject
http://futures.tradingcharts.com/historical/BP/1992/C/linechart.html shows Black Wednesday and the ensuing evolution of USD/GBP. The 25% fall took a couple of months.
http://futures.tradingcharts.com/historical/BP/1975/0/continuous.html and http://futures.tradingcharts.com/historical/BP/1976/0/continuous.html show the same variable in 1975/6. As you can see, it takes more than a year and a half to decline by about a third.
In contrast, every figure you'll find concerning yesterday's debacle only covers a single day at most.
I predict continued decline (on average) in the near future, with probably another sharp fall when someone is finally idiotic enough to press the big red TEU Article 50 button.