Tuesday, February 07, 2012

The 19 Stages of the Bristol Pound

Things remain pretty quiet in the markets and apart from the RBA deciding not to cut rates but instead fuel the fires of dutch disease, Team Macro Man have been left to trawl through the smaller stories in the press.

The background theme of potential Euro break-up has provoked turbid debate as to how the introduction of local currencies could be managed without cataclysmic step change wrecking the domestic economies, so TMM were amazed to find that the UK city of Bristol has decided to leap-frog Greece and Portugal and plow ahead with the introduction of its own currency. TMM assume that Alex Salmond and his Scottish colleagues are watching the project with keen interest.

Of course, introducing local town currency is nothing new, but when one reads the resume of its creator, and knowing the qualifications needed now to even mention a new product in the City, we wonder why the FSA haven't already locked him up. Yet somehow the project is ready for launch. Now TMM have had a bit of experience in the currency markets and so would like to make their own predictions about the probable life cycle of the Bristol Pound.

We give you Team Macro Man's "19 stages of the Bristol Pound".

1) Bristol shopkeepers decide that their high street demise has nothing to do with a lack of shops that people actually want to buy things in, the internet, no parking, or cheaper prices from out of town super-centres but is due to having to use "bankers' fancy money" and so decide to make and use their own.

2) Bristol look for their John Bull rubber printing set, last seen in Toby's toy box in 1976, give up, and instead run a competition between 5 year-olds to come up with the simplest, most forgeable design possible and run it off using the printing service at Boots the Chemist.

3) The new Proud Bristol Pound is launched to gullible shop owners and the odd major supermarket who feel they have to go along for PR reasons but won't accept more that 5 or them per £100 of groceries and even then charge a 20% "handling fee".

4) All runs well for a month or so with local pride swelling. Some people especially appreciate the benefits of the new currency - mostly those who notice that there is no column in their tax returns entitled "Earnings denominated in Bristol Pounds".

5) Someone notices that the Bristol Pound is actually just like a normal pound with the drawback of only being accepted in a handful of shops that they wouldn't normally go to (remember - that's why it was created).

6) News spreads and folks start exchanging their Bristol Pounds for the universally accepted British pounds. Meanwhile, others have noticed that photocopying them is not that illegal and a run starts on the Bristol Pound.

7) Questions are asked and newspaper articles appear showing the frail and elderly freezing in squalid garrets surrounded by piles of Bristol Pounds that they had been persuaded to buy in the Post Office. "SOMETHING MUST BE DONE!"

8) But help is at hand... Reuters Headlines:

*THE SPINNING-WHEEL TEA ROOMS SEEN INTERVENING IN BRISTOL POUND SPOT MARKET TO SUPPORT LOCAL CURRENCY
*"SPECULATIVE ATTACK'S FROM CIRENCESTER MOBILE CHIP SHOPS WILL NOT BE TOLERATED AND FIRM POLICY IMPLEMENTATION WILL BE UNDERTAKEN" - SPINNING-WHEEL TEA ROOM
*"WE HAVE THE SUPPORT OF THE CENTRAL BANKS OF WESTON-SUPER-MARE AND BATH" - BEN FROM THE RED LION, CHANCELLOR TO THE BRISTOL POUND

9) A news headline temporarily stays the markets:

*CHINA'S WEN JIABAO SAYS "IT IS IN CHINA'S INTEREST TO SEE A STABLE BRISTOL POUND"

But hope is then dashed when followed by:

*CHINA NOT YET READY TO BUY PROPERTY IN CLIFTON - CHINA'S JIABAO.

10) Bristol introduces capital controls. Road checks on the M4 and M5 stop and ask motorists if they have any Bristol Pounds that they are taking up to "the big Smoke" and then onwards to "those off-shore folks, probably on the Isle of Wight, as the Lundy lot are OK and mostly seals".

11) The United States accuses Bristol of currency manipulation and demands an immediate devaluing to its true value of "toilet tissues" from the artificially maintained level of "chip wrapping".

12) Bristol buys a second hand HP Photosmart C7280 All-in One printer off Ebay and starts to print more Bristol Pounds (as it worked for the USA). Builders merchants and garden stores praise the policy as wheelbarrow sales explode. However, Zimbabwean economics sees Boots run out of printing paper.

13) Bristol realises that printing more Bristol pounds is the wrong thing to be doing and calls the Bank of England for some British ones instead.

14) The Bank of England offer to help, realising that Bristol is on the way to their holiday homes in Cornwall and that trouble in Bristol could add an hour each way to the journey. A delegation is sent, which soon discovers that the local bookie, Jim, having volunteered to look after the British Pound reserves, had paid them out against a 30/1 shot that had come in on the 4.30 at Haydock the week before.

15) The Bank of England and the counties of Avon, Somerset and Gloucestershire insist that any aid is accompanied by austerity measures for Bristol, to include half-day closing on Wednesdays, the sale of the "Great Britain" steam ship and 20 points off Bristol Rovers and Bristol City's league rankings, with all local teams being made to play in their underpants when a mid-level administrator at Bristol Council misinterprets the ban on short selling.

