Posted on 03/02/2010 12:38:30 PM PST by reaganaut1
Could Britain be on the verge of a debt panic?
The fiscal crisis in Greece and a growing worry that the coming elections here could result in a hung Parliament, with no political party strong enough to push through unpopular deficit-cutting measures, have sparked fears that Britain will experience its own sovereign-debt meltdown. In such an event, foreign investors would sharply cut back on their purchases of British government bonds, leading to an interest-rate spike and a potential double dip-recession, if not worse.
“If you really want a fiscal problem, look at the U.K.,” said Mark Schofield, a fixed-income strategist at Citigroup. “In Europe the average deficit is about 6 percent of G.D.P. and in the U.K. it’s 12 percent. It is only just beginning.”
Since the Labour government’s intense fiscal intervention in 2008 and 2009, yields on British government debt have soared to among the highest in Europe. And on a broader scale, which includes the borrowing of households and companies, the overall level of debt in Britain is the second-largest in the world, after Japan’s, at 380 percent of the country’s gross domestic product, according to a recent report by the consulting company McKinsey.
In recent weeks, the focus of attention has been on debt scofflaws in Europe like Greece, Portugal and Spain, countries where borrowing costs have shot up in line with their burgeoning deficits as investors demanded higher rates to compensate them for the added risk of lending the governments money.
But the recent plunge in the value of the pound below $1.50 and the gradual move upward of Britain’s benchmark 10 year borrowing rate on government bonds, or gilts, to above 4 percent suggest that investors are now getting ready to reassess the country’s fiscal condition.
(Excerpt) Read more at nytimes.com ...
NYT still remains clueless to the Greek economic failure and the oncoming domino effect which will ripple through Europe, the US, and land squarely on China, who will not be exempt from feeling the economic fallout of that domino effect. Woot for globalization and interdependence........ =.=
If this new job pulls through for me I’d love for the pound to reach near parity. I’ve always wanted to see London, and hike through Scotland.
The UK’s problem isn’t so much of a financial problem [although there probably is one]. Their problem is with Islamic invasion and cultural insurgency. It is their end.
They’re covering for our debt catastrophy until Obama can get his little healthcare program in place.
The headline could just as well read "US Teeter on the Brink" with Pelosi, Reid and 0bamao trying to push us over!
Or look at Citigroup!
“I’ve always wanted to see London, and hike through Scotland.”
i have been to London and want to go back but never made it to Scotland. always wanted to though see my ancestral roots and all
I’m so happy people don’t mind paying higher taxes for more services, because taxes are going to go up, up, up! :)
You wanted “Change” - you got it.
I proposed to my now-wife on Ben Lomond or whatever their highest mountain is called. It was July and it was snowing.
“It was July and it was snowing.”
you kidding? yikes
well i would like to see it just once before i die
would like my dad to go as well
maybe in a few years
To be accurate, it was only snowing on the mountain, not the lower areas.
Oh, and on the way to Scotland, over the Atlantic, I felt for the ring in my pocket and realized I had forgotten it; I had to buy a prop ring in the interim. Still, it all worked out, except for the haggis and blood pudding. that part did not work out.
All that happens is the pound weakens. End of story.
The UK has its own currency. It can readily handle its fiscal issues, it isn't Greece.
Doesn't mean you can't short the pound. Does mean all this hysteria is just that, hysteria.
other than the cold snowy part it sounds like a great way to propose
as you say waterfall and ring is something right out of the Bachelor or something
it sound nice though too bad you forgot the ring but alls well that ends well.
ugh Haggis is nasty
tried it once at a Scottish festival - absolutely dreadful!
The USA is special and this could not happen to us.
I was told it was because of cultural diffusion due to the fact that they had a common enemy in the British back in the olden days.
Intereastingly, at my family reunion were a ton of folks from france who had my (very Scottish) last name. They really did wear berets, and they were semi-drunk when they got off the bus!
“The UK has its own currency. It can readily handle its fiscal issues, it isn’t Greece.”
I don’t see how you could not see creating high inflation as not defaulting.
the reunion sounds like it was a lot of fun
beret wearing semidrunks from France would make it worth the trip alone never mind anything else ;)
my family had a large reunion in Nova Scotia last summer
we couldnt make it since my wife got let go from her job and started a new one (thank God) two months before the reunion. not a good idea to take a vacation when you are that new to the company.
maybe i can convince the Clan Elders to hold one in Scotland!
These stories are really tiring. It has gone on for so long without end that I simply don’t believe it any more. Somehow, out of thin air, the government is going to keep things going. The government and banks are not accountable any more.
The demand for money is not a constant.
And words mean things. Default means not paying a debt as contracted and owed, as e.g. Russia didn't in 1998, or Argentina didn't in the early "oughts". Bond buyers receive a contract to be paid a certain number of pounds in the future, not a value or a basket of other commodities. If they are paid the pounds they were promised, it isn't a default. They are responsible for deciding whether they want to hold pound, or dollars, or yen, or kumquats, now or in the future.
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