Tuesday, January 20, 2009

GB is bankrupting GB

The run on sterling today is another nail in the coffin of the British economy. The huge amount of potential losses being guaranteed by the Government, the dithering approach of taking a 70% stake in RBS rather than simply going the whole hog and nationalising it outright, the strategy of offloading some toxic assets onto the Bank of England whilst not counting them as Government debt, are being met with scepticism in the form of a sell off of the pound. This creates further problems. The Government is planning to sell vast numbers of gilts to fund the banking crisis but it is unclear who will buy them unless the interest rate is sufficiently attractive to outweigh the depreciating currency and they don't want to raise rates at this time when credit is so tight.

4 Comments:

Blogger kinglear said...

With virtually nil returns here, investment in Romania is looking more attractive by the minute...

9:36 am  
Blogger Winchester whisperer said...

I'm not sure which currency is falling faster, KL

8:58 am  
Blogger kinglear said...

WW - GBP. Did you read Willem Buiter's post? Great stuff

12:03 pm  
Anonymous Anonymous said...

...please where can I buy a unicorn?

6:01 am  

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