16) Riots break out and marches are organised to London, but the launch of a new Bristol rescue bond backed by Greece and Portugal and the swift reintroduction of the British pound swiftly restores calm.

17) Bristol shop keepers moan about the lack of trade once again (wheelbarrow sales plummet) and blame the fat cat bankers who forced them into having to introduce their own mickey mouse currency in the first place.

18) Jim the Bookie is not allowed to keep his bonus.

19) All is well

20 comments:

Anonymous said...

20. In 2050 Sothebys sell a Bristol pound misprint for £1 million ,or 100 yuan to a pork farmer from Sezchaun.

Polemic said...

Anon,

Good one - wish we'd thought of that!

Cheers,
Pol

Saul Bollox said...

TMM, if you had two of them, you'd have:

.... a lovely pair of Bristols....

abee crombie said...

wow i thought this post was a joke

Leftback said...

Always on the look out for Contrarian Indicators, LB notes, Bond Guy says go BOLIVIAN:

Blackrock's Fink Says Go All In Stocks

Funny how he didn't say that in October. Yellow lights flashing, TMM?

Lots of revenue misses out there in the US, now the question is, can (EURUSD squeeze + QE3 expectations + LTRO + Endless Eurofudge + Greek political yoghurt) really add up to a genuine bull market?

This reminds some of early 2008, after the credit crunch had started, and US spreads had blown out, but before the economy came to a shuddering halt. It takes a while for higher effective rates to filter into the real economy, but that's what's going on in Italy and Spain right now despite the improvement in sovereigns.

Anonymous said...

LB
Rush in for buckets of equity f--it until you're 100%
Margins may tank on, so multiples bank on we're no where close to the BRINK. The market is boring, everyone's snoring, you might want to just stop and THINK,of the very last person who was so certain that ships can never (ever ever)
SINK!

Intrinsic said...

Reading this makes my head hurt

http://english.caixin.com/2012-02-06/100353729.html

Amplitudeinthehouse said...

Intrinsic says his head hurts...

aussie no rate cut

the old lady throws in another 50 yards and betty pops.

Leftback said...

A good discussion on the role of "safe assets" and "global liquidity" in creating a variety of imbalances and crises in recent years:

Global Liquidity and "Safe Assets"

Anonymous said...

Didnt Lewes in East Sussex introduce its own currency a few years back. Perhaps there are some lessons from previous currency breakdowns?

Leftback said...

Some thoughts on one of our favorite widow makers:

Natty Gas

Leftback is on a Bug Hunt today.

Anonymous said...

BANNED IN CYBERLAND!!!!!!!

evgenii said...

Ithaca Hours - local currency of Ithaca, NY
http://en.wikipedia.org/wiki/Ithaca_Hours

Saul Bollox said...

'ere, oo left the tent flap open last night? The bears have got stuck into the victuals...

Leftback said...

Speaking of funny money.. a discussion of alternate instruments, such as the patacones that LB became familiar with in BA in 2001.

There are so many stories of barter in Greece, but it is becoming apparent that there is also a shortage of physical currency, and a variety of imaginative mechanisms are being utilized:

http://ftalphaville.ft.com/blog/2012/02/08/873921/greek-funny-money/

This can't last for much longer...

ashamed said...

RIP Whitney Houston. Fans of the Bodyguard star have expressed their sadness about her untimely death, but taken solace that she died doing what she loved best, holding a note.

sell structured settlement said...

The Bristol Pound is real money made for Bristol. It is designed to support independent businesses in and around Bristol, retaining and multiplying the benefit of every pound spent for ordinary people and businesses.

Polemic said...

Self structured, if you really think a local economy can run on gift vouchers then go for it. But if my kids are anything to go by, folks prefer cash to tokens.

Anonymous said...

This article is very missinformed, and entirely unobjective.

It makes me angry to read such rubbish.

You clearly have no understanding about what the Bristol Pound is trying to acheive or why it has been set up. Perhaps you might like to do some research before you start undoing peoples hard work!! I might add that there is a lot of support for the Bristol Pound which is not about traders being ignorant or wanting 'fancy local currency', it is about keeping money circulating in the local community and encouraging people to buy from local producers instead of the perhaps more convenient supermarkets.

This post has made me so angry - you are so ignorant!

Polemic said...

dear "so angry"

We are fully aware of what it is trying to achieve. We just believe that a naivety of how money works will leave it a costly local play thing, no matter how many catchy mission statements are used. If people really want to spend money in Bristol or at local shops they can do so without a Bristol Pound. We suggest you explore why the demand side of the services you are trying to support is lacking rather than invent a novel and costly way of paying for them.

We also note that there is a 3% FX fee to switch back to UK pounds. So it's not THAT freely convertible either.

Surely you have no need to be so angry as your proof will be in your own success - so be smug instead!

Good luck !

PS We assume you are all for the break up of the Euro as going back to lots of different local currencies, the harder it will be for people to take it out of their countries and so the more successful each one will be?